Oil and Natural Gas

Oil and natural gas demand worldwide has been growing steadily for many years. Many electrical power plants are now being fired by natural gas; this has put a particularly heavy domestic demand on that commodity.

We are all familiar with the worldwide demand for oil and how politics and weather can play havoc with that commodity. Unfortunately United States natural gas and oil producing capacity is declining along with our reserve base. The American Petroleum Institute reports that U.S. crude inventories are down another 7.1 million barrels the week ending January 4, 2008. "Oil supplies are becoming increasingly scarce and that will continue to drive up prices," says Claudia Kemfert, the energy expert of the DIW German Institute of Economic Research. They predict the price of oil will rise to $150 per barrel by 2013 and to $200 by 2018. Despite record drilling activity, especially in the energy rich Gulf Coast, drilling and completions has not replaced production. Kevin Norrish, an analyst at Barclays Capital says "We find it difficult to contemplate any scenario which doesn’t see annual prices growing steadily higher."

With the advent of new technology many deeper objectives are more clearly defined prior to drilling. Many of these objectives are currently not being drilled because these leases are being held by low producing wells from shallower formations. Over the next few years more of these opportunities will present themselves providing a much lower risk than before, and some very attractive untapped formations.