Previous Summit

North America is the birthplace of the oil and gas industry. After nearly a century and half, the industry now finds itself at a crossroads. Oil and natural gas prices are at record highs, and although price spikes have occurred in the past, there is a growing consensus among analysts that the current situation is not a transitory feature of the market. Instead, there is a fundamental and potentially worsening gap between our demand for oil and natural gas and our ability to supply it. Despite seemingly large resources, we are becoming increasingly dependent on imports (imports’ share of gas supply has tripled since 1985, and imports’ share of oil supply has jumped to almost 60% from 27% in 1985). More importantly, the domestic industry has been unable to increase production despite strong price incentives and increased drilling.

The root cause of this difficulty is the progressive change in the remaining resource base. The North American industry has picked much of the “low-hanging fruit,” and remaining resources are increasingly found both in deeper, more remote, more complex reservoirs (high cost and high risk), or in shallow, drilling-intensive, low-productivity reservoirs. Policy actions alone cannot change the nature of the resource base – dramatic cost-and risk-reducing technological improvements are needed in order to make the nation’s vast oil and gas resources viable to produce. These resources are not being developed by the major oil and gas companies; instead, they are in the hands of thousands of small independent operators who are developing the Next Generation of IT solutions that will improve oil recovery.

An important new source of domestic oil and gas supply is the deepwater Gulf of Mexico. Water depths exceeding 1,000 feet account for about two thirds of the gulf’s oil production, a share expected to continue to rise. Deepwater fields in the Gulf of Mexico contribute 17% of the Nation’s oil production and 7% of its gas output. Technology advances, such as Seismic Imaging, have helped the industry accelerate its drilling success rate in the deepwater gulf. Since the start of 2000, new deepwater drilling added oil and gas reserves totaling over 4.5 billion barrels of oil equivalent (BOE), a 58% increase over the total deepwater reserves discovered from 1974 to 1999, according to the U.S. Minerals Management Service (MMS). In 2000, MMS estimated that more than 50 billion BOE of recoverable oil and gas remains to be discovered in the deepwater Gulf of Mexico.