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107
Industry Overview
OIL & GAS
GE enables reliable, safe and highly efficient processes across
Oil & Gas operations
The Oil & Gas industry is facing downward commodity price pressures unseen in 30 years. In the second half of 2014, the Oil & Gas industry saw a 40% decline in
the price of oil. This dramatic shift is driving a need for improved efficiency in existing operations to preserve margins and maintain reinvestment rates. Operators
are also challenged with maintaining a reliable supply of power. Situated in sprawling facilities, refineries are especially heavy power users. Expensive electrical
assets run continuous processes involving distillation towers, processing tanks and pumps. Downtime of this equipment costs operators millions per day. The Oil
& Gas industry needs a bold new vision for unlocking hidden value and unprecedented productivity gains from the reservoir to the refinery.
BRENT PRICE PROJECTIONS
PLANNING FOR A WIDE RANGE OF
SCENARIOS
BRENT PRICE AFTER HISTORIC PEAKS
PRICE FALL LONGER THAN PREVIOUS
CYCLES
FACTS & FIGURES
110
100
90
80
70
60
50
40
30
20
10
0
120
110
100
90
80
70
60
50
40
30
20
1Q14
0 2 4 6 8 10 12 14 16 18 20 22 24
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
$/BBL
(quarterly average)
Brent price
peak = 100
Months of the peak
time
‘97 - ‘00
‘85 - ‘88
‘07 - ‘11
Range of
forecasts
Range of analyst forecasts
Dec ‘15 - Feb ‘16
$26 Jan 20th
‘14 - ‘16 to date
Slow recovery
Sustained Downturn
Futures Mar 24th
1
50% UP TO 10%
DAY OF LNG PRODUCTION LOSS
CAN IMPACT UP TO $5-7M
IN REVENUES PER DAY
OF SKILLED OIL & GAS WORKERS
ARE EXPECTED TO RETIRE IN THE
NEXT 5-7 YEARS
CAPEX REDUCTION THROUGH GE’S
ELECTRICAL AND MECHANICAL
INTEGRATION
108
UPSTREAM CAPEX PROFILE
DOWNSTREAM CAPEX PROFILE
Upstream
With limited resources and funding, oil and gas companies are faced with
a challenging predicament and must determine a way to invest for future
demand in a more deliberate and productive manner. By the end of 2016,
exploration and production (E&P) capex in the upstream space is expected
to be down over 35% since the peak of $673B spend in 2014. Furthermore,
a slow recovery is predicted and a return to 2014 spending levels is not
expected until the next decade. While production and well count are down
globally, the Middle East market has remained resilient with 2017 E&P
expected to increase by 3%. As oil prices begin to recover and grow above
$50 per barrel, onshore shale investment and production in the United States
is expected to rebound. Subsea and Offshore activities, as well as Onshore
activities outside of North America and the Middle East, are anticipated to
face a longer and more challenging recovery cycle as more risky project
funding is delayed or halted altogether.
Midstream & Downstream
Although an imbalance between supply and demand has caused significant
turmoil related to oil prices in recent years, long term demand for oil will
remain. As economic development and urbanization occur, there will
continue to be an ongoing need for efficient distribution of oil to end users.
As a result, the less volatile downstream and pipeline markets are expected
to see continued growth over the coming years. An offset to this effect is
the emergence of alternative energy sources and increased regulation that
support a corresponding need for operational efficiency in downstream and
pipeline technology.
Developments in Oil & Gas
BETTER PROJECT EXECUTION, LOWER COST AND INCREASED PRODUCTIVITY
($B)
($B)
time
Slow recovery
Sustained Downturn
‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19
Petrochems
+2% CAGR
+10% CAGR
Refinery
42
28
14
28
16
29
17
29
17
29
20
29
25
29
26
29
27
30
27
30
28
30
29
44 46 46 46
54 55 56 57 58 59
‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19
700
650
600
550
500
450
400
350
404
466
527
614
651
673
510
412
429 381 371 374
556
491
439