Trends in the effectiveness of petroleum exploration and development drilling in the U.S.Gulf of mexico OCS region, 1977-1998

摘要

As the large and easy-to-find petroleum reservoirs are discovered, petroleum discovery rates are expected to decline over time. COnsequently the unit cost of reserves additions will tend to increase because of resource depletion effects. However, the more recent declining trend in finding costs of petroleum reserves and recent sharp increase in finding rates in the U.S.Gulf of Mexico Outer Continental Shelf (OCS) have provoked debates on the role of technical progress on the OCS as an emerging offshore oil producing frontier.This paper reviews trends in the effectiveness of exploration and development drilling in the Gulf OCS region. An analytical model of exploration and development drilling effectiveness is developed, estimated, and applied. The empirical results suggest strong staistical evidence of overall diminishing returns on exploration and development drilling on the OCS. The results also show that the positive impact of technical progress and economic incentives is significantly mitigating the depletion effects on the finding rates and the finding costs of petroleum reserves during our sample period. These resutls are, howeve,r conjectural.