2017 Market Outlook
   Things are looking positive for the Oil,Gas, & Chemical industries

​        Last week, a couple of employees from OpAmp Information Management attended IIR’s market outlook event at the George R. Brown Convention center in Houston, Texas. Over 1100 professionals coming from all aspects of the energy industry gathered in a stadium style auditorium eager to learn what economic forecast was to be given about their respective branch of the energy industry. In total there were 6 economic related speakers that covered global macro spending, North American Spending, the power generation market, the midstream and downstream oil market, natural gas, and chemical processing. Below is our understanding of the high level outlook for each industry that was covered during this conference. 

​Global Macro Spending- As many people are putting a rough 2016 behind them, a wave of optimism is starting to form for the early stages of 2017. Overall there is a positive economic outlook for 2017 with overall global spending to increase by .3%. Although this sounds like a minuscule amount, this percentage roughly translates to a global 2.6 trillion dollar spending increase in which 77% of the money will primarily be invested into O&G terminals, pipelines, and production facilities along with chemical processing, power, and metals. This positive increase is caused by a slowly growing energy demand especially in natural gas and LNG as well as increase in global infrastructure due to the rise in population, and other countries’ economies growing. 

North American Spending- Whether you are a fan of the new administration or not, there is a projected economic growth for North America due to some of the tax reforms and overturning of regulations that are currently in place. These changes can theoretically streamline the permitting and export requirements necessary, as well as open the doors for expanded drilling, production, and infrastructure opportunities which in turn can drive stronger consumer spending abroad. On the gulf coast alone, the North American spending analysts forecasts a total of 40 billion dollars to be invested into major projects along with an additional 8 billion dollars directed towards maintenance initiatives. 2018 is projected to be an even stronger push in capital project investments as industries will have a better idea as to whether or not the new administration pushed the economy in a strong positive direction as forecast. 

​Power Generation- Although money will be spent on the power generation industry, it is forecast that there will be a slight decrease in the amount of money spent on this particular market due to a variety of factors such as the regulations targeting coal power plants, and the higher demand for clean energy production globally. Unless there are going to be any major regulation changes that support coal powered electricity plants, these facilities are projected to decrease over the next 4 years while an uptick in natural gas electricity generation facility startups and expansions will increase based on global demands. However a generous portion of the projected money invested will be specifically used for expanding upgrading and maintaining pre-existing electrical generating facilities in order to help make them more profitable and efficient.

​Midstream/Downstream Oil- One of the hardest hit markets for the last couple of years is finally making a slow and steady come back for 2017 and an even larger increase for projects forecast for 2018. Exploration and production in the Gulf is planning on making a comeback towards quarter 3 of 2017 as the demand for gasoline and distillate fuels also increases. Among an increase in production projects an up rise of transportation and storage build outs will also increase in order to meet the needs of other countries the United States exports to. Although this is a good sign for the market, the price of oil is not forecast to sky rocket but eventually hover around 60 dollars a barrel throughout 2017.

Natural Gas- Like the other markets seen above, there is a forecast steady growth for 2017-2020. Natural gas is becoming an even stronger global economic player due to the clean burning nature of the fuel as well as abundance leading to more and more countries moving to the product as a primary energy source. Another key factor making the Natural gas market continually grow are the demands for additional pipelines for export to Canada and Mexico resulting in more projects for the second half of 2017. Again depending on what the new administration does with the current company tax rates and environmental regulations we may see a surge in projects being approved for 2018 as well. 

​Chemical Processing- As mentioned before, money is being invested in all of these industries in order to meet the demand globally as well as on the home front. The conference analyst predicted that an estimated 15 billion dollars of new viable projects are going to be completed by the end of 2017, which is a significant increase from 10 billion dollars spent in 2016. The analyst has also found that the demand for ethylene and polyethylene are going to be the biggest drivers for these new products as the cost of feed stock to produce these chemicals is at an extremely low price. Again 2017 is acting like a test run for many of these markets and if all goes well a huge increase in dollars spent will be seen in 2018.

        Overall it seems that a wave of optimism is starting to spread across our country as well as in other parts of the world. With the possibility of a reduction in taxes and regulations in 2017, the demand for certain commodities will be following a positive sloping trend. According to the conference analysts, if the markets mentioned throughout this article do see a more fruitful 2017 fiscal year, 2018 will be even stronger as the many anticipated projects currently on hold will most likely become active once the 2017 3rd quarter numbers are in. Although the forecast given was based on speculation the numbers projected were relatively conservative compared to what other analysts have predicted but regardless, it is safe to say that there is a bright outlook for the upcoming years due to demand and plans for economic revitalization.