NAPE, the nation’s premier conference for buying and selling oil and gas land, opened Wednesday at the downtown convention center with a rebound in attendance and renewed hope in the oil field.
After a rough summer session at the meeting formerly known as the North American Prospect Expo — attendance was about half the prior year’s — planners expect this winter’s session to attract about 10,000 people, matching attendance from a year ago.
The industry is recovering, said Robert Clarke, the conference’s first speaker and a director at energy research firm Wood Mackenzie. And that rebound, he said, will be “very aggressive.”
“We certainly think the days of really, really bad prices, in the $30s and low $40s, are behind us,” Clarke said.
Global demand will continue to rise, and by 1.4 million barrels per day, he said. Oil prices should improve over the year, Clarke said, and end at least a few dollars higher than the $53 per barrel U.S. prices settled at on Tuesday. Oil companies will continue to spend more on exploration: Wood Mac expected 3 percent global growth, to $450 billion.
And West Texas’ Permian Basin will continue to lead the charge.
“The amount of transactions going on in the Permian is absolutely breathtaking,” he said.
“But don’t think this recovery is just a Permian recovery,” he continued. “Because it’s not.”
Eight other U.S. plays, from North Dakota to Colorado to Pennsylvania, are set to receive more investment this year than last. In the last month, U.S. companies have added 82 rigs in the patch, the largest single month addition since early 2011, Clarke said. The SCOOP and STACK in Oklahoma added 17 rigs; South Texas’ Eagle ford grew by 11; East Texas’ Haynesville added five.
Still, there are consequences to all that growth, Clarke said. Drilling contractors are starting to charge more for their services, which got so low in the crash, many said they weren’t making money. Now Wood Mac is hearing stories of day rates rising by 20 to 30 percent.
The industry’s vaunted efficiency improvement could “pause” some, too, Clarke said.
All that may drive break-even costs up.