(CNN) – The global oil industry is slated to make some big investments in 2017 following a painful two-year spending slump. And the U.S. — specifically Texas — is expected to lead the recovery.
Industry research firm Wood Mackenzie predicts U.S. oil sector spending will grow by 23% to $61 billion this year as American companies capitalize on rising crude prices.
Fracking in Texas and parts of New Mexico will really ramp up as American drillers look to extract more oil and gas from the Permian basin, said Malcolm Dickson, a principal oil analyst at Wood Mackenzie.
“The Permian is the hottest play around and it’s driving this growth in production… and growth in spending,” he said.
If crude prices keep rising and business owners feel good about the economic effects of a Trump presidency, there could be even more spending, according to the report.
Wood Mackenzie expects global spending on oil exploration and production to rise to $450 billion, up 3% from last year. It expects 20 major oil projects to get the green light, more than double the number approved in 2016.
Spending is still well below the record $774 billion set in 2014. But that boom was supported by oil prices that surpassed $100 per barrel.
Crude is currently trading just above $50 per barrel. It hit a 13-year low around $26 a barrel nearly one year ago but has been recovering ever since. Prices got a big boost when major producers — led by oil cartel OPEC — agreed in late November to limit production.
Barclays also sees a case for increased spending in 2017. The bank released survey results Monday that shows global industry insiders expect investments to grow by 7% this year, on average.
“With OPEC putting a floor on oil prices, operators have greater confidence to drill … although the early stages of the recovery will be uneven,” Barclays analysts wrote in the report.
Not all analysts are quite so optimistic about prospects for 2017.
Per Magnus Nysveen, head of analysis at oil consulting firm Rystad Energy, forecasts that approvals for major oil projects will take longer than expected and many may only materialize in 2018. He expects 2017 global spending to be roughly on par with last year.