It's getting harder for western oil companies looking beyond American shores to replace the proven reserves that are the industry's lifeblood.

The shale boom has kept Houston's oil hub and smaller firms well supplied for now. But some of the industry's giants are readying massive steel armadas to explore deeper waters, and developing technologies for probing regions and depths beyond the frontier of the known oil world after decades of exile from giant oil fields owned by authoritarian regimes. Some costly expeditions have failed; an oil-market collapse delayed others.

Royal Dutch Shell's $7 billion bust in the Arctic is the latest Big Oil example of the problem.

The quest for oil in Alaska's offshore waters - which Shell announced Sept. 28 it was terminating after a test well failed to find enough oil to justify further investment - illustrated the lengths to which oil companies will go to replace reserves that fuel future revenue streams.

"Why are they doing mega projects? Because they have to," said Dennis Cassidy, managing director at AlixPartners and co-head of the firm's oil, gas and chemicals practice. "But the challenge is so mind boggling."

To keep their reserves level last year, the seven biggest western oil companies would have had to replace all 18.4 million barrels of oil equivalent a day they produced - roughly the same amount the United States consumed daily.

Instead, Exxon Mobil Corp., Shell, Chevron Corp., BP, Total, Statoil and Eni's combined reserves fell by nearly 1.5 billion barrels last year, the steepest decline since 2004, in part because new oil and gas discoveries have been getting smaller and more scarce.

"Overall, they're not the monsters we had in yesteryear," said Bob Fryklund, chief upstream strategist at research firm IHS. "We're in a low cycle, and we haven't seen one of this magnitude since 1994."

IHS data show the oil industry found about 10 billion new barrels of oil equivalent in 2014, the lowest in two decades. Last year's haul was dwarfed by the nearly 60 billion barrels the industry discovered in 2010 and the more than 80 billion barrels in 2004.

Westerners unwelcome

Analysts believe the industry could still make big discoveries in the Middle East and Latin America, but the easy-to-find oil has been spoken for in North America and West Africa.

Fryklund said the oil industry needs to replace 30 million barrels of crude a day by 2040 - even as a continuing oil price slump delays projects that might have helped reach the goal.

Indeed, the oil industry only counts among its proven reserves barrels it can extract economically and with its current technology. That figure often declines with oil prices, forcing companies to write down some of the value of their oil fields.

Energy research firm Wood Mackenzie estimates the petroleum industry has canceled or put off spending $220 billion on 46 major projects that would have delivered about 20 billion barrels in reserves from places including West Africa, Canada, Nigeria and the Gulf of Mexico.

And with oil and gas prices expected to remain low next year, JPMorgan Chase believes global exploration and production spending will shrink by another 10 percent to 15 percent in 2016, on top of this year's 23 percent spending cut.

The world is a long way from running out of oil: Its proven reserves increased by 62 percent from 2000 to 2014, but much of that growth has been in places where Western oil companies are often unwelcome.

For example, Venezuela's proven reserves have quadrupled since 2000, giving the South American country the world's biggest oil resource of 298.4 billion barrels in reserves, according to the U.S. Energy Information Administration.

But for Western companies, drilling there has proven treacherous. Venezuela's government nationalized ConocoPhillips assets in 2007, leaving it little to show for a $3.1 billion investment in major oil fields there.

Other members of the Organization of the Petroleum Exporting Countries are similarly inaccessible.

"The easy oil has been found or is locked up in OPEC nations that aren't open to Western integrated companies," said Lysle Brinker, director of equity research in the upstream group at IHS Energy.

The portion of the planet's oil outside the grip of authoritarian governments has been shrinking since 1971, according to BP, when Libya, Iran, Iraq, Saudi Arabia and others began taking control of their assets and limiting the West's ownership of resources in the Middle East.

The oil industry has found one super giant field this year, Eni's massive natural gas discovery off the coast of Egypt, the largest find ever in the Mediterranean Sea. Last year, oil companies didn't find any fields with more than 1 billion barrels.

"That whole way of doing business is just so much more challenging than it has been historically," said Amy Myers Jaffe, executive director for energy and sustainability at the University of California at Davis. "I'm either going to go to a far-flung place like Shell did, or I could go someplace with big resources and lots of geopolitical issues."

Going into overtime

But the biggest reasons oil companies have struggled with mega projects are rising costs, overruns and schedule disruptions. Cassidy of AlixPartners estimates less than 10 percent of oil mega projects stay on budget and can bring up as much oil and gas as an operator initially expects.

"The vast majority of these projects overrun on the cost side and under-deliver on the production side," he said. "The ones that do hit, hit big."

IHS' Brinker said the cost of everything oil and gas companies use in big projects - steel, copper, cement, high tech equipment and labor - has climbed significantly over the last decade because much of the industry was in a rush to build new facilities at the same time, driving up demand and straining supply chains.

Average returns for major upstream investments by Exxon Mobil, Chevron, Shell, BP and Total sank from a peak of 30 percent in 2008 to about 8 percent in 2014, IHS data shows.

In 2013 and 2014, it cost an average $59 to add a barrel of oil equivalent to a producer's reserves and later produce it after equipment has been built, almost three times the $22 a barrel it cost in 2003 and 2004, according to a study by Morgan Stanley and The Boston Consulting Group.

One of the most prominent examples of a project in overtime is in Kazakhstan, where Western oil companies are plowing $30 billion more than they initially expected into the massive Kashagan oil field. They've faced a series of delays because of blowouts and other setbacks, and total project costs have come up to $50 billion.

In Australia, Chevron's Gorgon liquefied natural gas project has blown past its expected $37 billion total cost to more than $54 billion because of higher labor and material costs.

One of Big Oil's problems: bigness. Consultants say project managers often become entangled in the expensive whims of engineers, changing orders and redesigning facilities well into a project's schedule. Complacency about costs can take hold, which can be difficult to correct in large organizations.

But even now, with oil executives touting new initiates to cut costs through the ongoing downturn, few are making structural changes to bring down costs permanently or standardizing different components used in major projects, relying on suppliers to cut costs, shed jobs and provide equipment and service discounts.

"The major oil companies haven't been known for having a cost-conscious culture - they've been focused on volume and schedule," said John Hartung, a partner at the Boston Consulting Group in Houston. "All will talk about rebasing their costs. But only a handful are making more structural changes in resetting their cost structures on capital projects."

A rare chance

In some respects, the Big Oil model has served the majors well in the downturn. They've weathered the oil bust much better than smaller energy producers that don't have their own refining and petrochemical plants. Those operations do well when feedstock for making gasoline, plastics and other products are cheap.

But the oil bust is still meaningful to their future growth. Investors have wiped out more than $180 billion from Exxon Mobil and Chevron's combined market value since the oil collapse began last summer.

"The ones that do make structural changes are going to be better positioned to compete," Hartung said. "You don't get a chance to do this very often."

At a recent industry conference in Houston, Chevron CEO John Watson acknowledged that "in the short run it's going to be ugly," but added that his company and its rivals still have resources to develop in such areas as dense shale and deep water.

"I think the future is still pretty good," Watson said.

Rhiannon Meyers contributed to this report.