The Oil Drum

Roger, I just don't know about the Rockies. The whole area was completely open to leasing until the moratorium until, as I recall, about 1980, except for the national parks.How many giant oil or gas field have been discovered since then in the areas not placed in the reserved areas? None.
Same way with the eastern Gulf of Mexico shallow water areas, the California, Oregon, Washington Coasts, the Eastern Seaboard-the major oil companies pretty well picked over the inexpensive and moderately priced potential areas. I wouldn't expect many giant fields in any of those areas.
Areas where technology has improved to the point of new exploration-Deep water Gulf of Mexico-look a lot better. Areas where prices and technology have improved to make reserves formerly uneconomic to develop worthwhile-Bingo!
I think the real economic message of Hubberts peak is the cheap, inexpensive oil and gas has been discovered, and mostly produced. Ehat's left is going to cost more and money until no one can afford it.Quibbling about the exact timing is important to people trying to validate economic mathematical models, but not the rest of us.
Probably 98% of the oil and natural gas thats ever going to be discovered has already been discovered in the producing areas in the US. "New fields" like the Barnett shale were known to exist for many years-thats why George Mitchell tried to produce the shale gas for twenty years before he came up with an economic method. Same with Appalachian coal seam gas and a dozen other plays. People have known about coal seam methane for 150 years in the US. Thats when miners started accidentally blowing up mines.
Whats different is the price, so good engineers have devoted their time to figuring out how to make a profit.
My father had an economic concept he called trading dollars. He said there were a lot of areas-the Giddings Austin Chalk play was the one he referred to-where except for tax sheltering advaantages an investor was just trading dolars. In other words by the time he reached pay-out the cash flow was about the same as buying stock, and stock was a heck of a lot more safe. And he was right, except for the oil price run up from the oil embargo and new technology such as horizontal multi-lateral completions changed that game.
I think horizontal wells and fresh water fracs have changed the economics on coal seam gas and Devonian/Ordivician shale plays. And peak gas has raised prices permanently in the USA.
So how do we make money with this? Aye, thats the rub. The majors aren't a good idea-they're overhead is too high. Same way with companies run by promoters who are always chasing the next hot deal, like EnCana or Chesapeake. My bets are on players like XTO, where Boone Pickens is putting his money, or Anadarko which has stayed focused on buying or drilling long-lived production. These companies are smart and very well managed. Service company stocks are going to do great, this stuff is expensive to drill and complete
Working interests with low overhead or royalties under areas where there is production look best to me. Gas Royalty Trusts look wonderful, they're priced by being discounted to today's prices for future reserves, ad gas prices will very likely double in th next year as we have an average 32% depletion rate in new wells coming online and the stored gas won't cover the decline rate very long.
At any rate, thats my best thinking. I'm personally planning to do 4 or 5 oil well reentries about 60 miles southwest of Houston in an oil field that was discovered in 1902. The wellheads are leaking oil, so I know there's some pressure and a couple of months of production at 5 barrels a day per well should get my money back.