Despite the heightened and sustained sense of optimism that characterizes the energy sector, indications point to a significant supply crunch. This follows a long period marked by oversupply and runaway growth in US oil production, factors that make the prospect of a supply crunch and rising prices unfathomable to many players in the industry. Such news couldn’t have come at a worse time for many optimists who foresee a sustained run given the rebounding of prices that have managed to break through to $70 per barrel. So what does 2018-19 have in-store for oil and gas investment projects in North Dakota, western Texas, southeast New Mexico, and other places? According to industry experts, three trends are most likely to become apparent going into 2019. Here is a brief look.
A Marked Rise in LNG Facilities
The US is destined to witness a significant rise in the establishment of Liquefied Natural Gas (LNG) facilities owing to its sustained position as one of the hottest fossil fuel markets and the rapid decrease in the set-up costs of LNG Export Facilities. The rise in LNG production is also buttressed by discoveries of huge reserves and the preference of LNG in high-demand markets that have zero to limited pipeline access. US shale gas remains preferable in many markets due to it cheap costs despite requiring more by way of transportation when compared to other players such as Australia. 2019 is indeed shaping out to be a great year for oil and gas investors if more facilities get the go ahead.
Permian Basin Production to Continue Cooling Off
The Permian Basin in western Texas and south-east of New Mexico has been witnessing sustained growth in gas production over the years. Production recently averaged 3.4 million BPD, which doesn’t augur well with the area’s pipeline capacity that stands at 3.6 million BPD. Without any significant growth in pipeline construction activity, the runaway production is set to cool off in the year 2019 from the 800.000 BPM annualized rate. The reduction is already taking shape with some companies announcing their intention to cut down on rig count in the Permian while others are expected to pause some drilling activities until pipeline capacity improves.
Offshore Drilling Set to Firm
Offshore drilling hasn’t been performing well, affecting contractors and investors with some losses over the past few years. This is unlike most oil and gas stocks which have been on a rebound since 2016. The past three years saw the drying up of new work and the reassignment and rationalization of global fleets. However, consolidation efforts coupled with the emergence of ‘stronger’ operators position the industry to fully take advantage of the recent rise in offshore drilling activity. According to OffshoreEnergy.com, most players reported double-digit sequential revenue growth in Q2. The first half of 2018 also saw more offshore drilling projects getting the green light as opposed to the whole of 2016 and is set to double the 2017 figure.
Get your Strategy on Point
As 2019 is around the corner, it is time to take stock of your portfolio and investment strategy to leverage new information and trends in the market. Consult our experts today to get expert help and access to North Dakota oil and gas investment programs and other lucrative projects. Fig Tree Capital Ventures is ideally placed to provide much-needed help and guidance. Simply call 866 300 2170 or write to us at info@figtreecapitalventures.com.
