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Move over, Middle East: North America looks set to lead the global energy investment drive this year, with companies expected to spend $392-billion on upstream capital and operating expenditures in the region, according to forecasts of IHS CERA, an energy consultancy.
“Capex (alone) is expected to reach US$274-billion in 2012, driven by the region’s boom in unconventional production including oil sands, tight oil, shale gas, tight gas and coal bed methane, which are forecast to account for US$128-billion of the 2012 total,” noted IHS CERA in a report published Monday. “Driven by continued investment in unconventional resources, total North America spending is expected to reach US$528-billion in 2016.”
Capital spending in the oil sands sector is forecast to reach 28% to US$18.5-billion in 2012, rising US$28-billion by 2016 as high oil prices spurs expansion plans, the Cambride-based consultancy estimates.
“The U.S. and North America currently make up 50% of all drilling activity in the world,” Candida Scott, senior director at IHS CERA told the Financial Post in an interview. “Drilling activity is one of the key items behind the corporates’ spending money, as companies look are drilling for not only shale gas but tight oil since the past 18 months.”
The expansion forcasts are in line with other predictions for North America’s resurging energy sector. A recent report by Citigroup estimated that Canadian, U.S. and Mexican oil and gas production could add a staggering 11 million barrels per day over the next 10 years.
The United States alone is on course to become the largest liquids producer in the world and looks almost certain to overtake Russia and Saudi Arabia before the decade is over, wrote Ed Morse, Managing Director and the Head of Global Commodities Research at Citibank, in a note to clients.
North America’s crude oil and natural gas liquids sectors have the potential to nearly double from 15.4 million bpd in 2011 to almost 27 million bpd by 2020, the U.S. bank said.
The boom in the North American energy sector is part of a greater effort by major oil companies to seek new developments and pursue geologically and commercially challenging resources to replace conventional and mature oil and gas fields.
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