More CapEx needed to meet demand growth
Posted: Mon Oct 29, 2018 4:59 pm
Analysts: More Spending Needed To Meet Future Oil, Gas Demand
Velda Addison Senior Editor, Digital News Group Hart Energy
Friday, October 26, 2018 - 12:43pm
"With oil and gas demand set to continue growing during the next decade, companies will need to step up spending, according to an energy consulting firm. Wood Mackenzie says upstream oil and gas companies must invest 20% more to meet the world’s future energy needs. Annual development spending needs to rise to about $600 billion through the next decade."
MY TAKE: This will not happen if oil, gas and NGL prices go lower.
More from the article:
That could prove a difficult task for some holding onto cash with not-too-distant memories of plunging oil prices, shelved projects, massive layoffs and other cuts. Additionally, companies are facing pressure today to use excess cash flow—thanks to improved market conditions and efficiency—for other purposes, including returning it to shareholders.
“Four years of deep capital rationing have had a severe impact on resource renewal, especially in the conventional sector,” Tom Ellacott, senior vice president of corporate research for Wood Mackenzie, said in a news release.
The firm pointed out that spend is rebounding post downturn but said sustainability is an issue.
“Not enough new high-quality projects are entering the funnel to replace those that have left,” Ellacott added.
The comments were shared as oil and gas companies kicked off their third-quarter earnings release season, sharing details on financial performance and operational highlights with some giving a peek into upcoming spending plans.
Velda Addison Senior Editor, Digital News Group Hart Energy
Friday, October 26, 2018 - 12:43pm
"With oil and gas demand set to continue growing during the next decade, companies will need to step up spending, according to an energy consulting firm. Wood Mackenzie says upstream oil and gas companies must invest 20% more to meet the world’s future energy needs. Annual development spending needs to rise to about $600 billion through the next decade."
MY TAKE: This will not happen if oil, gas and NGL prices go lower.
More from the article:
That could prove a difficult task for some holding onto cash with not-too-distant memories of plunging oil prices, shelved projects, massive layoffs and other cuts. Additionally, companies are facing pressure today to use excess cash flow—thanks to improved market conditions and efficiency—for other purposes, including returning it to shareholders.
“Four years of deep capital rationing have had a severe impact on resource renewal, especially in the conventional sector,” Tom Ellacott, senior vice president of corporate research for Wood Mackenzie, said in a news release.
The firm pointed out that spend is rebounding post downturn but said sustainability is an issue.
“Not enough new high-quality projects are entering the funnel to replace those that have left,” Ellacott added.
The comments were shared as oil and gas companies kicked off their third-quarter earnings release season, sharing details on financial performance and operational highlights with some giving a peek into upcoming spending plans.