WASHINGTON, Sept. 24 (UPI) -- Investment in the exploration and production side of the oil and gas sector could flirt with historic lows if oil prices remain depressed, a U.S. brief said.
"Low oil prices, if sustained, could mark the beginning of a long-term drop in upstream oil and natural gas investment," a brief from the federal Energy Information Administration said.
West Texas Intermediate, the U.S. benchmark for crude oil prices, at around $44 per barrel are roughly 50 percent lower than this date in 2014. EIA explains investments in upstream activity, the exploration and production side of the industry, is "highly sensitive" to fluctuations in crude oil prices.
Most companies focused heavily on exploration and production have cut spending and staff in response to the weak crude oil market. Baker Hughes, which services the upstream sector, reported second quarter profits down 33 percent year-on-year, rival Schlumberger reported a 25 percent drop in revenue year-on-year and Halliburton posted a 26 percent decline in revenues.
Rig company Hercules Offshore, a company with headquarters in Texas, filed for bankruptcy protection in August.
EIA said total upstream investments could stay below the 10-year average if crude oil prices remain depressed. In annual energy outlook report, the EIA said it expected crude oil prices to average about $70 per barrel in 2020.
"This price level could result in substantially lower annual oil and natural gas investment over the 2015-20 period than the annual average of $122 billion spent during the 2005-14 investment cycle crest period," it said.