Surviving the Downturn: Oil Executives See Continued Tough Times Ahead
Authors: Jacobs Trent , Rassenfoss Stephen , Parshall Joel 
Published: January 2017

Surviving the Downturn: Oil Executives See Continued Tough Times Ahead
Trent Jacobs, JPT Senior Technology Writer, Stephen Rassenfoss, JPT Emerging Technology Senior Editor
Enough dust has settled over the past year to give the global oil and gas business a clearer view of its new landscape. Holding little back, speakers at the annual IHS CERAWeek conference in February discussed how the industry has been shaped by the disruptive impact of North American shale production and predicted that many more months of financial pressure will spell the end for some companies.
The current industry situation is often compared with the last prolonged downturn in the 1980s—used by many in the oil patch as the measuring stick for rough times. But for Ali Al-Naimi, the Saudi Arabian minister of petroleum, the contributing factors are different this time around. Speaking in Houston at the annual gathering of top executives from operators, national oil companies, the service sector, and government, he explained that today’s crude market includes an expanded roster of producing nations and is under the influence of financial instruments that did not exist 3 decades ago. Al-Naimi then disputed the idea that his country is engaged in a global battle for market share that some claim is prolonging the bust. “Let me say for the record, again, we have not declared war on shale or on production from any given country or company— contrary to all the rumors that you hear and see,” he said. “We are responding to challenging market conditions and seeking the best possible outcome in a highly competitive environment.”
Nevertheless, Al-Naimi also argued that the market is simply not big enough for high-cost producers, and said they have three options: lower their costs, borrow more money, or liquidate.
“It sounds harsh, and unfortunately it is, but it is the most efficient way to rebalance markets,” he said. “Cutting low-cost production to subsidize higher-cost supplies only delays an inevitable reckoning.”
On the topic of a potential production freeze proposed by a minority group of the Organization of Petroleum Export Countries (OPEC) and Russia, Al-Naimi said such a move could happen but ruled out any notion that Saudi Arabia would cut oil production.

World Must ‘Tighten Valves’ on Methane Emissions
Joel Parshall, JPT Features Editor
The importance of reducing emissions of methane, a short-lasting but powerful atmospheric greenhouse gas (GHG), received close attention from panelists at an IHS CERAWeek strategic dialogue, Tightening the Valves on Global Methane Emissions.
A frequently asked question is “why all this focus on methane,” said Mark Brownstein, vice president for climate and energy at the Environmental Defense Fund (EDF). “Isn’t the issue carbon dioxide [CO2]? Actually, it’s both.”
Methane emissions remain in the atmosphere for much less time than CO2 but are a far more powerful pollutant while they last. “It’s thought that 25% of the warming that we’re experiencing right now on the planet is because of methane emissions,” Brownstein said. “A 45% reduction in oil and gas industry methane emissions would have the same impact over 20 years as closing one-third of the world’s coal [-fired power] plants.”