After the price of Brent oil hit a 12-year low of $30 a tonne in 2016, the energy sector has desperately needed a resurgence of industry confidence. Fortunately, 2018 seems to be the year oil and gas businesses have been eagerly awaiting.
A survey conducted by DNV, a technical adviser in the energy sector, found that two-thirds of senior oil and gas professionals said their companies would maintain or increase capital spending in 2018. That is a massive increase, as only 39 percent of professionals reported maintaining or increasing capital spending in 2017. Furthermore, the same survey found 63 percent of executives had confidence that the industry would grow in 2018, as opposed to only 32 percent last year.
“Our research indicates that the oil and gas industry is becoming more confident that its successful focus on cutting costs and building new efficiencies into the value chain will last,” DNV Oil & Gas Chief Executive Liv Hovem said in a statement. “Intentions to increase capital and innovation spending in 2018 come alongside a clear signal that oil and gas industry costs will not return to pre-2014 norms.”
Here in Colorado, evidence of the rebounding oil and gas industry are plentiful. New data from the Energy Information Administration estimates that drillers in the Niobrara region, which includes much of northern Colorado will produce 580,000 barrels daily in March, a 6 percent increase over February’s production. Additionally, gas production in the same area is expected to increase as well.
The Niobrara region includes swaths of land in several states but Weld County, Colorado is one of the top oil and gas producing sections in the area. There are almost 24,000 active oil and gas wells in Weld County.
Despite concerns that the amount of drill rigs working in Colorado has remained relatively flat, industry experts assert that this number does not indicate a downslope or stagnating growth.
“Rigs are only one part of the picture,” Bernadette Johnson, vice president of Market Intelligence at DrillingInfo in Littleton, told Colorado Public Radio. “What matters more is how quickly those rigs can drill wells, and how big those wells are.”
As it just so happens, an increase in wells is on the horizons, as the Colorado Oil and Gas Conservation Commission received 5,548 applications to drill last year, a 60 percent jump from the previous year and the most in at least six years.
It’s refreshing and exhilarating to see the oil and gas industry bounce back after such a detrimental lull. We at Upstream Petroleum Management are prepared to meet the changing demands of our clients. Contact us today to discuss your needs regarding regulatory permitting and industry relationships.