Manup Industry Roundup - W0623: NEWSL -01
Good morning!
Global oil and gas suppliers look set to echo the biblical story about the Egyptian pharaoh’s dream of seven years of feast and seven years of famine – only in the opposite order. All signs point towards 2022 being the start of another super cycle for the energy services sector.?Rystad Energy?expects the global market for oil and gas contractors to rise to a peak of $1 trillion in 2025 and remain at high levels for several years thereafter.
Below are the oil and gas stories and news that made headlines this week carefully curated by?Manup.
Summary of the news
Rystad Energy: Energy Services Sector Set To Grow To $1 Trillion By 2025
The global market for oil and gas contractors is expected to rise to a peak of US$1 trillion in 2025 and remain at high levels for several years thereafter, according to Rystad Energy
Helped by strong growth in the midstream part of the industry to liquefy, transport, and re-gasify natural gas, overall oil and gas spending is?forecast to stay above US$920bn annually?on average for the 2022-2028 period, according to the energy consultancy.
Despite the risk that another downturn cycle in oil and gas may occur after 2025, oilfield service suppliers should be able to branch out into other parts of the wider energy market –within geothermal energy, hydrogen, offshore wind, and carbon capture, utilisation and storage.
Together with oilfield services, this expansion into other energy areas could provide a?US$1 trillion market for suppliers by 2025, which could be sustained for several years after that.
Overall utilization is improving rapidly as suppliers are careful not to over-invest in more capacity, which has driven up prices for offshore rigs, land rigs, frac fleets, proppant, OCTG, vessels, and subsea infrastructure to levels not seen in a decade.
“All signs point towards 2022 being the start of another super cycle for the energy services sector,” said Audun Martinsen, partner and head of energy service research at Rystad Energy.
Last year was a turning point, with the post-pandemic recovery and record high gas prices and strong oil prices, allowing oil and gas companies to?lift their oil and gas investments by 20%.
Energy security concerns prompted petroleum producers to raise production and contract goods and services from suppliers, and the oilfield service industry was quickly sold out of fracking fleets, rigs, and casing and tubing steel. The prices that suppliers could charge surged by double-digit percentages, allowing EBITDA margins to climb.
“After the rebound in 2022 we are entering a very promising 2023, with potential for?13% growth?for oil and gas investments and?10%?for low-carbon investments,” commented Rystad.
Lukoil Hits 50 Million Tons Of Hydrocarbon Production In Caspian Sea
Russian oil and gas company Lukoil has reached 50 million tons of liquid hydrocarbon production in the Russian sector of the Caspian Sea.
Lukoil said that it discovered 11 fields in the Caspian Sea so far. The first one, named after Yury Korchagin, was discovered in 2000 and launched in 2010.
In 2005, Lukoil discovered the Vladimir Filanovsky field with initial recoverable reserves of 129 million tons of oil and 30 bcm of gas. It became the largest geological discovery in the post-Soviet Russia. Commercial production at the field began in 2016.
The company continues development of the Valery Grayfer field. Its plateau level is expected to exceed 1 million tons of oil per year.
Following drilling and testing of prospecting wells in 2022, a large gas condensate Khazri field was discovered. This year, Lukoil plans to submit to the Russian national register data on a huge oil and gas condensate field named after one of the company’s founders Ravil Maganov. The Yury Kuvykin field is also a potentially prospective production area.
It is worth noting that Lukoil is one of the largest oil and gas vertical integrated companies in the world accounting for over 2% of crude production and circa 1% of proved hydrocarbon reserves globally.
Lukoil has a full production cycle to control the entire value chain from upstream to downstream. According to data provided by Lukoil, the company employs over 110 thousand people.
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Stena Drilling Wins Contract For Its Stena Spey Offshore Rig
Offshore drilling company Stena Drilling has signed a new drilling contract with the oil and gas company Ithaca Energy in the UK.
The contract is for Stena Drilling's Stena Spey midwater semi-submersible drilling rig. Under the contract with Ithaca Energy, the operations for the rig on the UK Continental Shelf is due to commence between 1st June 2023 and 1st September 2023 for a firm scope of one well.
According to the rig's AIS, the Stena Spey is currently at anchor in Scapa Flow off the north coast of Scotland
Back in February last year, the rig won a contract with TotalEnergies for a stint on the UKCS between 16 March 2022 and 15 April 2022.
Prior to this, the Stena Spey rig was used for the decommissioning campaign of the Kinsale area gas fields located off Ireland. The campaign, which started in mid-April 2021 following the arrival of the rig, ran through to November 2021.
According to report by Wood Mackenzie, there were 25 semi-submersible drilling rigs in Europe, of which 18 were under contract and seven were available. Also, according to Woodmac, global average day rates for midwater floaters were around $200,600.
Workforce Watch
Energy Workforce & Technology Council: Oilfield Services Employment Highest Since March 2020
Employment in the U.S. oilfield services and equipment sector rose by an estimated 3,069 jobs to 652,090 in January, according to preliminary data from the Bureau of Labor Statistics (BLS) after adjustments to December numbers and analysis by the Energy Workforce & Technology Council (Energy Workforce).
December adjusted number of 649,022 is down slightly from the preliminary number of 650,587. Gains in November were made in four of the seven categories tracked by Energy Workforce.
The January increases make OFS employment the highest since March 2020, and continues to reach closer to the pre-pandemic numbers in February 2020 of 706,528. Overall, U.S. employers added 517,000 jobs, exceeding expectations and significantly higher than the 260,000 gains in December.
The participation rate remained relatively unchanged with a minimal increase to 62.4% in January. The overall unemployment rate dropped to 3.4%, the lowest level in 53 years. Leisure and hospitality employers led the January increases by adding 128,000 jobs, while construction (+25,000) and manufacturing (+19,000) added the fewest jobs.
January State-by-State Breakdown
Other stories we are following…