As our industry moves from the depressed state of the past several years, the rapid rise of unit costs within exploration, development, and production is causing real concern that the activity increase may be dampened by rising industry costs. In addition, and more ominous, is the possibility for a more expensive cost structure which could threaten the viability of oil and gas as the energy of choice into the next century.

Nevertheless, the future health of our industry requires that cost increases be offset by concomitant productivity increases. Efficiencies must be added that will drive down finding and production costs even in the face of stretched resources and rising infrastructure costs. How we accomplish this is our ultimate challenge and there are several fronts that offer the potential to achieve breakthrough productivity.

This paper will address improvements in reservoir productivity, infrastructure costs, and applied technology development. Finally, these activities must be integrated through the right business model structured to align the interests of all parties. Experience is proving everyday that aligning interests definitely leads to productivity gains. Service companies are contributing to the industry's ability to meet today's challenges through technology development and creative alliances.

Traditionally, the oil and gas industry has been a zero sum game. This is no longer necessarily true. Working together in key, high-impact areas, we can enlarge the industry and help assure that oil and gas is the world's preferred energy source well into the 21st century.

AAPG Search and Discovery Article #90937©1998 AAPG Annual Convention and Exhibition, Salt Lake City, Utah