Since the summer of 2014, energy prices have fallen to less than half levels seen in March 2014.
While some investors may be warned off by the pump value of oil and natural gas, the present
and future of U.S. energy production has never been brighter.
Exploration companies and energy sector investors see current world energy use and production
in light of the following factors.
Falling Demand for Oil
Even though the U.S. recession has all but ended, oil use has not recovered along with the economy.
Since November 2007, vehicle miles driven fell by more than 03.6 percent.
In addition, sales of hybrid and clean-diesel vehicles have increased.
The U.S. has about 3.5 million hybrids on the road today.
Sales of clean-diesel cars increased 25 percent from January to June 2014, while total car sales
were only up a little more than 4 percent.
Demand in the rest of the developed world has also slowed.
Energy consumption growth gained only 0.9 percent in 2014, although recent patterns would have
suggested about a 02.3 percent growth.
2014 was not singular: 2012 grew at 01.4 percent and 2013 at 01.8 percent.
For example, China would have expected increased energy consumption of 07.5 percent annually.
Instead, because their world customer based has slowed, consumption rates lagged at 04.3 percent
in 2012, 03.7 percent in 2013 and 02.6 percent in 2014.
Whether from dampened economic activity or greater efficiency, the fact remains that demand is
growing at much slower rates.
Increased Production
U.S. energy production capability has skyrocketed.
It has escaped no one’s notice that U.S. oil and natural gas production has skyrocketed in the past
decade, more than 50 percent since 2005.
In the first decade of the century, the U.S. pumped almost 5 million barrels (including both oil and
natural gas) each day.
By the end of 2014, that rose to more than 9 million.
Some have suggested that the U.S. could become energy self-sufficient within 10 years.
And, while oil rig counts are still down (more than 49 percent from October 2014 to the end of
March 2015), the efficiency of oil extraction has risen sharply to compensate.
Drilling efficiency in the Bakken field of Texas rose more than 50 percent from 2011 to 2013;
in Eagle Ford, the figure was 38 percent from 2012 to 2014.
Increased Efficiency
The average rig today can drill more wells because of pad drilling; that is, drilling more wells from
the same site on the surface without having to reposition the rig.
Older, less efficient rigs will be removed and replaced by the newer technology, leading to an
expected increase in efficiency even while rig numbers continue to fall.
Using this and other new technologies, energy producers can revisit old and previously considered
“played out” fields.
These once dead wells can be brought back to life with minimal investment in time and money.
These fields and wells are an exciting investment opportunity for energy sector companies such
While the face of energy exploration, production and supply has changed rapidly, investment
opportunities still abound.
While the wildcatting days may not be dead, they are certainly changed.
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