Big Oil companies continue to try to find the next big thing in fossil fuel energy. One of the biggest drawbacks of Big Oil right now is supply. There are issues with extraction, refining and more. The Sydney Morning Herald points out some of the problems plaguing Big Oil:
But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are troubled by worsening delays. Drilling rigs are scarce. Engineers, geologists and petroleum specialists are in short supply. And the politics of oil and gas are becoming trickier, with producing countries demanding a bigger share of the revenue and growing angry about project delays that postpone their payments. …
These higher costs mean the industry needs higher energy prices to finance new projects. They are also constraining its ability to expand quickly. “There are no easy barrels left,” says Robinson West, the chairman of the industry consulting firm PFC Energy. “The only barrels are going to be the tough barrels.”
The main quest for Big Oil companies is to find as-yet untapped sources for oil and even for natural gas. This was one of the drivers behind Russia claiming part of the Arctic seabed during the summer. And Statoil (STO) is hoping to increase its piece of the action with its underwater operations in the far north.
But as Big Oil continues its quest for more oil, many of the companies appear to be overlooking the development of alternative energy. At some point, the rising costs of energy will finally prompt consumers to do something about increasingly-cost-inefficient fossil fuels. But until that happens, Big Oil companies like Exxon (XOM) and Chevron (CVX), which are moving up again after a volatile couple of days, are likely to continue to try to do their best to find new sources of oil.
Disclosure: I do not own any Big Oil stock.
Photo:Patrick Beeson, Creative Commons, Flickr