Experts Explain Future of Oil Industry

HOUSTON - If you make your living getting energy out of the ground you will find little comfort in the findings of analysts Marshall Adkins and Robert Bryce.

"I think its going to take years now to work through this bust with prices depressed both on the oil and gas side relative to what we saw in the spike," predicts Bryce, who writes extensively on the global energy market.

It's a position largely shared by Adkins, head of energy research at investment firm Raymond James and one of the oil patch's most respected analysts.

"What we see in the industry is a massive slowdown in drilling activity," says Adkins.

"We are assuming a 65-percent reduction before you even come close to correcting the problem," he adds.

The "problem" is over supply, particularly when it comes to natural gas, which accounts for the lion's share of the drilling in the U.S.

During the past few years, energy companies have discovered and produced vast new quantities, in areas known as the "shale plays." Trouble is, an economy rocked by recession doesn't need the additional production.

" We've got way to much gas sitting around the U.S right now, prices come down, people stop drilling," Adkins says.

When drillers stop drilling, thousands of people in the energy sector lose their jobs.

"As more rigs are laid down there's less need for people in the service business and it really is a stunning turn around," says Bryce.

"I think there's more pain to come," he adds.

Exacerbating the bloated natural gas market, the specter of imported liquefied natural gas from processing plants in Africa and the Middle East.

"There maybe nowhere else for that LNG to go except to the U.S because it's by far and away the biggest market," explains Bryce.

Adkins calls LNG imports a "wild card" that could suppress natural gas prices further.

"We are already way over supplied, according to our models, so I'm not sure we can take any of that gas," he says.