>Be interesting to hear what Rod Wallis had to say on that topic today.

Yes it would, but we do know what Michael Lynch has to say on a somewhat similar topic. The question isn't whether or not a few wells will be economic, the question is will the project be economic over it's lifespan.

The science of geology has advanced today to the point where crude oil and gas deposits can be identified with great precision, even those at depths 20 thousand feet below sea level or in the Arctic regions or the vast deserts of Africa and Asia. Prospecting tools are so sophisticated today that the risk of drilling a dry hole is sharply reduced. Once an underground reservoir is located, petroleum engineers determine what will be the extraction costs (capital) and then, what will the production (lifting) costs be. Once the size of the reservoir is postulated and approximate capital and operating costs are estimated, the next step is to test the structure and, if indeed a hydrocarbon reservoir is found, it is quickly delineated and a second estimate of capital and production costs is made. Following this, an estimate of the sales price of the crude oil and natural gas is made for the life of the project which can range from 5 years to 50 years. In fact, oil companies rarely make predictions beyond about 20 years and after 10 years the discount factors make further calculation marginal. With over one hundred years of experience in pricing coupled with an understanding of price trends during both up and down cycles, oil companies can quickly determine the approximate economics of any given project.

http://www.glgroup.com/News/ExxonMob...