Perspectives

Oil and Gas Industry Outlook 2017

The slow path to recovery

What are the long-term impacts of the oil and gas downturn? What are the reasons to be positive for an oil and gas recovery? Read about the state of the industry in Deloitte’s 2017 Oil and Gas Outlook, a take from John England, US Energy & Resources leader and US and Americas Oil & Gas leader, Deloitte LLP.

Long-term impacts of the downturn

The impact of the extended oil price downturn will likely have long-term effects on the industry in a number of areas including capital allocation and people:

Capital allocation
The survival mentality in the oil and gas industry seems to have resulted in a mindset shift toward shorter-cycle projects. $620 billion of projects through 2020 are estimated to have been deferred or canceled as a result of the downturn, and the appetite for long-term and complex major capital projects has waned, despite a few notable exceptions. While this trend certainly seems to lower the risk of individual companies in the industry, it may pose some broader questions regarding energy supply and security. Where will supply come from in 2020 and beyond? Are there enough short-cycle projects to fill the supply gap? Will the capital markets support the long time horizons acquired to develop more complex projects?

People
Prior to June 2014, one of the common challenges facing the industry was talent. Would the industry find the skilled workforce needed to fulfill the potential of shale revolution as well as the growth in deepwater and related mainstream projects? In the wake of massive layoffs, these concerns seem very distant. However, the question for the industry is: Will the people come back to the industry when the recovery begins in force?

Download the outlook for further insight on long-term impacts of the oil and gas downturn.

John England's take on 2017

While I called 2016 the “year of tough decisions,” I’d characterize 2017 as “the slow road back.” Supply and demand balances are still slow to return to a sustained equilibrium, although the OPEC decision to cut production should help accelerate the drawdown of global oil inventories, even if OPEC countries do not completely deliver on their announced production cuts.

Overall, there are reasons to be positive and reasons to not be positive (I prefer this to “negative”) that largely offset each other. Thus, my view that we are on a slow path to recovery.

The oil and gas industry is incredibly resilient and has some of the brightest, most innovative people I have ever met. This is clearly what leads to my overall optimism about the industry for 2017 and beyond.

Download the outlook to read more about what the future may hold for 2017.

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2017 regulatory trends in energy

The 2016 election results may, over time, reshape the energy industry’s regulatory landscape. Some key regulatory areas, such as derivatives oversight, renewable energy tax credits, and environmental protection, face uncertainty. And time will tell how these events may impact the industry. The issues included in this year’s report provide a starting point for an important dialogue about future regulatory challenges and opportunities.

Access the full report for a deeper look at these trends.

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Energy Regulatory Outlook

Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

Discover more Industry Outlooks.

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