A majority of oil and natural gas company executives polled in a survey released Wednesday expect a net decrease in rig deployment next year compared with 2016 levels, as spending by operators slides amid a forecast that US commodity prices will remain cheap.
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The survey by consulting firm Deloitte of over 250 industry professionals highlights the uncertainty producers, processors, pipelines and exporters see in the energy sector heading into 2018, even as the Trump administration promises new opportunities for projects.
Half of upstream oil and gas executives surveyed expect up to a 10% decline in capital expenditures next year versus last year, including 4 in 10 expecting exploration spending to fall, Deloitte said. Some 58% expect a net decrease in rig deployment.
On the midstream side, 56% of executives expect a decrease in capital expenditures in 2018 versus 2016, while only one in eight expect an increase over the next year, the survey found. Pipelines are seen as the best opportunity for growth in 2018, with the Gulf Coast seen as the most enticing region. Top prospects include expanding into new markets such as LNG.
Still, executives surveyed expressed concerns about environmental issues, controlling costs and existing regulations.
"The protracted holding pattern we've been in for the last two years seems to have shaken executives' confidence in every sector -- upstream, midstream and downstream," said John England, a Deloitte vice chairman and leader in the firm's US energy and resources unit, in a statement. "As the industry hunkers down to focus on cost reduction and productivity, one silver lining may be a drive to the next wave of digital technology adoption to uncover new efficiencies important to success."
Other findings of the survey include:
* Almost half of respondents expect Henry Hub natural gas to be between $2.50-$3/MMBtu in 2017, with price increases expected for 2018, and into 2020, up to $3.50/MMBtu.
* Oilfield services is seen as the sector with the greatest potential for increased mergers and acquisition activity, followed by upstream exploration and production, integrated oil and midstream.
--Harry Weber, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com