Every day, there’s another story about oil and gas exploration in North America. The naysayers call it a disaster; the bulls call it a miracle.
Recently, there have been a slew of stories about how high finance is getting in bed with E&P companies in the United States’ tight oil patch.
Of course there has always been an interest in oil and gas, but with surging production and huge land deals being made lately, more and more private equity, venture capital, and banking firms are getting their hands dirty.
And it’s because we’re talking about a huge amount of undeveloped oil and gas that has yet to be tapped.
Just yesterday, Laredo Energy secured $130 million in private equity money to help pay for drilling in the Eaglebine play in central Texas.
Then there’s PetroCore, which was featured in Bloomberg last week for securing $100 million from another private equity firm to buy and develop unconventional oil prospects in North America.
And of course, there’s also Swift Environmental Ltd., a Canadian company that found a way to make a buck off the oil and gas boom. Founder Sean Hannigan developed a state of the art vacuum.
That’s right, a vacuum.
It fits in the back of a pickup truck and helps Canadian drillers clean up their well sites quicker by sucking up any spilled oil.
We can’t exactly blame the finance guys for jumping into the oil and gas business all over North America. They typically pursue the most lucrative opportunities — and what could be more lucrative than energy?
Remember, no matter how pessimistic one is over fossil fuels, the cold, bitter pill to swallow is that these energy sources are the backbone of world power generation.
Don’t believe me? Just take a look at this sobering chart…
Above, you can see BP’s projections for global energy consumption up to 2035. And it shouldn’t come as a shock that coal, oil, and natural gas will still account for most of the world’s energy consumption for decades to come.
And as we continue to see more money flow into developing tight oil and gas resources, you can bet that OPEC’s list of worries will grow even larger — especially once the export ban in the United States is lifted.
Until next time,