Outlook for the north American energy sector Company outlook can and are usually tilted to the positive side.So one need to be carefull
in their interpretation.
Last night,Step reported their Q4.Here is their Outlook.
MARKET OUTLOOK
The outlook for the north American energy sector is anticipated to continue strengthening as major energy infrastructure projects are completed in Canada and the U.S. In Canada, completion of the Trans Mountain Expansion Project will increase the capacity of the original Trans Mountain Pipeline from 300,000 barrels of oil per day to 890,000 barrels of oil per day and completion of the LNG Canada facility will require 2.1 BCF per day of feed gas to produce liquified natural gas (“LNG”) for export. These projects are both anticipated to be complete in 2024, with additional LNG projects expected to add up to 4-5 BCF per day by 2030. In the U.S., numerous LNG projects are under construction with completion dates anticipated over the next 3-4 years, adding 11-12 BCF per day to current U.S. LNG export capacity of approximately 13-14 BCF per day today. Collectively these projects demonstrate that North America is becoming a cornerstone supplier of clean, reliable energy to the world, lifting millions of people out of energy poverty and delivering energy security to allies across the world, while providing constructive economic conditions for north American producers and service providers.
Near term commodity prices continue to remain volatile, with concerns over recession and overproduction weighing on prices. North American crude oil, as measured by the benchmark West Texas Intermediate (“WTI”), is showing greater resiliency due to the higher correlation with global oil markets. Those markets are heavily influenced by the supply management policies of the OPEC+ producers, which helps smooths out the volatility in crude prices. Natural gas prices are expected to remain weak through the shoulder season, with the benchmark Henry Hub price recently testing multi decade lows in Q1 2024 as a result of an extremely mild winter and record gas production. Major U.S. producers have announced reductions in their 2024 capital programs to return this market to balance, which will result in softer U.S. activity levels for at least the first half of the year relative to prior years. Canadian gas production is heavily affected by the price of natural gas liquids (“NGLs”), which have been more stable than natural gas due to their correlation to oil prices. Demand for condensate, a key NGL, remains strong and is supported by growing oil sands production. Nonetheless, major Canadian natural gas producers are also voicing more caution around expected 2024 activity levels, which may result in deferral of some work scope to later in the year.
The long-term outlook for oilfield services is very constructive. The structural under-investment in hydrocarbon production capacity through the last seven years has been exacerbated by geopolitical tensions, forcing governments and policy makers to confront the realty that oil and gas will be a key part of the energy mix for many years. STEP is proud to work in Canada and the U.S., countries that have the natural resources, regulatory frameworks, and technical expertise to deliver safe and affordable energy to the world.