As we come to the end of what has been a transformational year in our sector, shifting commodity prices and evolving drilling strategies have demanded agile thinking and ingenuity – especially in the service sector. Technological innovation has been on the rise as PESA Members spearhead efforts to increase productivity and efficiency across the supply chain.
While some market analysts remain unsure if the downturn is truly behind us, broad trends provide optimistic prospects for 2019.
Strong domestic production growth combined with market volatility abroad has pushed American oil and gas markets toward net exportation of natural gas, crude oil and petroleum products, an exciting economic prospect for the future. OPEC and its allies appear committed to cutting production in the coming months, with an eye towards ending an oil price slump. U.S. influence over the industry should continue to grow, with the U.S. Energy Information Administration (EIA) predicting that U.S. crude production will exceed that of Russia and Saudi Arabia in 2019.
Many in the industry plan to expand operations in the next year, which has significant implications for our sector. Retaining talent, especially in high-impact, high-turnover regions like the Permian Basin, will be critical. PESA will continue to offer opportunities for intra-sector collaboration and development opportunities for our Member Company employees to generate lasting solutions for maintaining the greatest oil field assets, the men and women who compose our workforce.
To maximize potential for long-run growth, pipeline infrastructure must improve. This is especially imperative in the Permian, where low pipeline takeaway capacity is already slated to suppress production through 2019. Such an issue provides an opening for our sector to step in and provide needed expertise, and PESA Member Companies are fully engaged in creating solutions to this challenge.
Our sector’s success is also intrinsically linked to decisions made in statehouses, capitols and economic forums worldwide. Policy outlooks for the coming year are mixed, bringing both opportunities and challenges for our sector.
On a global scale, trade policy will remain a wild card. Despite cross-industry pushback, the toll of the Sino-U.S. trade dispute has grown to encompass $53 billion, with the potential to increase nearly fourfold. China has also imposed a 10% tariff on liquified natural gas, indicating a new willingness to target domestic upstream development. PESA has and will continue to spearhead efforts to firmly advocate for a thoughtfully considered approach to trade, and these efforts will continue into 2019.
Our industry has reason to keep looking up. This coming year provides an opportunity to strategize, grow our businesses and capture the tremendous opportunities that lie ahead.
All the best,