Investment in natural gas loses its shine

Evaluate Energy

Richard Krijgsman

Evaluate Energy

Total upstream capital spending continued to rise in 2013, but while investment in oil-related projects is up, capital spending in upstream natural gas is falling. What’s more, the overall rate of increase in upstream capital spending is losing momentum, prompting the question of whether we are seeing the early signs of a cyclical downturn in capital spending following a decade of strong growth.

That is according to an Evaluate Energy analysis of the latest company capex data for 2013. This analysis adds more granularity to the EIA’s analysis of upstream capital spending that used Evaluate Energy’s data last month.

Companies do not generally report the split between capex on oil vs gas related projects. So Evaluate Energy has created a couple of peer groups for this analysis: one oil-weighted group of 85 companies whose oil production forms more than 75% of their total oil and gas output and another gas-weighted group of 29 companies whose natural gas production forms more than 75% of their output.

For the purposes of this report, the company has studied the capex of the oil-weighted group since 2007. These companies accounted for $250 billion of capex in 2013 and their total capex has been rising in absolute terms in recent years. However, the rate of growth in oil capex has been slowing, a trend that looks like it will continue as margins continue to be squeezed.

For the gas-weighted group, both the rate of growth and the absolute level of capex have been falling. As many of the companies in this group are based in the US, this trend partly reflects the downturn in gas-focused capital projects as gas prices remain low.

05/20/2014

Evaluate Energy

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...