What Will Happen to the Oil Industry in 2020?

The 2010s were a big decade for oil and gas, with highs like the discovery of Brazil's Libra oil field juxtaposing with lows such as the Deepwater Horizon disaster. So what's in store for the year to come? Looking forward, here's a glimpse at some of the trending projected outcomes for 2020.

• US domestic rig count to stabilise

For the first six months of 2020 analysts are expecting the US domestic rig count to stabilise, representing a welcome change from the steady fall seen during the last six months of 2019. This trend is expected to continue at least halfway into the year, when producers could revise their budgets.

• Small to medium-size bankruptcies to increase

Limited access to capital markets combined with volatile oil and gas prices could lead to an increasing number of small to medium sized producers facing bankruptcy in 2020.

• Increase in mergers and acquisitions

A by-product of increased bankruptcies could result in a spike in the number of mergers and acquisitions seen in 2020. This started to materialise in December 2019, with several significant acquisitions announced, including the US$2.5 billion purchase of Felix Energy by WPX Energy.

• Commodity prices stable but range-bound

The world is currently experiencing a surplus of oil and gas, which will keep commodity prices relatively stable in 2020. While this will mean no nasty surprises, it will also prevent oil and gas prices from making significant gains in 2020.

• Shale production on the rise

Despite the controversy surrounding shale drilling, the industry will continue to grow and evolve in 2020. A recent article published by Forbes predicts shale growth will make it difficult for crude to surpass the US$60 to US$65 a barrel price range it's currently confined to.

• US LNG exports to rise

Last September, the EIA reported the US had become a net exporter of oil for the first time in seven decades. With export capacity in the Gulf Coast and other port facilities set to continue to rise in 2020, this trend will likely endure.

• Isolation from Middle East events

Thanks to the rapidly escalating shale boom and the emergence of the United States as a major oil and gas exporter, tensions in the Middle East, including events like the Iranian missile attacks on Saudi oil infrastructure, will have a negligible impact on the global oil and gas market.

In 2020 the oil and gas industry will also welcome a stream of new technologies and innovations. For more information on the latest petrochemical advances, don't miss 'Sulphur analysis in aromatic and Naphtha hydrocarbon stream of petroleum products and crude oil.'