Oil’s Greatest Hits, 2016 Edition
While this year’s “hits” for Oil & Gas may have seemed more like barely passable b-sides, 2016 did share with us some head-bobbers, even if they weren’t immediate chart toppers. Collected nicely by a two-part article launched by Forbes this week–the first taking a look at the year past, the second giving a preview into next year–below are a number of the highlights taken from Oil & Gas’ 2016 album. Prices Went Up
I know, this is a bit “glass half full” look at the year, but on January 4th, 2016 (January 1 being a holiday and the 2nd and 3rd fell on the weekend this year), WTI Crude closed at $36.81. Yesterday, December 20th, WTI Crude closed at $53.49, more than a 31% increase. But I hear you, amidst everything that happened volatility-wise with oil & gas during 2016, this IS a bit “glass half full).
Technology Came Through Huge
The economic climate of the 2016 oil and gas industry forced companies to improve processes and develop more efficient (and more reliable) technologies. The improvements helped drop the cost of drilling, completing and operating new wells, which was key for helping companies stay profitable with oil in the $30s and $40s. Estimates show that companies were able to slash operating costs by anywhere from 30% to 50%. When oil prices shoved oil and gas companies into a corner in 2016, the companies proved to shove back with better technology and more efficient processes. Specifically, a few highlights in the realm of new or improved technologies include new “fracking” technologies that gave companies access to more of the formation rock during each frac, and in turn helped recover more hydrocarbons. Also worth noting, more pipeline systems made for more efficient transfer of oil. In short, these two classes of improvements meant companies could recover more oil and transfer it quicker and more efficiently.
U.S. Oil, Now Consumed by Others
President Obama’s 2015 signing of the repeal that ended restrictions on exporting U.S. oil really impacted 2016’s export numbers. Until 2016, the majority of U.S. oil exports went to one country, Canada. This year, U.S. oil exports reached 22 countries, including China, Spain and Italy. At the beginning of 2016, U.S. oil exports averaged about 364,000 barrels each day. By end of Q3, that number had nearly doubled, according to the EIA. How much oil the U.S. exports in 2017 will greatly rely on pricing and the continued growth of exporting relationships.
We’ve Got Oil
Since 2014, the U.S. was right up at the top of the list of world’s largest oil producers, thanks in large part to improvements in fracking technology, which significantly improved how much oil U.S. companies could recover. This year, the U.S. sits only behind Saudi Arabia as the world’s top oil producer. We’re Number 2! We’re Number 2!
OPEC Constructed a New Ceiling
For any who follow my posts, you know I’ve written quite a bit about the OPEC deal that will limit how much oil its member countries produce. This will be something we’ll watch in 2017 to see what impact it has on the global oil supply (and we’re all champing at the bit to see if Russia plays ball, even though they are NOT an OPEC member).
The 2017 Sun Will Come Out Tomorrow (well, in a couple weeks)
Lots of changes pocked the 2016 year for U.S. oil and gas. As we gear up to swap the calendar and welcome in a new President (and the seemingly pro-oil team he’s assigned thus far), we can’t deny it’s at least an exciting–although not ALL positive–time for oil and gas.
Merry Christmas and Happy New Year Everyone.