FORGET pipeline problems in Alaska. The real elephant in the corner is “peak oil”. This issue is in the same category as global warming – although there is a division of opinion as to whether or not it’s real, it is probably prudent to assume the worse-case option.

Peak oil is the point at which it is accepted that half of the world’s total oil supplies have been used, and lifting production worldwide becomes problematic. It doesn’t mean we’re about to run out, but it surely indicates that it won’t get any cheaper. It is likely peak oil in US fields occurred about 1971, and there are suspicions about the number of years the Saudis can keep pumping greater quantities of black oil.

Figures for May indicate that US, British and Norwegian production fell, but there is no real consensus emerging about global oil reserves peaking – it might have already happened, or be five, 10 or 20 years off. If you suspect the peak oil crowd is right, then it might pay to take a closer interest in announcements coming out of oil and gas explorers.

Especially with natural gas prices moving upwards in some markets, including North America.

AMONG the latest developments is the move by Petsec Energy to acquire interests in another 33 oil-and-gas leases in the Gulf of Mexico for an outlay of $13 million. More than 36 prospects within these leases have been mapped, according to Petsec, with an estimated potential for 157 billion cubic feet of gas and 29 million barrels of oil. This brings the number of Gulf leases in which the Sydney-based company has a stake to 50.

Pryme Oil & Gas continues to gobble up acreage onshore in the US, the latest with a joint venture on the Tuscaloosa Trend in Louisiana which has been a big gas producer and is now getting a new look-over, led by by BP and Amoco.

Cooper Energy has recently boosted its oil reserves in South Australia by 50 per cent. Its Cooper Basin sales for the June quarter of 81,849 barrels might seem small beer, but the cash is helping it fund its share of a well that will spud next February in an Indonesian field where a 200 million barrel discovery is being targeted.

But, of course, the quest for oil and gas is rarely a smooth affair. Two promising recent floats, both aiming at reviving old fields, seem to have lost favour with investors.

Elk Petroleum not only managed to get its float away in 2005, but last March persuaded clients of KTM Capital to part with another $11.7 million to help get the Grieve field in Wyoming, which had first pumped oil in 1954, back into shape. The field has proved a hard nut to crack, with Elk producing just 17,551 barrels of oil and 5.6 million cubic feet of gas since it listed. Its shares hit $1.23 in February, but came to ground this month, bottoming at 29.5c.

Production at the Caddo Pine field in Louisiana is running at about 600 barrels of oil and 2 million cubic feet of gas a month. When it listed in July 2005, Louisiana Petroleum shares closed 57 per cent up on their first day and went as high as 44.5c. This month they got down to 9.5c.

A MORE exotic oil and gas play is Mali, where Sphere Investments holds two exploration licences covering 72,656sqkm. The Perth-based company, now focusing on developing its large iron ore project in Mauritania, is planning to spin off the Mali acreage, probably listing it on the Doha Stock Exchange in Qatar.

Sphere has Qatar Iron & Steel as a 9 per cent shareholder and has formed strong ties in Qatar and Saudi Arabia where steel companies are looking for North African iron ore supplies.

Chances are that Sphere stakeholders will get a look-in at the new oil vehicle. Sphere is in the process of floating a new company here, Shield Mining, to hold its Mauritanian gold and base metals assets. Sphere is pumping $4.42 million into Shield and is seeking to raise just $1.5 million solely to get shareholder spread. Existing Sphere shareholders not only have a priority right to subscribe, but Sphere will make an in-specie distribution of its majority holding in the new company to them.

A WARM welcome to our newest – and unhedged – gold producer, Kalgoorlie-Boulder Resources. The company will extract between 5000oz and 6000oz from its Jackpot mine near Coolgardie before deciding whether to go underground. It’s flogging off its oil, gas and uranium assets to focus on gold and base metals around Kalgoorlie. One promising lead is some nickel sulphide targets south of Bulong – particularly with nickel spot at around $US28,000/tonne.

The Weekend Australian implies no recommendations regarding any of the stocks mentioned. The author does not hold shares in the mentioned securities.

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