5 Most Attractive Regions for Oil Investment
Photo credit: Devon Energy
For the second year in a row, the Fraser Institute's Global Petroleum Survey ranked Oklahoma as the top spot on Earth for oil exploration and development.
The Fraser Institute surveys managers and executives of oil companies across the globe every year, asking them to evaluate locales based on attractiveness for oil investment. The survey includes questions that measure how encouraging any given place is, based on its regulatory, commercial, and geopolitical climate.
Let's look at the top five regions on the institute's list. Note that overall proven reserves -- and therefore the volume of real investment dollars -- are not factored in to the survey's rankings.
No one in his right mind would expect to see Arkansas on this list, given that the state produces all of 18,000 barrels per day, but here we are. The state was one of the very few on the survey that didn't receive a single "Would not pursue investment" because of any of the listed factors. It also ranked highest out of any North American jurisdiction for its lack of trade barriers.
It's important to note that when the Fraser Institute reshuffles its rankings to group regions by size of reserves, Texas places first, ahead of Qatar, Alberta, the United Arab Emirates, and Norway. This list is all-inclusive, though, so the Lone Star State sits in fourth place.
Texas has a history of being oil-friendly at the state and local level. It's currently producing more than twice the amount of oil of any other U.S. state, and it has arguably the best infrastructure in place for continued growth. There are many, many oil producers in Texas, but the top two are Occidental Petroleum and EOG Resources . Both companies produce more than 40 million barrels of oil in Texas every year.
Last year, Manitoba was the only Canadian province on the list, but Saskatchewan takes its spot this year, as survey respondents noted that the province has a "[c]ollaborative approach to setting regulations that involve environmental, industry, and local concerns," and that its "Statistical Inventory Reconciliation (SIR) is very effective with land owners and processes to get wells drilled." Furthermore, "[r]egulations have very little time impairment on activities."
Saskatchewan provides 20% of all of Canada's oil. Second only to Alberta in production, the province has an oil scene dominated by PetroBakken and Crescent Point Energy.
The Magnolia State is not known as an oil-producing powerhouse, but it ranks second on this list for the second year in a row. As one survey respondent put it simply, the draw to Mississippi is "[e]ase of regulation and low costs to operate with good lease terms."
Mississippi doesn't produce much crude oil, but it seems the producers who are there are having an easy time. Regardless, the state remains a key cog in the U.S. energy story, as its three oil refineries account for 2% of all U.S. capacity.
As it turns out, that place where the wind comes sweepin' down the plain is also the perfect spot to set up an oil rig. Oklahoma ranks fifth in the U.S. for oil production, but first on our list, as survey respondents like the state's commercial environment better than any other place in the world. In addition, respondents remain unconcerned about Oklahoma's environmental regulations and are positive about the state's taxation and fiscal terms for oil and gas production.
Many important energy companies are based in Oklahoma City and Tulsa, including Devon Energy and Magellan Midstream Partners , two businesses that produce and transport oil, respectively. The state is also home to the Cushing oil hub, further cementing its importance to not just the American energy story, but the world's oil picture as well.
The Fraser Institute's list is meant to be a global one, but the North American energy story is so compelling right now, and the geopolitical risk so low, that you can't blame exploration and production companies for loving it here.
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