US oil and gas executives agree structural shift is underway in industry
Houston, 18 October 2016
EY Energy Executive Insight Session discussion focuses on disruption and 2016 election impact
Oil and gas leaders that gathered in Houston on Wednesday at the EY Energy Executive Insight Session (EEIS) agreed that the current downturn calls for a structural shift in the industry.
Key topics discussed included shale’s role in the global market, continued innovation and transformation across the industry and expectations for energy policy after the 2016 election.
“Unconventionals have already changed the energy picture both in the US and abroad,” said Deborah Byers, US Energy Leader, Ernst & Young LLP. “However, innovative and entrepreneurial US oil and gas companies are continuing to transform during the downturn. They are leveraging technology, digital and other efficiencies to rapidly improve exploration and production economics as well as boost company performance. At the same time, shale — which is much more price responsive than traditional supply — is lending stability to the market.”
For exploration and production companies, key issues discussed included the need to boost capital efficiency, target superior resources bases, and secure more barrels per dollar. Panelists pointed to seismic technology, digitization of data, enhanced oil recovery as well as increased activity in resource bases like the Permian Basin as examples of these trends.
Flexibility led the discussion for midstream companies. Panelists explained that midstream operators have the challenge of planning and investing in systems to transport increased production, like in the Permian, while recognizing that production may surge and then balance or may shift to a different geography depending on price.
With elections looming, potential legislation and regulation was another hot topic throughout the event. During a morning keynote, Senator Orrin Hatch, R-Utah, addressed the Senate Finance Committee’s post-election priorities, such as tax reform and trade policy.
“There is tremendous optimism about the innovation the industry has already leveraged to transform the global supply dynamic and overcome low oil, but policy that enables instead of hampers energy industry development is essential going forward,” Byers said. “Staying abreast of policy changes will be critical for oil and gas companies as they seek to ensure both compliance and competitiveness.”
EY released a new report at EEIS on the energy and tax policy positions of the Democratic nominee, Hillary Clinton, and the Republican nominee, Donald Trump. Election 2016 and its impact on energy policy also addresses key regulations companies in the oil and gas, power and utilities and mining and metals sectors should we watchful of. More information is available at ey.com/oilandgas/USpolicy.
EEIS speakers included Orrin Hatch, president pro tempore, U.S. Senate; and Adam Sieminski, Administrator, U.S. Energy Information Administration. The panel, moderated by Byers, featured: Dan Borgen, Chairman, CEO and President, USD Group; John Mingé, Chairman and President, BP America; Scott Sheffield, Chairman and CEO, Pioneer Natural Resources; and Ken Medlock, Senior Director, Center for Energy Studies, Rice University’s Baker Policy Institute.
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This news release has been issued by Ernst & Young LLP, a member firm of EY serving clients in the US.
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