Forces And Trends In The Oil And Gas Industry

Introduction

Cameron International formerly known as Cooper Cameron provides flow equipment products, systems, and services to oil, gas, and process industries worldwide. “The company's Drilling and Production Systems segment provides systems and equipment to control pressures and direct flows of oil and gas wells. It provides surface and sub sea drilling and production systems, control systems, blowout preventers, oil and gas separation equipment, gate valves, actuators, chokes, wellheads, drilling riser, and aftermarket parts and services for onshore fields, onshore and offshore environments, deepwater sub sea applications, and ultra-high temperature geothermal operations. This segment also manufactures elastomers for pressure and flow control equipment; other petroleum industry applications; and petroleum, petrochemical, rubber molding, and plastics industries. Cameron International's Valves and Measurement segment provides valves and measurement systems to control, direct, and measure the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines, and transmission systems to refineries, petrochemical plants, and industrial centers for processing. It provides gate valves, ball valves, butterfly valves, Orbit valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes, and aftermarket parts and services, as well as totalizers, turbine meters, flow computers, chart recorders, ultrasonic flow meters, and sampling solutions. The company's Compression Systems segment provides reciprocating and centrifugal compression equipment, and aftermarket parts and services. Its products include integral engine-compressors, separable compressors, turbochargers, integrally geared centrifugal compressors, compressor systems, and controls. The company was founded in 1833. It was formerly known as Cooper Cameron Corporation and changed its name to Cameron International Corporation in 2006. Cameron International is headquartered in Houston, Texas, (Yahoo Finance 2007).”

As the demand for oil increases, the price per barrel increases. The price per barrel has now reached $80 per barrel. The demand for oil and gas equipment is at an all-time high. Companies such as Cameron International Corporation have a record “$3.8 billion dollar backlog” (2007) of equipment orders. They cannot build the equipment fast enough. Why is this occurring? This paper will explore some of the trends and forces in the oil and gas business.

Trend of Supply and Demand

“Rising demand, continued product restraint by OPEC, and moderate increases in non-OPEC supply have kept oil prices firm in recent months” (Spears and Associates, 2007). Developing countries such as India and China continue to consume more energy thus putting more pressure on OPEC to produce more. According to Drilling and Production Outlook (September 2007), Oil consumption is expected to average 64.8 million barrels per day (bpd) up 1.6 % from the previous year. The demand for oil in the U.S. continues to grow at 1.3 % year over year. OPEC (Organization of Oil Exporting Countries) continues to be the supply for most of the world’s oil at 30.4 bpd; non-OPEC companies contributed 49.2 bpd in 2006. The US rig count continues to climb 8% with total spending on