According to a new Wood Mackenzie report, upstream oil and gas industry projects are set to double in 2017 compared to 2016. Although still 40% below 2014 pre-crash levels, exploration and production spending is expected to rise by 3%, to $450 billion.
The oil slump caused the companies that survived to become more efficient and to cut costs in ways they never have before. Malcolm Dickson, a Wood Mackenzie principal analyst for Upstream Oil and Gas stated, “2017 will demonstrate how efficient the oil and gas industry has become, showing projects in better shape all round.” According to Dickson, companies have reduced costs by 20% since 2014 and are expected to drop another 5% this year.
As oil prices sit around the low $50 range since the OPEC production cut announcement, WoodMac is forecasting a 2017 average of $57.00 a barrel. This price is projected to gradually increase to $85 a barrel in 2020: The steady increase can be attributed to the growing supply/demand ratio, which as of now, is set to widen to 20 million bpd by 2025.
See key themes and more of Wood Mackenzie’s 2017 forecast. https://www.woodmac.com/media-centre/12534166