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Technology and the Exploratory Success Rate in the U.S. Offshore

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  • Kevin F. Forbes
  • Ernest M. Zampelli

Abstract

Over the last 20 years, the offshore exploratory success rate has more than doubled for a group of large producers which includes Exxon, Shell, Mobil, and Texaco, according to the U.S. Energy Information Administration (EIA). It is tempting to conclude that this increase can be attributed to the many advances in seismic and drilling technologies that have occurred over the same period. However, such a conclusion may be premature given that much of the increase in the success rate occurred in the late 1970s and early 1980s, well before the major advancements in seismic technology. The conclusion may also be premature in that it ignores the relationship between price and the success rate. Increases in the price may positively (negatively) affect the success rate. Given this, and the decline in price over the past decade, one would expect the success rate to have declined (increased) in the absence of technological change. This paper develops an econometric model that attempts to disentangle and quantify the effects of the major factors hypothesized to affect the offshore exploratory success rate. The analysis relies on company level data from the EIA's Financial Reporting System over the period 1978 through 1995.

Suggested Citation

  • Kevin F. Forbes & Ernest M. Zampelli, 2000. "Technology and the Exploratory Success Rate in the U.S. Offshore," The Energy Journal, , vol. 21(1), pages 109-120, January.
    • Handle: RePEc:sae:enejou:v:21:y:2000:i:1:p:109-120
    DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No1-5
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    References listed on IDEAS

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    1. Paul W. MacAvoy & Robert S. Pindyck, 1973. "Alternative Regulatory Policies for Dealing with the Natural Gas Shortage," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 454-498, Autumn.
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    4. Forbes, Kevin F. & Zampelli, Ernest M., 2002. "Technology and the exploratory success rate in the U.S. onshore," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 319-334.
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    Cited by:

    1. Mohn, Klaus & Osmundsen, Petter, 2008. "Exploration economics in a regulated petroleum province: The case of the Norwegian Continental Shelf," Energy Economics, Elsevier, vol. 30(2), pages 303-320, March.
    2. Lindholt, Lars, 2015. "The tug-of-war between resource depletion and technological change in the global oil industry 1981–2009," Energy, Elsevier, vol. 93(P2), pages 1607-1616.
    3. Forbes, Kevin F. & Zampelli, Ernest M., 2002. "Technology and the exploratory success rate in the U.S. onshore," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 319-334.
    4. Cleveland, Cutler J. & Kaufmann, Robert K., 2003. "Oil supply and oil politics: Deja Vu all over again," Energy Policy, Elsevier, vol. 31(6), pages 485-489, May.
    5. ten Cate, Arie & Mulder, Machiel, 2007. "Impact of the oil price and fiscal facilities on offshore mining at the Dutch Continental Shelf," Energy Policy, Elsevier, vol. 35(11), pages 5601-5613, November.
    6. Managi, Shunsuke & Opaluch, James J. & Jin, Di & Grigalunas, Thomas A., 2005. "Technological change and petroleum exploration in the Gulf of Mexico," Energy Policy, Elsevier, vol. 33(5), pages 619-632, March.

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    Keywords

    Oil exploration; US; oil production; oil companies; drilling offshore;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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