Domestic oil and gas production can be considered a stagnant industry, because most of the significant available onshore oil and gas reserves have been exploited. Oil production in the United States in 1998 consisted of 3.04 billion barrels. The significant recoverable reserves left to be discovered and produced in the United States are likely limited to less convenient locations such as in deep waters offshore, remote arctic locations, and difficult-to-manage reservoirs with unconsolidated sands. Materials and corrosion control technology used in the traditional onshore production facilities have not significantly changed since the 1970s. The material and corrosion control technology required for the more difficult production locations must be more reliable due to the excessive cost of replacement or failure in these locations. The commodity price of oil will continue to dictate whether or not these new developments will even be considered.
The majority of cost savings for any oil production facility is in the prevention of failure in one of the production arteries, such as downhole tubing, surface pipelines, and production vessels. Downhole tubing, surface pipelines, pressure vessels, and storage tanks in oil and gas production are subject to internal corrosion by water, which is enhanced by the presence of CO2 and H2S in the gas phase. Internal corrosion control is a major cost item consideration. The total cost of corrosion in the U.S. oil and gas production industry is estimated to be $1.372 billion annually, made up from $589 million for surface piping and facility costs, $463 million in downhole tubing expenses, and $320 million in capital expenditures related to corrosion.