Exploration drilling
operations
is very expensive: at a minimum 3 to 4 million euros on land and 20 to 60 million euros at sea, but it can exceed 100 million euros for very deep drillings or those in difficult conditions. If the drilling is a success and it opens up hydrocarbon production, the investment is reimbursed by the production of oil. But if it is a failure, the company loses its investment. That is the reason why oil companies weigh very carefully the pros and cons before taking the decision to drill! By the end of the studies in a zone, geologists and geophysicists have defined a certain number of prospects.
For each prospect they have calculated a range of probabilities for the accumulation of oil and gas. With the oil field engineers, they have also calculated a range for the potential reserves. The reserves represent that part of the accumulation that can be extracted and brought to the surface for exploitation. Why a range for the reserves and not a unique figure? Because all the parameters entering into the calculation of the accumulations and of the reserves are not precisely known before the drilling.
An oil company possesses prospects all over the world. But exploration budgets are limited and all the prospects cannot be drilled in the same year. A team exists therefore, which manages all the prospects. These people, technicians and experienced economists, decide each year the allocation of the exploration budget between the different subsidiaries worldwide. They approve, or not, the drilling propositions forwarded by the technicians or the subsidiaries. |