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Think about it. Thus far in 2011 we've spent lots of our time ruminating about the generally steady climb of prices for crude oil and gasoline. While those two markers have backed off ever so slightly of late, I'd be hard to convince that they're not headed higher in the intermediate or long term.

We can all think of realistic reasons for the increases. Of course, the world has faced what's been labeled as the Arab Spring, during which demonstrations and violence have gripped much of the Middle East and North Africa. However, only Libya has thus far affected global crude production -- and hence prices -- to any meaningful extent. And while we've all been keeping our eyes on bigger producers like Saudi Arabia and Iran, it's also nigh onto impossible to discuss oil price escalations and pain at the pump without the subject of out-of-control speculators rearing its head.

Chasing expensive oil
For my money, however, a lion's share of the price hikes involve fundamental changes in where and how we retrieve crude oil -- along with the manner in which those changes may expand. While I'm agnostic regarding scary thoughts about peak oil, we've clearly moved light years from the days when we could simply turn a drill bit to the right in West Texas or the shallow-water Gulf of Mexico and transport the resulting crude to the appropriate refinery.

But how things have changed! For instance, if you paid attention to The Wall Street Journal last week you have more than an inkling that the members of Big Oil are now being forced to head for many of the world's least hospitable places and fight challenging technological conditions for success in producing black gold. For instance, the Arabian Peninsula and other Middle East garden sports not long ago typically released a treasure trove of desirable light crude with very little coaxing. However, they're now testing the technological mettle of the major oil companies that seek to produce the "thick as molasses" heavy oil from the wells.

In a desolate area of the peninsula that they jointly own -- the Partitioned Zone -- Saudi Arabia and Kuwait are attempting to extract gooey heavy crude from the giant, but recalcitrant, Wafra field. The Saudis have enlisted the aid of Chevron (NYSE: CVX  ) , the second-largest U.S. oil company. Chevron's approach, which still is in what amounts to a $340 million experiment in a tiny part of the field, is to inject 600-degree-Fahrenheit steam into the ground with an eye toward reducing the oil's viscosity.

Who's paying for this?
Should that approach prove successful -- Chevron is putting up the initial funding -- the all-in tab certain to expand to untold billions of dollars over several decades. But the project's success is hardly guaranteed. In fact, the Journal quotes retired Chevron engineer Robert Toronyi as saying, "They're in trouble." He maintains that it'll be difficult for his former employer to generate a profit, given the challenging nature of the project.

While Chevron is alone among major oil companies working upstream with the Saudis, other efforts in the region have also called upon Western expertise. For instance, Connecticut's Praxair (NYSE: PX  ) has rolled up its sleeves to work with Abu Dhabi on improving production from the heavy oil Zakum field. And Occidental Petroleum (NYSE: OXY  ) and Royal Dutch Shell (NYSE: RDS-B  ) have been plying their trade in Oman's Mukhaizna and Marmul fields, respectively.

You likely know that in nearby Iraq a host of the world's big oil companies have been laboring to increase production from the war-torn country. Indeed, their efforts are beginning to pay off: China National Petroleum, the parent of PetroChina (NYSE: PTR  ) , recently received its first 2 million barrels of oil from its work alongside BP in the giant Rumaila field.

Rosneft is picking up a shell
But it isn't only in the overheated Middle East where the technological knowhow of the world's major companies has been called upon to benefit exploration and production efforts. Russia has recently turned its attention toward its more promising -- but essentially unexplored -- areas, where it can benefit from the companies' offshore expertise. For instance, in January the state-controlled oil giant OAO Rosneft and BP (NYSE: BP  ) agreed to exchange stock, prior to jointly exploring the frigid Russian Arctic.

However, as the world knows by now, the deal has been blocked by a group of Russian billionaires who own the other half of BP's TNK-BP joint venture, Russia's third-largest oil company. And so authorities in the country have reportedly held talks with Royal Dutch Shell regarding the other European company replacing BP in the Rosneft partnership. At the same time, ExxonMobil (NYSE: XOM  ) and Rosneft will figuratively hold hands under another new arrangement that will have the pair exploring the Tuapse Trough area of Russia's Black Sea.

More travels for Big Oil
I could continue with descriptions of newly formed alliances for which major oil companies have ventured far from the easy pickings of yesteryear to augment their dwindling reserves and production. Indeed, with the percentage of the world's oil and gas reserves owned by the traditional majors having plummeted from 85% in the 1960s to just 15% today, it appears likely that the world's governments and their state-owned oil companies will more frequently tap the technological capabilities of the traditional companies.

But how should Fools best play this escalating and important phenomenon from an investment perspective? At the risk of excessive simplicity, my recommendation is to look first to Exxon, the biggest of Big Oil. Given its sound management, technical expertise, and geographic spread, I'd watch the big company carefully. The ideal way to do that is add the company's name to your watchlist, our free, personalized stock monitoring service.

With situations like this in mind The Motley Fool has created a new special oil report titled "3 Stocks for $100 Oil," which you can download today, absolutely free. In this report, Fool analysts cover three outstanding oil companies. To get instant access to the names of the three oil stocks, click here -- it's free.

Motley Fool newsletter services have recommended buying shares of Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named in this article. The Motley Fool has a disclosure policy.

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David Smith

A longtime securities analyst and multiple-term member of The Wall Street Journal's All-Star Research team, Dave specializes in energy and natural resources.

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