After 2-year low, the oil search accelerates
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However, Mr. Wood at Exxon says the near-term price outlook is not that optimistic. ''But we've got a big problem that's much more serious. We have a problem of reserves,'' he emphasizes.Skip to next paragraph
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For the past three years, Exxon has been able to replace the reserves it's produced. ''We're big enough to worry about the bigger problem,'' he says, ''but the US needs to worry.''
Exxon and other major energy companies such as Shell Oil are stepping up exploration efforts this year. Shell is drilling in 6,448 feet of water in the mid-Atlantic - the deepest offshore project attempted so far. They will be going after lease sales in the Gulf later this year.
Imports worry exploration executives at Exxon and Shell too. While the United States has made progress on imports (they now account for about 30 percent of our use compared with 45.7 percent in 1977), they say, it has not been enough progress.
The industry argues government policy should be more supportive of exploration. ''Oil is seen as an unending supply of revenues (for the government) whenever they are needed,'' says Mr. Jones. According to the American Petroleum Institute, taxes eat up 43 percent of pre-tax income in the petroleum industry, compared with 24 percent for other US industries.
And while former Secretary of the Interior James Watt opened up sizable amounts of land for exploration, the industry complains that Congress has taken the shine off their good fortune by stepping up exploration moratoriums because of environmental concern. In fiscal year 1982, for example, 700,000 acres were withdrawn from offshore exploration. The 1984 total is 53 million.
''We don't do any (environmental) damage,'' states Wood. ''We can document that, but we can't make anyone believe us.''
The industry also blames regulation for today's uneven distribution of pricing, the present glut, and hence disincentive to explore. It warns that once the glut is over, there will be a problem of delivering enough gas because the gas needed then is not being produced now.
Two subjective questions come out of the issue of government policy: Is the drop in US reserves such a bad thing? And how much is the government to blame for the last two years of exploration drop-off?
Industry analysts have various opinions. As far as the public is concerned, the drop in reserves is not a big deal because it has not made a drastic impact on energy prices, says Michael Maddox, director of drilling services at Data Resources Inc. ''If you are Exxon, though, you are awfully concerned, because you are watching an industry liquidate itself.''
On the issue of government policy, Maddox says ''There's no question that the government has hurt exploration. On the other hand, getting out of the way wouldn't have caused imports to go to zero.'' However, now that the easy oil has been found, and companies are having to look to the offshore frontiers for fuel supplies, government policy will become more important.