The world oil industry must adapt to lower world oil prices rather than hold out hopes for a reversal in the market's decline, the managing director of Royal Dutch/Shell said Monday.
The oil industry's success in the 1990s would depend on its ability to adapt its exploration and development programs to the leaner economic climate, John Jennings said in Brisbane at the annual conference of the Australian Petroleum Exploration Association.This would involve drilling wells close to existing fields as well as working out more efficient recovery techniques, he said.
Boosted by high oil prices in the 1970s and early 1980s, oil exploration has been taking place at unprecedented levels, but there have been no discoveries on the scale of fields in the North Sea and Alaska, Mr. Jennings said.
Because of this lack of new major finds and low oil prices, he said the industry would have to increase production from established fields.
This would mean a re-exploration of proven basins to pinpoint smaller, more elusive oil traps, and the development of cost-effective methods for producing from smaller fields, Mr. Jennings said.
Despite the disappointment of recent years, the game is far from over, and a lot of oil is still to be found - much of it in existing fields, much of it in established petroleum provinces.
Crude recovery from unconventional sources such as tar sands and oil shale remain uneconomic, but Mr. Jennings did not discount their future development.
He said major oil companies in Canada were developing techniques to recover oil from these sources.