The oil and gas industry has been a crucial part of the global economy for decades, but it is facing numerous challenges in the 21st century. This article provides an overview of what we can expect from the future of oil and gas based on the latest research and industry trends.

The State of the Industry

1. The oil and gas industry experienced significant growth in 2022 [6].
2. The O&G industry will likely enter 2023 with its healthiest balance sheet yet and with continued capital discipline. 93% of O&G executives state they’re positive about the industry in the coming year [5].

Future Oil Prices

1. Approximately 70% of respondents expect oil prices to remain above $60 per barrel through 2024. That is significantly higher than reported in last year’s survey, in which the majority of investors projected an oil price between $40 and $60 per barrel [1].
2. If GDP growth recovers faster than expected, we may see a near-term price increase at more than $55/bbl. However, if demand recovers slower than expected or if OPEC+ stops cutting output, prices could be depressed or highly volatile for the next three to four years [3].
3. The EIA predicts that by 2025 Brent crude oil’s nominal price will rise to $67/b (in 2021 dollars). By 2030, world demand is seen driving Brent prices to $79/b. By 2040, prices are projected to be $84/b. By then, the cheap oil sources will have been exhausted, making it more expensive to extract oil. By 2050, oil prices could be $90/b [10].

Global Oil Demand

1. Global oil demand, still reeling from the effects of the pandemic, is unlikely to catch up with its pre-Covid trajectory. In 2020, the start of our forecast period, oil demand was nearly 9 mb/d below the level seen in 2019, and it is not expected to return to that level before 2023 [2].
2. Those who believe consumption has peaked still anticipate that gasoline consumption will rise in mid-2021, despite higher prices as a result of the inevitable lag between any demand-induced increase in crude oil production and the increase in refined products to meet demand [4].

Adapting to Change

The oil and gas industry is facing pressure to adapt to a changing world, with new technologies and decarbonization efforts shifting the focus away from traditional fossil fuels. Here are some of the key developments to watch for:

1. Transition to Renewable Energy: The oil and gas industry is making efforts to shift towards renewable energy, with many companies investing in solar, wind, and other renewable technologies [7].
2. Carbon Capture and Storage (CCS): Carbon capture and storage is a key technology for reducing emissions from the oil and gas industry. CCS involves capturing CO2 emissions from industrial processes and storing them underground [7].
3. Increased Focus on Efficiency: Companies are increasingly looking for ways to improve efficiency to reduce costs and emissions. This includes using digital technologies such as artificial intelligence and the internet of things to optimize operations [7].
4. Shift to Electric Vehicles: As electric vehicles become more popular, oil demand is expected to decline [9]. This trend is expected to accelerate as countries implement policies to reduce carbon emissions and support the transition to electric vehicles [7].

Challenges Facing the Industry

Despite the positive outlook for the industry, several challenges must be addressed to ensure long-term sustainability. These include:

1. Climate Change: The oil and gas industry is one of the largest contributors to climate change, and reducing emissions is crucial for the industry’s long-term viability. This will require significant investment in new technologies and a shift towards renewable energy sources [7].
2. Rig Decommissioning: Decommissioning ageing rigs is one of the biggest challenges facing the industry, with costs expected to reach $13 billion a year by 2040 [8].
3. Geopolitical Instability: Political instability in key oil-producing regions can cause significant disruption to the industry, leading to price spikes and supply shortages [3].

Conclusion

The future of the oil and gas industry is likely to be shaped by the industry’s efforts to adapt to a changing world, including an increased focus on renewable energy, carbon capture and storage, and efficiency. However, the industry will also face significant challenges, including the need to reduce emissions, decommission ageing rigs, and navigate geopolitical instability. By addressing these challenges and embracing new opportunities, the industry can continue to play a crucial role in the global economy.