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The Role of Success Rate, Discovery, Appraisal Spending, and Transitioning Region on Exploration Drilling of Oil and Gas in Indonesia in 2004–2015

Author

Listed:
  • Harry Patria

    (Faculty of Economics and Business, Department of Accounting, Universitas Indonesia and PT. Strategi Transforma Infiniti (Patria & Co.))

Abstract

Petroleum exploration decision remains a subject of petroleum and economic studies for decades. Most of the studies discuss the investment decision by focusing on either a technical or economic perspective. In reality, economic, geological, and environmental factors are expected to determine the way investors make a decision. This study aims to increase the understanding of best practices in decision-making by scrutinizing integrative perspectives applying panel data of 32 basins in Indonesia in 2004–2015. This study provides several contributions to optimize decisions on wells drilled. First, this study derives an empirical model examining several plausible factors of economy, geology, and environment. Second, the findings demonstrate how to empirically examine which factors significantly determine wells drilled by companies. The last contribution is to empirically support a technical transformation from Western to Eastern exploration due to the natural depletion of oil fields.

Suggested Citation

  • Harry Patria, 2021. "The Role of Success Rate, Discovery, Appraisal Spending, and Transitioning Region on Exploration Drilling of Oil and Gas in Indonesia in 2004–2015," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 67, pages 183-194, Desember.
    • Handle: RePEc:lpe:efijnl:202112
    as

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    References listed on IDEAS

    as
    1. Finch, John H. & Macmillan, Fiona E. & Simpson, Graeme S., 2002. "On the diffusion of probabilistic investment appraisal and decision-making procedures in the UK's upstream oil and gas industry," Research Policy, Elsevier, vol. 31(6), pages 969-988, August.
    2. repec:lpe:efijnl:514-1075-1-pb is not listed on IDEAS
    3. Robert S. Pindyck, 1974. "The Regulatory Implications of Three Alternative Econometric Supply Models of Natural Gas," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 633-645, Autumn.
    4. Rao, Raghavendra D., 2000. "An integrated modelling framework for exploration and extraction of petroleum resources," Resources Policy, Elsevier, vol. 26(3), pages 133-143, September.
    5. Harry Patria & Vid Adrison, 2015. "Oil Exploration Economics: Empirical Evidence from Indonesian Geological Basins," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 61, pages 196-213, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Basin; exploration; geological and economic variables; wells drilled;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources

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