Oil and Gas Industry Trends & Outlook for 2024

The oil and gas (O&G) industry has always been heavily impacted by macroeconomic factors, from geopolitical tensions and climate change to government regulations and technological advancements.

In the past few years, the industry has undergone a series of unprecedented pressures—the COVID-19 pandemic, tightened greenhouse gas regulations, the Russia-Ukraine War, and ongoing tensions in the Middle East, to name a few. At the same time, the oil and gas industry has undergone a digital transformation, with companies racing to integrate advanced technologies and automation throughout their value chains, so as to remain competitive. 

Overall, the industry enters this year well poised for success, with a strong financial position and high oil prices. At the same time, the sector is still subject to disruption from geopolitical factors, high interest rates and rising material costs, evolving policies and regulations, and the emergence of new technologies—lending a degree of unpredictability. 

And yet, despite the uncontrollable nature of many of the aforementioned disruptors, oil and gas companies are currently in a unique position to safeguard and fortify themselves against external threats by leaning on the unique opportunities that are available to them in the market. By staying ahead of emerging trends and changes, O&G companies can be more proactive—rather than reactive—with their strategies and maintain their competitive positioning.

In 2024, several key trends are expected to impact the industry, including shifting global energy trade dynamics, rising M&A activity, a greater focus on decarbonization initiatives, and the rise of generative AI and other disruptive technologies. Below, we cover these trends in detail, as well as our outlook for the future of the industry. 

Shifting Global Energy Trade Dynamics

Geopolitical events have led to a dramatic reorganization of global energy trade flows in recent years. One of the most impactful factors was the Russia-Ukraine War, which resulted in the EU and U.S. putting sanctions on Russian oil supply—in turn leading Russia to significantly increase its energy exports to the APAC region.

Meanwhile, U.S. crude oil and natural gas production reached all-time record highs in 2023, and U.S. exports of liquified natural gas (LNG) and distillate fuel to Europe increased by over 100% from 2021. With Europe lessening its dependence on Russian energy supply, maritime energy trade is expected to increase significantly. 

Meanwhile, OPEC (Organization of the Petroleum Exporting Countries) and its allies agreed to cut oil production by 1 million barrels per day starting in January 2024. And with ongoing conflicts in the Middle East and recent attacks in the Red Sea, OPEC+ oil prices and production are still subject to volatility. However, analysts predict that U.S. output is on track to offset any OPEC+ production cuts in 2024. 

Recent M&A Deals and Increased Industry Competition

Last year, the oil and gas industry saw a spike in M&A deal activity as many companies sought to enter the Permian Basin and expand into renewables. Deals in the Permian Basin exceeded $100 billion in 2023 and included Chevron’s acquisition of Hess for $53 billion, ExxonMobil’s acquisition of Pioneer for $59.5 billion, and Oxy’s acquisition of CrownRock for $12 billion. At the start of 2024, SouthWestern Energy also announced its merger with Chesapeake Energy, creating a $17 billion company.

For ExxonMobil, this deal will help accelerate its mission of reaching net-zero greenhouse gas emissions (Scope 1 and Scope 2) from its Permian unconventional operations by 2030. It will also expand its business territory and increase cash flow, as well as capital returns for shareholders.

Similarly, Chevron’s deal also helps it expand business territory—further strengthening domestic energy security—and increase cash flow and shareholder returns. According to broker research within the AlphaSense platform, analysts predict that U.S. energy companies will continue consolidating smaller-scale firms in order to increase their competitiveness and further their energy transition goals.

“Ultimately, the industry wants to match the best operator with each asset, to drive performance across operations, and optimize capital and carbon management. This has set the stage for a wave of consolidations, with integrated oil companies and large E&Ps (exploration and production companies) looking to secure acreage, enhance their cash flow and maximize returns via acquisition, rather than traditional exploration.”

– Bruce On, US-West Region Strategy and Transactions Energy Leader | Ernst & Young LLP

Technology and Generative AI

As in most other industries, digital transformation is ushering in a new age in the oil and gas sector, with exciting new opportunities for optimizing operations, enhancing efficiency, improving safety, and increasing innovation. 

Artificial intelligence (AI) and machine learning (ML) can be used to efficiently analyze large amounts of data for predictive maintenance and optimization of operations. Cloud adoption and near real-time data integration from the field will be integral in improving performance and increasing operational efficiency. Automation of traditionally manual processes will also help companies reduce costs, improve processes, and enable better and more data-driven decision-making. 

According to EY’s findings, enterprises that establish AI engineering best practices will generate 3X more value from their AI efforts than those that do not. In 2024, more oil and gas companies will be investing in their AI tech stack to remain competitive and optimize operations.

“With confident and responsible adoption of AI, oil and gas companies will unlock the full potential of their workforce, have a greater impact on daily operations, accelerate real-time decision-making, and positively impact the bottom line.”

– Bruce On, US-West Region Strategy and Transactions Energy Leader | Ernst & Young LLP

The next frontier for the industry is generative AI—the new technology that took the world by storm in the past year. Generative AI can aid in cost reductions with its applications in predictive maintenance, increasing process efficiency with applications in supply chain management and data processing and analysis, increasing revenue generation by optimizing exploration of high-yield reserves and enhancing recovery from existing ones, and driving innovation by enabling rapid testing of new concepts and ideas.

Oil and gas companies that are able to effectively integrate AI and genAI into their processes in 2024 will be lightyears ahead of many competitors, not just in terms of productivity but also their ability to hit carbon emission targets and ESG goals.

Increased Focus on Decarbonization Strategy and Energy Transition

2024 is the year that oil and gas companies will markedly increase their focus on emission reduction and decarbonization strategies. This is due in large part to the many clean energy policies that have been passed by governments since 2021—including the Inflation Reduction Act in the U.S. and the proposed European Net-Zero Industry Act. 

In the U.S. the Environmental Protection Agency (EPA) put out a ruling on December 2, 2023, aimed at cutting methane emissions from oil and gas operations through the use of methane detection and reduction technologies, as well as financial penalties for failure to comply with the new mandates.

With this increase in governmental pressure, we will see more electrification of oilfield equipment in 2024. Oxy, Chevron, and ExxonMobil—some of the largest oil and gas producers—are already leading the fray in electrification in the Permian Basin thanks to their recent dealmaking activities.

Additionally, global oil demand is expected to slow down in the long-term, while global demand for biofuels is expected to rise by 44% from 2022 to 2027. Refining companies will, therefore, be producing and bringing to market more low-carbon fuel alternatives, in order to offset long-term decline in fossil fuel demand and meet evolving consumer and market expectations. 

Overall, the challenge for most oil and gas companies this year will be striking a balance between meeting revenue and profit goals, while also abiding by new clean energy policies and implementing scalable decarbonization strategies.

ESG Initiatives

ESG—environmental, social, and governance—is a key priority for oil and gas companies that want to remain competitive, maintain a favorable reputation with consumers, and appeal to investors. 

In addition to focusing on sustainability to abide by governmental regulations and meet both stakeholder and consumer expectations, oil and gas companies are also increasing their focus on community engagement and worker safety. With advanced technologies like drones, sensors, and data analytics, there is greater potential than ever for improving operational safety, monitoring infrastructure integrity, and mitigating risks. Similarly, automation and the use of VR and robotics can be used to create a safer workplace for employees. 

In addition to creating a better, safer working environment, companies that harness the power of advanced technologies to drive ESG initiatives can also streamline processes, reduce costs, and establish trust with shareholders and consumers.

Oil and Gas Industry Outlook for 2024 and Beyond

The main themes of the year for the oil and gas industry will be innovation and adaptability. The industry is currently seeing rapid technological growth, healthy cash flow, and robust financial health—all factors that point to a successful coming year. 

And yet, this is also a transformational moment for the industry, as long-standing global dynamics break down, technology opens up untapped possibilities, and climate-consciousness becomes a non-negotiable rather than a nice-to-have.

With ongoing shifts in the regulatory and geopolitical landscapes, as well as consistent technological developments and an influx of M&A activity, O&G companies will need to stay ahead of macroeconomic events and prepare for the inevitable changes that are currently underway.

The companies that will do this most effectively are those that:

• Leverage new technologies like genAI and ML to increase efficiency, cut costs, and mitigate risk
• Prioritize decarbonization strategies, low emission targets, and taking deliberate measures to support the energy transition
• Consider technology and ESG as key principles when building strategies for growth, mergers and acquisitions, and competitive advantage
• Utilize a market intelligence platform, like AlphaSense, that provides access to critical insights, from regulatory updates and geopolitical events to competitive intelligence and analyst reports

Stay on Top of the Oil and Gas Industry

Staying ahead in the oil and gas industry requires diligent market research efforts, speed, and confidence in decision-making. AlphaSense is a leading provider of market intelligence, including 10,000+ high-quality content sources from more than 1,500 leading research providers—all in a single platform. 

AlphaSense keeps you up to date on all the latest energy trends with our premium content sets and unmatched AI search capabilities.

Specific types of content you’ll find on the AlphaSense platform include:

• Company documents including event transcripts, FERC documents, global filings, press releases, company presentations, and ESG reports
• Over 1,500 research providers including Wall Street Insights®, a premier and exclusive equity research collection for corporate teams 
• 40,000+ expert call transcripts with industry expert perspectives from customers, competitors, former employees, and partners
• Regulatory content including FERC documents and sites such as Energy Information Administration
• Over 3,000 curated news sources and trade publications including industry news, market news, and energy.gov

Our AI search capabilities enable accurate, fast, and comprehensive qualitative and quantitative research, and can mine unstructured data for the most critical insights. These features include:

• Smart Summaries, our first generative AI feature, summarizes key insights from earnings calls for faster analysis
• Smart Synonyms™ technology that ensures you never miss a source important to your research
• Automated and customizable real-time alerts for tracking companies, industries, and potential investments
• Table export tools that support M&A workflows like target lists and due diligence
• AlphaSense Assistant (coming soon!), an AI-powered chatbot designed to answer your most pressing business questions, quickly and accurately

Stay ahead of the rapidly evolving oil and gas industry and get your competitive edge with AlphaSense. Start your free trial today.