Dozens of energy projects beginning each week
More than 30 oil, gas, shale and petchem projects are starting each week, report says
Despite the lower price of oil, McIlvaine is still reporting more than 30 new projects per week in its oil, gas, shale and refining markets and projects.
The low oil prices are discouraging exploration, but they are not slowing the plans already in place to develop known reserves, it said
The expected return on investment is already based on fluctuating oil prices over the 20 year projected plant life.
Saudi Aramco has just predicted that projects totalling $1trn would be delayed or cancelled.
Saudi Aramco itself has put on hold its deep water oil and gas exploration and drilling activities in the Red Sea and suspended plans to build a $2 billion clean fuels plant at its largest oil refinery in Ras Tanura.
But Saudi Arabia's King Salman said that the kingdom would continue oil and gas exploration despite the fall in crude prices and vowed to build a strong, diversified economy.
The oil price drop will have an impact, but activity will continue at levels higher than that experienced in previous slumps, while many shale projects will be at least marginally profitable when oil is at $60/barrel, said the report.
Some deep water projects (the Gulf of Mexico and West Africa) will be the highest-cost source of supply and will, therefore, be most sensitive to the fluctuating price,” it added.
“The cost of capital for projects has decreased along with oil prices. This has the effect of lowering the break-even point for projects,” the release said.
“The level of new project activity is reduced from its highs over the last several years but continues at a level above average for the last two decades.”