Times are hard for the global oil and gas industry right now. Reduced oil prices are squeezing budgets across the board, with the greatest impact being felt by high-cost producers and exploration companies. The price drop also risks exacerbating another of the industry’s long-running challenges: the skills gap. With the ‘Great Crew Change’ drawing ever closer, the risk is that young talent – badly needed by the oil and gas industry – might see the current difficulties (including job redundancies) and decide to look elsewhere.
It’s not all doom and gloom though – global oil demand continues to grow, and is expected to increase by a further 10 - 15 million bpd over the next decade or so.1 It is also worth remembering that the US$100+ price we had all become so used to was actually a relatively short-term phenomenon;2 After all, it is not so many years ago that the WTI crude price lay well south of US$50/bbl. The pain being felt now, whilst unpleasant, is arguably just a symptom of the industry’s ‘fat trimming’ and readjustment back to what is perhaps a more realistic price environment. The industry has been through periods of reduced oil prices before, adapting to them can hurt, but it will survive.
It’s also easy to look at prominent regions that are having a difficult time at present (the US shale plays and the UK North Sea being two examples) and assume that these represent the whole of the industry, but this isn’t the case. Take Sub-Saharan Africa for example; this is one region where oil and gas exploration is still continuing apace. A recent report by GlobalData has declared that “despite the slump in oil prices, exploration activities will continue in Sub-Saharan Africa in 2015” and that “the region continues to attract activity, led by emerging oil and gas hotspots in Kenya, Tanzania and Uganda”. According to the report, falling drilling costs, recent exploration successes and a lower-cost operating environment have spurred both onshore and offshore exploration across East and West Africa.
Exploration activity is well underway across much of the rest of the world too. To give just a few examples: Vietnam, with the help of Indian company ONGC, continues to explore in the South China Sea, despite protests from China; Shell is pushing ahead with its ambition to explore for oil in the Arctic; CGG is using broadband technology to help uncover oil reserves in Brazil’s Santos Basin (Cover Story on page 16); and UK Oil & Gas Investments has made a potentially significant discovery at its Horse Hill prospect in southern England.
Yes, times are rough for many right now, but the industry continues to produce oil and gas at record levels despite these challenges. There are already tentative signs of a recovery emerging from the US shale plays; EOG Resources and others have reported that cost cutting measures have put them on track to better deal with the current oil price. In other words, the good news is out there, it just doesn’t always get the headlines it deserves – spreading positive news about the industry, showing how it has a future and a key role to play can only be a good thing when it comes to recruiting the next generation of oil and gas professionals.
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1 - http://www.ft.com/cms/s/2/5e3b53ce-e44c-11e4-9039-00144feab7de.html#axzz3ZGQSncOU
2 - http://www.macrotrends.net/1369/crude-oil-price-history-chart