When a barrel of crude hit $100 and above, that price helped to support more expensive exploration and development projects, including oil sands, ultra-deepwater, EOR and unconventional plays. When companies are making more money, they can spend more money; and budgets reflect this.
But when the price of oil plummeted, so did investments in new or technologically advanced projects. Companies worldwide contracted, delaying projects and laying off employees.
While the market has not fully recovered, the steady price of oil in the $75/barrel range certainly helps encourage development dollars to be spent. OPEC has kept production curtailed effectively to support a more manageable (than $30/barrel or $50/barrel) price for a barrel of crude.
As the ramp-up begins, we see major acquisitions and industry moves taking place across the board. Oil services companies are merging (, major producers are acquiring interest in new projects, and the employee marketplace is heating up.
Hot opportunities for both companies and investors have very clearly emerged. Major dollars are being spent in the US onshore shale plays, and the Canadian oil sands market is certainly heating up.
Major international companies, such as India's Reliance, Royal Dutch Shell and Norway's Statoil have committed billions of dollars to shale in the US. Experts have predicted that the massive natural gas resources of the s hale plays in the US may very well turn the typically regional commodity into a global one, like oil is today.
China's Synopec recently agreed to pay $4.65 billion to acquire a stake in ConocoPhillips Syncrude development in Canada, while French major Total is spending $1.1 billion to acquire a slice of Canadian oil sands. At the close of 2009, South Korea's KNOC agreed to pay $3.9 billion for Canada's Harvest Energy.
Additionally, new oil provinces are garnering attention, with companies turning toward the Atlantic Margin for exploration opportunities. The first drilling offshore Greenland in more than a decade is currently under way, with Cairn Energy spudding its first well offshore Greenland earlier this month.
Also, exploration offshore the Falkland Islands has gotten the attention of many, with the first two wells in this South Atlantic region discovering hydrocarbons. Desire Petroleum found gas at its Liz prospect, and Rockhopper Exploration discovered oil at Sea Lion. Presently, Rockhopper is readying to spud another well, this time in the Ernest prospect; and Falklands Oil & Gas (LON:FOGL) is looking, along with its partner BHP Billliton, to hire a deepwater rig to drill in the area.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.