From Tulsa World
The state’s oil and gas industry showed signs of stabilizing in 2017 after rough years marked by the 2014 crash in the price of oil.
Area oil and gas executives believe that 2018 might be the year that the industry catches its breath. That’s because oil prices have moved above $60 a barrel, which came as somewhat of a surprise as many were prepared for prices to remain about $50.
“I think overall it’s setting up to be a pretty positive year with some help on the front end from pricing,” said Alan Armstrong, president and CEO of Williams Cos. “There is a sigh of relief from the oil industry in general to see higher prices.”
The rise in price should be a big boon to the state’s producers.
Armstrong also expects to see a lot of response in places like the Permian Basin (west Texas) and the Bakken (Montana and North Dakota).
“I think everyone is holding their breath wondering how long those higher prices will last,” Armstrong said. “The higher the prices the more will get produced so it’s a matter of time before the market is saturated, bringing those prices back down.”
Many of the producers Armstrong has talked to are planning on living within their cash flows and will not be going into public equity markets or debt markets to produce.
Rick Muncrief, chairman and CEO of WPX Energy, said his company is taking a cautious approach to growth this year.
“We are feeling pretty optimistic but also being thoughtful. We’ve been through some tough times and are trying to keep it in check and stay disciplined,” he said.
WPX, an oil and gas exploration company based in Tulsa, operates in North Dakota, New Mexico and Texas.
“If you step back and look at a macro level you’ll see the U.S. producing 10 million barrels of oil a day. We have been there since 1970 and we’re seeing more growth along the way,” Muncrief said. “This will be great for U.S. jobs and consumers because the global oil demand is still very strong and if it not for U.S. development, I’m not sure what prices would do. I’m not sure OPEC could keep up with demand.”
Carlin Conner, president and CEO of SemGroup, said continued record-level production is proof of the industry’s resiliency.
“Oklahoma produces over 5 percent of total U.S. oil production, hence we will continue to see investment in our E&P and midstream sectors,” Conner said. “I believe it is important that the industry is proactive in partnering with other economic and community stakeholders to ensure that we are operating safely and protecting the environment while generating economic value.”
He added that new exports of crude oil and growing existing exports of other hydrocarbons will allow the industry to develop new outlets and “demand sinks” that will support increased domestic production and manufacturing.
“SemGroup is seeing this trend first hand with our recent acquisition of a major oil storage and transportation terminal on the Houston Ship Channel. In addition, technology and operating cost optimization will make the industry even stronger and more resilient,” he said.
Natural gas, Armstrong said, is continuing to be very low priced even cold temperatures in parts of the country temporarily driving up the price.
“There is so much confidence in the producers’ ability to get gas out of the ground at a low cost it is continuing to stay very low on a long-term basis,” Armstrong said.
The price of natural gas nearly reached $3.50 for February on NYMEX futures, but looking out for one to five years, the price goes right back down to about the $3 range.
“That’s a real positive thing,” Armstrong said. “That means demand for natural gas is going to continue to stay strong.”
Maintaining low natural gas cost in the long term might not necessarily be the best thing for producers, it does mean that low-cost manufacturers of gas will be successful, Armstrong added.
Confidence in the United States’ ability to produce gas at a low cost is resulting in several LNG projects coming about, which is another positive, Armstrong said.
