Low oil prices translate to a rapid drop in production. They will also lead to a series of secondary effects such as debt defaults from deflation, loss of jobs, collapse of oil exporters, and loss of credit needed for exports. These will eventually lead to a rapid decline in oil production. In addition, secondary and tertiary recovery, specifically enhanced oil recovery, will be out of reach. I feel the industry needs to reinvent itself. It needs to think out of the box and make use of novel ideas and technology to maneuver during the challenging time.
There is no doubt that horizontal and complex-geometry wells have contributed significantly to the reliable supply of affordable energy, resulting in improvements to the quality of life of people around the globe. Now, with lower commodity prices and uncertainty over the timing of price recovery, the entire supply chain is squeezed. The challenge has moved to improve efficiency while maintaining a robust, nonnegotiable focus on safety and environmental responsibility.
Conventional wisdom implies that natural-gas demand will continue to grow, especially in locations where coal is being phased out, nuclear growth has slowed/reversed, and renewables remain a small and intermittent energy source for the foreseeable future. The underlying fundamentals may tell another story: liquefied natural gas (LNG) plants in progress will increase supply by 122 million t/a by 2020, while LNG demand is expected to grow much slower.
The oil- and gas-production industry has experienced dramatic price swings over the past year. Crude-oil (spot) prices have varied from more than USD 120/bbl to less than USD 40/bbl since the third quarter of 2014. In high-price environments, technology can be developed economically to exploit additional resources. In low-price environments, technology must be deployed selectively to optimize production. New technology may still be developed and applied, but it is likely to be very focused on reducing operating costs. Or, existing technologies may be revisited, to be applied more effectively.