This column was originally published on RealMoney on May 8 at 9:07 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Last week was like the Indianapolis 500 for oilfield nerds in the energy capital of the U.S. as the annual Offshore Technology Conference came to Houston.

Thousands of exhibitors came to peddle everything from rigs to pipes to those companies searching for oil and natural gas in global waters. Plus, many foreign countries set up shop in hopes of attracting explorers for black gold, and at the same time pour money into the ground and the economies of nations with hydrocarbon prospects.

While there are literally thousands of new products introduced each year, only a handful are truly innovative technologies that will improve exploration and production. And as it becomes more difficult to find oil and gas, and exploration horizons become more challenging, the need to rapidly advance capabilities becomes more acute.

This year, two companies' offerings stood out --

FMC Technologies

(FTI) - Get Report

and

National Oil Varco

(NOV) - Get Report

.

Operations on the Seafloor

One of the most promising new exploration horizons is deep water.

Whether in the Gulf of Mexico, the North Sea or offshore West Africa, rig and drilling technology now allows explorers to drill in water 10,000 feet or deeper. The most pressing challenge is to make production more efficient and reduce the infrastructure above the water line.

The solution: Put the operations on the seafloor.

For years, companies like FMC Technologies and

Cooper Cameron

(CAM)

have been perfecting production equipment for the seafloor, connecting multiple wells and reducing the need for major production infrastructure above the waterline. Not only has that technology created additional opportunities for deepwater exploration, it has reduced the cost of such exploration.

The next generation of deep-water technology is subsea separation and processing. Wells never run pure. Many produce oil, natural gas and water. As a result, there is the need to separate the products, and that is a process requiring fairly sophisticated -- and large -- equipment.

When drilling in deep water, that equipment has been placed on an above-water platform, which means that everything out of the well has to be brought to the surface. After it is separated, the water (and sometimes the gas) is reinjected into the well and the oil is sent to market.

Not only is the equipment large and expensive, the platform that houses the equipment is also expensive. However, the biggest issue with bringing everything above the waters' surface for separation is the impact on production.

The reinjection process degrades the integrity of the reservoir. Ultimately, the back pressure caused by reinjection in deep-water processes reduces the amount of oil and gas that will be recovered.

So a process that could put the processing on the seafloor would be of great value to deep-water producers, creating less back pressure and allowing the reservoir to produce longer. Enter FMC Technologies.

At the OTC, FMC and its subsidiary CDS Technologies won a "best in show" award for its new subsea processing technology. The company will install the first commercial subsea separation system in the coming year for

Statoil

(STO)

in its North Sea Tordis field.

Statoil will pay approximately $100 million for the system. While a lot of money, Statoil believes separation on the seafloor will increase the ultimate recovery from the Tordis field to 55% from 49%.

Even though that may appear to be a small increment, that change yields nearly 19 million additional barrels of production over the life of the field. To be more clear, at $50 a barrel, that equals nearly $950 million in additional revenue. That makes the decision to invest $100 million relatively simple.

While still prospective, the market for this technology could run to the $10 billion to $15 billion range between now and 2012. And, with little immediate competition, the bulk could go to FMC. While Cooper Cameron and others are looking at subsea processing ideas, the competitors admit they are at least two years away from a commercial product.

Everyone is watching the Tordis project. If it is successful, FMC will have a transformational technology with a list of customers at least a page long.

Ready for Drilling

While not as big a deal as subsea processing, National Oilwell Varco has a new Ready Rig that will serve an important role in the expansion of the North American rig fleet. A slimmed-down version of the company's popular Ideal Rig, the Ready Rig is a 1,000 horsepower unit with modern electronics and equipment that promises to make it quicker and simpler to drill wells to about 11,000 feet.

The company will market the rig for about $8 million to $9 million, with drill pipe and an automated pipe-racking system. It can be operated by a three-man crew.

While it may not be revolutionary, it fills a market niche that has been somewhat ignored, as rig developers have looked to build more powerful rigs with deeper potential. And it again shows that National Oilwell Varco not only has expertise in rig technology but also in identifying important market niches.

Moreover, I understand that the company took at least one order for the rig at the OTC, a good start for a new product. I've heard that National Oilwell Varco's backlog is growing, with April one of its best months on record.

If true, those who think the energy cycle is coming to an end should take a second look.

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:

It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our

free trial offer

to TheStreet.com's

RealMoney

premium Web site, where you'll get in-depth commentary

and

money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice --

try it now.

Christopher S. Edmonds is partner and managing director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback;

click here

to send him an email.