The international oil and gas industry is predicting a healthy investment in exploration and market opportunities over the next 12 months, according to a new report on the future of the sector.
Deep Water Ahead? is published by the Economist Intelligence Unit (EIU) and sponsored by GL Noble Denton, an independent technical adviser to the industry.
Key findings include that industry investment plans remain on track, however, regulatory change in the wake of the Gulf of Mexico disaster is thought certain. Costs are likely to rise for most firms.
Following BP’s Macondo oil field incident, government policy and regulation will have an impact on operational risk. Noble Denton said just over 70% of survey respondents expected regulation to become more stringent in North America, with a substantial majority (68%) anticipating cost increases in general. It added: “The longer-term impact of Macondo will be on companies’ operational strategy, especially as their safety record will become a more important factor in gaining access to global reserves.”
Noble Denton president John Wishart said: “This report helps to bring clarity to a sector that has faced significant challenges in recent years. While it forecasts an upturn in growth with guarded confidence, the industry must concentrate on overcoming significant technical challenges if the market is to pick up dramatically.
“The demand for energy is taking the exploration, production and distribution of oil and gas to even tougher extremes of geography and climate, and pushing the boundaries of the industry’s technical knowledge to its very limits. Against this backdrop, key players in the industry will need to find more innovative solutions to mitigate risk, while operating more efficiently and sustainably. Their success will define their position and reputation in the market this year.”
Tony McAuley, managing director for energy at the EIU, said: “New risks are emerging, and ‘black swan’ (rare but significant) events such as the gulf disaster have shown that the operating environment and the perception of risk can change seemingly overnight.
“Our survey shows that there is room for optimism too. There is an appreciation that the industry must do its bit to reform, yet there is equally a clear message that policymakers must not allow knee-jerk reactions to influence regulations.”