At the tail end of 2017, it was predicted that 2018 was set to be the year of recovery in oil and gas as upstream companies increased production and oil prices continued to rise. Fast forward 10 months and the oil and gas market has now seemingly reached a level of stability, with climbing oil prices and recruitment in the industry on the rise. On the back of an optimistic 2018 in the industry, there are some positive trends predicted for 2019.
In this blog, we draw on industry insights to paint a picture of what next year may look like for the industry:
1. AN INCREASE IN OFFSHORE ACTIVITY
Offshore activity is expected to increase as new projects are being sanctioned and activity levels are approaching 80% of their historical highs. This suggests that the offshore upturn seen throughout 2018 is set to continue. With a recent rise in final investment decisions on offshore oil and gas projects globally, this is set to have a positive impact on global offshore investments throughout 2019, according to Rystad Energy & Offshore Mag.
What offshore activity can we expect to see throughout 2019?
The Valhall field, one of the longest standing fields in the North Sea for example, is expected to produce until 2060. A series of initiatives are underway to ensure this is achieved by its operator, Aker BP. This is just one example of an operator prioritising ways to improve and maintain the performance of a platform. As projects like Valhall become increasingly common and operators plan to maintain and improve their existing assets, we can expect to see a rise in demand for well conductor repair and integrity services, centralizers, and slot recovery.
In the Strategy PWC 2018/19 report, which provides a comprehensive outlook on the oil and gas industry over the current period, it was stated that as oil prices will continue to rise into 2019, operators are likely to be tempted to push their assets harder to produce more. However, given the age of many offshore assets, operators need to ensure they are maintaining and improving the integrity of their assets so that rising levels of activity do not put stress on equipment, compromising adherence to regulations and/or causing expensive failures.
2. SMALL COMPANIES STORM AHEAD
2019 could be the year in which smaller producers take the reins in the oil and gas market. With the North Sea remaining one of the biggest and most important regions for activity, offshore projects are on the rise, and innovations are moving quickly. It is key that companies can act and respond efficiently to a fast-paced industry. Smaller operators can often offer more streamlined decision-making processes, which allows them to act rapidly to develop and explore changing environments within the market.
This streamlined decision-making process is what makes smaller companies stand out in the industry next to the larger organisations. Oil and Gas People have stated that ‘’many of these companies have become specialists in specific production techniques, taking advantage of the fast-advancing technological landscape to compensate for their scale.’’
3. going digital with industry 4.0
Within the industry, 2019 is the year in which service companies and operators alike can transform operations efficiency across their workforce by leveraging advanced digital technologies.
Industry 4.0 is a term we should expect to hear regularly throughout 2019 in conjunction with industry advances. This term refers to digitisation that is used to improve processes and production within the oil and gas industry. Industry 4.0 is likely to come into play throughout 2019 as operators grasp the huge potential within both innovation in product management and offshore technologies. It is expected that organisations are to spend as much as $907 billion per year on industry 4.0 until 2020, and that these organisations in turn could see a 10-50% increase in efficiencies.
From drones used to inspect offshore platforms, introduction of artificial intelligence and machine learning, to advanced digital transformation of business and operational processes – oil and gas companies are beginning to define new digital advances.
Here at Claxton we are developing innovative strategies that seek to apply digital technologies to addressing customer challenges and generating opportunities for value creation. New technologies are at the heart of Claxton’s development and we actively embrace those that accelerate improvements in the way we respond to our customers’ needs. For example, investing in research and development is essential to driving the disruptive innovation that defines our approach to reducing the cost to our customers.
For global oil and gas upstream companies, digital innovation can play a key role in helping to tackle the challenging landscape within the industry. Talking at the second annual Bloomberg Global Business Forum ADNOC’s CEO, Dr. Sultan Ahmed Al Jaber, said: “The fast adoption of these breakthrough technologies will help ensure we meet the world’s growing energy needs, create new market opportunities and address inequalities in access to energy.”
4. recruitment surge
With 41% of oil and gas company executives expanding their headcount throughout 2018, it is highly likely that this recruitment drive will continue into 2019.
This anticipated growth in recruitment is undoubtedly a reflection on a positive shift within the oil and gas industry which has seen companies remaining reactive to market conditions and offshore activity rising. Growth in headcounts has been aided by campaigns within the industry to push for a more inclusive workforce. With 2018 marking the ‘Year of the Engineer’ and the annual ‘International Women in Engineering Day’ proving a large success; year in which increasing numbers of both women and young people will join the oil and gas industry too.
Recruitment at Claxton
Since the turn of the year, Claxton’s headcount has increased by over 20%. We plan to grow our workforce by a further 15% through 2019 by recruiting personnel to strengthen our onshore and offshore operations, as well as other departments within the company. Along with highly experienced technicians, the mix will include graduates and apprentices to enhance resilience and create routes for progression within the company. We place an importance on influencing the next generation of engineers which is why we offer them a route into the industry and an opportunity to develop within Claxton. Claxton’s growing workforce is in line with the overall anticipated industry headcount increase for 2019.
5. OIL PRICE INCREASE
And finally, perhaps the most important trend we hope to see throughout 2019 is an increase in oil prices; which is currently over $80 per barrel. It has been speculated that prices could rise towards $100 per barrel towards the end of the year or by early 2019. The year-on-year increase in oil prices are positive steps towards recovery following the 2015 slump. Furthermore, analysts at Offshore Magazine have predicted that offshore gas production will perform well moving into 2019, resulting in a peak in prices.
This blog provides a brief outlook into our predictions for the oil and gas industry as we approach 2019. What trends do you expect to see next year? Let us know in the comments.