Schlumberger CEO: $70/Bbl Oil Price Needed To Boost Activity

Although the price of crude has seen a significant rebound from its lows at the beginning of the year, it needs to be higher for a sustained period for global exploration activity to undergo a major boost, Schlumberger Ltd. (SLB) Chief Executive Andrew Gould said Friday.

Gould said that $60 barrel “is OK, but it’s not going to lead to a rush in activity. $70 (per barrel) might be a lot more encouraging,” he said.

The reason, Gould said, is that most of the easy oil is gone, and new projects are located in areas that are expensive to produce, such as the deepwater or the Alberta tar sands.
In addition, borrowing costs – to finance these major projects – have gone up in the wake of the financial crisis.

Wall Street Journal (through Google News)