A report recently published by Wood McKenzie has stated that 2014 could be a “pivotal” year for the gas and oil industry, while 2013 has been declared a mixed year.
The Wood McKenzie report, which was recently published, gives predictions for the year ahead for the gas and oil industry. The report was commissioned last year and could lead to changes in how the industry is regulated.
The report explains how capital investment in the gas and oil industry continued to grow during 2013, reaching a record £21.3 billion. However, there were also a lot of project delays that proved to be expensive, and the costs of some of the projects threatening to spin out of control meant they had to be delayed. Production failed to perform as well as it could, and there was a lack of exploration success.
However, 2014 looks set to be a much better year, according the report. It is predicted that there will be an increasing amount of UK-based deals throughout the next 12 months. In addition, the report highlighted the fact that there are “promising new fields due on-stream” for the year ahead.
One area of concern that was outlined was the lack of success in the UK exploration field. There are many issues affected exploration, one of them being that some companies are unable to gain adequate investment to fund the projects. However, with new announcements regarding gas exploration and a government push to develop shale production, this could change in the years’ ahead.
Gas and oil exploration wasn’t very productive in 2013 and the Wood Review explains that success in the exploration area combined with production performance will be essential for the longevity of the industry.
There was also plenty of optimism in the report for the year ahead, although the writers of the report urged caution. The analysts expect to see an increase in production in the UK and they are forecasting 14 new fields to come on stream.
However, there are concerns some companies might not reach these goals, as this is what has happened in previous years.
Another area that was discussed in the review is the potential impact of the Scottish referendum, which could lead to a split in the oil and gas assets of Scotland and the UK.
Final recommendations from the report will be delivered later this year.