United States Oil and Gas Upstream Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The US oil and gas upstream market is expected to record a CAGR of under 4% during the forecast period of 2020-2025. Factors, such as the reduction in the cost of the drilling rigs up to 40% after 2014 oil crisis, till 2019, are likely to drive the US oil and gas upstream market. However, volatility in oil prices along with comparitively higher production costs for unconventional resources is expected to hinder the growth of the US oil and gas upstream market.

Key Highlights

• The onshore segment held a significant market share in 2018, and it is likely to dominate the market during the forecast period. Since majority of the oil and gas production in the United States is from onshore activities.
• The increasing number of activities and oil production from the Permian Basin in the United States is likely to create a good number of opportunities for the United States oil and gas upstream market.
• Increasing deep-water activities in offshore are likely to drive the US oil and gas upstream market in the forecast period. Huge amount of proven reserves in Gulf of Mexico is attracting more investment in the deep water sector.

Key Market Trends

Onshore Segment to Dominate the Market

• In 2018, the United States produced 10.95 million-barrel oil per day (MMBPD) was higher than any past year. Out of the total oil produced, 68% comes from the five states of the United States that includes- Texas, North Dakota, New Mexico, Oklahoma, and Alaska; 16% from the offshore, and rest 16% from the rest of the states.
• United States natural gas production in 2018 was 30.6 trillion cubic feet (Tcf). Out of the total natural gas produced, 22.9 Tcf is from tight or shale gas, 1.4 Tcf from offshore.
• In June 2019, Railroad Commission of Texas (RRC) permitted to drill 905 new wells in Texas. In July 2019, according to Baker Hughes Inc., there was a total of 463 rigs in Texas, which was 49% of the total active rigs in the United States.
• In 2018, Exxon Mobil Corp announced to triple its oil and gas production by 2025 from Permian Basin. This is likely to create many opportunities and is expected to drive the US oil and gas upstream market in the forecast period.
• Therefore, owing to the mentioned points, activities in onshore are likely to increase and have a positive impact on the US oil and gas upstream market over the forecast period.

Increasing Deep Water Activities Expected to Drive the Market

• Deep-Water activities in the Gulf of Mexico is likely to drive the market during the forecast period. Many companies after 2014 decreases the investments in the offshore market but due to the decrease in the cost of drilling rigs and less investment return period than onshore, the offshore activities again gained its pace. Due to which Deep-water is expected to see a significant growth in the United States oil and gas upstream market during the forecast period.
• In 2018, Royal Dutch Shell started production from its deep-water field, Kaikias, in the Gulf of Mexico. In phase 1, it drilled three wells that were completed in 2018, and phase 2 is expected to start in 2021. This with several other ongoing projects is likely to drive the United States oil and gas upstream market.
• In 2019, Bureau of Ocean Energy Management (BOEM) bidded 71 tracts covering 397285 acres of land in the waters of the Gulf of Mexico. Majority of the bids were acquired by the majors players in the region such as Chevron, Shell and BP.
• In December 2019, Chevron Corporation announced to develop the Anchor Project in the Gulf of Mexico, which will be the first deep-water and high-pressure project of the oil and gas industry. This project will be needing advancement in drilling technologies and is likely to drive the United States oil and gas upstream market.
• Hence, the increasing deepwater activities are expected to drive the United States oil and gas upstream market during the forecast period.

Competitive Landscape

The US oil and gas upstream market is moderately fragmented. Some of the key players in this market include Exxon Mobil Corporation, BP plc, Royal Dutch Shell Plc, Total SA, and Chevron Corporation, amongst others.

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