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McCOLGIN, JAMES D., Conoco Inc., Houston, TX

ABSTRACT: Worldwide Exploration Climate

Petroleum companies have entered a period of aggressive restructuring. Investment in exploration is reduced as a result of lower available cash flow and the poor results of past investments. Exploration by non-government companies is expected to remain at low growth caused in part by the massive global restructuring now underway and environmental concerns related to consumption of hydrocarbons. Exploration is geared toward the midterm expected future price of oil which is not expected to increase substantially.

With limited available resources, companies are becoming much more selective in their area of focus. This, coupled with probable industry consolidation of companies, will result in a decrease in competition for new acreage. Funding will concentrate on conventional low cost plays in the areas where governments grant the best terms. High-cost oil at the margin, including Arctic, heavy oil, and deepwater areas, has become particularly vulnerable as most investments are being made in projects that survive economically under low prices. Additionally, R&D funding has been reduced, thus the development of cost effective extraction technology necessary to exploit these higher cost areas has been deferred. We must acknowledge that developing high-cost frontier or non-conventional oil is a igh-risk venture that can only be pursued through efficient operations and the effective use of appropriate technology under economic terms which provide incentive and protection if prices decrease. A collaborative working partnership between host governments and industry that effectively addresses the long-term objectives of both parties is essential for these types of projects to proceed.

AAPG Search and Discovery Article #90988©1993 AAPG/SVG International Congress and Exhibition, Caracas, Venezuela, March 14-17, 1993.