Oil and gas megaprojects in North America might suffer backlogs in 2014, according to an industrial outlook published in January by consultancy Deloitte. According to John England, Deloitte's vice-chairman and US oil and gas leader, 2014 will bring a rise in spending on engineering, procurement and construction (EPC). Although the rising number of new projects will be profitable for industries in EPC, companies will struggle to find workers to fulfil new orders, especially given a limited pool of professionals with suitable skills. “EPC companies will face hiring challenges and will find their technical capabilities stretched thin as they try to maximise the talents of their best people,” Mr England said in the outlook.
Furthermore, the oil and gas sector in the US will face a number of governmental and regulatory uncertainties, such as potential new environmental regulations with regards to shale development, and heath and safety regulations connected to offshore operations. Further challenges include the rising number of drilling requests, as well as the need for companies to operate in states that have limited experience of the oil and gas sector.
Companies operating in the sector will also face increased competition for financing in 2014, as megaprojects account for a big portion of cash flows for oil majors. On top of that, the renaissance of the American oil and gas sector, due to advances in shale exploration and offshore drilling, has increased the activity of independent companies, adding more bodies looking to secure funding for their projects. “The North American oil and gas industry will likely require more complex financing structures to meet the level and breadth of investment forecast,” said Mr England.
Among the good news for the sector, Mr England highlighted favourable changes in the public’s opinion of oil and gas-related operations. Since 2008, the positive public perception of the sector has increased by 11%, with the oil and gas sector increasingly seen as adding jobs to the economy and offering attractive employment opportunities. “In order for oil and gas companies to maintain the social licence to operate, they must communicate a clear commitment to environmental care, safety and community engagement,” said Mr England. “The industry should continue to brand itself as a high-tech, innovative industry that cares about people and the environment and is critical to the US economy.”