Spending on oil and gas exploration in the US is expected to increase in 2004, as the demand for energy continues to grow. According to a national survey of mid-size independent US oil and gas companies conducted by Grant Thornton LLP, global accounting, tax and business advisory firm, 70% of respondents plan to increase their US exploration spending in 2004, while only 21% plan to increase foreign exploration efforts.
"Although a healthy majority of respondents expect domestic drilling activity to increase this year, only 30% and 44% expect prices for oil and gas, respectively, to be high enough to support an increase of more than 20%," Ed Davis, partner-in-charge of Grant Thornton's Houston energy practice, said. Davis notes that forecasted natural gas prices are the most important factor affecting respondents' capital spending plans.
According to the survey, 60% of respondents will concentrate on natural gas exploration over the next three years, while only 10% will focus on oil and 30% plan to pursue both. Respondents believe that the Gulf of Mexico and Rocky Mountains provide the greatest potential for domestic natural gas discoveries.