New oil and gas projects are being given the go-ahead around the world in the wake of rapidly-rising energy prices. This morning, the UK handed a green light to Equinor and Ithaca Energy’s development of a massive North Sea field – the country’s latest step toward reviving the sea’s depleted oil and gas output. Annual upstream investment across the globe will rise above the 2015 – 2022 average this year as benchmark crude prices approach $100.00 per barrel.
In spite of a global expansion of drilling, North America has seen a large decline in active rigs recently. The US is approaching record production figures, but that is only now catching up with previous highs recorded more than three years ago. Discordant federal policies regarding the oil and gas industry, emanating largely from the White House, appears to have given many drillers pause in considering North American expansion. If the US’s energy prospects remain sidelined, OPEC+ producers will be given free license to continue bending energy prices to their whim.
Related ETFs: SPDR S&P Oil & Gas Exploration & Production ETF (XOP), VanEck Oil Services ETF (OIH), Energy Select Sector SPDR Fund (XLE), Invesco DB Oil Fund (DBO)
The United Kingdom has given a green light to one of its biggest new oil and gas projects in years, as Equinor’s North Sea Rosebank field received approval to start output in 2026-2027. Reuters notes that the joint development between Equinor and Ithaca Energy, which will cost $3.8 in its first phase and run close to $10.0 billion through 2051, should produce 300 million barrels of oil in its lifetime. Though oil and gas output from Britain’s North Sea has shrunk by two-thirds in the past 20 years, the UK government confirmed plans in July to renew its energy output from the region, aiming to grant hundreds of new oil and gas licenses in the North Sea.
The approval of the Rosebank project is in line with a revival of new investment in oil and gas projects around the world, following a global energy emergency in 2022. Last year, benchmark Brent crude oil futures shot to a fourteen-year high north of $133.00, extinguishing overly optimistic pronunciations about “peak oil” that became common in 2020 when COVID-19 slammed international oil prices into the single-digits. Global upstream investment is…
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