Oil and Gas Industry Trends of 2016

The oil and gas industry has had its ups and downs throughout the year. The industry trends for 2016 have provided the sector with great benefits as well as a few challenges.

But the year isn’t over yet. Here are the 2016 oil and gas industry trends to look for during the rest of the year and beyond.

Low Oil & Gas Prices but Decreased Demand

Gas prices have been on the decline and will continue to fall during the remainder of the year and maybe into 2017.

With that said, consumer demand for natural gas is expected to increase through the rest of the year and into next year. The United States and the Middle East are expected to have the highest demands for 2016.

In other areas, however, demand for natural gas and oil is faltering. While prices remain low, changes within the economy in Europe and China are leading to overall decreased demand. Because of this, the price for a barrel of oil is likely to change in the near future.

Increased Production

Concerns about depleting the supply of natural gas and oil have lessened considerably in 2016. Increased fracking and new plants have made it possible to extract oil and natural gas from more places.

This has led to an increase in natural gas and oil supply all over the world. In fact, the US Energy Information Administration predicts that crude oil production in the Gulf of Mexico will increase from 1.5 million barrels per day to 1.9 million barrels per day by 2017. However, production in the United States is anticipated to drop by 1.2 million barrels per day.

Focus on Climate Change

The continuing focus on the environment and climate change has become one of the biggest oil and gas industry trends for 2016. Because of this, we’ve seen many companies adopt environmentally friendly production methods to reduce the world’s carbon footprint.

However, more stringent environmental regulations could pose problems for many plants in the future. These government regulations may force companies to change their ways of operation to decrease harmful emissions. But these restrictions would only pose short-term problems. Thanks to new advanced technologies, companies can implement efficient systems without sacrificing production.

Digital Technologies in the Industry

Perhaps the most interesting trend in oil and gas industry for 2016 is the increased focus on digital technologies. In a recent survey, many believe that digital technologies can add more value to companies.

According to McKinsey & Company, these technologies will provide monetary benefits to oil and gas companies. Their research showed that using digital technologies within the industry could reduce capital expenditures by up to 20%. On top of that, they could reduce operation cost in upstream by up to 5%.

Many companies have already adopted digital technologies such as cloud systems, the Internet of Things, and advanced analytics.

The year isn’t over for the oil and gas industry, but we can make a few predictions about the future. Based on the industry’s 2016 trends, the oil and gas sector will continue to deal with falling prices, increased production, and government regulations. Plus digital technologies will provide immense benefits to the sector.

For more information on industry trends, read our post on Challenges That the US Petrochemical Industry is Facing in 2016.