First Oil: Forecast calls for a near-repeat in 2025

KURT S. ABRAHAM, EDITOR-IN-CHIEF & CHIEF FORECASTER 

Fig. 1. The largest floating production vessel in Brazil to date, FPSO Almirante Tamandaré, is now operating off the country’s coast in Búzios field. Image: SBM/Petrobras.

As we do every year at this time, we have just completed our annual winter forecast. And quite frankly, this new forecast is calling for nearly a full repeat of 2024’s performance, in terms of overall activity numbers. We don’t see any major gains or significant losses among the various regions. Many of the market factors that were in place last year are still here in 2025, both in the U.S. and globally.  

In the U.S., many upstream companies and their equipment/service partners are thrilled to have President Donald J. Trump and his pro-industry policies back in the White House. But it’s still somewhat early to determine just how much his administration will help the industry on detrimental regulation from the last regime. Otherwise, U.S. operators in many cases are still practicing fiscal discipline, still looking for equipment and service costs to come down more, and still waiting out oil and gas prices. Despite Trump’s call to “drill baby, drill,” most operators that I’ve talked to are going to be cautious, measured and prudent. 

Outside the U.S., some factors in the global markets have subsided, others remain present, and new ones have appeared. The Covid pandemic five years ago has faded considerably. On the other hand, the Russia-Ukraine war is now three years old and requiring American intervention to broker a peace deal. This continues to impact the global natural gas market. 

The “pause” that former President Joe Biden imposed on the granting of new LNG export licenses last year has been erased by an Executive Order issued by current President Donald Trump, which reverses Biden’s action. The perception that an oversupply of oil persists on the market, which emerged last year, continues, despite OPEC+ keeping a fair piece of production off the market. Accordingly, the group will stick to its policy of gradually raising oil production from April forward. So, plenty of factors continue to impact the markets. 

So, how does this translate into numbers? Well, in the U.S., we forecast that drilling will be up 1.7%, at 17,720 wells. That’s only 299 more wells than the 2024 total. Mind you, there should be no increase in the first quarter, just a tiny bit og gain in the second quarter, and then the bulk of the small increase in the second half. As for footage drilled, we expect U.S. operators to rack up 270.0 MMft of hole, also up 1.7% from 2023’s figure. Then, if you look at our international forecast, you will see that drilling outside the U.S. will be up just 0.9%, at 42,057 wells, vs. last year’s total of 41,685 wells. That’s only a difference of 628 wells across the entire globe, outside the U.S.  

The one data point that shows a little more movement is worldwide offshore drilling, which will be up 2.1%, to 2,622 wells. But again, that’s only a difference of 53 wells across the planet. Also, if you look at predictions for capital spending this year, courtesy of our friends at Evercore ISI, you will see that they are calling for just a 1.3% increase in international capex during 2025. And within North America, U.S. spending will actually decline 3.2%. In Canada, capex will still increase, but at a 6.8% rate.  a 17.0% increase last year to a mere 2.3% this year.  

Fig. 2. Drillships like this one operating offshore Brazil are now being subjected to closer regulatory scrutiny. Image: Petrobras.

So, we can expect an E&P year much like we had in 2024—no great changes on a percentage basis, either up or down. In the meantime, we invite you to visit all our considerable forecast material in this issue, including specific articles on the outlook for U.S., Canadian and International activity.  

Brazil continues putting forward a solid effort. While other countries across the globe continue to argue and debate their energy policies moving forward, Brazil keeps moving forward on its hydrocarbon development, particularly offshore oil. Yes, if only some other nations could be as persistent on oil and gas as Brazil. 

The most recent example of this progress and persistence is when Petrobras commenced production from the FPSO Almirante Tamandaré (Búzios 7) on Feb. 15, 2025, in Búzios field, located in the pre-salt layer of the Santos basin. This is the first high-capacity unit to be installed in the field, with the potential to produce up to 225,000 bopd and process 12 MMcm (423 MMcf) of gas daily. In total, 15 wells will be connected to the platform through a subsea infrastructure, including 7 oil producers, 6 water and gas injectors, 1 convertible well (producer and injector), and 1 gas injector. 

The FPSO Almirante Tamandaré is part of the sixth production system of Búzios and will contribute to the field reaching a production level of 1.0 MMbopd, expected by the second half of 2025. Soon, it is anticipated that Búzios will become Petrobras' largest producing field, with the goal of reaching 2 MMbopd by 2030. 

The FPSO unit is leased from SBM Offshore and, in addition to having above-average capacity compared to industry standards, it is equipped with decarbonization technologies, such as a closed flare system, which helps reduce greenhouse gas emissions into the atmosphere. The unit also features heat recovery technologies that reduce the demand for additional energy. 

The Búzios consortium is composed of Petrobras (operator), the Chinese partner companies CNOOC and CNODC, as well as PPSA, the company responsible for managing production-sharing contracts. 

Now, while Brazil is proceeding admirably, a new wrinkle has developed is of some concern and which could slow down a number of projects. It seems that in recent weeks, Brazilian regulators have been implementing a “crackdown” on drilling offshore. This includes drilling being conducted by large companies like Petrobras and Equinor, thus complicating E&P projects at a key moment in the nation’s effort to boost crude output. Furthermore, the drilling delays will complicate Brazil’s efforts to reverse last year’s oil production decline. Before 2024, Brazil had been a noticeable source of non-OPEC supply growth in global oil markets. Should output fail to grow in 2025, that might be interpreted by the OPEC+ alliance as a reason to put more oil on the market without risking a lowering of prices. 

Granted, as reported by Bloomberg, some drilling stoppages resulted from serious safety issues, including a Feb. 14 pump failure that blew off a cover aboard a Valaris Ltd. drillship working for Equinor. But other drilling vessels have been suspended for more minor issues that normally wouldn’t cause disruptions, according to executives who asked Bloomberg not to identify them discussing sensitive information.  

At least three other drillships were halted in recent months, according to some of these executives. The stoppages are slowing both exploration for new fields and the drilling of additional development wells in older discoveries. Two Petrobras rigs were temporarily suspended as of Feb. 20, prompting the establishment of a working group to better address regulatory concerns, said the state-owned company.  

Neither Brazil’s oil regulator, ANP, nor the Mines and Energy Ministry responded to Bloomberg’s requests for comment. Brazil pumped more oil than most OPEC members last year, averaging up to 3.4 MMbpd, enough to account for roughly 3% of global supplies. 

Unplanned shutdowns and licensing delays were prevalent last year in Brazil. Several analysis houses had predicted an output increase by the country last year, but that did not happen.   

The increase in drilling stoppages began in December and coincided with the departure of the previous head of ANP, said the anonymous executives. The suspensions have sent alarmed both operators and contractors, who now face the prospect of a more restrictive operating environment. One of the drillships that has been halted is the NS Carolina that is part of Ventura Offshore Holding Ltd.’s fleet of four vessels, according to some industry personnel. Ventura didn’t immediately respond to Bloomberg’s request for comment, either. 

Fig. 3. U.S. Secretary of Energy Chris Wright denounced what he terms “sinister” net zero goals. Image: Official portrait.

Brazil is known to have independent regulators with stricter environmental and safety standards than other regions, including the U.S. Gulf of Mexico, but we would urge them to use more measured judgment on some of these situations.  

Trump energy secretary takes Europe, particularly Britain, to task. In a somewhat refreshing expression of “free speech” that no doubt would please U.S. Vice President J. D. Vance, U.S. Secretary of Energy Chris Wright (Fig. 3) attacked what he termed “sinister” net zero goals and seemed to single out the UK in the process. Wright called a pledge to achieve net zero carbon emissions by 2050 a “sinister goal,” and he criticized the British government’s attempts to reach clean energy targets.  

This dust-up dates back to 2021, when former U.S. President Joe Biden committed the United States to achieving net-zero emissions by 2050 to help fight climate change. This goal was to be achieved, in part, by using subsidies to encourage an expansion of clean energy and electric vehicles. But as we know now, the Trump administration is working to reverse this policy plank and remove these subsidies as quickly as it can.  

"Net Zero 2050 is a sinister goal. It's a terrible goal," Wright said, speaking via videolink at a conference being held in London that Bloomberg monitored. "The aggressive pursuit of it,” continued Wright, “—and you're sitting in a country (the UK) that has aggressively pursued this goal—has not delivered any benefits, but it's delivered tremendous costs." 

Wright also used a question-and-answer period at the Alliance for Responsible Citizenship event to say his number-one priority was for the (U.S.) government to "get out of the way" of the production of oil, gas and coal. As an example, the Trump administration on Feb. 14 granted an LNG export license to the Commonwealth LNG project in Louisiana. It is the first approval of LNG exports after Biden paused them early last year. 

"We ended the pause and approved the Commonwealth LNG export terminal last Friday, and many more in the queue," said Wright. "The world simply runs on hydrocarbons and for most of their uses we don't have replacements." 

On net zero, Wright took particular aim at Britain, saying its pursuit of a decarbonized energy system—which the current Labour regime wants to reach by 2030—had damaged living standards and exported emissions elsewhere in the world. "No one's going to make an energy-intensive product in the United Kingdom anymore. It's just been displaced somewhere else," said Wright. "This is not energy transition. This is lunacy. This is impoverishing your own citizens in a delusion that this is somehow going to make the world a better place." 

British Prime Minister Keir Starmer has made clean energy a focal point for his strategy for the UK, hoping that development of the country's offshore wind resources, in particular, will be the source of a new round of skilled, well-paid jobs and economic growth. In January Trump, speaking ahead of his presidential inauguration, had criticized the British government's energy policy with a demand that the UK "open up" the North Sea oil and gas basin and dispose of wind farms. 

As readers who frequent this column know well, this editor does not think highly of the current UK government. The comment by Chris Wright that this regime is risking the energy impoverishment of its own citizens is spot on. Long live free speech! 

IN THIS ISSUE 

Special focus: 99th Annual Forecast & Review. For the 99th consecutive year, the World Oil staff has assembled its annual review and forecast of global E&P activity. The forecast section features Evercore’s capital spending outlook, the regulatory/political picture in Washington from Contributing Editor David Blackmon, and the U.S. drilling forecast, compiled by our editorial team. The U.S. report includes considerable analysis. Additional reports cover Canadian and international E&P.W 

Hydraulic fracturing.  In a really fine article, a LANXESS author has really outdone himself in explaining efforts to control reservoir souring and corrosion in hydraulic fracturing. As he so wonderfully states, “garbage in, garbage out.” What he refers to, of course, are challenges of microbial contamination in fracing, whereby microbes can lead to souring, corrosion and biofouling in shale reservoirs. Stressing the use of an optimized biocide program to control these issues, the article details development and evaluation of HPHT bioreactors to test biocide effectiveness under reservoir conditions. 

Management issues. In an exclusive interview with World Oil, Wood President for Technical & Assurance in Projects, Jeremy Hall, says he believes Wood will continue to pursue a dual track of oil and gas work, and energy transition projects, as the economic picture brightens. Known for delivering engineering, advisory and operational solutions, Wood is involved with major projects globally. In addition to numerous projects in the Western Hemisphere, Hall says he sees huge growth in the Middle East for Wood, where they are doing traditional oil and gas projects. They also are working on decarbonization all over the Middle East. As for the greatest technical challenges, Hall says he thinks striking the right balance between engineering and economics is right up there. In other words, the challenge is to do things well but in the most cost-efficient, efficient manner.