By Pat Hinds
As we get close to the bottom of the market for oil & gas prices, I am starting to see articles on the “peak oil” theory reappear in local news papers and on the web; for example at:
Many experts in the oil & gas industry believe that we reached peak oil production early in 2000, yet the demand for oil will not peak until 2015. The combination of growing demand and depleting reserves will lead to a market that will see the price of oil test the highs of 2008. The counter to the peak oil theory is that technology will drive exploration into new areas of the world; this “unconventional” exploration will lead to new discoveries that will replace the existing oil supply.
The question is not when is oil going to test the $100+ per barrel cost, but how quickly is it going to happen. The “peak” theory is this will happen quickly and cause a major shock to the economic system; the “unconventional” theory is the process will be over a period of time and the shock to the economy will be more gradual. In both cases, the earnings of oil & gas companies will increase and the requirement to spend money on exploration will be significant.
My experience with start-up companies has proven that it is difficult to time a market; the key to success is to be in a position to capitalize on a market when it starts to move. Investment in technology by oil & gas companies is going to be significant, but it does not matter if you are in the “peak” camp or “unconventional” camp; the revenues of oil & gas producers will grow in the near future and that money will be invested into exploration and production growth. Oil & gas exploration will require technology to support the unconventional nature of exploration; as a technology company you will need to be in a position to take advantage of this move in the market. If you have not explored the oil & gas vertical and identified accounts within the sector as strategic, you will miss the market opportunity driven by “peak” oil demand.