Energy Blog

CAPEX is falling: but how much?




IHS Costs and Technology teams published their quarterly reviews of the Global and North America upstream spend providing a detailed overview of the past few months and forecasts for the future.

Below are executive summaries from the IHS bottom-up analysis of field development projects and wells in the North American and Global oil and gas industry. These reports provide the IHS forecast for nominal capital and operating spending with key activity indicators.

Download the free Global Upstream Spending sample report including table of contents and appendices. Visit the IHS Online Store store to purchase the full North America Upstream Spending and the Global Upstream Spending reports.

North American Upstream Spending

  • This year, IHS lowered its oil price forecast significantly, reflecting the greater-than-expected resilience of North American production, a weakening global demand growth, and a high OPEC output.
  • Unconventional oil and gas activities have collapsed in the region, with capex expected to drop another 35% in 2016 following a 50% fall in 2015.
  • The turning point will be in the second half of 2016. However, the recovery in spending and activity will be long and drawn out, with regional spending in 2020 to remain 28% below the peak levels observed in 2014.
  • Canadian oil sands spending in 2015–16 is, to some extent, maintained by ongoing projects. The market segment will reach a trough in 2019 as these projects are completed.

 

Global Upstream Spending

  • Globally, IHS lowered its oil price forecast significantly, again reflecting the greater-than-expected resilience of North American production, a weakening global demand growth, and a high OPEC output.
  • Global upstream E&P capital expenditures (capex) will fall 15% in 2016, compounding the 31% drop in 2015, led by declines in the North American region
  • Overall forecast capex within the 2015–19 time frame has now been reduced by USD2.0 trillion from the forecast before the collapse in oil prices.
  • OPEC’s spending remains much more resilient than its capex, with a cumulated decline of 13% from 2014 to 2016.

By Bjorn Hem, Principal Analyst, IHS Market Survey System

 

Download the free Global Upstream Spending sample report including table of contents and appendices. Visit the IHS Online Store to purchase the full North America Upstream Spending and the Global Upstream Spending reports.

 

About The Author

Principal Researcher

Bjorn Hem is a Principal Researcher with IHS' Market Survey System, working with the Cost and Strategic Sourcing Team. He was part of ODS-Petrodata which was acquired by IHS.

Prior to joining IHS, Hem worked as an analyst and consultant for the downstream oil and gas industry in PFC Energy in Paris. He also has one and a half years experience from management consulting. He holds a Masters in Management degree from SKEMA Business School, France, and a Bachelor with honours in Civil Engineering from Heriot-Watt University, Edinburgh, UK.

Within the Cost and Strategic Sourcing Team, Bjorn is part of the Market Survey System (MSS) and the Capital Cost Analysis Service (CCAS) teams. MSS delivers in-depth market analysis, including supply and demand forecasts, as well as detailed information on current and upcoming projects and trends within more than 30 specific market segments covered. In MSS, Bjorn covers the Industry Trends Market Analysis, which summarizes the outlook across all MSS Market Segments, and analyses emerging trends seen across the oil and gas industry. Bjorn is also the lead analyst for the IHS Upstream Spending Report and the IHS North American Upstream Spend ing Report which covers spending for the global upstream oil and gas industry. In CCAS, Bjorn is responsible for covering industrywide macro and procurement trends.