Houston, Texas 25 January 2018: Senior US oil and gas professionals expect a positive step change in the industry’s CAPEX, OPEX, headcount, and research and development (R&D) spending for 2018. A new survey from DNV GL, the technical advisor to the oil and gas industry, confirms that after three challenging years, 69% of respondents say their companies will maintain or increase capital spending in the year ahead (this compared to 43% in 2017).
About the report
Confidence and Control: the outlook for the oil and gas industry in 2018 is DNV GL’s eighth annual report providing a snapshot of industry confidence, priorities, and concerns for the year ahead. The survey reveals an imminent turnaround in spending on R&D and innovation after three back-to-back years of cuts and freezes.
More than a third (36%) of 813 senior sector players surveyed expect to increase spending on R&D and innovation in 2018; this is the highest level recorded in four years.
The survey indicates that the greatest perceived barrier to growth in the US is over-supply of oil and gas; this was cited by twice the number of respondents in the US compared to globally (38% versus 19%). Notably, compared to last year, the impact of a skills shortage and the ever ageing workforce has more than doubled as a concern, rising from 13% to 30%.
The concerns of over-supply in the market may explain a greater focus on cost management amongst US oil companies, compared to their global counterparts. More than a third (35%) believe that cost management will be a top priority in the next twelve months, a rise from 23% in 2017; this is four points higher than the global average.
“With the price of oil stabilizing, offshore developments are now able to attain better margins and our survey indicates a cautious turnaround in optimism for the US oil and gas industry. However, it’s still a very tough market, so it is not surprising to see a further increase in focus on cost control for 2018,” said Frank Ketelaars, regional manager, the Americas, DNV GL – Oil & Gas.
“It is encouraging to see fresh impetus to accelerate R&D investment and initiatives that focus on improving efficiency and production. I believe that in order to compete with cheaper onshore production in the US and other regions of the world, the Gulf of Mexico operations must embrace innovation, digitalization, and standardization to reduce their average lifting costs.”
Other key findings from DNV GL’s survey include:
- Rising confidence is evident:
- North America is up from 49% to 57%
- Latin America has the brightest outlook at 77% (up 31% from 2017)
- Europe also has a more positive outlook, up from 25% in 2017 to 64% this year
- Asia Pacific is at 57% in 2018, up from 30% in 2017
- Nearly three-quarters (73%) of senior industry professionals globally say their organizations were successful in achieving cost efficiency targets set in 2017, as compared to 72% in US
- Just 37% of senior industry professionals globally and in the US cited the oil price as an expected barrier to growth for 2018, compared to 64% one year ago
- Nearly two-thirds (62%) of respondents globally expect their organization to maintain or increase headcount in 2018, compared to 65% in the US. This compares to 43% globally in 2017 and 50% in the US
- 58% of respondents globally expect to maintain or increase operating expenditure in 2018, up 17 percentage points from 41% last year, compared to 64% in the US, up 7 percentage points from 57% in 2017.