American Consequences - September 2017

project which regions will be more profitable over the course of the coming year... and what technological developments over the previous year could unlock more productivity. When companies decide their capital budgets, it sets the stage for what they can expect in the coming year... how much they can grow, how much they can earn, how many people they can hire, and even any potential mergers and acquisitions across the entire energy space.

much capital those E&P companies set aside each year. This group is responsible for much of the modern technology that’s used in oil and gas production today. They provide the manpower and know-how to get new wells drilled, completed, and producing oil and gas... and keep them on line through their entire life cycle. I’m talking about oilfield-services companies... E&P companies don’t usually own and operate their equipment... The technology changes quickly and the highly specialized equipment is expensive to make. A modern, new land rig generally costs between $20 million and $40 million today. In addition to this initial outlay, it costs a lot of CALL IN THE EXPERTS

To be clear, I’m not talking about a budget that puts a few crews back to work fracking wells in Midland, Texas... I’m talking about worldwide oil and gas producers that combined to spend more than $500 billion at the last peak in 2014 and will get close to that again by 2021 . The above chart from consulting firm McKinsey & Company illustrates my point... Historically, North America has been – and will continue to be – where the most money is invested worldwide. That makes sense, as the U.S. is the dominant player in the space. This chart gives us a good idea of what it’ll cost to feed global oil and gas development. But with so much to spend, where’s all the money going? Who will profit the most? In the oil and gas sector, a group of companies exists that’s just as critical as the E&P firms... Yet the success of these businesses depends almost entirely on how

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