Oil and gas executives expect their companies' U.S. upstream capital spending to increase this year, according to the results of a recent survey by KPMG. The study polled 126 global corporate and technical executives from oil and gas companies in March and April. Twenty percent of the respondents stated their fiscal year 2004 upstream capital spending, excluding acquisitions, in the U.S. market would increase 10% or more. Twelve percent said it would increase by less than 10%. On the other hand, 13% expect spending to decrease up to 10%, and 7% said it would decrease 10% or more. Forty-three percent believe capital spending will remain flat. "Our survey found in general that executives are casting a fairly optimistic view going forward," says William Kimble, national sector leader for KPMG's energy and chemicals practice. "That being said, there are still many factors, such as the conflict in Iraq, that will continue to shape the industry's future." Land-access issues are among those factors. When asked if federal acreage now off-limits to producers were to become available for oil and gas activity, 35% of the respondents said they would increase their U.S. spending between 10% and 30%. However, respondents also noted that currently, in addition to a lack of high-quality prospects, there are not enough qualified people to handle available opportunities. Among other issues, most of the respondents expect merger and acquisition activity in North America to increase. And current high natural gas prices continue to be a concern in the areas of industrial production, consumer spending and inflation. Fifty-six percent of the respondents are optimistic that a comprehensive U.S. domestic energy policy will be reached within the next two to five years. However, 31% believe a policy is unlikely to happen. -Jodi Wetuski
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