U.S. Oil, Natural Gas Firms Pushed Spending to $20 Billion in 1994

Capital spending by oil and natural gas companies in the United States last year rose 9% to $20 billion, the highest level in three years, accounting firm Arthur Andersen & Co. said Wednesday.

Meanwhile, capital spending by such firms outside the United States fell 5% to $29.4 billion, the lowest level in five years, the firm said in its 16th annual review of oil and gas exploration and production.

“The trend we are seeing here of U.S. exploration and production spending increases will continue,” said Victor Burk, Arthur Andersen managing director of energy services.

“There is a renewed emphasis on exploration and development of U.S. oil and gas reserves among both the majors and independents,” Burk said.

The increased U.S. spending reverses a trend that saw major and independent oil companies racing to exploit resources in developing countries in recent years.

Independent oil companies last year invested $7.5 billion on domestic exploration and production, up about a quarter from the $6 billion spent in 1993.

Domestic spending by the majors was unchanged at $8.6 billion, or about 53% of the total $16.1 billion spent on U.S. exploration and development last year, Burk said.

“The strong increase in domestic spending in today’s survey data, which few would have forecast three years ago, indicates the oil and gas industry is committed to the U.S. over the long term,” he said.

In addition to increased spending, energy companies improved oil and gas production replacement rates and lowered costs of replacing reserves, according to the firm’s survey, which is compiled from the companies’ financial reports.

Costs of finding and producing oil and natural gas continued to fall due to improved technologies such as three-dimensional seismic surveys, horizontal drilling and advances in deep-sea exploration.