What are the tailwinds and headwinds for oil and gas in 2019?

As we enter the new year, the best of us are seeking to predict what will drive us forward and what will hold us back in 2019. Here we present a possible vision for this coming year and how the oil and gas sector might respond.

Tailwind: Improved technology will drive rationalisation of the workforce

The lower workforce costs attributed to the improvement in technology is likely to be a major tailwind in 2019. Of course, the influence of technology – with Big Data and the Internet of Things – has served to rationalise processes over the past few years. However, more exciting technologies could be still to come.

Remember the SEXTANT project announced by NASA in January 2018 that could use X-ray pulses to “see” moving objects? There is every chance that this could start to evolve into a tool of immense productivity in exploration, at the very least.

Improved operator efficiency, the reduction in cost and improvement in equipment efficiency, such as in drilling tools and systems, are all major tailwinds likely to drive the industry forward. Although this efficiency is more than likely going to be a result of improved hardware for greater productivity, but there could also improved software for greater transparency of processes.

Tailwind: Macro-economics

What cannot be ignored is the macro-economic influences on oil and gas. The price of oil and gas and the global economic recovery are likely to continue to drive success in the sector. This is supported by a greater reliance on the use of natural gas across the world. This is because gas is likely to be used in power generation. Therefore, US energy policy could also be perceived as a tailwind for oil and gas, with increased LNG exports from America.

Headwind: Macro-economics

The improvement in the world economic position and the continued improvement in price of oil and gas are of course opportunities. However, macro-economics invariably also bring threats to the sector too.

Uncertainty in politics across the world and the fluidity of prices are both potential
threats. Most executives favour the positive impact of improving prices, over the threat of unfavourable prices. However, uncertainty is not the best friend of any company in the sector.

Furthermore, the oversupply of oil and gas could continue to be a problem into 2019.

Headwind: Greater regulation

The sudden upsurge in concern about the climate, particularly the influence of the anti-plastic movement since the David Attenborough documentary, could be a significant headwind.

Although there is an acceptance that renewable sources of energy are not yet sufficient, and that the world is still heavily reliant on gas and Petro-chemical products, pressure is building for a significant solution.

This popular uprising could lead to greater government regulation, which brings uncertainty.

Headwind: HR issues

Although the reduction in workforce due to technology is a bonus, the change in emphasis within the sector brings some potential talent shortages for the coming year. The technical talent needed to drive forward progress in oil and gas seem not to be emerging, as the sector is not as attractive as other areas of industry.

There are other HR issues at hand. There is soon to be a flood of retirements of key personnel and there is a lack of leadership talent to take their place. The same lack of appeal of the sector that leaves us sparse in technical skill is also hitting other areas, with the sector ranking only sixth in attractiveness to new entrants in 2018.

A mixed picture

The general trend is towards opportunity. The headwinds of technology and improving world economics are strong, and there is a general positivity in the sector.

However, the successful implementation of technology and the changing requirements of the workforce do present significant short-term tailwinds. The growing risk to the industry of environmental worry and desire for regulation is more likely an issue for 2020 than 2019, when America goes to the polls again.

Exi Flow Measurement specialises in products for the gas and liquid measurement industry – manufacturing, researching and developing with a focus on continuous project development and enhancement. To speak to us about how we can help you, call +44 (0)1243 554920 or contact us here.