The year started with a change to the political environment in the U.S. as Donald Trump took office in Washington, D.C., as president. Along the way to 2018, the oil and gas industry found optimism from an administration focused on “deregulation.” OPEC and non-OPEC members kept their promise to curb oil production and even extended its agreement through 2018.
Oil prices hit the $60-plus per barrel range, not exactly the high prices of days gone by but producers found working in a lower-for-longer environment much more palatable thanks to advances in technology. Laterals kept getting longer and the “digital oil field” became a common term in executive offices throughout the industry.
There were bumps and challenges, no doubt. Hurricane Harvey caused late-summer havoc in the heart of the U.S. energy industry. Hurricane Irma followed a few weeks later and then came Hurricane Nate in October, which at one point shut-in more than 1 million barrels per day of U.S. Gulf of Mexico production. There was no shortage of geopolitical strife that threatened to upend markets.
Now, as we move into 2018 it’s time to look back at the news stories (in no particular order) that show the progress the industry has made in putting the worries of the last few years behind it and to begin looking toward better days ahead.
Did oil and gas get a ‘Trump bump?’
With an administration promising to tame what it considers overregulation and a cabinet featuring several energy industry advocates in key posts—including former ExxonMobil CEO Rex Tillerson (Secretary of State), Rick Perry (Department of Energy), Scott Pruitt (Environmental Protection Agency) and Ryan Zinke (Department of the Interior)— 2017 looked like a good year for oil and gas.
Among the top political happenings:
- In 2017, the administration delayed an Obama-era rule limiting methane emissions on federal and tribal lands. Meanwhile, oil majors teamed up to cut methane emissions on their own.Politics Aside, Methane Emissions-Fighting Mission Continues; Oil Majors Move To Cut Methane Emissions; PODCAST: Methane and Messaging
- The infrastructure permitting structure was streamlined by executive order. Oil, Gas Industry Cheers Trump’s Infrastructure Order; FERC Has To Catch Up—And More
- Both Trump and Zinke signed orders to open offshore exploration and to reconsider regulation governing those activities. Trump Takes Step To Change Offshore Oil, Gas Leasing Program; Politicians, Experts Weigh In On Offshore Drilling Executive Order; Much Ado About ANWR
But how much effect the new administration has had on the industry remains to be seen, especially as it enters its second year.
Harvey, Irma and a harrowing hurricane season
“This is not like anything we have ever seen before,” Bruce Jefferis, CEO of Aon Energy, a risk consulting practice, told Reuters during the height of Hurricane Harvey. To the many oil and gas industry members who lived through the storm, that sentiment rings true, and then some. The storm became personal for many in the industry as is struck the heart of the U.S. oil and gas sector in Southeast Texas.
Many U.S. Gulf Coast ports and Texas refineries closed during the storm. Meanwhile, U.S. crude oil prices posted the steepest monthly losses in a year on Aug. 31.
The Gulf Coast received a double whammy a few weeks later when Hurricane Irma hit Florida.
During the storm and immediately after, Hart Energy’s editors, many in the midst of the flooding themselves, also filed these reports:
- Harvey Aftermath: Flooding Could Strand Eagle Ford Oil, Gas
- Harvey Day 4: Disarray Engulfing Texas Spreads To Louisiana
Hurricane Nate caused a production pause, which shut-in more than 1 MMbbl/d of production at one point. It likely lowered the 2017 production average, the U.S. Energy Information Administration (EIA) told Hart Energy.
The oil and gas industry wasn’t just hit by the hurricanes, it hit back. The industry responded with an financial support for victims and became an active participant in the recovery process: Oil Industry Still Giving To Harvey Recovery Efforts Three Months Later
Russia’s growing influence over oil production cuts
OPEC handed oil producers a reason to relax for another nine months—maybe—when it and non-OPEC members, led by Russia, agreed to continue production cuts through 2018. By the time the post-meeting press conferences in Vienna were ending, industry watchers were already wondering whether the oil-producing nations would follow through or end the agreement early.
While there were reasons to be optimistic—Continental Resources chairman and CEO Harold Hamm told Hart Energy he was surprised that Libya and Nigeria were brought into the agreement—all eyes turned to Russia which many believed was itching to ramp up production sooner rather than later.
- Stratas Advisors: OPEC Agreement Creates Optimism While World Watches Russia
- SPECIAL REPORT: OPEC Set To Continue Oil Production Cuts
If you build it, it will flow
The year started with talk of DAPL protests. It’s ending with renewed interest in Keystone XL and several other important pipeline projects that had been stunted until the political winds began to change this year.
We saw the industry examine the lasting effects of DAPL.
Eventually, the protests subsided, and DAPL began operations.
In Canada, pipeline buildout issues abound: Requiem For A Pipeline: How Energy East Died; Canada’s About Face on Energy East. But Kinder Morgan Canada was able to win its Trans Mountain Pipeline appeal.
The oil field goes digital
There was perhaps no trendier buzzword in the oil and gas industry in 2017 than the “digital oil field.” While the digitization of the industry didn’t happen overnight, 2017, aided by the need for efficiency in the face of the lower-for-longer price environment, became the year in which the digital oil field took hold.
Digital innovation matched with operational technology became the driving force in exploration. Even top service company executives where talking about it.
Did oil and gas suffer ‘Permian fatigue’?
It’s not as though the Permian suddenly became a forgotten entity. It’s still the No. 1game in town. But in 2017, investors started to look at other horizons, perhaps because they are deemed more affordable than the pricey Permian.
These are just some of the top news stories that shaped 2017. Coming in February, Hart Energy’s Oil and Gas Investor magazine will feature a month-by-month look back at the year, which you’ll also be able to find on OilandGasInvestor.com.
And, check back here on Jan. 2 and Jan. 3 for our two-part look ahead to 2018 featuring prominent analysts from the oil and gas industry.
SOURCE: OilandGasInvestor.com & Hart Energy Staff
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.