Oil & Gas Industry Resurgent in the U.S.

Aaron Hand is Managing Editor of Control Design and Industrial Networking. He joined Putman Media recently after almost 20 years covering high-tech industries, including semiconductor, photovoltaics and related manufacturing technologies. He has a B.A. in journalism from Indiana University, Bloomington, and an M.S. in journalism from the University of Illinois, Urbana-Champaign.

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As this week's Yokogawa Users Group meeting in New Orleans began its final day wrap-up, Pennwell's Nicole Durham offered up a 2013 energy outlook to the conference's many oil and gas industry attendees.

Durham is publisher of the Oil & Gas Financial Journal, so is hooked into the trends in the industry. As such, she delivered an overview of the factors shaping fossil fuel industries, as well as the economies built around them. They are industries going through considerable change, and are seeing renewed activity in the United States and other parts of the world. "These are very interesting times within the industry, and it does give us a whole lot to write about," Durham said.

A range of factors are shaping traditional energy markets, including what Durham calls an oil and gas renaissance in the United States. Technology advances paired with a desire for energy independence have driven oil production to 9.3 million barrels a day—up significantly from a presumed peak just a few years ago.

Natural gas production, too, is at an all time high. This has meant cheaper energy for individual households—and for industrial consumers. It also is bringing about a move to natural gas by electric utilities. If anything, oversupply is a current problem among gas producers, Durham, said, noting that gas companies are committed to spending more to produce gas than they can earn.

"We're finding natural gas everywhere." Nicole Durham, publisher of Oil & Gas Financial Journal, on the new availability of unconventional sources of natural gas.

Key technical developments bringing about the boost in production include advancements in horizontal drilling; multi-stage fracturing, in which a fluid is sent down an oil or gas well at high pressure to create cracks and channels through which hydrocarbons can be recovered.

Supply and Demand Growing

Besides having more ability to produce gas and oil in this country, there is also growing demand for the stuff. The global population is expected to reach 9 billion people around 2050. Much of the growth, Durham noted, is occurring in poor countries with energy challenges.

New supplies of natural gas may well help fill the gaps. What was previously considered a 50 to 60 year supply of gas in the United States is now thought to be enough to last about 200 years, Durham said, calling shale a "game-changer." The EIA predicts a natural gas "super spike" by 2016.

"We're finding natural gas everywhere," Durham said. "And this is not just happening in America. It's everywhere." She pointed to shale reserves in China, Argentina, Brazil, Mexico and other countries, "all of which are sitting on unknown quantities of gas," she added. "This could essentially provide some stability as well as economic recovery for those regions also."

Durham sees this as a win for infrastructure and refiners, and noted the impact that it could have on the U.S. trade deficit. "If all goes as planned, we will see a further reduction in energy imports," she said.