The petroleum company is obligated to proceed with the tract exploration 

 in a diligent manner or run the risk of losing development rights to the 

 tract. 



Description 



Exploratory drilling determines the location, extent, and quantity 

 of oil or gas. This phase differs from production drilling of wells for 

 the retrieval of commercial quantities of crude oil defined by exploratory 

 drilling. It also differs from Continental Offshore Stratigraphic Tests 

 (COST wells) which are deep drilling exercises seeking geological 

 information on the types of rocks, layers, and formation pressures in an 

 area to be leased. 



The equipment used in exploration drilling is called a "rig." The 

 three major types of rigs used in offshore exploration are jack-up rigs, 

 semi-submersible drilling rigs and drill ships. These rigs are described 

 under Construction/Installation in this section. 



Oil companies do not own drilling rigs; instead, they contract for 

 both rigs and crews from a drilling company. The equipment and crew 

 drilling a hole belong to the drilling company; the hole belongs to the 

 oil company. 



Since the oil companies do not own rigs, they suffer no financial 

 consequences when work is not available. Instead, the oil companies can 

 wait until rig rental rates drop before drawing up contracts. Since 

 rates may be artificially low for some years, exploratory drilling in 

 speculative areas may increase. At present, though, the oil industry 

 has been reducing exploration and concentrating on development. 



Site Requirements 



Exploration is conducted within tracts leased by oil companies, in 

 areas suggested during geophysical surveying. There are no specific 

 site requirements for rigs as they are mobile. They use service bases 

 which do have site requirements and which are described in Section 

 2.3.1. 



Construction/Installation 



Offshore oil exploration today is significantly different in both 

 complexity and cost when compared with operations only 20 years ago. 

 The early offshore wells were drilled in relatively shallow and protected 

 waters. However, as exploration moved further offshore, it was necessary 

 to use larger steel platforms that were permanently affixed to a specific 

 site; this was usually accomplished by driving piles into the shallow 



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