World Oil Forecast: Congressman and industry experts offer upbeat view for 2023

World Oil Staff January 27, 2023

Houston (WO) – Featuring a “first look” at anticipated upstream oil and gas trends for 2023, World Oil hosted its 55th annual Forecast Breakfast on Jan. 27 at the Norris Conference Center in Houston, Texas.  Over 300 industry professionals representing operators, service companies, drilling contractors and others attended the event, featuring projections, data and analysis on global E&P. It should be noted that while this was the 55th Forecast Breakfast event, World Oil has actually conducted upstream forecasting for 97 years.

speaker at World Oil's annual Forecast Breakfast for the oil and gas industry
From left to right: Mark Finley, The Baker Institute; Jeremy Thigpen, Transocean; Wesley Hunt, U.S. Congressman; Kurt Abraham, World Oil; Andy McDowell, Gulf Energy Information

Four speakers gave their candid assessments of upstream market forces, technology influences, industry practices and statistical trends. The group included U.S. Congressman Wesley Hunt (R-Texas), Transocean CEO and past IADC Chair Jeremy Thigpen, Rice University/Baker Institute Fellow (in Energy and Global Oil) Mark Finley, and World Oil Editor-in-Chief/Chief Forecaster Kurt Abraham. Together, they shared a common theme: Oil and gas isn’t going anywhere, and the outlook is good for continued strengthening of the industry’s upstream sector, with increased activity on the way.

Mark Finley: Will demand disappointment repeat? As the first speaker, Finley analyzed the global oil and gas market’s behavior during 2022 and asked an important question: “Will demand disappoint the country again in 2023 as it did in 2022?” While global projections look promising, with new supply sources coming online in Norway, Guyana and beyond, political tensions and high interest rates may create headwinds for U.S. supplies moving forward. At the same time, U.S. shale is looking like an area of stability, as operators continue production development in the Permian basin of West Texas.

Russia continues to be a risk to the global oil and gas market; however, China’s reopening may fill in the gaps. In general, analysts are looking for things to return to normal, post-COVID, and prospects are positive.

Jeremy Thigpen: Offshore industry is exiting “eight years of winter.” Following Finley’s assessment of global market macro issues, Thigpen spoke about the factors and issues affecting offshore drilling contractors. He said the industry has experienced a “brutal seven to eight years,” with per-barrel prices dropping and multi-year contracts shortening. However, he added, there’s hope beyond the horizon.

Thigpen anticipates a continued period of upstream recovery, as the focus shifts from an energy transition to energy security. Oil and gas demand is rising since the low levels of the pandemic, and people in many parts of the world are still looking for a higher standard of living. According to Thigpen, oil and gas will play a “huge role” in this “season of growth,” where the industry can help to lift additional people out of poverty.

Offshore drilling operations, said Thigpen, will focus on safety and efficiency. He sees increases in productivity shortening first oil production times. His candid assessment is that with so much opportunity for offshore activity and a less saturated market, the industry is looking at a much healthier structure.

Rep. Wesley Hunt: “Unleashing American energy.” Representing Texas’ newly created 38th congressional district in the Houston area, Congressman made a spirited speech, where he emphasized his initiative to “unleash American energy.” As an oil and gas proponent, Hunt referred to himself as the “energy Congressman of the world,” and for good reason.

With so much potential in U.S. field areas like the Permian basin and Marcellus shale, Hunt says that the U.S. “has the ability to fuel ourselves and our allies.” It’s not about choosing renewables over traditional energy sources, he explained; it’s about combining assets. “This is not an energy transition,” said Hunt, “it’s an energy addition.”

Kurt Abraham: Growth expected for U.S. and International drilling. World Oil’s Editor-in-Chief and Chief Forecaster, Kurt Abraham, presented projections and data for upstream activity this year. According to the forecast, U.S. drilling will be up over 8% in 2023, with most of the action coming from Texas and the Mid-continent region.

Internationally, all regions outside of the U.S. will experience growth, with the Middle East, Africa, South America, and Canada leading the charge. In Western Europe, while the UK industry battles windfall taxes that may discourage investors, major players will continue to develop projects in Norway.

The invasion of Ukraine, he said, serves to put a cap on Russia’s drilling levels, as Western nations impose sanctions. However, in other parts of the FSU, countries like Kazakhstan and Azerbaijan will continue to increase activity, as new infrastructure and drilling projects make their markets more attractive.

Offshore activity will grow at a faster rate than onshore drilling, said Abraham. He expects wells drilled offshore to increase nearly 15%, with improvement likely in every region. Leading the regions will be the Middle East, where activity is predicted to jump 33% higher, followed by Africa at 22%.

Final takeaways. Overall, the message is clear: while climate activists push to divest in conventional energy resources, oil and gas will continue to have a place in society’s functioning for the foreseeable future. Accordingly, 2023 looks to be a year of growth for the entire upstream industry, to the highest levels since 2019.

For those could not attend the live presentation in Houston, World Oil will host a webcast covering the forecast on Feb. 22, 2023. As always, a full breakdown of this year’s forecast will be featured in World Oil’s upcoming February issue.

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