The world’s biggest oil and gas companies are preparing the first round of large oil and gas projects since the price crash of 2014. Firms will approve approximately $300 billion in spending on these projects in 2019 and 2020 alone – more than the last three years combined.
The crash
Between 2000 and 2008, the price of oil soared to record heights. A barrel of oil that once cost $25 rose to $150. This increase was driven by a growing energy demand in emerging economies such as China and India, coupled with production cuts by the Organisation of Petroleum Exporting Countries (OPEC) in the Middle East.
Despite the unprecedented spike, the world’s major oil and gas companies remained positive and invested heavily in future projects, while overextending existing ones. However, a deep global recession cut demand for energy across the globe and sent oil and gas prices rapidly downwards once more. Another drop in 2014 – driven by lessening demand for oil in countries such as China and Russia –put oil and gas companies firmly on the back foot.
Lessons learned
At the time of the 2014 crash, companies were estimated to be $80 billion over budget. The next few years were spent recovering losses and adopting a new strategy: capital discipline. Projects were completed on time and on budget, while the focus was put on innovation instead of growth. Internet of Things (IoT) applications, Artificial Intelligence (AI) and Machine Learning (ML) have since all made their mark on oil and gas operations.
The result has been improved productivity and fiscal responsibility, putting companies in a position to start expanding once more. The question is whether these companies will begin repeating investment mistakes of the past.
A step back?
A major consideration for the oil and gas industry has been reducing emissions. Gas flaring – where excess natural gas is flared and released as Carbon Dioxide (CO2) – has been recognised as a leading contributor to greenhouse gases. In recent years oil and gas companies have been collaborating to reduce flaring emissions, and production sites across the globe have driven a five per cent decline in gas flaring in 2017.
Investment in mega projects means the industry will start producing larger quantities of oil and gas once more. A main focus on liquefied natural gas (LNG) in Mozambique and deep-oil in Ghana could mean extraction and processing will flood the market with more oil and gas, but also increase emissions. There is a possibility that these mega projects will negatively affect the progress oil and gas companies have made to reducing unnecessary flaring across the globe.
Key to tracking flaring levels is accurate reporting and tracking. Fluenta’s FGM 160 Flare Gas Meter provides ultrasonic technology for reliable flare gas measurement. Through measurement, companies can better understand their emissions targets and significantly reduce routine flaring.
For more information on Fluenta’s FGM 160 Flare Gas Meter, click here.
