“It’s even more worrisome in a time like this when you have significant geopolitical risks coming from different spots in the world.” said
Of particular concern is a shortage of global spare oil capacity, Webster said. Many oil-producing countries are on the decline, while others are pumping out almost as much as they possibly can. There’s little remaining margin to boost production if supplies dwindle.
The world’s three largest oil producers —
These moves, however, leave
In recent years, the oil and gas sector has sounded alarm bells about so-called “peak demand.” That’s the theory that global oil consumption could plateau soon with the switch to renewable energy and electric vehicles. But now there are increasing predictions that demand could actually outpace crude supplies starting in the next year or so.
These declines were triggered largely by the recent oil bust that sent crude prices plummeting from more than $100 a barrel in mid-2014 down to a low of $26 per barrel in
Global oil demand each year has grown by roughly 1.5 million barrels a day of late. But higher crude prices coupled with ongoing fears of worldwide trade wars — led by the
Rather than spend money on the long-term, multibillion-dollar mega projects in deep ocean waters, companies are more often opting for quicker, cheaper drilling efforts in areas like
“There was an implosion in major project investments, and exploration spending has evaporated,” said
That’s an ominous sign for crude oil supplies in the few years ahead, starting as soon as 2019, he added.
“The elephant in the room that people aren’t paying attention to is the rapidly decreasing spare productive (oil) capacity,” Herbert said, especially within the
Many oil and gas companies like global energy services leader Schlumberger have warned of the need for greater oil and gas project spending for more than a year. Schlumberger CEO
“It is becoming more and more apparent that the new projects expected to come online during the next few years will not be sufficient to meet the increasing demand,” Kibsgaard said.
Even the Permian is seeing its growth slow down. The Permian is producing a record of more than 3.3 million barrels of oil a day, which is near the region’s pipeline capacity.
A bevy of new pipeline projects are under construction to transport the Permian oil across the state to port and refining hubs near
As a result, drilling and well completions activity in the booming Permian have flattened out in recent weeks, Herbert noted, a trend that could continue well into next year.
The oil will keep flowing. That’s why companies like
It’s really much better for the energy sector if
“At those higher levels, people get stupid and lose discipline,” Wicklund said.
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