The oil and gas industry has evolved almost beyond recognition in recent years, and 2013 will be another period of change. As global energy demands continue rising and ‘easy’ oil becomes less readily available, the industry has been compelled to explore new frontiers and pioneer technologies that unlock resources considered completely inaccessible just a decade ago.
According to the findings of Seismic Shifts, a new research report on the outlook for the industry commissioned by GL Noble Denton, 2013 could also be the year in which we see the beginning of an east-west divide in supply and demand. The US will increasingly fuel its own energy needs, relying less on the Middle East for imports. In turn, the Middle East may be able to refocus supply toward growing energy demands in Asia.
An annual litmus test for industry sentiment, Seismic Shifts was produced with input from a survey of more than 400 oil and gas professionals, and in-depth interviews with 20 industry executives. It reveals that the Americas as a whole have already overtaken Asia as the oil and gas industry’s preferred investment destination this year and the International Energy Agency (IEA) believes the US will be in a position to rid itself of its dependence on foreign oil within a decade. Latin America is also expected to develop significant growth potential, with Brazil leapfrogging countries in the Asia Pacific region to become the second most favourable country for investment in 2013.
As well as the beginnings of a shifting global focus in 2013, GL Noble Denton’s research reveals that the industry faces a new reality. Increasingly challenging operating environments have given rise to companies dealing with tighter margins, higher risks, more rigorous regulation and, crucially, tougher contract terms in a sector that is fast approaching a skills meltdown. This industry-wide deficit of skilled oil and gas professionals is now seen as the number one barrier to this broadly positive outlook on global growth, up from the second biggest barrier in 2012 and fifth biggest in 2011.
But despite this ongoing skills challenge, there is much for oil and gas professionals to be optimistic about. Almost nine in ten of those surveyed (89%) were confident in the industry’s outlook for 2013, and there is broad expectation that spending on innovation will continue to increase throughout the year, with just 6% expecting to see this outlay fall.
According to the senior industry players we surveyed, technology will be particularly important in unlocking the remaining potential of existing mature reserves, such as those found in the North Sea. This is reflected in the fact that the UK and Norway both appear in the top six most popular industry investment destinations for 2013, reaffirming the recent resurgence in North Sea activity.
Unconventional gas is a subject that has dominated headlines in recent months. Despite the continued proliferation of shale gas extraction and concerns over a broader global gas ‘glut’, GL Noble Denton’s research highlights that senior oil and gas professionals think any further worldwide decoupling of oil and gas prices remains unlikely. Nearly half (44%) of respondents believe that gas prices will continue to deviate from the oil index. This stability, combined with predictions of a steady oil price, is helping to fuel much of the industry optimism so evidently expressed in the research.
Despite overall faith in the industry, it is clear that companies will have to think smarter to ensure the strong industry confidence that is taken into 2013 still remains at the end of the year. The shifting geographical shape of the sector, combined with the emergence of innovative projects around the world, means that operators will face another year of opportunity, tempered with tough investment decisions.
Written by Pekka Paasivaara, Executive Board Member, GL Noble Denton.
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Read the article online at: https://www.hydrocarbonengineering.com/special-reports/05022013/oil_gas_industry_oulook_2013/