Was 2016 a Good Year for Oil and Gas Companies?

2016 may be fading to a memory for some, but for the oil and gas industry the events of the past 12 months left a scar. Fuelled by the rise of the renewable energy, 2016 saw a record number of oil and gas firms go broke. In the wake of the bankruptcies, experts are warning that the renewable energy revolution could see oil prices drop to as little as US$10 a barrel.

Led by global accountancy group Moore Stephens, the study revealed that 16 oil and gas companies were hit by insolvencies in 2016. This is a stark contrast to 2012, when zero firms were forced to shut down operations.

Now, environmentalists are advising the UK to prepare for the transition to a low carbon economy. They’ve also warned that mass job losses could be on the horizon, as the world embraces the “new industries of the 21st century”.

Global oil price crash fuels bankruptcies

Analysts blamed the mass bankruptcies on the global oil price crash, which saw crude prices fall from around US$120 a barrel to under US$50. Small firms were simply unable to cope with the price plummet, with head researcher Jeremy Willmont commenting, “The collapse of the price of oil has stretched many UK independents to breaking point.” He goes on to warn that unless the landscape improves, small producers could be hit even harder in 2017. 

“Unless there is a consistent upward trend in the oil price, conditions will remain tough for many of those and insolvencies may continue,” he adds.

The social impact of the renewables revolution

A social crash is also on the horizon, with chief Greenpeace UK scientist Dr Doug Parr warning that ultimately, the fall of the fossil fuel industry will lead to “desolate communities.”

“It’s also time for Government to recognise that we should not leave the workers stranded, but provide opportunities in the new industries of the 21st century,” he muses.

Keynote energy giants are already taking pre-emptive steps, with Engie, the world’s largest private power production company increasing its renewables investments, and gradually selling off assets like its fossil fuel exploration rights and coal-fired power stations. These changes are inspired by in-house research, revealing that by 2030 the Provence-Alpes-Cote d’Azur region could slash energy costs by 20% by making the switch to 100% renewable sources.

While oil and gas disciples maintain that fossil fuels will continue to maintain their relevance for some time, there’s no denying that the renewables revolution is on the horizon. For oil and gas companies, this could mean that 2017 could be even sourer than its predecessor.

As renewables threaten the oil and gas industry, producers are continually searching for new ways to maximise efficiency, and boost profits. ‘How opting for coriolis flowmeters can make you money’ spotlights the importance of specialised equipment, with expert commentary from David Bowers, Product Manager Pressure and Process Flow for ABB UK Measurement & Analytics.