Big Oil reaps big profit in 2Q as fuel prices soar

The search is leading many in the industry back to the U.S.

Exxon, BP and Shell reported lower oil production from fields outside the U.S. in the second quarter. International production dropped in part because maintenance issues and entitlement programs in foreign countries forced them to take less oil as prices rose.

A wave of anti-government uprisings also swept through oil-producing regions in North Africa and the Middle East.

Production issues overseas will help keep the U.S. a premier destination for the oil industry, even if Congress heeds calls from Obama and others to do away with roughly $4 billion in industry subsidies. Not only is America the largest petroleum consumer in the world, it is home to the most extensive pipeline and transportation network. Technologies that have helped tap large reserves of natural gas are increasingly being used to find oil onshore in the U.S.

Even without subsidies, analysts said, the U.S. probably would still be a more profitable place for oil companies to work. In addition to entitlements, many foreign countries charge expensive royalties and other fees that can sweep a large portion of a company’s oil revenue off the table. Oppenheimer & Co. analyst Fadel Gheit said the Algerian government takes about twice as much in taxes and royalties as the U.S. Libya pockets three times as much. “Outside the U.S., the government take is significant,’’ Gheit said.

As they announced their quarterly profits, oil executives said they will devote billions of dollars more to finding new deposits that will eventually bring more supply to the market. The executives also said they want to get back to work in the Gulf of Mexico, where deepwater exploration was shut down last year following BP’s massive oil spill.