US$380bn of new oil & gas projects missed

THE global oil and gas industry has shelved 68 major new projects worth up to US$380bn because of the continuing trend of falling oil prices.

An analysis by industry consultant Wood Mackenzie has shown a total of 68 projects worldwide have been deferred or delayed as the price of oil continues to fall. Oil is trading at US$31/bbl at time of publication, an 80% approximate decrease from the US$145/bbl peak in 2008.

Wood Mackenzie says despite pressure from corporate partners to reduce eventual long-term spending, oil companies will not free up capital to spend in the short term. It also says deepwater projects have been the hardest hit, with many projects being pushed back until 2017 or beyond if prices do not recover.

The analysis said, “Over the next five years, potential investment currently hangs in the balance, across these 68 projects. This is disproportionately weighted towards deepwater projects where half of new projects have been deferred.

“Deepwater is not being disregarded as a theme. A trend is evolving in which companies are taking time to re-work development solutions. Such changes take time to implement, but the need to improve deepwater development economics is strong.”

The analysis offers some positive news for chemical engineers. With investment likely to be kept low for the foreseeable future, Wood Mackenzie says companies are being forced to find new ways to develop their high-cost resource for low prices. This will encourage new innovation for standardisation.