Black gold, or oil, nearly doubled in price in 2022, and because of it, the White House is demanding that Oil/Gas companies and services up their drilling capabilities. While most companies have increased their efforts by nearly sixty percent, drilling operations aren’t about what they were in pre-pandemic years.
This is due to the many executive orders signed by President Biden when he assumed office in January of 2021 in a deliberate effort to cripple the carbon-producing oil and gas industries. However, with alternative fuel sources are not able to keep up with energy demand and skyrocketing fuel prices, the White House has had no choice but to implore energy companies to drill for more oil and gas.
That said, drillers are limited to harvesting existing wells, some of which have nearly dried up. But by employing an artificial lift for oil and gas, a driller can bring an old well back to life. In fact, experts are predicting a near ten percent increase in artificial lifts at least until 2025. That is, assuming Biden is a one-term President.
According to a new financial report, these are the best of times, and they are the worst of times for the oil and gas industry. However, optimism is on the horizon. At a recent Artificial Lift Conference and Exhibition in Texas, which is hosted annually by the Society of Professional Engineers or SPE, the Vice President of Spears and Associates stated that there’s a lot to like about the immediate future. But also a lot not to like.
What he’s referring to is that due to strict government regulations, the artificial lift industry doesn’t have much control, which means owners should concentrate on what they can control and influence. Spears projects an annual 8 to ten percent increase in the artificial lift market up to and including 2025 for U.S. drillers and drillers on a global scale.
High Oil and Gas Prices
Presently, the oil and gas industry is benefitting from record high energy pricing, which is producing record profits. The dividends have been accompanied by a strong demand for technical innovation and advances in the artificial lift industry.
But the high prices are a double-edged sword; Spears points out. If a barrel of oil is $100 or $110, that’s good for the industry. “But it’s terrible for the consumer,” he states. Inevitably, the industry depends on the consumer for their livelihood.
With oilfield profits in the green presently, there is also a big push for every single molecule of oil that can be harvested. There’s also a corresponding demand for expensive sucker rods and drill bits, and drill bits break all the time, especially when the deep rock proves stubborn and nearly impenetrable.
High Tech Advances
According to the experts, innovation in the oil and gas industry is peaking at levels never before seen. With new technological advances on the way, companies are said to be “earning back some of the trust it destroyed” with its shareholders over the past two decades.
But with there being a lot to be happy about at present for the oil and gas industry, there are also some harsh realities it has to face head-on. Population growth not too long ago was expected to boom has taken an unexpected turn for the worse, and it has slowed to an alarming rate in the U.S. alone. Therefore, the overall energy demand has slowed.
But there are other big concerns for the industry. Including oilfield inflation. Budgets. Hostile politics. Lack of oil exploration due to harsh regulations. Lack of real capital. The threat of recession (which presently seems inevitable). And a lack of experience personnel in specific “hot spots” around the world.
It must also be noted that many companies still in operation have exhausted their budgets way too early in the year due to high prices associated with equipment. Spare parts. And. Ironically. The high cost of energy. Another term for this is “oilfield inflation.”
Government Regulation Relief
Says Spears. While budgets typically can run out in late November or early December. He’s never heard of them being depleted in June. July, or August. But budgets will be reset soon for the new year. Making the issue a temporary one at worst.
What’s needed to bring down the high cost of energy. He stresses. Is government regulation relief so that oilfield exploration can once more start up. Right now. The amount of funds being invested in geophysical activity is practically zero.
Eventually. Even President Biden will have to agree that the oil and gas industry will have no choice but to go. Thumping underground” in search of new oil and gas deposits.