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08/28/13 at 09:09 AM

Investment in U.S. oil and gas production reached the highest level in at least a decade, according to the accounting firm Ernst & Young.

A study released Tuesday found in 2012 the 50 largest U.S. oil and gas companies spent $185.6 billion on exploration and developing new production domestically. That represented a 20 percent increase over the previous year and the most in the 10 years the firm has done the analysis.

“The increased exploration and development spend we’re seeing in this year’s study speaks to the incredible opportunity unfolding in tight oil from shale formations and the high cost of developing these unconventional resources,” said Marcela Donadio, Americas oil & gas leader for Ernst & Young.

“Everyone wants in, and they are paying a premium to play.”

The spending spree comes as new hydraulic fracturing and horizontal drilling technologies continue to open up vast oil and gas reserves previously considered too costly to drill. U.S. oil production hit 6.5 million barrels a day last year, the highest level since 1996, according to the U.S. Energy Information Administration.

In Texas, where the Permian Basin and Eagle Ford formations are attracting scores of modern-day wildcatters, oil production increased 35 percent last year, according to the Texas Railroad Commission.

But in the longer term analysts and industry leaders continue to remain bullish. Last year the rate of new oil and gas discoveries to existing production reached 260 percent. In 2008 the rate was 9 percent.

“For years, people said the industry would struggle to replace U.S. oil reserves,” Donadio said. “The steady rise in extensions and discoveries as well as oil production replacement rates changes that story.”

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