Senior executives with U.S. independents say the industry is struggling to keep up with staffing and drilling demands, according to a survey by accounting, tax and business-advisory firm Grant Thornton LLP. Some 89% of respondents anticipate an increase in domestic capital expenditures in 2006; 89% expect a need for more capital (versus 83% last year); 88% report difficulties obtaining drilling services (versus 70%); 79% expect more difficulty securing contract-drilling services this year; 95% expect higher employment levels at their companies in 2006 (versus 70% in 2005 and 62% in 2004); and 65% expect difficulty with hiring and retaining employees (up from 20% two years ago). The survey queried some 75 oil and gas executives. It is the fourth annual survey by the firm. Reed Wood, Grant Thornton partner-in-charge, energy practice, says, "This is the first time independent E&Ps were more concerned with issues like human resources than they were with price expectations." He adds that the survey's results indicate competitive pressures are growing in the E&P business. "While 2005 was clearly a banner year for the independents, the game is getting tougher. Our survey shows that a shortage of equipment and manpower will take a toll this year." Respondent Harold M. Korell, chairman, president and chief executive of Houston-based Southwestern Energy Co., says, "For acquisition companies, it will be a battle to position themselves best for growth, and for drilling companies, it will be a battle to secure the equipment and services to carry out their drilling plans." Winners in the past couple of years have been companies that focus on a drilling strategy underpinned by unconventional resource plays, he adds.