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U.S. Shale Patch Dominates Top 10 Oil Investment Ranking

Bakken

Oklahoma and Texas are the best destinations for oil and gas investment, with the two states occupying the number 1 and number 2 spots respectively in the latest ranking by Fraser Institute of the best oil and gas investment destinations globally.

The think-tank’s Global Petroleum Survey 2016 polled 381 managers and executives from the industry on issues concerning regulatory frameworks for oil and gas investments, environmental policies, and political stability. Issues in these areas have been identified by the industry as major barriers to investment decisions.

The survey respondents ranked countries, provinces, and states, as well as offshore areas when relevant, which is why U.S. states rank among countries such as Norway, and provinces such as Saskatchewan and Alberta.

It’s hardly surprising that Oklahoma and Texas top the list: both are major oil-producing states and have been so for a long time. As such, legislation has been passed to stimulate investments in oil, and even though the environmental lobby is becoming increasingly powerful on a national level, in Oklahoma it has seen serious opposition from the Attorney General, who has just been picked for the top job at the Environmental Protection Agency.

Texas, the crown jewel of the U.S. oil industry, is also not among the most enthusiastic environmental policy backers: the state is simply too dependent on the energy industry to afford it, so for oil and gas investors, it is as attractive and safe a destination as Oklahoma. Still, Texas is diversifying into renewable energy: it’s already the country’s top producer of wind power, according to the EIA.

Going further down the top 10 list, we see Kansas at #3, Saskatchewan at #4, and Wyoming at #5. Kansas, home to the Mississippi Lime play, was swept into what was called the new gold rush in the early 2010s and played a part in the shale revolution. Wyoming is home of the Big Horn Basin and has suffered dearly from the oil prices crisis, which has further motivated its authorities to stimulate new investment in the industry and oppose environmental policies. Related: Japan Importing Less Crude Oil; Gives Iran, Russia Cold Shoulder

Saskatchewan, at #4, hasn’t spent as much time in the public eye as Alberta and its problematic oil sands has, but it has been ranked by oil and gas executives as the fifth best jurisdiction to invest in energy. The province combines oil sands with regular oil, which is being extracted through conventional and horizontal drilling alike. It’s the second-largest oil producing province in the country, after Alberta. With Canada being the kind of stable economy it is, it’s only understandable that it should be on the top 10 list.

Based on the criteria of the survey, it’s also hardly surprising that Venezuela was ranked as the least attractive for oil investments, followed by Quebec – likely because of the opposition to fracking. Other list bottom dwellers include Libya, Bolivia, New Brunswick, California, New South Wales in Australia, Ecuador, Ukraine, and Russia.

It’s interesting how environmental policies and opposition to fracking have been decisive in ranking some locations in North America and Australia among the worst energy investment destinations, along with politically chaotic countries like Venezuela, Ukraine and Libya.

This fact could motivate environmentalists to push harder for environmentally friendly regulations that would seek to tie the hands of oil and gas businesses and further demotivate investments. A pro-oil government in the U.S. could compromise such a push, however, with a focus on job creation and energy independence.

By Irina Slav for Oilprice.com

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