ABSTRACT

During the past decade, the Western Canadian up-stream oil and gas industry has not been overly attractive to the investment community. With deregulation of both crude oil and natural gas, product prices have been market driven and have dropped considerably. During the same period the industry has had severe cutbacks in personnel in an effort to reduce costs.

An examination of the current status of the industry must consider the various internal and external factors and agencies that directly affect the viability of exploring for oil and natural gas.

The following major factors will be addressed:

Geology of the Basin. Does the basin contain sufficient recoverable reserves? Are the accumulations of hydrocarbons of sufficient size to make exploration economic?

Markets and Transportation. Light crude remains a very sellable product. Heavier crudes have become give-aways. Natural gas markets appear to be available if economic transportation can be constructed.

Governments. Government incentives to the industry have almost gone. Government rents have not decreased. New environmental awareness continues to add to costs.

Exploration and Production Companies. What strategies and game plans will make success possible? Is the size of a company significant? Should companies be structured differently?

Financing. The industry remains highly capital intensive. Rate of return on investment has been dismally low. Can this be improved? Will product prices increase?

The People. Are changes needed in our approach to exploration? Can we replace the lost experience? Are we worth what we are being paid?

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