Whilst we aren’t completely out of the woods yet, things are broadly looking up for the upstream sector. The oil price remains in the mid-to-high US$60s, new technologies are boosting efficiency and cutting costs, and investment is beginning to grow once more.
US shale production, particularly, continues to soar, supported by growth in light, sweet crude oil output. Indeed, the US is now producing so much oil that its exports are soaring too. By the end of March, US exports had risen to 2.175 million bpd, equating to roughly 15 million bpd a week, setting a new record.1 However, it looks like there’s even further growth ahead – Tom Kloza of the Oil Price Information Service was quoted as saying that: “We think that number is going to go up to probably 20 million or more, get to maybe 2.5 million barrels a day [...] The United States is in essence going to be exporting more than the United Arab Emirates, Kuwait, Nigeria, those individual countries.”2
The offshore sector has also seen some positive news recently as investment begins to return and grow once more. A recent report by analysts at GlobalData has predicted that the US Gulf of Mexico (GoM) alone will see more than US$40 billion of capital expenditure by the end of 2021. The expenditure will see the region contain over 660 fields with roughly 400 being conventional or heavy oilfields and the remainder being gas condensate fields. With GlobalData recording breakevens ranging from US$29.5 for shallow water to US$51.8 for ultra-deepwater projects, the investment is expected to see US GoM production remain stable at approximately 2.2 million bpd for the next four years.
Even the North Sea, which was hit particularly badly by the downturn, continues to see new investment with companies reporting the possibility of £5 billion on the cards.3 The money covers 16 projects, which could receive approval within the next 12 months, and amounts to more than the combined investment of the previous three years. Although far from its historical peak, the news of the investment is a welcome sign of returning prosperity in the sector. Deirdre Michie, Chief Executive of Oil & Gas UK, said: “Our sector is leaner, more efficient and more optimistic than it has been in recent years and 2018 looks set to be a better year […] More projects are taking place and investment is happening because of the sweeping changes made to adapt to the challenging business climate. This has helped make the UKCS one of the most attractive mature basins in the world in which to do business and we will continue to work hard to maintain our competitive advantage.”4
As always, the Oilfield Technology team will be attending the Offshore Technology Conference (OTC) in Houston; feel free to drop by our booth (Palladian Publications – 3150). In the meantime, why not take a look at our ‘OTC Technology Review 2018’, starting on page 49? This exciting feature showcases some of the innovative technologies on display at this year’s show – we look forward to discussing these with you in Houston!
References
- ‘Soaring US oil exports may derail the crude rally, Oil Price Information’s Tom Kloza says’ – https://www.cnbc.com/2018/04/06/u-s-oil-exports-could-derail-the-global-oil-rally-says-energy-expert.html
- Ibid.
- ‘Resilient and reshaping but greater activity needed to fully reboot industry’ – https://oilandgasuk.co.uk/resilient-and-reshaping-but-greater-activity-needed-to-fully-reboot-industry/
- Ibid.
