What it must have been like, being one of those pioneers getting into the traditional oil industry back before all the biggest fields went into production. Well, we are back to this point again, only this time we’re in the deep waters and the shale.
There are five major oil and gas trends that have the ability to take us back to those first golden days of the industry, but the golden days won’t last forever and before we know it, deep-waters won’t look so deep, and the unconventional will become the new conventional.
Oilprice.com analysts recently put together a detailed presentation on the 5 trends we see dominating oil & gas in the coming years. We have listed some of these below, but you can see the full research piece here.
Around 30% of oil and gas extracted in the world is from off-shore oil & gas production, and most of that offshore production is from shallow water wells. Only 9% of that oil and gas is being recovered from deep-water wells, but this is changing—rapidly.
Over the next 15 to 20 years the industry expects offshore oil and gas production will equal on-shore production. Most onshore fields have matured, but the ocean holds vast untapped potential, and the oil industry is betting its future on deep-water drilling. The industry is spending some $27 billion annually on subsea facilities--for wells at depths of 7,000 feet or more. That number is set to grow almost five times to $130 billion in 2020.
This, in turn, is creating a boom in the subsea technology industry.
Subsea systems cut out an entire layer of traditional production simply by doing everything down on the seafloor. That translates into lower production costs so it saves money and increases the profit margin on each well.
At the same time, we are also “rediscovering” new wells, bringing them back from the dead. For decades the industry has poured money into research and development on how to get more oil out of existing wells. We were seeing only 25% of the oil in a well extracted. Now we can go back and get 5% of the oil from a well thanks to the “Lazarus Process” and Enhanced Oil Recovery (EOR).
Right now in the US alone there are about 89 billion barrels of oil sitting there waiting to be extracted from “dead wells.”
Another game-changing dynamic in the industry is the increasing application of supercomputers that make exploration fast and easy. Supercomputing and use of massive amounts of seismic imaging data help us to find the sweet spots for exploration without tons of expensive and time-consuming drilling. Supercomputers can find the same amount of oil in weeks that it used to take decades to hit.
And the oil and gas industry is second only to the US Department of Defense in terms of using supercomputers. Through the supercomputers’ analog geology, for instance, we were told that standing in emerging oil darling Angola was the same as standing in offshore prolific Brazil—and where to start drilling.
In recent years the industry has added 4D imaging, which unlocks a variable that allows oil and gas companies not only to determine the geological characteristics of a potential play, but also gives them a look at the how a reservoir is changing—in real time.
Then we have the rise of US natural gas exports and the race to build infrastructure to get liquefied natural gas (LNG) to international markets that are scrambling for more.
Finally, we have the shale revolution that is waiting to explode outside of North America, with much of Europe dawdling on this, but Ukraine ready and waiting for the investor onslaught, Russia prepping its 75 billion barrels of recoverable shale oil and Argentina doing the same with its 27 billion barrels of recoverable shale oil and 802 trillion cubic feet of recoverable shale gas—among many other potential venues.
Take a moment to see the full presentation by our analysts here: The 5 NEXT Big Oil & Gas Trends
By. Charles Kennedy of Oilprice.com