Investments in oil exploration and production should increase by 8% in 2010

Oil industry spending on exploration and production for new sources of fossil fuels is expected to rise 8% in 2010, according to a study published Tuesday. The 110 largest publicly traded oil and gas companies likely will spend US$353-billion this year to search for natural gas and crude, the energy research firm IHS Herold said in its 2010 Global Upstream Capital Spending Report. Due to the Gulf of Mexico oil leak, some exploration spending is expected to shift from deepwater to onshore wells, the report said.

That prediction is in line with industry trends that have seen large energy companies invest heavily in large natural gas fields, including the mammoth Marcellus shale region underneath Pennsylvania and surrounding states. And despite the Gulf leak, many energy companies are ”touting their exposure to liquids production,” IHS said in its report. Any increased regulation on the industry will result in higher operating costs and increased capital spending, the report found. In 2009 oil companies cut exploration and production spending by about 22 percent as the recession cut into oil prices. Crude costs, though, have steadily improved since last year. On Tuesday crude for July delivery rose 1.9% to US$76.54 per barrel.