The consensus of oil and gas industry analysts is that we are reaching the end of the downturn. In fact, most analysts are forecasting improved economics by the middle of this year.

The Q3 findings published in the EIC (Energy Industry Council) Monitor — a quarterly index used as a barometer of the global energy industry — indicate that the power sector is leading the way toward continued economic recovery, followed by the renewable energy and downstream sectors.

According to Mike Major, EIC CEO, “All sectors across the energy supply chain are now showing signs of a sustained recovery.” The first green shoots of recovery were visible in the renewable energy and power sectors in the middle of 2009, and these areas are continuing to lead the way, boosted by a growing commitment from government and industry to cleaner and more secure energy supplies. Part of the green energy picture, of course, is natural gas.

“EIC Monitor shows that recovery is already on its way,” Major said, “although the continued turmoil in the financial markets may still have an impact on future project funding.”

The US Energy Information Administration’s annual energy outlook says oil prices will rise steadily beginning in 2010 and will continue on that trend to 2035 and beyond. And the natural gas wellhead price is projected to follow suit, rising from the low levels experienced during the 2008-2009 recession. Shale gas has been the primary source of recent growth in US technically recoverable gas resources recently and is expected, along with Alaska production, to offset declines in supply to meet consumption growth and lower import needs through 2035.

Meanwhile, a report issued by IHS CERA in the beginning of December announced that falling costs for upstream oil and gas facilities appeared to be bottoming out. The IHS CERA Upstream Capital Costs Index, which tracks costs associated with the construction of new oil and gas facilities, continued to decline, down 4% from mid-2009.

According to Daniel Yergin, IHS CERA chairman, “The IHS CERA upstream cost analyses show that some confidence has returned to the industry as oil prices have recovered and expectations rise for a strong economic recovery in 2010.”

Overall, the indices project an increase in costs in the near term, with relatively stable oil prices and recovering gross domestic product growth driving capital costs.

Infield Systems in the UK points to upbeat announcements from central bankers that imply the world economy is already in the first stages of a recovery. Real economy indicators such as manufacturing and housing have improved in Western Europe and North America, and both consumer and business confidence have partly recovered from earlier lows.

It is Infield’s view that the worst of the global recession is likely past — even if the way ahead is not completely clear.

Infield analysts believe companies that weathered the economic recession in 2008 and 2009 are now better placed than before and are ideally placed to take advantage of the next round of spoils that will last well into the next decade.

This is some of the best news the industry has heard in quite a while.

I don’t know if it’s time yet to jump on the bandwagon, but I sure like the sound of this tune.