Smaller Finds, Higher Costs to Boost Oil Prices

Harsh and difficult working conditions and shrinking pools of hydrocarbons could boost the cost of finding crude oil by up to 60% a barrel over the next five years, Bernstein energy analysts said Tuesday.

“The marginal cost of supply is rising over time because the average (oil) field size is falling and costs per unit are going up,” Bernstein analyst Neil McMahon told investors and analysts in a conference call.

The cost of finding an extra, or marginal, barrel of crude oil is likely to rise to between $60 to $80 a barrel by 2010, McMahon said.
Schlumberger