The global oil and energy sector is witnessing some of the biggest mergers and acquisitions and gas discoveries. The industry is leaving no stones unturned in its quest to quench the world's oil thirst. The huge surge in demand has put oil reserves at the center of the storm. The U.S. has emerged as a major player through the development of unconventional areas, but new sources have also been discovered in conventional reserves like the North Sea -- where the industry had been fast losing hope of stumbling upon anything worthwhile.
Changing North Sea fortunes
Production in the North Sea commenced back in 1971 and reached its peak in 1999. During 1999-2000, oil from the area constituted 9% of the world's output. Since then, average production has been on a decline. The area has produced almost 30 billion barrels of oil equivalent and seemed to be on a path to exhaustion. BP's
But this is not the end of the story. Something miraculous happened that might have given sleepless nights to the oil biggies that showed their backs to the North Sea.
A fresh breath of life
Oil companies make a beeline
After the news, oil majors rushed to announce fresh investment plans for the region. BP is making investments in the Clair Ridge in the North Sea. According to Wood Mackenzie Consultants, Total
The natural second step has been to step up research and development activities in the fields. One such initiative is a Danish energy agency program along with ConocoPhillips, Eni
The area provides added incentives to players, with high price realization being first and foremost. Higher oil prices have been a contributing factor for companies to take up drilling activities in the North Sea area, with Brent crude trading at an average of more than $100 a barrel, which is more than the price of WTI crude. The second incentive is proximity to markets like Europe. Also, advanced technology has opened up new avenues in the North Sea reserves as it has made shallow-water drilling viable for businesses.
Amid the furor, some worries remain. Tax hikes announced in the 2011 U.K. budget and general market instability due to the eurozone crisis may impede the area's growth.
The North Sea has been a major source since its discovery in the late '60s and has now made a comeback. Given the volume of recent discoveries, it has put an end to talks of it being a mature area nearing exhaustion. I am keeping my fingers crossed. If you're looking for additional stocks to profit from oil's increasing scarcity, I invite you to read "3 Stocks for $100 Oil." You can download this special report from The Motley Fool for free by clicking here.