I can guarantee you that they will find "something." The problem is whether it will make a material difference. Hubbert found more than 50 years ago that a one-third increase in estimated URR for the Lower 48 only postponed the projected Lower 48 peak by five years.

Of course they expect to find oil and they will. At tomorrow's prices they should make money for awhile yet. However, it doesn't change the point made here, which is that ongoing finds are not large or plentiful enough to prevent the declines stemming from the depletion of the older and larger fields. This makes the smaller amounts found just that much more valuable.

Joe, the easy way of looking at it is to imagine that for a given amount of money spent exploring and developing, to keep it simple let's say $1million, you got an extra so many barrels of oil, say 20,000, and you sell that at $50 plus your margin.
Oil gets tougher to find, so in a couple of years for the same $1million you only get 10,000 barrels.
However, the price has doubled so you make the same!
The oil company gets just as much money, and obviously carries on looking for more oil, but the poor old customer only gets half as much oil for the same money.
So long as the oil price keeps rising, the oil companies keep looking for more oil.
This over-simplifies things, but not enough to alter the broad picture.
You get less and less oil for your money.

Of course they will continue looking and all Oil Majors budget for Exploration.

One or two things must be born in mind though.

A modern , deepwater hpht semi-sub or drill ship rents out at circa $500, 000 per day. Thats about 1.5 billion US per operational year.

A less modern offshore rig goes for less, but they too are in short supply.

An Exploration programm is usually 2-4 wells per year , depending upon sea depth and final drilling depth.

So, $100 Billion doesnt actually amount to a massive exploration pulse in real terms. A dollar doesnt go quite as far as it used to.

Compared with the Halcyon days of the 80's, 100 Billion is not translated into a grat deal of new exploration wells. - Admittedly, fewer wells need to be drilled because of advances in Seismics and other techniques, but 100 billion sounds like a lot but it isn't.

100 Billion US = 50 Billion Sterling = Labour's bail out of a half assed mortgage company called Northern Wreck.

The problem for Western Majors is: Where to look? If you want to spend money on exploration, you want to go where you will find an elephant, be able to develop it and not see it nationalised after you have done all the hard work. This too is a limiting factor.

Joe,

Just to emphasize what the Mudlogger said about exploration costs. Last year I worked on a Deep Water well that cost $148 mm. Just one well. And not only did it not find hydrocarbons it did a good job of condeming any future drilling in the immediate area. Of course the operator was optimistic about the potential and all the new technology (very expensive technology) helps. But in general exploration success runs around 10% to 20%. But when the payoff can be huge the players will make the bets. The growing problem now is the diminishing number of places to make the bet. Besides fighting mother nature the fear of nationalization is quickly becoming a dominant factor. All the oil companies in the world now control only 15% of the production. The national oil companies (the governments) control the other 85%. As government revenue drops due to depletion they will be even more tempted to redo the trade and take more of the production stream regardless of the terms of the original concession.

Pitt my Elder,

Heres the deal. I spend a great deal of time on this site. Sometimes I don't see that all of our efforts have made much progress in the greater sphere at mitigating upcoming oil depletion, so I get frustrated. Today was one of those days, and I was distracted by much more unpleasant items than ducks on a pond and singled you out with an accusatory tone and for that I'm sorry. However, I must say that when I see your login pseudonym, I have come to instantly expect a criticism or a pointing out of an error, so this has obviously become a knee jerk defensive pavlovian response, especially in my own interaction with you (n>30). Don't get me wrong. This community needs 'cleaner fish'/border collie types to reign in any BS and call people on unsupportable facts - it keeps the discussions high level and credible - but there does exist a fine line between correcting and searching/heckling minor errors when the larger point of the comment is valid.

In the current example, I admit to not being an expert on historical recovery rates, though in talking to people in the field I've been led to believe rates have been roughly in the same range for a long time, with very gradual increases. The BP slideshow showed they were increasing marginally, not dramatically - which was the initial point of my comment to Euan - the drop in discoveries would NOT be that alarming if recovery rates were keeping pace. Furthermore, the discovery graph I posted includes backdated reserves that were added to initial discoveries. Ultimately, a large part of the Peak Oil story WILL be about recovery rates, as the difference between 35% and 50% recovery could be hundreds of billions of barrels and moderate global decline rates. I know Gareth Roberts at Denbury Resources is shooting for 50%+ using CO2 injection and there are other EOR techniques that offer promise as well. As is usually the case when the stakes are high, there are many claims that recovery rates will dramatically increase in the future - the problem is we can't really know recovery rates until a well/region is finally abandoned. I listed the recovery rate sources I had available not as definitive answers but as datapoints I had read and learned about.