Future of Gun Drilling in Oil and Gas Sector

posted in: Technical Basics | 0

Although the oil and gas industry as a whole has seen significant growth in the past few years, the year 2015 hasn’t been any good for oil and gas workers who engage in drilling operations. The collapse in oil prices towards the end of last year was probably the worst thing that could have happened to the industry. Many outfield companies, both big and small, lost a lot of money and numerous companies had to lay out workers if they were to remain in business. A certain Southeast Asia company sent packing close to 6,000 of its global workforce.

In January 2015, a research company, Doulas Westwood, noted that most public oil drilling companies had lost more than half their value in the past one year. Despite this, the research company noted that if average prices of oil remain between $50 and $70 a barrel up to 2016, then the total number of wells drilled would in fact increase by 17 percent come 2020.

The biggest impediment to oil and gas drilling is the sheer cost. If you think about it from the cost perspective, then there is always a huge chance that a company is going to make a big loss. So, most companies are trying to cut costs. One research shows that currently, the money you would get from selling oil couldn’t even cover for drilling and production costs.

In fact, some companies have suspended drilling in some of their deep-water exploration projects. This trend was first witnessed in Mexico, North America, but has since spread to the Southeast Asia. Surely if you can’t make a profit from a business, then the best option is to find alternatives.

Mazalov, who works at a mining company in Malaysia, says that it costs about $90 to drill and produce a barrel of oil. Considering that it is virtually impossible to sell the produced oil at more than $90 a barrel, you immediately realize that these people aren’t making a single cent from their business.