Offshore

Majors move out, minors move in to British North Sea

The sale of gas fields in the British North Sea could be a sign that bigger companies are losing interest in an area with a bit of a future, analysis finds. Serica Energy said Tuesday it was taking on the role of operator at the Bruce, Keith and Rhum fields in the North Sea in a deal with British supermajor BP that could have an initial value of as much as $17 million. Serica gets about 110 staff from BP in a deal that leaves the British supermajor with the costs associated with any decommissioning. Serica, meanwhile, didn’t have to raise any additional equity to finance the deal. The deal for the North Sea means Serica’s production grows from a […]

New oil expected from North Sea by December

New oil production is on pace to start in December from a floating production facility off the east coast of Scotland, Premiere Oil said Thursday. “In the United Kingdom, the Premier-operated Catcher project remains on schedule for first oil during December,” the company announced . “The floating production storage and offloading vessel arrived on location on Oct. 18 and the production buoy was successfully pulled into the hull.” Catcher was discovered in 2010 by Premiere and the company put the gross reserve estimate at the time between 25 million and 50 million barrels of oil. A North Sea review from consultant group Wood Mackenzie, published early this year , found more than a dozen new oil and […]

Shell to repair damaged portions at Enchilada platform, re-deploy personnel

14 Nov 2017   Offshore

Royal Dutch Shell Plc said it was in the process of developing a plan for repairing the damaged parts at its Enchilada platform and re-deploying personnel following its shutdown after a fire last week. Staff members work at the booth of Royal Dutch Shell at Gastech, the world’s biggest expo for the gas industry, in Chiba, Japan, April 4, 2017. REUTERS/Toru Hanai “On Saturday November 11, an assessment team confirmed isolation of the platform from the 30-inch gas export pipeline and no presence of uncontained hydrocarbons,” a Shell spokesperson said. The company has no timeline to resume normal operations at the platform, Shell added. On Nov. 8 the oil major had shut down its Enchilada platform in the U.S. Gulf of Mexico after a fire that caused injuries to two people. Shell said it did not observe any signs of oil on the water associated with this […]

Four Gulf of Mexico oil platforms shut after Enchilada fire: Shell

14 Nov 2017   Offshore

Royal Dutch Shell said on Tuesday that production at four oil platforms in the Gulf of Mexico has been shut in the wake of a Nov. 8 fire at its Enchilada platform. “Production is shut in at the Shell-operated Enchilada and Salsa platforms, as well as the associated Hess-operated Conger field,” in which Shell has a 37.5 percent share, it said in a statement. “In addition, Shell safely shut in all production operations at its Auger platform due to downstream constraints caused by this incident.” Production from Auger flows back to Enchilada for transport to shore. There was still no timeline for the resumption of normal operations, Shell said. “Shell is in the process of developing a plan to repair damage caused by an operational incident on its Enchilada platform and safely re-deploying personnel.”

Russian oil company eying Gulf of Mexico opportunities

14 Nov 2017   Offshore, Russia, USA

Russian oil producer Lukoil said it may be setting up a partnership to work in the Mexican waters of the Gulf of Mexico. File photo by A.J. Sisco/UPI Nov. 13 (UPI) — Russian oil producer Lukoil said Monday it was vetting the possibility of teaming up with a Mexican company for work in the Gulf of Mexico. Vagit Alekperov , the chief executive officer at Lukoil, said he was meeting with authorities at Petróleos Mexicanos, known also as Pemex, to discuss a potential partnership for offshore oil in North America. His announcement came after Washington enacted more sanctions on Russia, though the CEO said that was irrelevant. “No, [sanctions] do not affect [this],” he was quoted as saying by Russian news agency Tass. The U.S. Office of Foreign Assets Control in early November amended Russian sanctions with respect to the energy sector, blocking U.S. entities from helping with companies […]

The Oil Rig Drilling 10 Miles Under The Sea

13 Nov 2017   Offshore

Final sea trials for the Blue Whale II underwater drilling rig are now underway , according to the technology’s producer, CIMC Raffles, marking a new milestone drilling rig developments. The Blue Whale I model, completed back in February, and its newer sibling, Blue Whale II, represent the most advanced offshore drilling rigs in the world – ready to tackle water depths of 12,000 feet and drill to a depth of 50,000 feet while extracting fossil fuels. The Blue Whale I was used to drill methane hydrate from the South China Sea in recent weeks on behalf of the China National Petroleum Corporation. The nearly $1 billion platform is as tall as a 37-story building, the largest oil platform in the world . Gas hydrate , methane hydrate in particular, is a cage-like structure of crystallized ice, inside of which are trapped molecules of methane, the chief constituent of natural […]

The Oil Rig Drilling 10 Miles Under The Sea

11 Nov 2017   Offshore

Final sea trials for the Blue Whale II underwater drilling rig are now underway , according to the technology’s producer, CIMC Raffles, marking a new milestone drilling rig developments. The Blue Whale I model, completed back in February, and its newer sibling, Blue Whale II, represent the most advanced offshore drilling rigs in the world – ready to tackle water depths of 12,000 feet and drill to a depth of 50,000 feet while extracting fossil fuels. The Blue Whale I was used to drill methane hydrate from the South China Sea in recent weeks on behalf of the China National Petroleum Corporation. The nearly $1 billion platform is as tall as a 37-story building, the largest oil platform in the world . Gas hydrate , methane hydrate in particular, is a cage-like structure of crystallized ice, inside of which are trapped molecules of methane, the chief constituent of natural […]

Shell Enchilada oil platform in Gulf of Mexico shut after fire

9 Nov 2017   Offshore

Royal Dutch Shell Plc shut its Enchilada platform in the U.S. Gulf of Mexico on Wednesday after an operational incident that caused injuries to two people. The U.S. Coast Guard said that the platform, along with associated production, was stopped after a fire. It added that the fire had been reduced to a small flame from a pipeline on the platform, located about 112 nautical miles south of Vermilion Bay, Louisiana. Two people were injured and the crew of 46 were evacuated to a nearby platform, the Coast Guard said, adding that there was a report of a light sheen north of the Shell platform. Along with its Enchilada platform, Shell said in a statement that it shut its Salsa and Auger platforms and nearby fields. A 30-inch gas export pipeline was also shut. Shell said it had identified the source of the fire at Enchilada and […]

House takes up offshore drilling overhaul

8 Nov 2017   Congress, Offshore

As leaders in the U.S. House take up an offshore drilling bill, pressure has mounted on the U.S. government’s lack of oversight for protection of public lands. The Accessing Strategic Resources Offshore Act, or ASTRO, would limit the presidential authority to put parts of the Outer Continental Shelf off limits to oil and gas drillers and give the Interior Department the authority to move ahead with new lease sales “as soon as practicable,” but no later than a year after the announcement of intent. House leaders scheduled a markup hearing on the measure for Wednesday. Miyoko Sakshita, the oceans project director at the Center for Biological Diversity, said the ASTRO Act was a giveaway to the oil and gas […]

U.S. offshore has unique oil export potential

3 Nov 2017   Offshore

Big energy companies with deep pockets could carve out a durable U.S. position on the global energy market with offshore production, analysis found. The U.S. Energy Information Administration reported total crude oil exports topped 2 million barrels per day for the first time since a 40-year-old ban on exports was lifted under President Barack Obama in 2015. Geoffrey Craig, the oil futures editor for commodity pricing group S&P Global Platts, said in an emailed report that exports were supported by the lower price for West Texas Intermediate, the U.S. benchmark for the price of oil, relative to Brent, the global benchmark. “This trend [for exports] is not surprising with Brent’s premium to WTI […]

Trump to Auction Off Swaths of Gulf of Mexico to Oil Companies

1 Nov 2017   Offshore, USA

The Trump administration made history Tuesday in proposing that nearly 77 million acres in the Gulf of Mexico be made available for companies wanting to purchase federal oil and gas leases — the largest offering ever in the United States. In announcing the sale, the Interior Department compared the targeted waters to “about the size of New Mexico” and said the first lease sales off Texas, Louisiana, Mississippi, Alabama and Florida are scheduled for March next year. The event will include “all available un-leased areas on the Gulf’s Outer Continental Shelf,” a statement said. Interior Secretary Ryan Zinke first broached such a sale shortly after he took office in March, proposing to offer 73 million acres for leases. This part of the Gulf was the scene of arguably the worst environmental disaster in U.S. history, the 2010 Deepwater Horizon explosion and subsequent spill of 215 million gallons of crude […]

U.S. Resources Set For Record Breaking Resurgence

1 Nov 2017   Offshore, USA

The highest-profile happening was a new offshore petroleum lease sale — announced last Tuesday by the Department of Interior. It will make available the largest swath of drilling acreage ever seen in such a bid round. The Department of Interior said that Lease Sale 250 — scheduled for March 2018 — will offer 76,967,935 acres in federal waters of the Gulf of Mexico, offshore Texas, Louisiana, Mississippi, Alabama and Florida. Making it the largest area ever included for bidding in the history of the U.S. industry. All told, a full 14,375 blocks will be made available — including shallow- and deep-water projects. This makes this sale a key gauge of ongoing interest in the U.S. Gulf of Mexico, which has been one of the world’s most active offshore plays the last few decades. And the opportunities in U.S. resources don’t stop there. Big openings are also coming in the […]

The Return Of Deepwater Oil

31 Oct 2017   Brazil, Offshore

In a historic auction for deepwater oil assets in Brazil, the oil majors showed up on October 27 and bought several offshore blocks, indicating a high level of interest in the country after a major policy overhaul allowed private investment. Royal Dutch Shell won half of the blocks that were offered, and Shell was already one of Brazil’s largest foreign investors. After purchasing BG Group for around $50 billion, Shell took a large presence in Brazil. The logic behind Shell’s strategy is that the company argues it can breakeven with oil at $40 per barrel, making Brazil one of the most attractive places to drill offshore in the world. “These winning bids were submitted after our thorough evaluation and add strategic acreage to our … global deep-water growth options,” Shell Upstream Director Andy Brown said. ExxonMobil took one block, expanding its position after winning six offshore blocks a few […]

GoM July Production Update

26 Oct 2017   Offshore, USA

GoM C&C production for July by BOEM was 1746 kbpd and by EIA 1761, compared with, respectively, 1631 and 1634 kbpd (corrected) in June. The EIA number is a new peak, the BOEM one is still 24 kbpd short of their March numbers. The growth was from Thunder Horse (partially), Constitution and Baldpate/Salsa (which is mostly gas) coming back on-line, plus continued ramp-up in Stones and Marmalard. C&C Production Details For new fields added since late 2014, data for Tubular Bell’s, which has not been available since late 2016, has been updated and shows a growth of about 14 kbpd in that period, hence there is now a slight continuing rise shown in new lease production over the past six months, rather than the previous plateau; Tubular Bells looks like it is now on plateau, about 40% below it’s nameplate, and there is […]

The biggest U.S. offshore oil and gas grab to attract the biggest firms

26 Oct 2017   Offshore, USA

With the opening of what’s described as the biggest grab of U.S. offshore assets ever, an analyst said the region is best suited for the biggest of firms. U.S. Interior Secretary Ryan Zinke said the next auction of more than 75 million acres of federal waters in the Gulf of Mexico was the largest ever in the national history of offshore development. “In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy dominant,” Zinke said in a statement . Crude oil prices […]

BOEM Plans Biggest GOM Lease Sale Ever

25 Oct 2017   Offshore, USA

BOEM proposes lease sale for nearly 77 million acres in Gulf of Mexico. The U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) on Tuesday proposed what it claims is the largest oil and gas lease sale ever held in the United States. “In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy dominant,” Interior Secretary Ryan Zinke said in a written statement. “And the economic terms proposed for this sale include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.” According to the BOEM website, the unit of the Interior Department anticipates livestreaming the results of Proposed Lease Sale 250 from New Orleans on March […]

Will Demand For Offshore Rigs Ever Recover?

23 Oct 2017   Offshore

Last quarter, offshore drilling rig companies retired more rigs than ever before in a three-month period, according to one energy advisory firm. Embattled Transocean is sending six floating rigs to the junkyard that will cost it $1.4 billion. According to Bloomberg’s David Wethe, it doesn’t get much worse than this: There’s a major overhang of offshore drilling rigs ordered during the boom years prior to 2014, and there’s little hope that it will ever clear, even if offshore drilling recovers, which he believes is highly unlikely—at least not to any significant extent. Indeed, offshore exploration is still more costly than onshore, especially in the deep waters. In a lower-for-longer environment, E&Ps are naturally opting for cheaper resources. Yet this is by no means the whole picture. There’s still a future for offshore oil, and it’s not too bleak; in fact, in parts of the world, it’s rather bright. At […]

Oil’s Biggest Rigs Headed to Junkyard as Daily Losses Mount

19 Oct 2017   Offshore

Transocean Ltd. is finally sending Pathfinder to its grave, after two years in a Caribbean purgatory that cost about $15,000 a day. The move by the world’s biggest offshore-rig operator signals just how bleak the future looks for deepwater drilling. Pathfinder is the most famous of six floating rigs the company is scrapping in burials that will add up to a bruising $1.4 billion write-off. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith. That’s how bad it is, with predictions crude prices won’t go much higher than $60 a barrel in the next year compared with around $50 recently. “Deepwater is going to be playing a much-reduced role on the global oil-supply […]

House leadership supports U.S. offshore overhaul

13 Oct 2017   Offshore

An offshore drilling act critics said was “wish list” legislation for the oil and gas industry was hailed as a strategic win by House Republican leadership. The House Natural Resources Energy and Mineral subcommittee heard testimony Wednesday on the Accessing Strategic Resources Offshore Act or ASTRO. The measure would limit the presidential authority to put parts of the Outer Continental Shelf off-limits to oil and gas drillers and give the Interior Department the authority to move ahead with new lease sales “as soon as practicable,” but no later than a year after the announcement of intent. Subcommittee Chairman Paul Gosar, R-Ariz., said the offshore oil and gas industry is vital for U.S. economic success, generating […]

About 71.1 percent Of U.S. Gulf oil output offline ahead of Nate: BSEE

7 Oct 2017   Offshore, USA

About 71 percent of U.S. Gulf of Mexico oil production is offline ahead of Tropical Storm Nate, the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) said on Friday. Nate is forecast to enter the Gulf and strengthen into a hurricane before making landfall late Saturday in Louisiana, near several major refineries. Oil companies have evacuated staff from Gulf platforms and curtailed output ahead of the storm, with production equaling 1.24 million barrels of crude per day already offline, according to BSEE. About 53.2 percent of Gulf natural gas production remains offline, BSEE said.

Early pressure mounts on overhaul of U.S. offshore oil and gas rules

7 Oct 2017   Congress, Offshore, USA

Members of the U.S. House next week take up a measure on offshore drilling that advocates say checks off the wish-list for the oil and gas industry. The House Natural Resources Energy and Mineral subcommittee scheduled a hearing for Oct. 11 to take up the Accessing Strategic Resources Offshore Act, or ASTRO. The measure would limit the presidential authority to put parts of the Outer Continental Shelf off limits to oil and gas drillers and give the Interior Department the authority to moved ahead with new leases sales “as soon as practicable,” but no later than a year after the announcement of intent. In one of his final moves in office, former President […]

Offshore rig firms see end to worst downturn in history

5 Oct 2017   Offshore

Demand for offshore rig rental globally is starting to recover from its worst ever downturn, led by oil firms’ growing demand for harsh-environment exploration and triggering multi-billion dollar tie-ups among drillers hoping to profit, executives said. While the 2014-2016 oil price crash caused firms to cut exploration budgets, ending a boom in rig demand and bankrupting many owners, energy companies are now seeking to replenish their hydrocarbon reserves. The nascent demand for harsh-environment rigs, particularly for North Sea drilling, could lead to increased rates for these units as soon as 2018, and other categories may follow in 2019 or 2020, companies and analysts say. Transocean ( RIGN.S ) Chief Executive Jeremy Thighpen told UBS analysts he would not be surprised to see next fixtures for such rigs to rise to $300,000 from current levels of around $200,000. Oslo-based Pareto Securities also said it expected day rates […]

Chevron terminates Gulf of Mexico rig contract early

22 Sep 2017   Offshore, USA

A subsidiary of Chevron terminated a contract for a rig working in deep U.S. waters in the Gulf of Mexico nearly a year early, Transocean announced. “A subsidiary of Chevron elected to exercise its contractual option to terminate the drilling contract for the ultra-deepwater drillship Discoverer Clear Leader, effective November 2017, prior to its expiration in October 2018,” the company said in a statement . The rig was last listed in Transocean’s fleet status report as deployed in the Gulf of Mexico at a day rate of $575,000, an increase of 1 percent from the previous rate to lease the rig each day. Transocean said it would realize a lump-sum $148 million for contract termination […]

BP’s Thunder Horse Platform Shut Temporarily On Power Issue

20 Sep 2017   Offshore

BP Plc halted production at its Thunder Horse platform in the U.S. Gulf of Mexico on Monday following a power outage, a company spokesman confirmed on Tuesday. The benchmark for sour crude rallied to its strongest in more than two years on the disruption. BP evacuated its workforce of about 300 people from the facility after the power outage as a precaution, according to the statement. Technical and essential personnel were scheduled to return to the platform on Tuesday. The platform has the ability to produce up to 265,000 barrels of oil a day, and was producing about 180,000 barrels a day as of May. BP’s four operated platforms in the Gulf can produce up to a total of 695,000 barrels of crude a day. Thunder Horse was the company’s largest producing Gulf platform in 2016. Mars Sour Crude traded at up to […]

Seadrill Files for Chapter 11 Bankruptcy Protection in Texas

13 Sep 2017   Offshore

Seadrill Ltd ., one of the world’s largest offshore drilling companies, has filed for Chapter 11 bankruptcy protection at the Southern District Texas court as part of a plan to restructure roughly $10 billion in debt, it said Wednesday. The Bermuda-based company is controlled by Norwegian shipping magnate John Fredriksen and operates a fleet of 68 rigs and drillships for customers including Total SA, TOT Petrobras Brasileiro SA and Exxon Mobil Corp. The company said 97% of its bank lenders, 40% of bondholders and a group of investors led by Hemen Holding Ltd., its biggest holder—also controlled by Mr. Fredriksen—had approved the restructuring plan. The creditors have agreed to postpone the repayment of $5.7 billion in secured loans for five years, with $2.3 million in unsecured bonds to be converted into a 15% […]

Hurricane Season Weighs On Gulf Of Mexico Production

11 Sep 2017   Offshore

Production for June by BOEM was 1631 kbpd and by EIA 1636, compared with 1673 and 1659 kbpd, respectively, in May. The decline was mostly from Thunder Horse going offline and Constitution staying offline. Hurricane Cindy didn’t seem to have much of an impact, things will be different for the impact of Harvey on August figures. Even with the two offline facilities coming back July numbers will struggle to beat those for March, and after that the depletion declines and hurricane disruptions take over. Note that the “others” area includes any assumptions BOEM has made to allow for missing data, which is quite a lot this month. (Click to enlarge) The combined new fields added from late 2014 are holding a plateau with South Santa Cruz and Barataria fields added and a new lease for Marmalard starting (adding about 20 kbpd combined). Stones also had a better month and […]

GoM June Production Update

7 Sep 2017   Offshore

Production Production for June by BOEM was 1631 kbpd and by EIA 1636, compared with 1673 and 1659 kbpd, respectively, in May. The decline was mostly from Thunder Horse going offline and Constitution staying offline. Hurricane Cindy didn’t seem to have much of an impact, things will be different for the impact of Harvey on August figures. Even with the two offline facilities coming back July numbers will struggle to beat those for March, and after that the depletion declines and hurricane disruptions take over. Note that the “others” area includes any assumptions BOEM has made to allow for missing data, which is quite a lot this month. The combined new fields added from late 2014 are holding a plateau with South Santa Cruz and Barataria fields added and a new lease for Marmalard starting (adding about 20 kbpd combined). Stones also had […]

About 5.5 percent U.S. Gulf oil output still shut after Harvey: government agency

4 Sep 2017   Offshore

About 5.5 percent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday after Hurricane Harvey made landfall in Texas more than a week ago, the federal Bureau of Safety and Environmental Enforcement said. The total lost oil production in the Gulf since offshore platforms started shutting on Aug. 23 is about 2.97 million barrels. The affected output is down significantly from the peak of 24.5 percent, or 428,568 bpd, on Aug. 26 as evacuated workers returned and activity resumed. Energy companies operating in the offshore Gulf of Mexico produce about 1.75 million bpd of oil. “Since the storm has passed, operators have begun inspecting facilities and resuming production. To date, no damage reports have been received,” BSEE said in a press release. Personnel remain evacuated from 30 offshore platforms, it said. The federal agency also estimated that 8.4 […]

Where oil rigs go to die

1 Sep 2017   Offshore

It was night, stormy, and the oil rig Transocean Winner was somewhere in the North Atlantic on 7 August 2016 when her tow-line broke. No crew members were on board. The rig was being dragged by a tugboat called Forward, the tethered vessels charting a course out of Norway that was meant to take them on a month-long journey to Malta. Within the offices of Transocean Ltd, the oil-exploration company that owned the rig, such a journey might have been described with corporate seemliness as an “end-of-life voyage”; but in the saltier language heard offshore, the rig was “going for fucking razorblades” – for scrap, to be dismantled in a shipbreaking yard east of Malta. In that Atlantic storm, several thousand miles from her intended destination, Winner floated free. The 33-year-old rig had never moved with so little constraint. Winner was huge – 17,000 tonnes, like an elevated Trafalgar […]

Trump’s Atlantic Drilling Plan May Be A Lost Cause

21 Aug 2017   Offshore

A key public comment period just ended for revising the offshore exploration program along the U.S. Atlantic Coast, and the path forward might not be as smooth as the Trump administration had hoped. The Department of Interior, which regulates offshore drilling and also conducts lease sales to the industry, had closed off the possibility of drilling in the Atlantic and Arctic Oceans during the Obama era. But President Trump has tried to move quickly to reverse that decision, kicking off the process to open up the Atlantic for exploration. But the President can’t just open up the Atlantic at the stroke of a pen – there is a protracted legal and regulatory process that the Department of Interior must go through. One step of that process just came to a close. The Interior publishes five-year plans, which detail what offshore areas under federal control they will auction off. The […]

Efforts mount to expand U.S. offshore drilling

19 Aug 2017   Offshore

 After a rebound in the value of high bids for oil and gas acreage in the Gulf of Mexico, industry supporters said it was time to push for greater access. “We have an opportunity in the next offshore leasing plan to truly embrace our nation’s energy potential and ensure American consumers and businesses continue to benefit from the U.S. energy renaissance,” Erik Milito, the director of exploration and production for the American Petroleum Institute, said in a statement . The comments from Milito, whose organization represents the business interests of hundreds of oil and gas companies, followed the first lease in the Gulf of Mexico under President Donald Trump . Trump has put oil, gas and coal at the […]

Governor opposition complicates Trump administration’s Atlantic drilling plans

19 Aug 2017   Offshore, USA

The Trump administration is facing increasing pressure from governors of East Coast states to keep federal Atlantic waters out of the five-year oil and natural gas leasing plan it hopes to finalize late next year. Several East Coast governors, including Republicans and supporters of President Donald Trump, have ramped up pressure on the administration to keep the Atlantic out of the 2019-2024 federal offshore lease plan. This is significant since the administration is required by federal law to consider local and state opposition to offshore drilling before it approves a lease sale. “The coast has spoken,” said Sierra Weaver, a senior attorney with the Southern Environmental Law Center. “It’s time for Washington to listen.” Interior Secretary Ryan Zinke “has been clear that the administration will listen to local and state interests,” said Dustin Cranor, a spokesman for Oceana, an environmental group. “If that’s the case, the Atlantic Ocean should […]

Oil producers signal offshore return in latest Gulf of Mexico auction

17 Aug 2017   Offshore

Major oil producers pushed up high bids at a Gulf of Mexico offshore auction to $121 million on Wednesday, a nearly seven-fold increase from a year ago, as their return to deep water exploration gained momentum. This compared with $18 million in high bids at the Bureau of Ocean Energy Management’s (BOEM) Outer Continental Shelf auction last summer. Winners will be announced after a 90-day review. Some producers have signaled that they expect Gulf of Mexico projects to become more profitable now that they have trimmed operations to adapt to low oil prices. Offshore drilling typically requires higher prices for producers to break even. Royal Dutch Shell claimed the largest number of blocks, with 19 high bids valued at a combined $25.1 million. Chevron Corp followed with 15 high bids totaling $27.9 million. Anadarko Petroleum Corp won 10 blocks for $10.6 million. Exxon Mobil Corp took […]

Known Gulf of Mexico deepwater areas most attractive in modest lease sale

17 Aug 2017   Offshore

US Gulf of Mexico Lease Sale 249 on Wednesday was not a barn-burner, but it did show a measure of competitive bidding in the deepwater and even boasted two eight-figure bids and dozens more that topped $1 million each. The sale appeared to highlight majors’ preferences for known deepwater areas, since shallow-water bidding accounted for a scant 10 blocks and offers received for these were mostly under $200,000 each. But sale sponsor Bureau of Energy Management officials expect interest in shallow water bidding to improve in subsequent sales, owing to the agency’s recent lower royalty relief reduction aimed at drumming up more development in that arena. “We only provided a month’s time for [operator] interest in the lower royalty,” said Mike Celata, BOEM Gulf regional director, in a post-sale telephone press conference. “My expectation is that in March we’ll have greater interest.” In July, the agency reduced the royalty […]

Has Gulf Of Mexico Production Peaked?

17 Aug 2017   Offshore

Amid strong indicators that U.S. shale production will reach new heights by the end of 2017, efforts to promote further exploration and production in the Gulf of Mexico, long a center of U.S. energy output, have run into some headwinds. Some even doubt that Gulf production, much of it from expensive off-shore rigs, can compete in the “lower for longer” price climate that will likely endure through the end of 2017. With a much longer lag-time for off-shore projects, production in the Gulf of Mexico (GOM) is less sensitive to short-term changes in price. But with the consensus around lower prices growing, it’s possible likely that investment in offshore may taper off, as investment seeks out more reliable returns from shale fields. On Wednesday the first bids on new oil and gas leases in the Gulf of Mexico were offered. The Secretary of the Interior, Ryan Zinke, revealed plans […]

Offshore drilling mergers raise hopes for sector recovery

16 Aug 2017   Offshore

Transocean’s GSF Development Driller II crosses Istanbul’s Bosphorus on its way to the Black Sea September 6, 2014.Murad Sezer HOUSTON (Reuters) – Mergers among offshore oil drillers are raising hopes that consolidation could bring relief to a sector struggling to emerge from an industry downturn triggered by low crude prices. Transocean Ltd, one of the world’s largest offshore drilling contractors, on Tuesday agreed to buy Norwegian rival Songa Offshore SE for $1.1 billion. The deal follows Ensco Plc’s pending purchase of Atwood Oceanics Inc in a transaction valued at $839 million. The deals would bolster both companies’ positions in major oil and gas-producing regions: Transocean in the North Sea and Ensco in offshore Australia. They come as oil prices remain below where they began the year, adding to worries about excess rig capacity continuing into the next year. “I think everyone realizes that consolidation is important […]

Has Gulf Of Mexico Production Peaked?

3 Aug 2017   Offshore

Production for May by BOEM was 1673 kbpd and by EIA 1661, compared with 1661 and 1658 kbpd, respectively in April. March looks like the peak, at least near term, for the basin, especially with Hurricane Cindy impacting the coming June figures. (Click to enlarge) The combined new fields added from late 2014 look to be peaking as well. Great White came back on line but xxx and yyy declined. In previous data I had omitted one big producing lease in Mars, which included the new Deimos field. With this added the production growth through 2017 is higher (and as shown later the decline in mature fields faster) than previously shown. There may be more increase to come: The Mars leases had three rigs operating through June, one dedicated for Deimos, which has now gone. The two platforms on the field each have a dedicated platform rig, so they […]

NC governor on Trump drilling plan: ‘Not off our coast’

21 Jul 2017   Offshore

Under pressure from President Donald Trump, North Carolina’s governor announced his opposition on Thursday to drilling for natural gas and oil off the Atlantic coast, saying it poses too much of a threat to the state’s beaches and tourism economy. Up against a Friday deadline for comment from elected officials on the Trump administration’s request for companies to perform seismic testing under Atlantic waters, Democratic Gov. Roy Cooper held a news conference at a coastal state park to announce he’ll be registering the state’s opposition. “There is a threat looming over this coastline that we love and the prosperity it brings, and that’s the threat of offshore drilling,” Cooper said at the Fort Macon State Park in Carteret County, where he said he visited as a child and as a parent. “As governor, I’m here to speak out and take action against it. I […]

Oil output slow, steady for U.S. in Gulf of Mexico

14 Jul 2017   Offshore

The slow, but steady, gain in oil production expected from the U.S. waters of the Gulf of Mexico shows the region is more stable than shale, a rig analyst said.  The bulk of total U.S. oil production comes from inland shale basins. Total U.S. output is expected to reach 9.9 million barrels per day next year, the highest level ever if forecasts are accurate. The U.S. Energy Information Administration estimates about 20 percent of total U.S. oil production comes from the Gulf of Mexico.  Oilfield service company Baker Hughes reported 21 rigs in the Gulf of Mexico for the week ending July 7, unchanged from the previous week and up 16 percent from the same week in 2016. Energy price agency S&P Global Platts offered a more fluid picture for the week, but added the region as a whole was stable.

GULF OF MEXICO DISCOVERIES, RESERVES AND PRODUCTION

10 Jul 2017   Offshore, USA

Part I Discoveries and Reserves The following are a few charts and observations concerning the US Gulf of Mexico production, with data mostly taken from BOEM for the OCS and a bit from EIA. The BOEM data site has been updated and makes it easy to get the raw data, but not in a very easily discerned way. This post is intended to make it a bit easier to follow and come to your own conclusions concerning the likely future of GoM production. I’m sure I’ve made a few mistakes in getting and downloading the data, but the relative trends are probably more informative than absolute values so there will need to be follow up revisions as new data is available and hopefully any issues will get smoothed out. Reserve data is available for 2015. New data for 2016 is likely not available […]

Greenpeace: U.S. bowed to pressure over Atlantic energy work

7 Jul 2017   Offshore, USA

A U.S. decision to extend the comment period for work tied to oil and gas development in the Atlantic was a response to public outrage, Greenpeace said. The National Oceanic and Atmospheric Administration published a notice in the Federal Register stating that the public comment period for “five proposed incidental harassment authorizations” for seismic surveys in the Atlantic Ocean were extended by 15 days to July 21. The notice said the extension was granted because of multiple requests. Mary Sweeters, a U.S. campaigner for Greenpeace, said seismic surveys used to get a better understanding of the oil and gas reserve potential threaten the marine ecosystem and the economies of Atlantic coastal states, many of which rely on tourism […]

In disaster’s wake, BP doubles down on deepwater despite surging shale

27 Jun 2017   Offshore

About 300 BP workers commute 150 miles here by helicopter, from the Louisiana coast to a deep-sea drilling platform that can produce more oil in a day than a West Texas rig can pump in a year. On the deck of Thunder Horse, they work two-week shifts, drink seawater from a desalination plant, and eat ribs and chicken ferried in by boat. On the ocean floor, robots provide remote eyes and arms as drills extract up to 265,000 barrels per day. “There’s a whole city below us,” said Jim Pearl, Marine Team Leader on the platform. This is just one of the four Gulf of Mexico platforms on which BP […]

Rig Trends: Offshore Rig Market Recovery Reports Premature

23 Jun 2017   Offshore

For quite some time now, many oilfield analysts have reported the beginning of a recovery in offshore rig demand. For quite some time now, many oilfield analysts have reported the beginning of a recovery in offshore rig demand. Recent report headlines, however, have now started to use phrases like “elusive recovery” or something similar. The fact of the matter is that a recovery never really started. Yes, there have been isolated positive developments in some markets for some rig types, but reports of a recovery have most definitely been overstated. As seen in the figure below (courtesy of the June 2017 RigOutlook forecast), the competitive jackup, semisubmersible (semi) and drillship rig fleet totaled 700 rigs comprising 431 jackups, 150 semis, and 119 drillships. While this was down by 6.2 percent from 747 in September 2014 (generally recognized as when the current downturn began), the drop in rig demand during […]

Woodmac: Only the ‘Very Best’ Projects Sanctioned

20 Jun 2017   Offshore

Only the very best deepwater projects have been sanctioned during the oil price downturn, which speaks volumes of the Liza field’s potential. Only the very best deepwater projects have been sanctioned during the oil price downturn, which speaks volumes of the Liza field’s potential, Pablo Medina, Wood Mackenzie’s senior analyst for Latin America upstream, said in a statement sent to Rigzone. “The short time it took ExxonMobil to go from Liza’s discovery to declaring Final Investment Decision (FID) signals the competitiveness of the project, both within the company’s portfolio and globally,” Medina stated. ExxonMobil Corp revealed June 16 that it, and its partners, would spend $4.4 billion to develop part of the Liza oilfield off the coast of Guyana. Woodmac forecasts that the full development of Liza-Payara will produce over 330,000 barrels per day of oil at peak, with reserves of over 1.5 billion barrels of oil equivalent. However, […]

Democrats aim to block Atlantic energy surveys

13 Jun 2017   Offshore

Senate Democrats concerned Atlantic energy work could harm some maritime species that depend on seismic activity to communicate. File photo by Ken James/UPI. June 12 (UPI) — The process to open parts of the Atlantic Ocean up for energy exploration is ill-advised and lacks transparency, a group of Senate Democrats said. President Donald Trump ‘s administration issued a draft for public comment in the federal registry last week for seismic airgun blasting in the Atlantic Ocean, a practice used to get a better understanding of the reserve potential in a particular basin. Sen. Bill Nelson , D-Fla., led a group of Senate Democrats in calling on the administration to provide more transparency in the proposal. In a letter sent to UPI during the weekend, Nelson’s office said the call from the National Oceanic and Atmospheric Administration came with little notice and afforded no opportunity for public hearings. Nelson added […]

More offshore oil openings from Trump draw criticism

7 Jun 2017   Offshore, USA

The White House took another step to opening up offshore oil and gas reserves using a method that an industry critic said poses a real ecological threat. The office of President Donald Trump issued a draft for public comment in the federal registry for seismic airgun blasting in the Atlantic Ocean. The practice is used to get a better understanding of the reserve potential in a particular basin, though advocacy group Oceana said the method endangers marine mammals that use sound to function as species. Nancy Pyne, a campaign director for Oceana, said the risk is elevated because of the steady stream of Trump initiatives aimed at unraveling the environmental legacy of […]

Oil production in the Gulf of Mexico shows resilience

With crude oil prices in May holding above the $50 mark, analysis finds the U.S. Gulf of Mexico saw gains in exploration and production activity. Platts RigData, a forecasting unit within pricing group S&P Global Platts, revealed a total U.S. rig count for May at 1,026, up 6 percent from the previous month and more than double the level from one year ago. The U.S. waters of the Gulf of Mexico were the only production centers in the United States to show a decline in rig activity from last year, with the May level of 36 down 16 percent from last year, but a slow recovery is apparent. Eight new fields in the U.S. waters of […]

Trump Moves To Allow Drilling On Atlantic Coast

6 Jun 2017   Offshore

A new proposal by the Trump administration will allow oil companies to use seismic air guns to search for fossil fuel deposits in the Atlantic Ocean, according to reports emerging from Washington. Former President Barack Obama had blocked this form of testing due to dangers posed to marine wildlife in the area. The current White House needs Marine Mammal Protection Act permits from a specialized branch of the Commerce Department to allow five companies to use the technique. ” An authorization for incidental takings shall be granted if [the National Marine Fisheries Service] finds that the taking will have a negligible impact on the species,” a Federal Register notice, scheduled for publication on Tuesday, read. The agency will accept public comments through July 7th before deciding whether to grant the required permits. An approval would allow the seismic gun shots to fire in the Fall. Trump’s April executive order, […]

Carlyle OFS Exec: It’s Dangerous to Declare Industry in Recovery

1 Jun 2017   Offshore, USA

Carlyle Group principal cautions crowd at Louisiana Energy Conference that not all of the oil and gas industry is rebounding as conventional and offshore service companies continue to struggle. An uneven recovery is taking hold of the oil and gas industry, and if folks don’t realize that some sectors continue to struggle, industry exuberance can quickly retreat to the downturn’s despair. Stuart Page, principal in oilfield services and equipment at The Carlyle Group, said taking the same approach to the post-downturn economy as the one that led to plummeting commodity prices will imperil the industry. “I think it’s dangerous that we’re all looking at this as the new recovery. If everybody thinks the same thing, we’re all going to apply the same [excessive] valuations, we’re going to end up with the same problem all over again,” Page said during a panel at the Louisiana Energy Conference in New Orleans […]

Once Costly Deep-Sea Oil Turns Cheap, to OPEC’s Dismay

31 May 2017   Offshore

Deep-water drilling costs are coming down, Wood Mackenzie says Oil at $50 seen sustaining some deep-water projects by 2018 Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie Ltd. That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for the Organization of Petroleum Exporting Countries, which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil’s crash from above $100 a barrel, the group embarked on a different strategy of pumping […]