Deloitte’s 2018 oil, gas outlook offers input on recent trends

By Staff | January 22, 2018

The Deloitte Center for Energy Solutions has issued its 2018 outlook on oil and gas. The team at Deloitte provided a look at trends, opportunities and predictions for this year. Deloitte asked several questions to help guide its 2018 rundown, including: what is the current state of the oil and gas industry and where is it heading; what trends have we experienced; and, from those trends, what impact should we expect?

John England, vice chairman of Deloitte’s U.S. Energy and Resources division, provided the commentary.

What the U.S. gains from becoming a net energy exporter:

Although still a net importer of crude, “our growing place as an energy exporter and low-cost supplier could fundamentally change our position in the global energy landscape. Furthermore, it could change our views on geopolitics and national security,” the outlook said.

Potentially, the U.S. could use its energy production ability to take a more isolationist path. Or, greater production of oil and natural gas could give the country more leverage in the global economy.

Are shale production cost reductions sustainable?

England believes the reductions are remarkable, but asks if they can be sustained. “The evidence seems to tell us they are, with breakeven costs across the major U.S. shale plays still 30 to 50 percent below the levels of early 2015,” he said.

Important to the cost reduction storyline, England said, is the health of the overall production industry. While producers have benefited from decreased costs, many oilfield service firms have suffered.

What could change with OPEC?

Not much, according to England. The organization still has the same leverage as it did in the past. “OPEC’s role will likely continue to be a very important one for many years to come, but the rise of U.S. tight oil has certainly changed the playing field and will likely continue to do so for the foreseeable future,” he said.

Will the digital approach to oilfield development matter?

England believes the digital revolution is here and that when used properly, it could mean the difference between “thriving, surviving or just not making it.”

Low-cost digital-based technology used to develop fields, procure goods and services or move products while doing HR and back-office services can change the way companies do business. Companies willing to invest and embrace new technologies, England said, can find major value while remaining strong no matter the commodity price. “The digital cavalry is coming, but it likely won’t rescue everyone—possibly only those who are brave enough to embrace it,” he said.

To view the full 2018 Outlook, click here