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Global and Regional Markets

IHS: Oil market now reaching bottom as supply, demand begin to balance out

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The downturn in oil prices that has led operators worldwide to reduce budgets and drilling programs has reached a bottom, as the oversupply of oil has begun to balance out with demand, according to IHS Vice President for Energy-wide Perspectives Susan Farrell. “We have oil supply going below what is needed for demand (this year), which means we are finally going to start rebalancing the market going forward,” Ms Farrell said at the 2016 IADC World Drilling Conference on 15 June in Lisbon. While spending is expected to remain flat in the near future, IHS expects an increase in drilling activity beyond 2017 as companies begin to finish paying off debt from pre-downturn investments. Watch the video to learn more.

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Oil and Gas UK Wells Forum pushes UK North Sea to reduce well costs by half

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As low oil prices began to severely strain the already high cost of drilling in the North Sea, the Oil and Gas UK Wells Forum issued a challenge in 2015 for the industry to reduce well costs 50%. In responding to this challenge, operators have instituted strategies such as well scrutiny sessions, in which companies analyze each other’s plans for new wells and introduce ideas for efficiency improvements. “We’ve seen concrete ideas that have been brought to the table which have resulted in maybe 15% or 20% reduction of those well costs,” said Olav Skar, GM of Wells for Shell UK and former Chairman of Oil and Gas UK Wells Forum. “Now, that’s one step, and we’re looking, through industry collaboration, to get more ideas like that.” Watch the video with Mr Skar from the 2016 IADC World Drilling Conference in Lisbon on 16 June for more information.

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Galp Energia: Industry must work together to bring about sustainable business models

Carlos Gomes da Silva, CEO of Galp Energia, urged the industry to collaborate for sustainable cost reductions during a keynote speech at the 2016 IADC World Drilling Conference in Lisbon on 15 June.

For the drilling industry to come out of the market downturn with sustainable cost reductions, cooperation between operators and the service sector will be key. “It is now, in these times, that we have to be closer to each other,” Galp Energia CEO Carlos Gomes da Silva said during a keynote speech at the 2016 IADC World Drilling Conference in Lisbon on 15 June. Galp Energia has a market cap of approximately €10 billion ($11.2 billion) and operations in 14 countries, with 11 sanctioned projects currently producing...

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Shale to carry critical geostrategic implications for US for coming decades

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With the US assuming a new role as a swing producer due to the unconventionals, the nation is gaining far more influence over the global oil market than before, Baron Lukas, CEO of EnviroLogic Solutions, said at the 2016 IADC Drilling Onshore Conference in Houston. In addition, shale could allow the US to become fully energy-independent. In this video from the conference on 19 May, Mr Lukas explains the geostrategic implications of US shale production. He also discusses demographic trends, such as aging populations in developed countries, that could have an impact on long-term energy demand.

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BP: Operating on model of independent operator helping to weather downturn in Lower 48

BP has been able to speed up the company’s decision-making process and innovation by forming a separate business entity for the Lower 48, said Tripp Edwards, BP VP Drilling, during the Operator’s Outlook panel at the 2016 IADC Drilling Onshore Conference in Houston on 19 May.

International supermajor BP is weathering the downturn in the Lower 48 by operating this segment of the business more like an independent. This has been achieved by forming a separate business entity for this market, allowing for faster decision making and adoption of innovations, said Tripp Edwards, Vice President...

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US onshore rig count to pick up in 2017, but recovery will be gradual

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The US land rig count is expected to remain flat for the remainder of the year, but approximately 200 rigs will go back to work in 2017, James West, Senior Managing Director at Evercore ISI, said at the 2016 IADC Drilling Onshore Conference in Houston. This signals a recovery, but it’s like to happen gradually rather than immediately. In this video from the conference on 19 May, Mr West explains some of the factors that will moderate the onshore drilling market recovery, including challenges around labor and equipment.

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Marshall Adkins: US onshore rig count has potential to average 1,000 by 2017

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After almost two years of falling oil prices and rig counts, the industry should soon begin to see the light at the end of the tunnel. Raymond James and Associates is forecasting oil prices to average $60 in Q3 this year and $75 in 2017. “I think we are right at the beginning of a multi-year cyclical upswing in our business,” Marshall Adkins, Managing Director at Raymond James, said...

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BP’s Looney: To remain competitive, costs must be lowered sustainably, not follow oil prices

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World energy demand is likely to increase by a third by 2035, according to BP’s forecasts. However, oil and gas will face increasing competition from alternative energy sources over the coming years, BP Chief Executive of Upstream Bernard Looney said at the 2016 OTC on 2 May in Houston...

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