Oil and gas is the multi-billion dollar industry supporting the global economy to a broader extent. Despite the growing proliferation of alternative energy sources, it continues to play an imperative role in the development of a nation.
The United States is the topmost oil-producing country in the world and has held this spot for the past six years. As the world leader in oil production, the U.S produces around 12 million barrels of oil per day.
Image Source: U.S. Energy Information Administration
How can this industry keep up with extensive demand and production? What are the latest technological factors that may impact this segment in 2020? There are many key trends to watch in oil and gas markets this year, both in the U.S. and globally.
Here are five such most important predictions and factors that will shape the oil and gas industry in 2020.
The Expectation of Peak Demand in Oil Market
The shift to electric vehicles (E.V.s) and gas-powered electricity will place downward pressure on oil demand globally. The oil and gas operators may shy away from high-cost oil reserves because of uncertain long-term demand in this segment.
However, the oil and gas producers overly fixated on high-risk capital intensive projects with no diversified portfolios may find it hard to endure in the abridged demand setting.
A Consistent Push towards Shorter-Cycle Investments
In 2020, as the oil and gas industry moves away from giant developments, the global operators will continuously push for quicker returns with shorter cycle investments. With a significant reserve base, the minor and phased events are more likely to happen in the future as compared to the projects of the past.
At present, projects go from final investment decision (FID) to first oil and gas in 3 to 4 years, even for the higher integrated developments with midstream mechanisms.
If you did not know, this trend was observed with Zohr in Egypt in recent times and is anticipated for Liza in Guyana. Both are being established with a phased methodology to building up the volume.
Accelerated Demand for Natural Gas
As natural gas will increasingly replace coal and gas for power generation, its demand is said to accelerate in 2020. The investments on this liquefied natural gas (LNG) will continually take place across different regions. However, it isn’t certain about how the United States LNG exports will influence international trade via value and capacity.
Unrelenting an extreme supply of natural gas pooled with midstream restraints in the U.S. has been depressing the price of gas at the nation’s main hubs, thus making the United States LNG exports hypothetically competitive on the international marketplaces.
Adoption of Emerging Technologies
Although oil and gas is considered as a mature industry, technological innovation is disrupting this segment unceasingly. Progressions in drilling and fracturing approach molded space for the production of hydrocarbons from formerly unexploited sources, including low-permeability shale formations or ultra-deep-water sites.
Shale oil production in the U.S has ultimately changed the global oil and gas geopolitical background. The newly emerged technologies, such as artificial intelligence (A.I.) empowered drilling, and remotely-controlled production facilities are reducing the production costs while improving the returns and operational competences.
Impact of Sudden Supply Outages
Unexpected and short-lived outages because of the rising non-OPEC supply will have a smaller impact on oil prices when compared to the market five or ten years ago.
For instance, the mid-September attacks on a critical Saudi infrastructure resulted in the increase of oil price with WTI Crude experiencing a five-month high of $62.90 a barrel for a day, as decelerating demand growth and a prolonged trade war contemplated on costs.
Keep Up With the Current Oil and Gas Trend
The oil and gas industry is world-renowned for its technological innovation. Currently, there’s an implausible opportunity for your company to clasp cutting-edge technology before your competitors do. So, it’s essential to stay up-to-date on the latest technological advancements in this sector.