Oil and Gas Predictions for 2018
Hey, folks it’s that time…Oil and Gas Predictions for 2018.
We’ve done this since 2014 (2015, 2016, 2017), and we went back and looked and we have about a 75% success ratio. Which is actually pretty good, considering we aren’t professional analysts. But we do get this information from our clients and also the research we do all year long. So are you ready?
Number one. Online searches. Up until recently it didn’t matter if your company made 1-inch ball valves, if you showed up on Google. Surprisingly we’ve done the research and from 2014 to the end of 2016, online supply chain searches in oil and gas globally have grown 1700%. That’s right, 1700%.
Why? The old guy in the warehouse who knew where the 1-inch ball valves were, he didn’t go online and look for anything. If his boss told him to get some, he had vendor A, B, and C because he’s played golf with them for the past twenty years. They went out drinking, dinner, hunting, fishing and so on. So he knew where to get the ball valves. And if for some reason his vendors couldn’t supply him, he had a stack of paper catalogs he’d looked through. Well now he is gone. He’s taken the package or he’s retired. The new young person right out of school that took his job, when his boss says get me 1-inch ball valves, first thing he does is look for it on Google.
If your company doesn’t have a strategy to show up in organic search — searches for whatever your company does. Whether it’s a process, a service, parts, whatever. If you don’t show up in online searches, that it’s going to start hurting your business now. And you’re going to lose large chunks of your business in the future.
Online Searches-Vital for Oil and Gas Predictions for 2018
I know several large (and I mean really large) oil and gas service companies that are aware of this, and they’re working on it right now. Now the cool thing is if you’re a small company, you can pull ahead of these larger companies. If you go online right now and search for oil and gas sales experts, you’ll see me, modalpoint dominate huge multi-billion dollar companies, because we understand the importance of this. If you want to see some really extra cool, go search for oil and gas speaker and see who comes up number one. So that’s the first one for Oil and Gas Predictions for 2018, online searches.
Number two. This new younger workforce; they act and think differently. We talked about number one. This new younger workforce is coming in and they’re going to expect consumer grade technology. No matter how well you treat them, no matter what type of path to future success they have, they’re not work for your company for 20 or 30 years because they want different work experiences. Just the paycheck isn’t enough for them. They want to make a difference and they want to understand what’s going on, and play a part.
So this new younger workforce is coming in and it’s coming very fast. Right now, about 33% of the oil and gas workforce here and Europe are under the age of 35. In five years, this will be 70%. You have no choice, they’re coming and that’s who’s going to be running our industry. You got to get used to it, but that’s one of our oil and gas predictions for 2018.
Labor Shortage (No Really)
And then, everybody is going to think I’m crazy. Remember, last year I called the — the inflation on land at the very end of 2017 which is going on right now, so we got that one right.
So number three. Labor shortage. Yeah. Yeah. Yeah. I know we’ve had a bunch of layoffs in industry especially upstream and the service companies, but we’re facing a labor shortage; skilled labor, unskilled labor, managerial, project managers, engineers. There are simply not enough young people going to school to supply the need that we have.
So, one of two things are going to happen. You will see a price war breakout, which is never good for our industry. Or we’re going to have to look at ways of running our business with less people, and that’s an interesting way to go. We think there’s going to be a technology play there so we are keeping an eye on that. So, number three is labor shortages.
Number four for Oil and Gas Predictions for 2018. Changing buyer behavior. If you’ve been in sales in oil and gas, you’ve always looked for the “decision-maker”. Well he doesn’t exist anymore. It’s now a decision making team. And what used to be a linear track from discovery to close is now all convoluted, because all the different decisions have to be made by different groups of different people. If your sales and marketing organization doesn’t understand how that’s changing, you’re going to get left behind. So change in buyer behavior is number four.
Then, number five. We’ve hit the valley of negative public perception. We think 2018 the public perception of oil and gas (which is not good right now) will hit rock bottom. It’s interesting, of the millennials about 13% think of oil and gas in a positive way. The generation, the one right behind them, it’s a negative 3.5%. Come on people, as an industry we have to change that.
We have several oil and gas podcast and that’s our mission on the podcast. Its to help change the young people in the world’s opinion of this great industry (see bottom of this page). And we think in 2018, we’re going to hit the bottom of that negative public perception. And then we will start coming back up. We’re starting to finally understand how to use social media. And the world at large is starting to understand the prosperity that we bring with cheap, abundant, reliable energy. So rock bottom public perception and starting to reverse that trend is an Oil and Gas Predictions for 2018.
Oil and Gas Predictions for 2018 – New Business Models
Then new business models. Come on, Schlumberger is now an operator? You have pipeline companies that are actually standing up ethylene crackers. The world of oil and gas is changing and there’s these new business model that companies are trying. If you think about Schlumberger forming joint ventures with NOCs, what they are doing is testing the waters. They do that all the time (think OneSubsea). And once they get it figured out, then they’ll go full-blown and become an operator as one of their business units.
Imagine Schlumberger is an operator. Number one they can sell their services at cutthroat prices, which reduces the overhead of those wells, which means they can make money where anybody else can’t. Or they can keep their services the same, but make sure they provide the on time and help that operator which it would actually allow Schlumberger to produce oil in a more economical way. Either way they win, so they’re mitigating their risk by becoming an operator. That is really cool. And like I said, there’s a whole bunch of different models being tried and this is something new for oil and gas in 2018.
Then finally, number seven. We’re having confidence in upstream sector. Prices are still low and prices are going to stay relatively low forever. That $50 to $65 price range, but we’ve driven so many inefficiencies out of the system that we are now comfortable with that price range. So investors, upstream companies, the NOC’s, the majors, the super majors, they’re starting to spend money again in upstream. They’re not going to do silly stuff and land still rules, but you’re seeing that confidence come back in upstream which is good for everybody.
Then, pay attention. Here in the U.S. we’re going to have a boom in midstream; pipelines, tankers, rail, etc? Look at all the pipelines being built in the Permian. Why? Because it drives efficiencies and it’s safer for the environment. Plus it makes it a more predictable model not just to move the crude that you get out of ground, but to remove around the fresh water you need, to move the produced water to move around natural gas.
There’s a whole Renaissance of new pipelines being built in the U.S. and you need to get ahead and understand it because it’s number eight Oil and Gas Predictions of 2018.
NGL’s Will be Huge
Then NGL (natural gas liquids) they’re going to be huge. As we increase our production the world has an appetite for our NGLs. NGLs things like butane, pentane, propane and we are producing the begebe’s out of NGL’s and we are selling it to the rest of the world at very high margins. That’s stuff we use to almost just throw away, we are now selling and making very healthy margin on. So NGLs are going to be a huge business boom and are part of our Oil and Gas Predictions for 2018
Now I called this wrong in 2015. But I’m going to call it again and put my neck on the line. Number ten for Oil and Gas Predictions 2018, Mergers and acquisitions. I think the M&A activities will go through the roof in 2018. I think you can see large service companies combined to join forces. I think you will see a lot of independents combining. I think you’re going to see companies that just to be used thought of a technology company buying bits of oil and gas because they know they can make money out of it. I think the M&A activity for 2018 is going to be crazy and that’s just good for everybody.
All right. So, I just rattled off our ten Oil and Gas predictions for 2018. Can you do me a favor if you found it useful, can you share this? You know forward it to a friend, do the all company e-mail, post it on Twitter, whatever.
But this is our predictions for 2018. I hope you found it valuable. And like I said we have the podcast. I’ll put a link in the show notes so you can go check those out. We have a bunch more in the works. And we’re really building this Oil and Gas Global Network media super power in oil and gas. Its fun and we’re making a difference. So, go check that out as well.