Planning
The past year has undoubtedly been one of the toughest for the oil & gas industry in recent memory, Steve Robertson, Douglas Westwood, stated. As we enter 2017 we consider three key themes that could shape the industry over the year ahead.
A North America-Led OFS Recovery:
OFS markets are expected to bounce back in 2017 and we expect North America onshore activity to be at the forefront. These projects are characterised by short lead-times, and drilling & completion costs have nearly halved since 2014. Rig activity is recovering fast with more than 600 rigs working in the US now vs a low of 404 in late June 2016.
New offshore production systems orders to finally emerge:
Following a period of some 18 months since the last order for an offshore floating production system, it appears that 2017 will see some ordering activity at last. This includes (amongst others) FPSOs for Hurricane’s Lancaster development, Exxon’s Liza EPS, Petrobras’ Libra & Sepia fields and a semi-submersible for BP’s Mad Dog 2.
OPEC must remain disciplined to avoid oil glut:
At present we expect (based on project-byproject tracking of individual fields) an additional 1.2 million barrels per day of supply to come in 2017 from offshore production. OPEC needs to stick to its cuts to avoid a substantial overhang of production capacity and likely downward pressure on oil prices.
