Oil and Gas Industry Roundup: June 2017

Oil-and-gas-Industry-Roundup-June-2017Welcome back to this month’s edition of the oil and gas industry roundup. At the beginning of every month, we bring you the biggest stories from the month in a bitesize roundup. June 2017 has been a busy month for the oil and gas industry across the world, with renewable energy overtaking gas and coal as an energy supplier to the UK. China has also just completed the world’s largest solar farm in order to reduce their carbon emissions. 

A new report has predicted that US shale oil will reach 9 million barrels a day by 2025, suggesting that the oil industry is expecting to improve in the coming years. Whilst the North East of England is being cautiously optimistic for the offshore sector, with hints that the market is improving. We hope you enjoy this month’s industry roundup. 

 

Renewable Energy Provided More than Gas and Coal Combined to the UKRenewable-Energy-Provided-More-than-Gas-and-Coal-Combined-to-the-UK-Renown-Oil-And-Gas-Industry-Roundup

On the 7th June 2017, wind, solar, and nuclear power broke the record by producing more electricity than gas and coal for the first time ever in the UK.

Numbers from the national grid show that:

Wind supplied 9.5 gigawatts
Nuclear supplied 8.2 gigawatts
Solar supplied 7.3 gigawatts

Coal was not used at the time, and gas only provided 7.2 gigawatts meaning that renewables provided a total of 18.7 gigawatts, which is 50.7% of demand, meaning they provided enough power for more than 13 million homes.

A combination of the UK’s stormy weather producing large amounts of wind power and low demand resulted in the UK experiencing negative prices in the electricity market for the first time.

According to Born To Engineer, though they were only briefly in negative figures, it meant that some generators had to pay energy suppliers to take the electricity they were producing.

Businesses Cautiously Optimistic for North East Offshore SectorBusinesses-Cautiously-Optimistic-for-North-East-Offshore-Sector-Renown-Engineering-Industry-Roundup

The recent Subsea North East conference has surprisingly shown that there is some cautious optimism amongst businesses that operate in the offshore industry. The atmosphere at the conference in previous years showed that firms were worried about the price of oil.

Three years ago to the month saw the downturn in oil prices, leading to a huge industry restructure. Oil and gas businesses were forced to restructure, resize, and diversify during these challenging times.

Malcolm Dickson, the Research Director for Wood Mackenzie spoke at the conference and said: ‘From 40 sanctioned projects in 2014, activity fell to less than 10 in the following two years, but 13 projects have been sanctioned this year to date, although the projects which are moving once more are generally smaller ones than those approved prior to the crash.’

Leading Subsea North East member and CEO of PDL Solutions, Paul Charlton, has praised the North East for how they’ve handled the downturn, and how well they’ve managed to diversify. He believes that their patience might be about to be paid off as the industry is becoming ‘more upbeat, especially since the turn of the year amidst signs that real money is coming out for real projects.

New Forecast Predicts US Shale Oil to Reach 9 Million Barrels a Day by 2025New-Forecast-Predicts-US-Shale-Oil-to-Reach-9-Million-Barrels-a-Day-by-2025-Renown-Oil-And-Gas-Industry-Roundup

Data analyst company, McKinsey Energy Insights, has recently published their ‘North American Shale Oil Outlook’, in which they predict that shale drilling and completions will grow at 20% a year, and for production to increase by 12% annually through to 2021.

The company estimates that this will result in US shale oil production reaching approximately 9 million barrels a day by 2025. The company have worked this out based on their anticipated recovery price scenario. Though oil prices could still vary, it is predicted under the assumption that West Texas Intermediate prices will hit $60 – $70 per barrel from 2019 onwards.

According to Energy Voice, the analysis found a lot of positivity from the industry, despite North American shale oil margins struggling to recover after the 2014 market plummet. Key operational improvements have been identified such as ‘increased drilling efficiency, better completion designs, and high-grading’, which are all expected to help improve the oil industry and widen margins.

Stats show that ‘operators have reduced drilling time by an average of five days while improving initial production’, drilling activity has also more than doubled since Q2 2016.

World’s Biggest Solar Energy Farm CompletedWorld’s-Biggest-Solar-Energy-Farm-Completed-Renown-Oil-and-Gas-Industry-Update

China is working hard on moving away from the images often associated with their country of smog-filled cities and citizens wearing masks on a daily basis. In June 2017, they announced that they have completed what may be the world’s biggest floating solar farm.

The 40MW site sits on top of a flooded coal-mining town, in the eastern Anhui province, where it is expected that the cool surface of the water will improve the power of the site.

The solar farm is not only championed for being the largest in the world, but the installation is also evidence of China’s commitment to its green energy plans. According to Business Insider, ‘earlier this year, Beijing said it would splash US $361 billion on expanding the country’s renewably power capacity by 2020.’

China’s plans and commitment to renewable energy has earned them the top place in E&Y’s list of the top 40 renewables energy markets. Despite currently being the most polluting country in the world, if President Trump continues his plans to leave the Paris Agreement, China will automatically take its place as the leader of global climate action, according to the UN’s Secretary-General, Antonio Guterres.

Nevertheless, China is still committed to becoming more energy efficient and aims to generate a fifth of its energy from renewable sources by 2030.

 

We hope you enjoyed our June 2017 Oil and Gas Industry Roundup. You can read our engineering industry roundup here, and our healthcare industry roundup here. Please don’t hesitate to get in touch if you require more information about our services. You can follow us on Twitter and LinkedIn where we post regular updates on the industry. Join us again next month when we will be back with another roundup. 

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