World Oil Forecast: Upstream sector will see slight gains in 2025 as industry strives to meet global demand
HOUSTON (WO) – On Friday, Jan. 31, 2025, World Oil hosted its 57th annual Forecast Breakfast at the Norris Conference Center in Houston, Texas. Approximately 360 industry professionals gathered to hear timely insights on the upstream industry, and what’s expected for global drilling in 2025.
Three speakers gave detailed analysis of global data, predictions for 2025 drilling activity and insights on how recent geopolitical shifts may affect the market. The speakers included Kenneth Madlock III, Ph.D, Fellow in Energy and Resource Economics at the Baker Institute and Senior Director at the Center for Energy Studies; Chris Menefee, President of Unit Drilling Company; and Kurt Abraham, Editor-in-Chief and Chief Forecaster of World Oil. The event also kicked off with a special video introduction from Texas Senator John Cornyn.
The recent U.S. Presidential election and inauguration of President Trump was a topic touched on by several speakers throughout the morning, and there was a united expression of optimism in welcoming an administration that has already proven to be a strong ally and proponent of oil and gas progress. “As you know, President Trump has already set in motion several changes to support the oil and gas industry,” Senator Cornyn said in his video introduction, stressing the importance of domestic energy production.
Another theme that was consistent across all presentations: fossil fuels are here to stay as a necessary commodity to meet the ever-growing global energy demand.
Ken Madlock: Energy demand is a global, human issue. The event began with an informative presentation from the Baker Institute’s Ken Madlock, who emphasized that “energy demand is not a partisan issue, but an undisputed, global need.” Energy demand is rising fastest in the developing world, with hydrocarbon fuels as one of the largest drivers, Madlock said.
Despite opposing rhetoric, oil has historically been a growth story, Madlock continued. Net growth over the last 20 years was 20.4 MMbpd, not excluding challenges presented by the pandemic in 2020.
Madlock showed compelling data on the prominence of NOCs (national oil companies) as one of the top contributors to global production. “Market structure matters and government involvement matters,” Madlock stated, showcasing the implications these factors have on oil prices, geopolitics, energy security and more.
Chris Menefee: Investing in infrastructure is a key component to meet global demand. Following Madlock’s presentation was Chris Menefee, President of Unit Drilling Company and member of the International Association of Drilling Contractors (IADC) Executive Committee. Menefee discussed the offshore rig market and reiterated Medlock’s statements on NOCs, showing data to prove that regions with national oil companies are a driving force of demand for jackup rigs.
Menefee also reinforced the point made by Medlock that above all, the world demands more energy, and made a compelling point on what it will take to deliver it. “Rather than ‘drill, baby, drill,’ we should be talking about ‘build, baby, build,’” Menefee said. Without the proper infrastructure in place to transport and deliver energy to regions that need it, an increase in production will only take us so far.
Kurt Abraham: 2025 upstream activity to see modest increases in some regions, remain steady in others. World Oil’s Editor-in-Chief/ Chief Forecaster Kurt Abraham gave the closing presentation of the morning, delivering highly anticipated projections and data for drilling activity in 2025. According to the forecast, U.S. drilling is expected to see a slight increase, with 1.7% more wells drilled than in 2024.
U.S. activity overall will be up only slightly, Abraham noted, as some operators continue to practice fiscal discipline as political shifts play out, while others keep an eye on oil prices. Few U.S. states will see considerable gains in 2025, Abraham continued, although Pennsylvania, Utah, Kansas and Colorado are expected to be solid performers. The Gulf of Mexico continues to show healthy and steady activity, while California is recovering after hitting rock bottom.
Outside the U.S., World Oil projects the largest global well total since 2019. However, global drilling trends will prove to follow capital spending, which in some regions is either flat or on the decline. Some of this is due to continued OPEC+ production restraints, resulting in the drilling outlook being nearly flat.
Among the various regions, four will be up and three will be down, and the Middle East’s drilling will remain flat at a high level. Global offshore activity around the globe shows promising growth, particularly in deepwater development.
Final thoughts. The upstream sector can expect steady yet conservative gains overall, with many operators implementing strategies that favor free cash flow, and others waiting to see how geopolitical shifts play out. Overall, global demand continues to increase as infrastructure and the developing world expand, with oil and gas playing an undeniable part in fulfilling the world’s energy needs.
For those who could not attend the live presentation in Houston, World Oil will host a webcast covering the forecast on Feb. 12, 2025. A full version of this year’s forecast will also be featured in World Oil’s upcoming February issue.
