Gorgon Gas Facility on Barrow Island
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Despite the U.S. commodity market's financial slump, with both prices and spirits sunk to all-time lows, the petroleum industry is forging ahead to build on its production and operational position to fulfill worldwide energy needs.
In fact, the energy industry has helped to buoy the economy throughout recent market meltdowns and has provided its own saving grace in the midst of a sluggish national job sector. According to Reuters, Houston, home to one of the fastest growth rates of any U.S. city this year, is quickly becoming a dominant force as the nation's "Petro Metro," with half of the city's economy linked to such energy majors as ConocoPhillips and oilfield services firm Halliburton Co. Even if prices have dipped to around $75 a barrel after a high-ride of more than $147 in July, these companies still stand to hit paydirt with quarterly profits pouring in and operations in full-swing.
It is this very mentality – the desire to move ahead in a constant quest for "black gold" and gas – that sets the petroleum industry apart as both innovative and progressive. And while the commodity price rollercoaster does give the industry a bit of motion sickness and could have an adverse affect on future production, the energy economy remains strong.
International and U.S.-based industry major and junior companies are still actively pursuing E&P activities to boost oil and gas discoveries and production output, and third quarter reports trickling in this month testify to consistently high levels of revenue and operational activities, with the exception of natural disaster production setbacks from the recent hurricanes that battered the Gulf of Mexico.
In a report released by the American Petroleum Institute on Oct. 10, exploration and production drilling activity in the U.S. increased by 34% from last year's third quarter statistics. This jump in drilling operations is further proof that the hunt for hydrocarbons to supply consumer demand regardless of a slowing economy is still a significant and necessary endeavor.
Moreover, investments continue to garner interests in discovering new offshore prospects, especially when large reserves remain untapped in deeper waters. Such drilling exploits as Petrobras' pre-salt, ultra-deepwater exploration ventures offshore Brazil have the potential to unlock an untold amount of hydrocarbons, with probable reserve estimates ranging in the billions.
In spite an unpredictable stock market, Goldman Sachs continues to rate Petrobras a buy with company shares up 19% at $31.13 in recent trading. According to Dow Jones, Petrobras' stock, after dropping during last week's crude market plummet, is currently on the rise and gaining as the company reports new exploration successes. This week, Petrobras has notified Brazil's National Petroleum Agency of three new oil discoveries in its offshore basins. Moreover, Petrobras started up its first subsalt oil production at the Jubarte Field on Sept. 2, 2008.
At current conditions, the cost to produce oil from these subsalt deposits will run between $40 and $50 a barrel, said Brazil's Mines and Energy Minister Edison Lobao. So long as the crude oil price can stay afloat at productive levels, E&P efforts will continue to stimulate the industry and help stabilize the economic climate.
Additionally, Chevron has fully backed its U.S. $11 billion Gorgon project, reported yesterday by Dow Jones. Located in Australia, the project is developing massive gas finds through LNG. The Chevron-operated Gorgon and Wheatstone projects continue to make good progress, with both ramping up staff and contractor positions as we speak," said a spokeswoman for the project. "Gorgon has more than 700 people employed and this is expected to increase to 1200 next year." She continued, "We're in a long-term business and Gorgon is a 40 year-plus project."
Long-term offshore projects as large as Gorgon attest to the industry's ongoing effort to develop the world's natural resources and supply a constant demand for these commodities.
The business bottom line is this: while the stock and commodity markets may move wildly up and down, we can be sure that oil and gas will still be needed as invaluable resources for years to come in order to power transportation, homes, businesses and the economies of the world.