How Successful
Will the New Phase of Exploration Be If The Earth is
Already a Pin-Cushion?
McMahon, Neil1 (1)
With the current growing level of
expenditure on exploration, the industry may have found a floor to the
deteriorating trend in global discovered volumes. It is likely that the oil
industry will find more in 2006 than it did in 2004, the year marking the
lowest point. Projections that the industry will start a major exploration
discovery cycle are likely to be wrong. Analysing a
time series of global maps showing all exploration wells drilled from 1965-2005
one can see that every significant sedimentary basin has been tested. From
successes and failures, the industry has a good handle on where the remaining
reserves are located. Unfortunately no significant basin remains unexplored and
there is little hope of repeating the supply response recorded after the last
high oil price crisis in the 1973-1982 period. There will be losers in the
current cycle of exploration activity, resulting in higher than historical
exploration expenses, small field sizes, high finding and development costs,
and low reserve replacement rates. For companies just starting to revamp their
exploration programs, the chances of replacing reserves without increasing the
exploitation of unconventional hydrocarbons or investing in ex-National oil
companies is remote. In particular, companies that hope
for major finds in basins that previously have been extensively explored, with
the assumption that new technology will improve their success, will be
disappointed. We expect results of exploration activity to be relatively poor,
the outlook for 2007 could be less then impressive if low success leads to
reductions in exploration budgets.
AAPG Search and Discover Article #90063©2007 AAPG Annual Convention, Long Beach, California