Good morning; here's what the Oilman has for you today:

• Oil, Gas Exploration Spending Rebounds

• Pipeline Sector Keeps Growing through M&As

• Upcoming Oil and Gas Events

• Tweet of the Day

Oil, Gas Exploration Spending Rebounds

After three years of lingering at all-time lows, spending on new oil and gas exploration is set to recover.

Over the next four years, it will average $22 billion annually, per Wood Mackenzie.

What was that about a transition?

The push to move from hydrocarbons to other sources of energy was one reason for subdued spending.

The other, of course, was the pandemic and the shock it caused in energy demand.

But the pandemic is now over, and demand for oil is at a record.

Of course, spending will improve, even with all the IRAs in the world.

And, of course, Wood Mac makes a caveat:

“While spending will increase, it won’t return to anywhere close to past highs, and there will likely be a ceiling on the increase.”

That’s per the director of global exploration research, Julie Wilson.

She also said the ceiling will come from a “lack of high-quality prospects that would satisfy today’s economic and ESG metrics.”

Until there’s demand, there will be supply

Forget “today’s economic and ESG metrics.”

As long as there is demand for oil and gas, there will be supply.

Shell’s former CEO, Ben van Beurden, said as much after Shell got ordered to cut production.

Everyone in the industry knows it.

Only forecasters who double as transition cheerleaders pretend it’s not true.

As we’ve seen, all it takes is a price spike in Europe, and suddenly everyone cares about energy security.

Good thing the oil and gas industry decided to care harder.

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Pipeline Sector Keeps Growing through M&As

Energy Transfer last week agreed to pay $7.1 billion for pipeline sector player Crestwood Equity Partners.

The deal follows others in the midstream sector amid heightened opposition to new pipelines.

“A flurry of transactions”

That’s how the FT described what’s happening to the U.S. midstream sector.

Energy Transfer alone has made three acquisitions since 2021, all for nine-figure sums.

In 2021, it bought Oklahoma-based Enable Midstream Partners for $7.2 bln.

This year, before snapping up Crestwood, the pipeline major bought Permian-based Lotus Midstream.

The list goes on.

Because if pipeline operators can’t grow organically, they’ll go the inorganic way.

The M&A way.

Sure, not all pipeline operators go that way.

Canada’s TC Energy, for example, went the other way, spinning off its pipeline business.

Can’t really blame it. Reputational pressure is strong with pipeline operators.

There are always two ways to solve a problem

The acquisition wave in pipelines is prompted by hurdles put in the way of new capacity.

The ones putting these hurdles include environmentalists, land owners, and federal and state governments.

All these, except landowners, are led by the mistaken belief that refusing to have more oil and gas pipelines will somehow make demand disappear.

That’s clearly not the case. I mean, look at prices and investments.

Hint: they’re both up.

But sure, don’t allow new pipelines.

That’ll sure make oil and gas cheaper to move from one place to another.

Upcoming Oil & Gas Events

• August 20-22: Kansas Independent Oil Association 86th Annual Convention and Expo, Hyatt Regency, Wichita KS

• August 21-22: The Energy Summit, History Colorado, Denver

• August 23-25: Rockies Petroleum Conference, Marian H Rochelle Gateway Center, Laramie WY PAW

Around the Global Patch

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🇱🇾 Libya's critical militia challenge.

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