Rystad Energy

Energy research groups Wood Mackenzie and Rystad Energy say improvements in operations costs since the last downturn 5–6 years ago have made it difficult for companies to make further reductions amid the current drop in demand.

The combined effect of COVID-19 and an ongoing oil price war has ushered in one of the worst downturns for the energy industry in modern history. Yet, a bright side is shining through; flaring levels in the Permian Basin have fallen sharply and will continue to decline, a Rystad Energy report shows.

The drop in gas prices, although greater than forecast, will not be to the same extent as oil prices.

Oil exploration and production jobs globally are at about the level they were after deep cuts following the 2014 crash. Now companies need to find more to cut.

Gas demand is expected to grow by just 2 Bcm in 2020, down from previous expectations of 6 Bcm. The Netherlands, UK, Germany, and Spain are expected to see the biggest impact.

Leaders of Rystad Energy went online recently to talk about the effects of the coronavirus pandemic on the oil and gas industry, and the prognosis isn’t good.

Revised estimates of project sanctioning total $61 billion in 2020, which is down from $192 billion forecast in 2019.

More than 200 companies could become insolvent in the UK and Norway. This number may be larger when including the rest of Europe.

Because offshore project lead times are longer than in shale, production is likely to come on line in 2–5 years when oil prices may be higher. But the number of FPSOs to be sanctioned this year may be cut by half.

The most recent hydrocarbon production boom is under way in the Middle East, and this time, the race is spilling into offshore waters.