In the previous post, preview on oil and gas price in 2018 was focused on the upstream business, which is predicted to get busier, stronger oil price, and booming midstream industry. Of course, that is not all. Some analysts still have more. Not all of them have positive meaning. The following are some clearer descriptions on the preview of oil price and natural gas price throughout 2018.
More Previews on Oil and Gas Price in 2018
Oklahoma’s Government Will Mess Up SCOOP/STACK
The discovery of world-class resource play in Oklahoma, namely SCOOP and STACK areas, has made the state a central point of attention. It seems that the state government wants to mess up things. This is evident from the increasing intensity of drilling activities and increasing number of oilrigs in the region in the last two years.
SCOOP and STACK areas have been successful in attracting major investments with its production tax structure. The initial tax was only 2%. However, the problems related to budget deficit had forced the legislature to raise the tax rate back to its former 7%. If that happens, there will be decreased amount of capital dollars for investments, since the companies have to pay more for tax.
Natural Gas-Based Manufacturing Is Booming
Manufacturing industry, which is based upon natural gas, such as petrochemical is booming and it is expected to keep booming throughout the year. As reported by the American Chemistry Council in December 2017, the low price and abundant amount of natural gas jas resulted in the increase of investment in petrochemical plant and related equipment.
In other words, there will have been additional 822.000 jobs by 2025. It is expected that the number of natural gas based manufacture will grow even more throughout 2018, since the price of natural gas will not increase soon.
Export of Oil and Natural Gas Will Increase
In 2017, export of domestic crude oil increased by two folds. According to the US Energy Information Administration (EIA), it will double again in the coming two years. The increasing volume of export came primarily from Eagle Ford Shale and Permain Basin. The trend will continue in 2018.
On the other hand, some businesses are predicted to come online this year. They include new LNG export terminals located at Elba Island, LA, Cameron, Freeport, and GA. These will contribute to an increase of export capacity by at least 2 billion feet per day by the end of 2018.
Energy Production and Export Will be Supported by Federal Public Policy
It may not be difficult to see how this will happen. It is true that the Trump Administration has implemented so many favorable public policy decisions this year. It is easy to predict that the government will take more policy actions to maximize energy production and increase export capacity in 2018.
Given the previews of oil and gas price in 2018 above, it seems that next year will be the strongest moment for US oil and gas industry. The last time it got the same strength was in 2013. This is certainly good news, and many economists also expect the same.