FOUR years ago, oil-industry veteran Lawrie Payne was at a loose end in his native Canada and casting around for a new business venture.

Then a contact in Britain called — would he be interested in looking for oil in the North Sea?

On the face of it, it was an odd idea. As president of Sunningdale Oil, Payne had experienced the North Sea’s heyday in the 1970s, when the big oil groups invested billions in giant fields. Now it was making its swansong, with production in decline and the big boys packing up and going in search of new finds in more exotic climes.

For Payne, however, the idea struck a chord. He knew oil prices were only going one way — up. He also knew from his time at Sunningdale that there were plenty of pockets of oil left in the North Sea too small to interest the likes of BP or Royal Dutch Shell, but just right for a smaller, nimbler group. He got on a plane to Aberdeen.

After small beginnings — money invested by the management, friends and family, then private placings with City institutions — Payne’s group, Ithaca Energy, quoted on the London Stock Exchange, is set to start producing oil and is drilling for more. It will pump 1,800 barrels a day by the end of the year and forecasts 25,000 a day in 2010.

It has sunk six wells, only two of which have been “dusters” — industry slang for a dud. And all the while the rocketing oil price is making Payne’s hunch look more and more clever.

“We couldn’t have done this without a higher oil price, and we thought that it would go up. But we had no idea it would go up this much,” he said.

Payne’s North Sea adventure is a small example of what $130-a-barrel oil — on Friday it reached $139, with many analysts predicting $150 next month — is doing to the oil-exploration game across the globe. Fields that were once thought too small, too deep under the sea, or in too dangerous a country, are being rushed into production.

Companies are also dipping into “unconventional” hydrocarbon deposits — the sticky mountains of tar sands in Alberta, Canada and on the banks of Venezuela’s Orinoco river, the “tight sands” gas reserves of western Australia, and the methane trapped in long-disused European coal mines.

It is not an easy road to riches. Oil prospecting remains a risky game, and costs have marched up in line with the oil price.

Companies that at the start of the decade would have expected a decent return on a field at $20-$30 a barrel now have to clear $70-$80 and more to make money.

They also face fierce competition from groups that don’t care too much about the price — national oil groups from the resource-hungry nations of Asia, led by China and India.

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