American Oil and Gas Reporter - March 2017 - 79

SpecialReport: Midstream & Infrastructure Update
produced from the Marcellus/Utica for
fractionation in the Gulf Coast.
Although clearly impacted by the
severity of the industrywide downturn,
gas and liquids infrastructure development
will continue to be robust in North America, particularly during the next four
years. However, no matter which of the
two analysis scenarios unfolds over the
coming two decades, total infrastructure
investments will be substantial-on the

order of $22 billion-$30 billion each year.
Historically, the industry has proven
its ability to finance and construct the
projected levels of pipeline and gathering
capacity build-out determined in this
study. In fact, the projected future investments are consistent with the industry's
investment levels in infrastructure development in recent years.
❒

tion's complete report on North American
infrastructure development needs can be
downloaded at www.ingaa.org/foundation/foundation-reports/27958.aspx. The
study was conducted by ICF International
on behalf of INGAA Foundation. The
authors acknowledge ICF International
colleagues Srirama Palagummi and Kevin
Greene for their contributions to the report.

Editor's Note: The INGAA Founda-

Industry Optimism Growing For 2017
HOUSTON-Despite the drawn-out
recovery, confidence in oil and gas industry
prosperity has risen over the past year
among its senior professionals, according
to research released by DNV GL. The
firm says 45 percent of U.S. respondents
feel confident in the industry's prospects
for the year ahead, compared with only
27 percent at the start of 2016.
Short-Term Agility, Long-Term Resilience is DNV GL's seventh annual
benchmark study on the outlook for the
oil and gas industry. The report, which
DNV GL says draws on a survey of 723
senior sector players globally, provides a
snapshot of industry confidence, priorities,
and concerns for the year ahead.
Throughout the U.S. market, DNV
GL reports, respondents indicate investments are spread across the value chain,
with 42 percent saying they are likely to
invest in the upstream, 45 percent in the
midstream, and 27 percent in downstream
for 2017. Notably, the firm points out,
73 percent believe gas will become an
increasingly important component of the
global energy mix over the next 10 years.
Peter Bjerager, executive vice president
and director of division Americas in DNV
GL Oil & Gas, comments, "We see the
U.S. oil and gas sector pushing opportunities and investments across the value
chain. This shows the market's ability to
adapt and build a more robust portfolio
as companies position operations for the
future. Our research echoes this and predicts a more positive outlook for the U.S.
market in the year ahead."
Over the past couple years, DNV GL
observes, there has been a strong focus
on the price of oil in relation to recovery.
The firm says its study shows that 45
percent of U.S. respondents expect the

average West Texas Intermediate/Brent
oil price will range between $60 and $70
a barrel, and 14 percent expect the price
to be above $70 a barrel, aligned with
global expectations.
"We are pleased to see that respondents
globally consider the United States and
Brazil to be the top countries (in which)
to invest for 2017," Bjerager remarks.
U.S. respondents indicate a strong
focus on both digitalization and subsea
as emerging technologies in 2017, DNV
GL mentions.
Industry Priorities
Despite the optimism for 2017, DNV
GL says cost management still is reported
as a high priority among 82 percent of respondents (down 4 percent from the 2016
survey), compared with 85 percent globally.
However, hard work paid off in 2016,
DNV GL suggests, revealing that 79 percent of U.S. respondents feel they successfully achieved cost efficiency targets.
Throughout the United States, DNV
GL says, the key cost cutting priorities
for 2017 include operating expenditures
(34 percent) and organizational restructuring (33 percent). These results aligned
with global responses, the firm notes.
"In the past two years, we saw intense
short-term cost-cutting measures throughout the industry," Bjerager observes.
"Though U.S. respondents have a stronger
belief that the worst of the downturn is
over, restructuring and reorganization are
still on the table to ensure growth and
competitiveness for the long run."
Other key findings of Short-Term Agility, Long-Term Resilience, DNV GL reports:
* 41 percent of U.S. respondents believe oil prices will rebound in 2017 versus

34 percent of respondents globally.
* 43 percent of U.S. respondents see
oversupply of oil and gas as a barrier to
industry growth, compared with 27 percent
of sector professionals globally.
* The grip on cost control dropped
from 65 percent in 2016 to 44 percent.
* The share of U.S. respondents expecting an increased focus on efficiency
of assets rose from 34 to 41 percent,
while the focus on extending assets' life
spans increased from 29 to 36 percent.
Both are slightly lower than the global
responses for 2017 of 47 and 39 percent,
respectively.
* Expectations for increased overall
head count remained stable at 14 percent.
* The focus on cost management as
a top priority in the United States in
2017 dropped markedly, going from 38
to 23 percent. This is a larger fall than
globally, which went from 41 to 34 percent.
* While OPEX and organizational
restructuring are the top key priorities in
2017 in both the United States and globally, there is less of a focus on collaboration
and supply chain savings in the United
States.
* 59 percent of respondents state that
cost pressures are driving companies to
collaborate with industry participants.
* 68 percent of U.S. respondents understand that their businesses will seek
to achieve greater standardization of tools
and processes during 2017, two percentage
points higher than globally.
Complimentary copies of Short-Term
Agility, Long-Term Resilience may be
downloaded at www.dnvgl.com/industryoutlook2017.
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MARCH 2017 79

http://www.ingaa.org/foundation/foundation-reports/27958.aspx http://www.ingaa.org/foundation/foundation-reports/27958.aspx http://www.dnvgl.com/industryoutlook2017 http://www.dnvgl.com/industryoutlook2017

American Oil and Gas Reporter - March 2017

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