The Effects of Technological Improvements on Offshore Oil and Gas Bidding, Exploration and Development
Since the inception of the US federal offshore oil and gas leasing program in 1954, there have been dramatic improvements in seismic analysis of potential deposits, largely associated with advances in computing. Seismic analysis consists of selecting the mathematical model of the underground structure (within a class of models) that is most consistent with the seismic data. In the 1990s there was a widespread movement from two dimensional (2D) to three dimensional (3D) models. We seek to measure the productivity advances from adoption of 3D technology, as well as identifying who has benefited from these advances. The industry acquires leases on federal lands via an auction, and the measurement issue is who has captured the rents from adoption of the improved technology.