Reserve replacement has always been a major challenge for the oil and gas industry. As shown in Figure 3.1 below, in contrast to the continuous increase in demand, new discoveries have been in decline since the mid 1960s. Two means of addressing this challenge are to increase exploration activities and promote technological advances.

As much as the oil price influences global economics, global economics impacts the business plans of oil and gas companies and plays a role in the intensity of exploration activities. However, as shown in Figure 3.2, it is difficult to find a direct correlation between the oil price and the discovery of new oil and gas reservoirs. Similarly, oil supply (or, equivalently, demand) does not seem to correlate well with the new discoveries and oil price.

These statistics also point to a very complex problem between exploration and technical innovation. Because of the scarcity of hydrocarbon resources, new discoveries not only require larger exploration investments in higher risk environments, but also necessitate the use of new and more complex technologies. Thus, to frame the modern reserve replacement challenges of the industry, it is imperative to understand the intricacies of the processes by which new technology is developed and implemented in the oil and gas industry.