4 Predictions for Oil & Gas Industry in 2011

Now that most of you goal-setters out there have already labored over your list of goals, predictions, resolutions – whatever you call it for 2011, I thought I’d look at a few of their predictions I read over the weekend in key trends for the oil and gas industry for 2011 written by Bender Consulting.

oil and gas industryThe consulting company offered predictions on natural gas, crude oil, foreign oil superpowers, super majors and shale plays in its post. I’m only going to take a look at a few. Some of the company’s predictions may come as no surprise after reading the news in the last few weeks regarding the oil and gas industry – but some you may find intriguing.

1. Natural gas will become a more dominant energy source in the U.S. as the government pushes for greater energy dependence.

This prediction comes as no surprise as we see the significance of the Marcellus Shale since its rise to fame as a major gas contributor in 2003 when Range Resources – Appalachia, LLC began exploring new drilling and fracturing methods. The shale’s expanse stretches across most of the Appalachian Basin, roughly estimating to cover 600 miles. You can imagine the amount of gas potential this shale holds and I have no doubt that as the industry continues to refine its directional drilling and hydraulic fracturing methods, that this energy source will prove a boon. I’m interested in seeing how much more of a presences natural gas can take in our country’s resources, as a result of the Marcellus Shale demonstrating the vast amounts of gas available in our own country, where we once thought them naught.

2. Natural gas prices will stabilize by late this year but still remain low, as crude oil prices will hover near $100 and possibly require government intervention if it creeps too high to impede the economy’s slow recovery from recession.

In researching natural gas and oil prices, I found this piece by Christopher Head on Americans for Energy Leadership’s blog and he discusses how the prices of gas will be affected by the newly discovered shales. Read his post here. He too, agrees with this prediction, in that natural gas prices will stabilize as a result of the large volume of gas discovered in shales, and that it will keep prices affordable in the U.S. (read : lower for producers, though).

3. Offshore drilling will commence and increase in wake of the Deepwater Horizon’s rig explosion last April.

I don’t even need to include this prediction in the list, as we all know that the offshore drilling, particularly in the Gulf Coast will pick up again. What I’d like to see from this prediction instead is what effect the commission’s report and recommendations to Congress will have on drilling offshore in regards to new regulations, taxes and penalties. To read more on the report released last week check out the post: Commission wrongly blames entire oil and gas industry with Gulf oil spill.

4. Smaller production companies in the shale plays will consolidate this year.

We have many clients that come from smaller to mid-size production company backgrounds. I don’t have much insight into this statement; however this prediction interested me as it could potentially affect many of our clients or potential clients. If this prediction comes true this year, how will it affect the industry. With our economy the way it is, is this a solution that benefits all involved or only the larger companies consolidating the smaller ones?

What other trends have you identified yourself? What do you hope will happen or hope will not happen this year?


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