Geological Determinants of Crude Oil Extraction Costs: A Comparative Analysis of Production Economics Across Major Oil-Producing Nations (2015-2025)

This dissertation investigates the geological and technical determinants of crude oil extraction costs across seven major oil-producing nations—the United States, Venezuela, Russia, Iran, Saudi Arabia, Iraq, and Canada—during the period 2015 to 2025. Employing panel data econometric methods with 77 country-year observations, the study quantifies the relationships between geological characteristics, including API gravity, sulfur content, and the share of production from unconventional sources, and per-barrel extraction costs measured as both lifting costs and full-cycle costs. The analysis addresses a critical gap in resource economics literature by developing a systematic empirical framework linking geological parameters to production economics across nations representing the full spectrum of crude oil quality and extraction technologies. Results from Random Effects panel models, selected based on Hausman specification tests (p > 0.05), reveal that unconventional production share is the strongest and most robust predictor of extraction costs across all specifications. Each percentage point increase in unconventional production share is associated with $0.12 per barrel higher lifting costs and $0.46 per barrel higher full-cycle costs (p < 0.001). Production scale exhibits significant negative effects, with a 10% increase in production volume reducing lifting costs by approximately $0.42 per barrel, demonstrating substantial economies of scale in petroleum extraction. The study documents substantial cross-country cost variation: Saudi Arabia maintains the lowest lifting costs ($2.82 per barrel) while Canada exhibits the highest full-cycle costs ($39.23 per barrel), reflecting the fundamental geological differences between conventional Middle Eastern production and unconventional Canadian oil sands operations. The findings contribute to theoretical understanding of resource economics by providing micro-founded evidence linking geological heterogeneity to cost structures. Practical implications extend to energy security policy, sanctions effectiveness assessment, and energy transition planning. The unconventional cost premium of $3.50 to $4.80 per barrel in full-cycle costs provides empirical thresholds for comparing investment alternatives across resource types. Results inform U.S. Treasury assessments of sanctions resilience among petroleum-exporting nations and support strategic reserve management decisions by quantifying producer vulnerability to price volatility based on geological cost positions.