Abstract: The Cost of Finding Crude Oil and Natural Gas

Robert E. Megill

In the USA about 6 billion barrels of crude oil are consumed each year. Production is about half that at 3 billion. In sharp contrast, the industry is finding only about one billion barrels per year. The implication of this relationship portends imminent increases in imports of crude oil. For natural gas the situation is different, but is beginning to have the same trend as crude oil. In recent years the USA has been consuming about 18 Tcf, producing about 17 Tcf and finding only about 6 Tcf. We should expect increasing imports of natural gas in the next decade.

The cost of finding both crude oil and natural gas is related to the wellhead

price. If price increases, more money is spent looking for new supplies. When the wellhead price decreases, less money is spent looking for new supplies and the cost of finding (per barrel or Mcf) both crude oil and natural gas decreases.

The projection of present trends into the future for the supply and demand of crude oil and natural gas has major implications for national energy policy regarding the petroleum industry and the role of imports into the US.

AAPG Search and Discovery Article #90986©1994 AAPG Annual Convention, Denver, Colorado, June 12-15, 1994