World upstre

am oil and gas activity is expected to remain at a high level in coming years, with the annual number of wells drilled increasing to over 115,000 in 2018, according to a new study from the Freedonia Group. Although a sharp decline in oil prices in late 2014 will likely have a restraining effect on the upstream industry in the short term, global economic growth and continuously improving technology will support energy demand and investment in oil and gas projects. Some of the best upstream opportunities will be for natural gas, which presents a comparatively immature but gradually globalising market.

Jason Carnovale, Freedonia analyst, said, “The average number of active drilling rigs worldwide will rise modestly through 2018, trailing growth in the number of wells drilled annually as improving technology results in increasing rig efficiency.” Technologies such as multi-well pad drilling, highly mobile rigs, and measurement-while-drilling will all improve rig efficiency, although the growth of horizontal drilling and longer well laterals will offset this somewhat.

While tight gas, coalbed methane, and oil sands resources have become important to the world’s energy supply, the prospects for large scale shale drilling remain modest outside of North America. Even so, promising resource plays exist throughout the world, and countries such as Argentina, Australia, and China are expected to hold the best unconventional opportunities in the next several years.

In regional terms, drilling activity will remain concentrated in North America, where both the US and Canada possess among the world’s most active upstream industries. More rapid growth will be evident in a small number of other countries, primarily concentrated in Asia and the Middle East, where favorable resource opportunities and the availability of investment capital will stimulate upstream activity.

“Drilling activity in Europe will moderate, as Russia’s upstream industry is hampered by economic sanctions targeting the country’s oil and gas industry, and the mature and declining nature of the North Sea limits both the availability and profitability of new field development opportunities there. Similarly, a combination of above- and below-ground factors will hold back overall growth in Central and South America, despite some opportunities in Argentina and Colombia. Upstream activity in Brazil, for example, will be restrained by the level of indebtedness of the country’s national oil company and the expense of developing deepwater offshore, pre-salt fields,” said Freedonia in the new report.
Source: Business Standard