As oil and gas demand increases, so does the cost to exploit reserves in harsher and more difficult environments, Jim Wicklund, Banc of Americas Securities managing director, pointed out at the twice-yearly RMI Oilfield Breakfast. The easiest half of production has already been produced, and drilling must increase despite the location of the wells, he said.
The problem today is cost of oil and gas and supply, he said, and we are paying more for oil and gas because there are limited drilling opportunities available. Most new opportunities will be in harsh environments or in deepwater. Plus, OPEC has agreed to cut daily oil production by 1 MMbbl, which will keep prices at record highs. Even the price of LNG, seen by some as the solution to dwindling energy supplies, will remain high.
"There are no quick fixes," Roger Plank, Apache Corp. executive vice president and CFO, said. "LNG is not going to happen overnight." Plank also spoke at the conference.
Several panelists said the focus on the future of oil and gas production is not in the US. "Activity will be where the oil is," Wicklund said.
Don Jacobsen, director of Shell E&P wells, concurred. Jacobsen is predicting that Iran, Qatar, Saudi Arabia, Russia, Nigeria, Venezuela, and Norway will see the concentration of activity between now and 2030.
But future success in these areas will not happen without efficient technology. Wicklund predicts that the US will provide the sophisticated technology for these remote, high-cost areas that would otherwise be too costly to finance. Jacobsen said Shell's success in the North Sea is due to growth in new technology.