About 400 people attending the 12th annual Executive Oil Conference, sponsored by Petroleum Strategies Inc. in Midland, Texas, recently heard a rosy price outlook from the senior energy economist for Goldman Sachs. Oil prices will be around $60 to $65 per barrel for the next five to 10 years, because not enough investment has been made in oil production and refining infrastructure, said David Greely. The price no longer correlates to oil inventories because of the geopolitical-risk premium and the fact that long-dated prices have boosted spot prices, he said. "We have entered what we call 'the investment phase,' meaning that high world oil prices will be supported for the next 10, maybe 15, years to justify more investment in drilling and infrastructure." Escalating costs and labor shortages will be part of this scenario. Greely cited the fact that Malaysian state oil firm Petronas is "losing" engineers to Qatar in the Middle East, and that welders are being flown from their native Nova Scotia to Fort McMurray to work in the Alberta oil-sands projects. For more on this, see the May issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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