Ray Hunt, chairman of Hunt Energy Corp., Dallas, had some upbeat thoughts for a depressed oil industry during the Society of Petroleum Engineers's meeting last week in Washington.
Hunt believes the pendulum of public opinion has begun to swing away from extremist environmental causes and away from the precept that government regulation is more effective and efficient than private sector initiative.
THE TREK OVERSEAS
Hunt said since the nations of the former Soviet block have begun courting international oil companies, other governments outside the U.S. have improved the attractiveness of their exploration contracts in competition for the oil industry's finite capital and expertise.
"The greatest bit of irony in all this, of course, is that the one government that has been the least responsive to these global trends to date has been our own."
He predicted the growth of international commerce will play an expanded role in facilitating global harmony.
"In the vanguard of these private sector initiatives will be the oil and gas industry because we are the industry that host governments around the world recognize can accomplish the most for their people in the shortest time."
Hunt thinks the U.S. oil industry's stampede overseas is unwise. "Too many dollars are being thrown by too many companies at projects overseas that have a significant amount of risk.
"I feel a lot of people are underestimating the difficulties and the costs attendant to foreign operations, and the risk-weighted economics of some of the foreign plays that are being pursued today are becoming very marginal.
"The industry is making a mistake by assuming that all the big fields have been found in the Lower 48. There is a high probability of major new accumulations of natural gas remaining to be discovered, and I would further bet that by the end of this decade there will be some real surprises as to the size of the new oil fields discovered. "
Hunt's company is increasing its U.S. exploration and applying "the technology and thought processes we utilize in our international exploration activities" to domestic projects.
MANAGING COSTS
During this period of moderate prices for oil and gas, Hunt said, industry's biggest challenge is to manage costs.
"The steps now being taken to flatten organization charts and streamline operations are steps that should have been taken years ago.
"These adjustments are just as necessary for independents as they are for majors. The biggest difference is the great care that an independent must exercise to protect and maintain the continuity of one's exploration strategy and personnel.
"Exploration is not a science--but is very much an art. It just happens to be an art that uses a lot of scientific tools.
"How one manages an art form is significantly different from how one manages a manufacturing or a service entity ... and a significant premium should be attached to maintain stability and continuity."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
