Energy industry remains nervous about recovery

Executives from oil and gas production companies still feel battered from the recent industry downturn, so they remain skittish about whether a sustainable recovery is in sight, the accounting and consulting firm Deloitte & Touche said in a new report.

The report, based on an annual survey of executives of production, refining and pipeline companies, as well as leaders in the chemical industry, found that despite an increase in optimism, oil and gas company executives remain cautious about long-term spending. The survey found that most oil and gas production companies are focusing their spending on opportunities that will bolster their bottom line “today or tomorrow — as opposed to next year,” John England of Deloitte said.

“Most upstream executives surveyed see better days ahead,” England said, “but are managing more with caution as they work through growing pipeline constraints, mounting geopolitical tensions and rising oil prices that could also push up costs.”

All the sectors surveyed predicted slightly improved commodity prices. In all, 72 percent expect West Texas Intermediate crude to average $70 or more per barrel in 2020. Some 54 percent forecast that natural gas prices at Henry Hub, a delivery point in Louisiana, will average $3.50 or more per million British thermal units.

More than half of executives surveyed expect to see an increase in capital spending in 2019. Refining and chemical sectors, which were the least affected by the oil bust because it reduced costs of their raw materials, had the highest confidence that their capital spending would rise. The oil bust lasted roughly from 2014 to 2016, when oil prices hit a low of $26 a barrel from a peak of more than $100.