Will Trump Spark An Offshore Drilling Boom?

27 Apr 2017   Offshore, USA

In a bid to fend off criticism over a dearth of achievements in his first 100 days in office, President Trump plans to sign a flurry of executive orders this week. Among them is an executive order intended to open up new areas of offshore oil and gas drilling. “This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers,” a White House official told the Reuters earlier this week. The order calls for a “review of the locations available for offshore oil and gas exploration and of certain regulations governing offshore oil and gas exploration.” Specifically, the Trump administration is hoping to open up new areas to drill in the Gulf of Mexico, plus areas in the Atlantic and Arctic Oceans. The Obama administration had previously designated the Atlantic and the Arctic off limits […]

Unsung Gulf of Mexico Tracks New Crude Oil Production Record

26 Apr 2017   Offshore, USA

Permian Basin hoards the spotlight, but meanwhile, offshore producers are a fraction of a percentage point away from hitting another all-time high during the first half of the year, according to RBN Energy. Far from the $40,000 per acre land rush for shale in the Permian Basin, operators in the Gulf of Mexico are toiling offshore to outpace their own production records. In January, Gulf of Mexico (GOM) production totaled 1.75 million barrels per day, less than a percentage point away from the previous record set in 2009, according to Housley Carr, an analyst at RBN Energy LLC. Within the next month or so, the 2009 record is expected to fall. By 2018, the U.S. Energy Information Administration (EIA) expects a total of 1.9 million barrels per day in 2018, Carr noted in an April 24 report. “Admittedly, that’s an increase of only [300,000 barrels per day] from 2016, […]

Trump to sign offshore orders as 100th day in office, shutdown near

25 Apr 2017   Offshore, USA

Ahead of his 100th day in the White House on Saturday, President Trump is expected this week to unveil details of major policy initiatives, including executive orders aimed at expanding oil and natural gas drilling in federal waters and an outline of his tax reform goals. The week will also be complicated by ongoing negotiations with Congress to keep the federal government from shutting down on Friday, as occurred in 2013. These negotiations appear to be centered on funding for Trump’s border wall. While the border wall is a thorny issue for many Republicans and a nonstarter for Democrats, White House Chief of Staff Reince Priebus said the administration expects Trump’s “priorities” to be included in the spending bill Congress needs to pass by midnight Friday to avoid shutdown. “So we expect a massive increase in military spending,” Priebus said Sunday on NBC’s “Meet the Press.” “We expect money […]

BP Gulf Oil Spill Damage Valued at $17.2 Billion in New Study

21 Apr 2017   Offshore

BP Plc’s 2010 Gulf of Mexico oil spill caused damage to beaches, animals, fish, and coral that the public values at $17.2 billion, according to a financial accounting released on the seventh anniversary of the disaster. The tally, published Thursday in the journal Science, is based on a survey of thousands of Americans that asked what they’d be willing to pay to prevent the kind of impacts unleashed by the spill, which began with an explosion on the Deepwater Horizon drilling rig on April 20, 2010. The worst oil spill in U.S. history killed 11 rig workers, spewed 134 million gallons of crude, soiling birds and marine life across the Gulf. BP, which contracted the rig, was forced to sell off billions of dollars in assets to pay for damages. The latest study, ordered by the U.S. government, is the most comprehensive attempt yet to put on value on […]

Bankruptcy leads to closure of platform offshore California

19 Apr 2017   Offshore, USA

The pending closure of an oil installation offshore California because of a corporate bankruptcy marks a shift in state trajectory, environmentalists said. Venoco, which has its headquarters in Colorado, said it filed for Chapter 11 bankruptcy and would dispose of its assets as a result. The company will quit-claim its lease for the offshore South Ellwood field back to the state and now starts the decommissioning of its offshore Holly platform and associated infrastructure onshore. Venoco Chief Operating Officer Mike Wracher said there was a steady string of circumstances that led to the financial constraints that necessitated bankruptcy, including the ongoing closure of Line 901 in California. “We have pursued a number of market-based and regulatory solutions to address these challenges during the last […]

U.S. offshore oil production on the rise

14 Apr 2017   Offshore, USA

With two oil fields in the Gulf of Mexico starting production this year, and five on tap for 2018, offshore production is set to increase, a U.S. report found. Eight new fields in the U.S. waters of the Gulf of Mexico started producing oil last year, leading to a high-water mark of 1.6 million barrels per day, beating the previous record set in 2009 by 44,000 bpd. By January, regional offshore production was up another half million barrels on a daily basis. A March report from analytical group Wood Mackenzie found the cost to break even on oil and gas projects in deep waters, the U.S. Gulf of Mexico in particular, has dropped from around $70 […]

Gulf of Mexico crude oil production, already at annual high, expected to keep increasing

13 Apr 2017   Offshore, Oil Supply, USA

U.S. crude oil production in the Federal Gulf of Mexico (GOM) set an annual high of 1.6 million barrels per day (b/d) in 2016, surpassing the previous high set in 2009 by 44,000 b/d. In January 2017, GOM crude oil production increased for the fourth consecutive month, reaching 1.7 million b/d. On an annual basis, oil production in the GOM is expected to continue increasing through 2018, based on forecasts in EIA’s latest Short-Term Energy Outlook (STEO). In 2016, eight projects came online in the GOM, contributing to the high production levels. Another seven projects are anticipated to come online by the end of 2018. Based on anticipated production levels at these new fields and existing fields, annual crude oil production in the GOM is expected to increase to an average of 1.7 million b/d in 2017 and 1.9 […]

Florida lawmaker fending off calls for oil and gas drilling

13 Apr 2017   Offshore, USA

Amid calls for more oil and gas drilling, a Democratic senator in Florida said he was “beating back” pressure for exploration in the Gulf of Mexico. Industry groups like the American Petroleum Institute have praised executive orders from President Donald Trump that favor the oil and gas industry. With changes in Washington, Kevin Doyle, the Florida director of the Consumer Energy Alliance, said in a message sent to UPI that he called on state leaders to evaluate the potential for oil and gas exploration in the waters off the western coast of Florida. By Doyle’s estimates, state coffers could be bolstered for the benefit of Florida residents struggling with medical bills and dwindling pensions. “A strong and growing constituency in Florida supports […]

Gulf Of Mexico Breakeven Falls Below $50 Per Barrel

5 Apr 2017   Offshore

Twice as many deepwater projects expected this year as the last two years combined While U.S. shale has been by far the most important topic when discussing U.S. oil and gas production, Gulf of Mexico production is still a major factor. Oil production from the Gulf increased significantly in 2016, while nearly every state saw decreases in production. According to Wood Mackenzie, the offshore industry made major changes to drilling strategies and technology in the aftermath of the Deepwater Horizon disaster. These allowed operators to cut the average cost of projects by about 20 percent, making many projects profitable at $50 per barrel or even lower. Technological advancements are not the only factor increasing profitability, though. Producers are reducing costs with smaller projects, targeting only the best locations. Drilling “the core of the core” has become increasingly prevalent in onshore operations as well as operators look to make the […]

Seadrill in a Free Fall Seen Left to Day Traders as Hope Fades

5 Apr 2017   Offshore

Seadrill Ltd. , once the crown jewel of billionaire John Fredriksen’s business empire, is at the mercy of short-term speculators as the biggest funds shun the offshore driller amid a struggle to avoid bankruptcy. “It’s trading at option value and day traders are the ones pushing the price up and down,” Anders Bergland, an analyst at Clarksons Platou Securities AS , said Tuesday, right after the company again warned shareholders and bond investors they were facing steep losses in any restructuring deal. “There are no funds buying this right now, it’s trading.” Seadrill fell as much as 29 percent on Wednesday after closing 38 percent down the day before, already at a record low. The stock traded 25 percent lower at 6.51 kroner as of 12:47 p.m. in Oslo. The company has been working on a restructuring of the offshore-drilling industry’s biggest debt load for more than a year. […]

Oil and gas projects in deep waters grow competitive

31 Mar 2017   Offshore

On the heels of new developments in the Gulf of Mexico, a report finds the next breakout area for the recovering oil and gas sector may be deep water basins. A new report emailed from analytical group Wood Mackenzie finds the cost to break even on oil and gas projects in deep waters, the U.S. Gulf of Mexico in particular, has dropped from around $70 per barrel to below $50 per barrel in some cases. The price for Brent crude oil, the global benchmark, was around $52 per barrel early Thursday. Since 2014, Wood Mackenzie estimates the average cost to develop deep water projects, and not just in North America, have dropped more than 20 percent. Angus […]

Ocean Rig UDW Files for U.S. Bankruptcy Protection

29 Mar 2017   Offshore

Offshore drilling contractor Ocean Rig UDW Inc. filed for bankruptcy protection in the U.S. to block distressed debt investors from interfering with a debt restructuring that will slash $3.7 billion in debt from its books. The Cayman Islands holding company filed Monday night for protection under chapter 15, the section of the U.S. code dealing with cross-border insolvencies. Ocean Rig is one of a number of offshore rig owners and…

Gulf Of Mexico Lease Sale Nets $315M in Bids, Feds Suggest Trump Bounce

24 Mar 2017   Offshore, USA

Top bidders included Shell Offshore, Statoil, Chevron and Hess Corp, each offering more than $44 million for access to offshore exploration and production, according to federal records. Offshore energy companies ponied up more than $315 million in bids to lease 913,542 acres in the Gulf of Mexico off the coast of Louisiana, Mississippi and Alabama on Wednesday. The lease sale is the final one in the GOM under the Obama Administration’s Five-Year Plan, which made available all offshore areas with the greatest resource potential from 2012 through 2017. The first 11 sales in the program netted more than $3 billion in bid revenue on almost 73 million acres for development, according to information from the Interior Department. The top five bidders included major oil and gas companies: Shell Offshore – $61 million Statoil – $51 million Chevron Corp. – $50 million Hess Corp. – $44 million ExxonMobil – $22 […]

Statoil ‘resets’ exploration in U.S. Gulf of Mexico

23 Mar 2017   Norway, Offshore, USA

Norway’s Statoil has “reset” its exploration campaign in the U.S. Gulf of Mexico by placing top bids for 13 offshore deepwater oil and gas leases there in the latest auction, the company said Thursday. The majority state-owned company said in January it was considering whether to end its costly search for oil and gas in the region following a series of exploration failures. Statoil made total bids of $44.5 million in the auction, second only to Shell and ahead of Hess Corp, Chevron and Exxon. The outcome will now be subject to a 90-days formal review and final approval. “We continue to believe in the potential of the Gulf of Mexico,” Statoil’s Tore Loeseth, head of exploration in the U.S. and Mexico, said in a statement. Statoil said it expected its offshore […]

Major oil companies open their wallets in Gulf of Mexico bidding

Royal Dutch Shell plc, Chevron Corp and Exxon Mobil Corp signaled the oil industry’s return to the Gulf of Mexico’s deep waters with high bids in a government auction up 76 percent over a year ago. The auction of offshore oil and gas parcels received nearly $275 million in high bids, compared with $156.4 million a year ago. The year-ago auction drew the fourth lowest total bids for leases in the central Gulf. The oil industry had moved away from deep water projects as oil prices fell and regulatory scrutiny increased following the Deepwater Horizon disaster in April 2010, the largest accidental marine oil spill. The five-month-long spill, which spewed some 210 million U.S. gallons (780,000 m3) into the Gulf, caused extensive damage to marine and wildlife habitats, as well as […]

BP orders construction for new subsea production system

22 Mar 2017   Offshore

 Schlumberger subsidiary OneSubsea has been contracted to provide a subsea production system for BP’s Mad Dog 2 project in the Gulf of Mexico. The Mad Dog Phase 2 project is BP’s second stage of development for a planned offshore oil field. The phase builds on BP’s largest oil field discovery in the Gulf of Mexico. OneSubsea will be tasked with supplying undersea wells that extract petroleum. Company officials are confident their products will yield positive results for all industry partners while reducing risks. “Our equipment reliability is a key factor in mitigating project risk and this project will benefit from the supplier-led approach of using standardized equipment designs and specifications,” OneSubsea president Mike Garding said in a press release . The production contract includes […]

Shell Goes on a Deep-Water Drilling Diet

21 Mar 2017   Offshore

Shell, the world’s second-largest publicly traded energy company, is making a high-stakes bet that it can take highly efficient technology and processes perfected onshore and deploy it in deep-sea production.  It hopes to squeeze more oil out of existing undersea wells, like those that ring the platform, which weighs 82 million pounds and floats in 3,000 feet of water over the Mars oil field in the Gulf of Mexico. It also wants to make new deep-water projects cheaper and faster, especially in Brazil, where it acquired a bevy of offshore prospects as part of its $50 billion purchase of BG Group PLC last year.  It is a strategy born of necessity. Big oil companies have traditionally needed prices of $70 a barrel or more just to break even on new deep-water projects, which take years to begin paying off.  But with onshore shale oil flooding the market, Shell executives aren’t sure when crude, currently around $50 a barrel, will fetch more again. And with electric cars and other technologies threatening to eat into demand, they believe the world’s thirst for oil may peak as soon as the end of next decade.

Oil industry revives quest for deepwater reserves

10 Mar 2017   Offshore

Deepwater oil drilling can be expensive, time-consuming and a hard sell to investors. But the world’s top energy firms are restarting their search for giant oilfields under the ocean after a two-year lull. A recovery in oil prices to about $50 a barrel from a 12-year low in 2016 is reviving oil majors’ appetite for risk. Reductions in offshore production costs mean that some projects may be able to compete with North American shale fields, executives said at an energy conference in Houston this week. The recovery in the industry has so far been focused on onshore shale output from the largest U.S. oilfield, the Permian Basin. “Our competition over the past years has evolved from ‘we want […]

Oil industry asks Trump about drilling offshore

2 Mar 2017   Offshore

Despite general White House support for the oil and gas sector, a trade group said more than 90 percent of the reserves offshore remain off limits to producers. In his first address to Congress as president, Donald Trump highlighted an economic policy that emphasized American-made growth. “We have cleared the way for the construction of the Keystone and Dakota Access pipelines,” he said. “And I’ve issued a new directive that new American pipelines be made with American steel.” Trump has already signed executive measures that called for a fast-track approval process for pipelines that would feed U.S. export hubs on the southern coast. Both pipelines stalled under Trump’s predecessor. Randall Luthi , the president of the National Ocean Industries Association, […]

Shell Approves New Gulf Of Mexico Project, First Since 2015

1 Mar 2017   Offshore

Royal Dutch Shell has given the go-ahead to develop its Kaikias deepwater field in the Gulf of Mexico, the first such project the oil and gas company has approved in 18 months. Oil companies around the world are emerging from one of the longest downturns in recent decades amid warnings that the drop in investment in recent years may lead to a supply deficit by the end of the decade. Shell said the Kaikias oil and gas project, located some 210 kilometres (130 miles) from the Louisiana coast, will start production in 2019 and generate profits with oil prices lower than $40 a barrel after the company slashed its costs by around 50 percent […]

Rig company Seadrill teeters on the brink

1 Mar 2017   Norway, Offshore

Rig company Seadrill Ltd., based in Norway, said it was looking at restructuring options after noting it didn’t expect improvements in lease rates this year. Energy companies are spending more on exploration and production as crude oil prices settle at around $55 per barrel. Oil prices last year dropped below $30 per barrel and some of the smaller service companies collapsed as a result of the corresponding drop in spending. Seadrill, which counts dozens of deepwater and ultra-deepwater drillships in its fleet, said it was struggling with mounting debt and may have trouble staying afloat. President and CEO Per Wullf said the level of bidding had increased for his company’s services and there was room for some optimism. “Improving dayrates […]

Transocean says its phone is ringing

24 Feb 2017   Offshore

Rig company Transocean said that, after reporting an increase in revenues for the fourth quarter, recovery for offshore drillers was evident on the horizon. Transocean reported revenues for the fourth quarter at $974 million, a gain of 7.5 percent from the third quarter. “In the face of a very challenging market, we again produced impressive operational and financial results in the fourth quarter,” President and CEO Jeremy Thigpen said in a statement . During the peak of the market downturn last year, Transocean had already seen two rig contracts canceled. Since 2015, it had about a dozen contracts pulled prematurely as energy companies spend less on exploration and production during the market downturn and the company warned that “very few” new contracts were expected in 2016. Transocean’s earnings are important for a market keeping a close eye on exploration and production trends. Low oil prices […]

2017 Offshore Rig Market Not in for Much Improvement

11 Feb 2017   Offshore

In 2017, the offshore rig market is not expected to recover to the levels some had forecasted. In 2017, the offshore rig market is not expected to recover to the levels some had forecasted and many were hoping for. Although the Nov. 30, 2016 OPEC production cut agreement was a positive step, it is still too early in the process for a rig demand increase to materialize. As for price forecasts, in its February 2017 Short-Term Energy Outlook, the Energy Information Administration (EIA) predicted Brent to average $55 in 2017 and $57 in 2018. Offshore drilling spending fell around 30 to 35 percent in 2016 and is also forecast to decline in 2017, albeit not as much. As the offshore rig market continues its worst slump, maybe ever, operators and rig owners have continued to cut spending. In addition to administrative staff reductions, rig crews have also been let […]

Offshore Drillers Still Seeking Recovery Enjoyed by Shale

8 Feb 2017   Offshore, Shale Oil

While oil drillers in US shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. (Bloomberg) – While oil drillers in U.S. shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. U.S. offshore operators like Diamond Offshore Drilling Inc. and Atwood Oceanics Inc. are down more than 15 percent in the last month, as companies focus on onshore oil that reaps better returns. With oil trading near $53 a barrel, firms are looking toward booming plays like the Permian Basin in West Texas and the Scoop and Stack formations in Oklahoma, according to Marc Edwards, Diamond Offshore’s chief executive officer. “From an operator perspective, they still have choices as to how they deploy their capital. And, of course, […]

Offshore Drillers Are Still Seeking Recovery Enjoyed by Shale

7 Feb 2017   Offshore

While oil drillers in U.S. shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. U.S. offshore operators like Diamond Offshore Drilling Inc. and Atwood Oceanics Inc. are down more than 15 percent in the last month, as companies focus on onshore oil that reaps better returns. With oil trading near $53 a barrel, firms are looking toward booming plays like the Permian Basin in West Texas and the Scoop and Stack formations in Oklahoma, according to Marc Edwards, Diamond Offshore’s chief executive officer. “From an operator perspective, they still have choices as to how they deploy their capital. And, of course, I think, we all understand that right now competing with the unconventional place is quite difficult from a deepwater perspective,” Edwards said. “In the short run, if oil stays in a range […]

This Is Who Will Pay for Shutting Down North Sea Oil Rigs

1 Feb 2017   Offshore

Royal Dutch Shell Plc’s $3.8 billion sale of North Sea oil and gas fields creates a model for further transactions in a region where the question of who pays to remove decades-old offshore platforms has been an obstacle for other deals. Shell’s agreement with Chrysaor Holdings Ltd. included the condition that Europe’s largest oil company covers $1 billion in decommissioning costs, leaving the private-equity-backed explorer with an estimated $2.9 billion of liabilities. Sharing end-of-life costs between buyers and sellers is likely to remain the trend in the North Sea, where the billions of dollars of spending required to remove aging platforms and pipelines over the coming years presents a “real challenge” to deal-making, according to consultant Wood Mackenzie Ltd. “The trend recently has been for oil majors to sell their assets in the North Sea and the decommissioning costs have often been a real challenge for deals to go […]

BP Production to Grow with Thunder Horse South Expansion

24 Jan 2017   Offshore

BP plc made another step towards its goal of adding 800,000 barrels of new production by 2020 with the start of production in December from the Thunder Horse South Expansion project. The project is expected to increase production at Thunder Horse, one of the largest Gulf of Mexico fields, by an estimated 50,000 gross barrels of oil equivalent. The Thunder Horse South Expansion project also started 11 months ahead of schedule and $150 million under budget. These facts demonstrate that deepwater projects can be executed in a cost-effective way “while keeping a relentless focus on safety,” Richard Morrison, regional president of BP’s Gulf of Mexico business, said in a Jan. 23 press statement. BP achieved the savings by relying on proven standardized equipment and technology, rather than building customized components. To keep costs down, BP used equipment from FMC Technologies that had previously been used at Thunder Horse. BP […]

New Data Points To Rebound In Offshore Oil

14 Jan 2017   Offshore

Here’s one of the most important charts we might see in oil and gas this year. New this week from industry watchdog Wood Mackenzie — showing how many offshore petroleum projects will likely see final investment decisions (FIDs) during 2017. (Click to enlarge) Wood Mackenzie sees a major surge coming this year in investment decisions on offshore oil and gas projects There are a few important things to note here. First, approvals of new petroleum projects were running strong between 2007 and 2014 — with the blue bar on the left showing how FIDs during this period averaged 40 projects per year. Move to the 2015 however, and approvals for new project construction fell off a cliff. With only 8 projects getting off the ground that year. The past year wasn’t much better — with only 9 projects reaching FIDs during 2016. That drop-off was triggered by falling crude […]

Seismic Industry Still Reeling From Oil Price Bust

11 Jan 2017   Offshore

The exploration and production business has been bearing the brunt of slashed investment and reduced budgets in the wake of the oil price crash. Yet, another industry dependent on E&P expenditure has taken even more of a beating: seismic surveying. The seismic market has not only suffered the reduced exploration allocation, it has been piling huge levels of debt and is unable to flip more return on investment because spending cuts in exploration budgets have left them with less funding prior to completing a seismic survey job. Struggling E&P companies have been renegotiating seismic vessel rates, and many geophysical survey companies have been scrambling to cover their own costs. It was in December 2014 – a few months after the oil prices started crumbling – that Schlumberger (NYSE:SLB) said it was reducing its WesternGeco marine seismic fleet to lower operating costs in response to the price crash. But according […]

The Bad News Continues For Offshore Oil And Gas

6 Jan 2017   Offshore

The oil price bust, which resulted from the global crude oil glut, has created yet more oversupply, this time in the offshore industry, where a rig and vessel glut is forming. Offshore drilling has been one of the worst hit sectors during the oil price slump, with exploration expenditure having significantly dropped over the past two years and expected to continue to fall this year. This has left an oversupply of vessels and rigs, and to make things worse, new-build assets are entering the market. Many vessels and rigs are now being built speculatively, without existing contracts for their use, and those speculative assets will not find customers until at least 2019, a manager at a Norway-based company that specializes in preservation and corrosion protection in the oil, gas and shipping industries, has warned. According to Allan Durham, managing director at Stavanger-based Presserv, at least 61 floaters are on […]

Next U.S. Gulf of Mexico lease sale will be online

24 Dec 2016   Offshore

The next lease sale planned by the U.S. government for oil and gas reserves in the Gulf of Mexico will be streamed live on the Internet, an agency said. On March 22, the Bureau of Ocean Energy Management plans to stream the next lease for the rights to drill into 48 million acres of territorial waters off the coast of Alabama, Louisiana and Mississippi. “Livestreaming the sale enables BOEM to deliver pertinent bid information immediately to a much broader national and international audience,” the agency explained. Environmental advocates had complained moving the lease online would silence the voice of dissent. Demonstrations were […]

One size fits all? In offshore oil sector, using standard gear could cut costs 30 percent: association

23 Dec 2016   Offshore

Offshore oil majors could shave nearly a third off their exploration and development costs by simply agreeing to industry-wide equipment standards, according to an industry association executive. Rather than having big companies continue to go their own, expensive ways in ordering drilling gear tailored for their individual needs, oil majors could take a leaf out of the U.S. shale oil industry’s book, said Allen Leatt, chief executive of the International Marine Contractors Association (IMCA). U.S. shale oil drillers, whose rise was partly responsible for crashing crude prices in 2014, have halved their cost base to around $30-40 a barrel, thanks in part to standardization of drilling equipment. With an OPEC oil output cut about to kick in and prices rising, shale oil producers are now poised for profitable growth. “Oil companies could take out 30 percent of the cost using standardized specifications and ruthlessly pragmatic engineering,” the ICMA’s Leatt […]

One size fits all? In offshore oil sector, using standard gear could cut costs 30 percent: association

22 Dec 2016   Offshore

Offshore oil majors could shave nearly a third off their exploration and development costs by simply agreeing to industry-wide equipment standards, according to an industry association executive. Rather than having big companies continue to go their own, expensive ways in ordering drilling gear tailored for their individual needs, oil majors could take a leaf out of the U.S. shale oil industry’s book, said Allen Leatt, chief executive of the International Marine Contractors Association (IMCA). U.S. shale oil drillers, whose rise was partly responsible for crashing crude prices in 2014, have halved their cost base to around $30-40 a barrel, thanks in part to standardization of drilling equipment. With an OPEC oil output cut about to kick in and prices rising, shale oil producers are now poised for profitable growth. “Oil companies could take out 30 percent of the cost using standardized specifications and ruthlessly pragmatic engineering,” the ICMA’s Leatt […]

President Obama bans oil drilling in large areas of Atlantic and Arctic oceans

21 Dec 2016   Offshore, USA

Hundreds of kayaktivists protest drilling in the Arctic and the Port of Seattle being used as a port for the Shell Oil drilling rig Polar Pioneer (Daniella Beccaria/ via Associated Press) President Obama moved to solidify his environmental legacy Tuesday by withdrawing hundreds of millions of acres of federally owned land in the Arctic and Atlantic Ocean from new offshore oil and gas drilling. Obama used a little-known law called the Outer Continental Shelf Lands Act to protect large portions of the Chukchi and Beaufort seas in the Arctic and a string of canyons in the Atlantic stretching from Massachusetts to Virginia. In addition to a five-year moratorium already in place in the Atlantic, removing the canyons from drilling puts much of the eastern seaboard off limits to oil exploration even if companies develop plans to operate around them. The announcement by the White House late in the afternoon […]

Obama’s Offshore-Oil Plan Forces Drillers to Focus on U.S. Gulf

19 Nov 2016   Arctic, Offshore

Five-year schedule of lease sales leaves out Arctic, Atlantic Environmentalists have pressed for permanent protections The Obama administration’s decision to forgo auctions of new oil and gas drilling rights in U.S. Arctic waters deals a blow to energy companies seeking to lock up new territory beyond the long-explored Gulf of Mexico. Interior Secretary Sally Jewell said the move, announced Friday, strikes the right balance, by sustaining oil and gas development in the Gulf, while blocking the activity in remote and fragile Arctic waters that could be devastated by an oil spill. “The plan focuses lease sales in the best places — those with the highest resource potential, lowest conflict and established infrastructure — and removes regions that are simply not right to lease,” Jewell said in a statement. “Given the unique and challenging Arctic environment and industry’s declining interest in the area, forgoing lease sales in the Arctic is […]

US Interior offshore oil and natural gas leasing plan may be complicated by Trump win

14 Nov 2016   Offshore, USA

The Interior Department is expected this week to unveil its final five-year plan for offshore oil and natural gas lease sales and both industry and environmental sources believe proposed Arctic sales are more likely to be eliminated due to Republican Donald Trump’s electoral victory. The plan, with the proposed sales in the Beaufort and Chukchi seas cut out, could put the incoming Trump administration in the precarious position of scrapping the plan but halting all offshore oil and gas sales for the bulk of his four-year term or going forward with a limited number of sales, potentially only in the Gulf of Mexico. Interior’s Bureau of Ocean Energy Management is expected to unveil the final plan for offshore lease sales between 2017 and 2022 as early as Wednesday, according to sources, who spoke on the condition of anonymity. BOEM unveiled the proposed plan in March and while a planned […]

Catching A Falling Knife: A Deepwater Buyout

9 Nov 2016   Offshore

 Across the oil industry, many firms have started to see their stock prices stabilize. The offshore deepwater drilling industry is the exception. Deepwater drillers have continued to collapse in value. It is always dangerous to try catching a falling knife, but at this point the stock prices on many firms in the space don’t have much more to lose. The biggest firms in the industry, Noble, Enesco, and Transocean now trade at prices of around $4.75, $7.50, and $9.75 respectively. Stock price by itself means nothing, but it’s important to remember that all of these were companies where the stocks were once trading in the $40-$70 range. In other words, their market caps are roughly a tenth of what they once were. For about $6 billion, an outsider acquirer could buy up the top 3 players in the industry. That’s important because the problem in the […]

British Offshore Industry: Expect The Unexpected

The majority of us will say check out last year’s figures – only 13 exploratory wells were drilled in 2015. As put it – “Exploration in British waters has absolutely crashed and is now at its worst ever in the entire history of our still strategically vital offshore oil and gas industry.” But that was before the closure of the latest government licensing rounds. Keen observers (they do say the geeks will inherit the Earth) noticed that for the first time in over twenty years the recent offshore licensing offers in the North Sea concerned what’s described as “frontier areas”. And guess what? Be still our beating hearts. It was “really positive”. 24 companies applied for licenses covering 113 blocks – BP alone made 29 applications. Nick Richardson, head of exploration and new ventures at the OGA said, “It is not much use comparing this to […]

Offshore production nearly 30% of global crude oil output in 2015

26 Oct 2016   Offshore

Source: U.S. Energy Information Administration, based on Rystad Energy Global offshore oil production in 2015 was at the highest level since 2010, and accounted for nearly 30% of total global crude oil production. Offshore oil production increased in both 2014 and 2015, reversing consecutive annual declines from 2010 to 2013. Production from onshore tight oil plays has increased faster over the past several years and accounts for an increasing amount of total oil production. More than 27 million barrels of oil were produced offshore in 2015 in more than 50 different countries. Global crude oil production is expected to remain high in 2016, as many oil producing nations continue to increase production. A significant amount of global offshore production is concentrated in a few countries. In 2015, five countries provided 43% of total offshore oil production: Saudi Arabia, Brazil, Mexico, Norway, and the United States. Source: U.S. Energy Information […]

No Near-Term Recovery For Offshore Rig Market

20 Oct 2016   Offshore

The offshore rig market is currently in its worst slump since the mid-1980s, according to the October 2016 issue of RigOutlook. Offshore drilling in many parts of the world is dependent on the price of oil; the current price of Brent crude has risen to around $50 after bottoming out at just under $30 a barrel earlier in 2016. The Energy Information Administration (EIA) and others are forecasting oil prices to be around $60 by September 2017, which is generally considered the price necessary to spur an increase in offshore drilling. Whether higher prices can be sustained, however, is another question as energy demand in some parts of the world is declining. The offshore rig market is currently in its worst slump since the mid-1980s, according to the October 2016 issue of RigOutlook . Since September 2014, when the current downturn began, utilization worldwide has fallen by around 20 […]

The Biggest Opportunity Right Now In Oil And Gas

18 Oct 2016   Offshore

Offshore exploration has been a rare bright spot for the global oil and gas industry lately. Some of the movement in the offshore sector is coming as governments get more accommodating — in an attempt to spur drilling and increase revenues at a time when drilling is down across the world. With this week’s news about the big changes to Brazil’s petroleum laws being a prime example. Big players like Shell are already moving to take advantage of this shift in Brazil. Announcing that they are moving ahead with the development of the 8 billion-barrel Libra pre-salt field here. And Brazilian officials reported late this week that the shift to 100% foreign ownership is having a wider effect. With Petrobras CEO Pedro Parente telling the press that international firms began contacting him about opportunities on the same day that Brazil’s Congress voted to change the laws. And it’s not […]

Offshore Drillers Brace for More Pain Even With Bottom in Sight

16 Sep 2016   Offshore

Transocean, Seadrill see utilization rates stabilizing in 2017 As many as 60 more floating rigs need to be scrapped Offshore oil-rig operators, grappling with the biggest industry downturn in a generation, say they finally have the bottom in sight. The problem is, they could be stuck there for a long time. Transocean Ltd., which owns the biggest offshore-rig fleet in the world, believes utilization for floating units will reach bottom toward the middle of next year, Chief Financial Officer Mark Mey said at a conference organized by Pareto Securities ASA in Oslo. Seadrill Ltd., which owns the third-largest fleet, said utilization could stabilize as soon as the beginning of next year, and that rental rates had already bottomed out. Still, it’s impossible to say when those rates, which have dropped to about $200,000 a day from highs of $650,000 in 2013 for the most sophisticated units, will recover, said […]

‘Deepwater Horizon’ Film Retraces Stigma of U.S. Oil Disaster

15 Sep 2016   Offshore

BP supervisors on rig depicted putting profits above safety Star-driven movie premiered at Toronto filmfest this week Just as memories of the 2010 Deepwater Horizon oil rig disaster were starting to fade from public consciousness, an action-heavy movie version is set to bring them back, front and center. “Deepwater Horizon,” set for release at the end of the month, is an intense, big-budget depiction of the events immediately before, during and after the blowout and explosion at the ultradeep-sea drilling rig off Louisiana. The events left 11 workers dead and set off the worst oil spill in U.S. history. The filmmakers were aiming for a tribute to the victims and the survivors, but they also take some shots at the managers on the rig who worked for BP Plc, the majority owner of the well. In the Lions Gate Entertainment Corp. movie, which premiered at the Toronto International Film […]

Anadarko Goes Deeper in GOM with $2B Deal

13 Sep 2016   Offshore

Anadarko Petroleum Corp. is diving even further into deepwater Gulf of Mexico with a $2 billion acquisition of assets from Freeport McMoran Oil & Gas, the company announced Monday.  The deal, effective Aug. 1, will be immediately accretive, Anadarko CEO Al Walker, said in a news statement. It is expected to close by the end of the year.  The $2 billion buy will achieve several objectives for the Houston-based exploration and production company (E&P), including:

  • doubling Anadarko’s ownership in the Lucius development to about 49 percent;
  • expanding the company’s infrastructure throughout the Gulf of Mexico;
  • generating $3 billion in incremental cash flow during the next five years at current prices; and
  • enabling the company to accelerate investment in Anadarko’s Delaware and DJ basin assets.

The Delaware basin made headlines recently when another Houston-based E&P, Apache Corp., announced a major find in the region.

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Deep Investment Cuts Will Slow Rebound For Offshore Oil Services

9 Sep 2016   Offshore

French oil services company Bourbon said on Thursday that any rebound in oil and gas prices will take a while to reach companies in the offshore marine sector because of deep cuts in investments during the prolonged oil downturn. Bourbon, whose fleet of about 513 vessels provides offshore services for oil and gas companies, said its net loss in the first half widened to 104.3 million euros ($117 million)compared with a net loss of 19.2 million in the same period a year ago. Adjusted revenues fell 21 percent to 599.2 million compared with the first half of 2015, the company said. “After the drastic reduction of the level of investments of oil and gas companies over the past […]

Shell starts new production in Gulf of Mexico

7 Sep 2016   Offshore, USA

After taking a partial cash offer for assets in the region, Royal Dutch Shell said it started production at its deepest project yet in the Gulf of Mexico. Shell said it started production from the Stones development in the Gulf of Mexico using a floating production, storage and offloading vessel, the 13th such facility in its portfolio and, tapping a basin beneath 1.8 miles of water, the world’s deepest such development . “Our growing expertise in using such technologies in innovative ways will help us unlock more deep-water resources around the world,” Andy Brown, the director for exploration and product projects for Shell, said in a statement. By the end of next year, the company said Stones should be producing around […]

Where Will Gulf Of Mexico Oil Production Go From Here?

6 Sep 2016   Offshore

In this post, I will address 3 topics relating to the Northern Deepwater Gulf of Mexico – 1. Historical oil production 2. One view of the future of exploration 3. EUR ranges I will limit my comments to oil production (not gas production). All production data is from BSEE/BOEM. The play outlines on the map are my best estimates. I will be using the BSEE definition of deepwater, which includes water depths greater than 1000’. And, I will be assuming a Business As Usual future – by that I mean that fossil fuels will continue to be an important energy source, and the world will continue to be able to afford them. 1. Historical production Cumulative production to date from the deepwater GOM is about 7 billion barrels of oil (Bbo). Total shelf production is about 13 Bbo. The chart below shows both shelf (in green) and deepwater production […]

Shell to Sell Gulf of Mexico Oil Assets for $425 Million

Royal Dutch Shell Plc agreed to sell its Brutus/Glider operation in the Gulf of Mexico for $425 million as Chief Executive Officer Ben Van Beurden seeks to resuscitate an explorer dinged by the lowest profits in more than a decade. The buyer, EnVen Energy Corp., will gain control of four blocks in the U.S. part of the Gulf, as well as the platform and subsea pipeline network that funnel crude from the fields to shore, The Hague-based Shell said in a statement on Monday. The field pumps the equivalent of 25,000 barrels of oil a day, or 5.8 percent of Shell’s output in the Gulf of Mexico. Shell, the biggest oil producer in the U.S. Gulf, has been canceling projects and reducing cash outlays to cope with the plunge in oil markets and the burden of the company’s $54 billion purchase of BG Group in February. Quarterly profit fell […]

Has The Gulf Of Mexico Fallen Out Of Favor With The Oil Majors?

29 Aug 2016   Offshore, USA

A glitch interrupted the first-ever U.S. livestream of an oil lease sale on Wednesday, and although it didn’t affect the bidding, this epic fail provided just the right metaphor to describe the flop of the latest auction in the Gulf of Mexico, which saw a record low number of companies offering record-low money for leases in the western parts of the Gulf. Upon announcing in July the first-ever federal livestream of a lease sale , the U.S. Bureau of Ocean Energy Management (BOEM) had said that the 23.8-million-acre area offshore Texas was estimated to have economically recoverable hydrocarbons of between 116 million and 200 million barrels of oil and between 538 billion and 938 billion cubic feet of natural gas. So far, so good. This week’s lease sale, however, showed the dismal stark reality: just three companies bid for 24 tracts covering 138,240 acres, with all bids […]

Modest interest in latest Gulf of Mexico lease

25 Aug 2016   Offshore, USA

Despite tough industry conditions, bidding that emerged in the latest lease shows the U.S. Gulf of Mexico remains good energy acreage, the government said. Only three companies emerged with bids totaling $18 million and they took up only a fraction of the 23.8 million acres on the auction block. Abigail Ross Hopper, the director of the Bureau of Ocean Energy Management, said even that amount of interest in a weakened energy market was a success. “Though this sale reflects today’s market conditions and industry’s current development strategy, the bidding confirms that there is continued interest in the deepwater areas of the Gulf of Mexico,” she said in a statement. The government estimates the range of economically […]