?Oil and gas executives are speculating that oil prices will drop to below $100 by year-end, according to the results of a survey conducted by Houston-based audit, tax and advisory firm KPMG LLP’s Global Energy Institute.
This year’s survey polled 372 financial executives from oil and gas companies in April, with 55% of respondents expecting oil prices will drop below $100 by the end of the year. Another 21% think prices will close between $101 and $110; 15%, between $111 and $120; and 9%, above $120. While 44% expect prices will peak by the end of the year, a further 39% believe they will not peak until after 2010.
KPMG Global Energy Institute executive director Bill Kimble says, “The combination of traders moving resources into commodities and the weak dollar has had a significant role in the surge in pricing in recent weeks.
However, in addition, there are underlying issues in the energy industry, such as escalating energy demand in emerging markets and declining oil reserves, which will continue to contribute to upward pricing pressure for years to come.”
Although the majority of the surveyed executives expect prices to fall below $100, 44% plan to increase upstream capital spending by more than 10% during the next year, an increase of 9% from last year. Another 26% say investment will increase by up to 10%, an increase of 10% from last year. Only 5% anticipate a decrease in investment.
Kimble says, “The expectation of increased investment by U.S. energy companies shows that oil and gas executives are deeply concerned about energy security. The survey shows that all avenues, traditional and non-traditional, need to be supported in order to find a long-term solution.”
In addition to increased domestic investment, 46% expect that there will be more foreign investment in and acquisition of U.S. energy companies in the coming year, with 18% expecting it to increase significantly. Only 5% expect a drop.
Most respondents believe opening domestic land access would ?best enhance U.S. energy security. More specifically, 43% want the Arctic National Wildlife Refuge opened for drilling and 28% want more land access in the Rockies. A further 28% believe investment in renewable energy will enhance U.S. energy security the most.
However, the executives think that, while there should be more renewable-energy investment, they still do not see it as a serious near-term solution to energy supply. Last year, 60% said that it will not be viable to mass-produce any alternative fuels by the year 2010. This year, 54% gave the same response when asked about the year 2015.
Kimble says, “While KPMG’s survey showed that executives view alternative fuels as a long-term solution for the energy supply equation, they see other, existing clean-air energy sources as more realistic in the next 20 years.”
Almost all of the respondents expect gas will become a larger contributor to global energy supply: 54% believe it will grow significantly as a percentage of total energy supply; 37%, somewhat; 7%, about the same; 1%, decline.
As for global warming, the participants believe it is occurring but 62% say it is a natural weather cycle and 29% believe it is man-made.
Recommended Reading
Petrobras' Pioneering Tech Powers Decades-long, 2.9 Bboe Production
2024-05-08 - From discovery to revitalization, the deepwater Marlim Field offshore Brazil has driven development of technology while delivering more than 2.9 Bboe.
High Pressure, Temps, No Problem: BP Dives Deeper in GoM
2024-05-07 - BP is preparing for a 2024 FID on Kaskida and 2025 FID on Tiber projects in the Gulf of Mexico, a BP executive said during an OTC keynote.
Chevron Exec: Shale Still in ‘Early Days’ of Recovery Potential
2024-03-08 - From innovation to shale well recovery rates, executives at Chevron, SLB, Helmerich & Payne and Transocean see a lot more work ahead.
Tech Trends, OTC Edition: Drills & Bits
2024-05-14 - In this month’s Tech Trends, which takes place at the 2024 Offshore Technology Conference, new drilling technologies are on display as well as other bits that ensure efficient operations.
OTC: SLB Exec Says Goal is to Expand Production, Lower Emissions
2024-05-06 - Despite rapidly expanding global renewables capacity, oil and gas products will still supply around half of global energy demand by 2040, an SLB executive said during the 2024 Offshore Technology Conference.