Offshore
Woodmac: Only the ‘Very Best’ Projects Sanctioned
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
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
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
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
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
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 […]
Democratic senators snubbed with Atlantic energy move
A move to open up parts of the Atlantic to oil and gas activity by the Trump administration went against regional interests, a letter shows. The U.S. Interior Department said it would reassess permits denied to six companies looking to conduct seismic surveys in the Atlantic Ocean. Usually seen as a precursor to oil and gas drilling, Interior Secretary Ryan Zinke said it could advance other technologies as well. “Seismic surveying helps a variety of federal and state partners better understand our nation’s offshore areas, including locating offshore hazards, siting of wind turbines, as well as offshore energy development,” he said in a statement . The Interior Department said seismic data for parts of the Atlantic […]
All Washed Up? Shale Oil and Gas Drowns Out US Gulf of Mexico Shallows
More than 10,000 jobs in the US Gulf of Mexico may be lost, never to return, as shallow water drilling lands in the doldrums where experts say it will remain. Short-term contracts, dismantled infrastructure and lagging dayrates have long challenged shallow water drilling on the U.S. side of the Gulf of Mexico – but it’s the natural gas-belching shale plays that may finally turn the tide away from the shelf. In January 2007, there were 82 jackup rigs drilling in the shallow water of the U.S. Gulf (GOM). By January this year, that figure had dwindled down to 12. At the end of March, 11 jackups remained on the shelf, according to Rigzone Data Services. McDermott International Inc. began its exit from the U.S. shallows six years ago, said Scott Munro, McDermott’s vice president for the Americas, Europe and Africa. “There’s not much of the (U.S. GOM) shallow water […]
Little fanfare, but Gulf of Mexico oil still growing steadily
As rapid growth in U.S. shale production grabs headlines and threatens to upend attempts by OPEC to balance oil markets, a more unsung sector of the U.S. industry is also hitting new output highs – the offshore Gulf of Mexico. While attention and investment is focused on shale, the Gulf is the among the most prolific oil source in the United States, producing more than Alaska, the West Coast and Rocky Mountains combined. The region churned out a record 1.76 million barrels per day of crude in January, trailing only Texas onshore production, which includes the growing Permian Basin. “The business can compete with tight onshore oil any day,” said Richard Morrison, regional president for the Gulf of Mexico for BP Plc ( BP.L ) speaking at the annual Offshore Technology Conference in Houston, […]
Pentagon concerned about lifting offshore drilling moratorium
A letter viewed by Florida lawmakers from the Pentagon said maintaining a moratorium on drilling in parts of the Gulf of Mexico was in the nation’s interest. A letter from the Department of Defense to U.S. Rep. Matt Gaetz, D-Fla., expressed concern about recent executive action from President Donald Trump that could open up more offshore areas for drilling. Anthony Kurta, acting undersecretary of defense for personnel and readiness, said in the letter that keeping parts of the Gulf of Mexico off limits beyond 2022 was essential for developing future combat readiness. “The Department of Defense cannot overstate the vital importance of maintaining this moratorium,” the letter read. The April letter to Gaetz was obtained by the […]
BP: Deepwater Investments in GOM Make Sense
BP’s regional president for the Gulf of Mexico shares how his company was able to overcome the challenges of operating in deepwater. This year’s Offshore Technology Conference kicked off with a breakfast keynote from Richard Morrison, BP plc’s regional president for the Gulf of Mexico. He outlined how BP was able to adapt in order to continue to operate efficiently in deepwater Gulf of Mexico. Despite the low oil price environment during the oil and gas industry downturn, operational safety didn’t suffer, said Morrison, adding that there hadn’t been an increase in accidents in the Gulf of Mexico or elsewhere within the company. “The economics for deepwater investments make as much sense today as they did in 2001,” Morrison said. BP implemented measures to manage costs, which included cutting its Gulf of Mexico workforce by half since 2014. Its production in the Gulf of Mexico increased 15 percent, while […]
BP Says 1B Additional Barrels ‘Possible’ In Gulf Of Mexico Hubs
The head of BP’s Gulf of Mexico region said on Monday the oil company’s use of a new seismic imaging technology has identified 1 billion additional barrels of “possible resources” at four of its U.S. offshore fields. Richard Morrison, the BP region president, said at the Offshore Technology Conference in Houston that its “full waveform inversion” imaging techology was applied to data from its Atlantis, Mad Dog, Thunder Horse and Na Kika fields. The technology enhances the clarity of images collected from existing seismic surveys, particularly those involving complex salt structures that were obscured or distorted, the company said. BP last week said its use of the imaging technology had identified 200 million barrels of possible […]
BP finds hidden trove of oil in Gulf of Mexico
British oil major BP has discovered 200 million barrels of oil in a hidden cache in the Gulf of Mexico, thanks to a technological breakthrough allowing the company to see beneath geological formations that had befuddled oil exploration for decades. The find, worth a potential $2 billion in recoverable oil, is in an undrilled section of BP’s Atlantis field in 7,000 feet of water 150 miles from New Orleans. Long obscured by a salt dome, which distorts seismic waves that oil companies use to map features below the earth, the oil reserves were revealed by using a supercomputer and mathematical algorithm to interpret the seismic data in a new way. The Gulf find is another example of oil companies advancing technology to make unexpected discoveries. The advent of seismic imaging allowed oil and gas companies to model mineral layers below the earth’s surface and drill more precisely. The combination […]
Donald Trump Signs Executive Order Easing Offshore-Drilling Regulations
President Donald Trump signed an executive order Friday to ease regulations on offshore drilling and eventually allow more to occur, particularly in the Arctic Ocean. The order, which takes aim at last-minute Obama administration actions restricting drilling in the Arctic and Atlantic oceans, will likely have limited immediate impact owing to low oil prices, which make drilling in the affected areas economically unattractive. It…
Trump’s offshore oil move already facing legal challenge
With the ink barely dry on an order to review U.S. offshore drilling rights, environmental groups said preparations are already underway for a legal challenge. U.S. Interior Secretary Ryan Zinke announced last Thursday that President Donald Trump has an executive order in place to review the five-year program for offshore oil and gas development. In one of his final moves in office, former President Barack Obama used parts of the Outer Continental Shelf Lands Act to ban oil and gas work in the Chukchi and Beaufort Seas off the coast of Alaska, as well as Atlantic coast areas. Environmental groups said they were alarmed that the Trump administration aimed to put more acreage on the auction block, including possibly some of the first offers for offshore California in decades.
Tim Donaghy, a senior research specialist with Greenpeace, told UPI before Zinke’s announcement that the OCSLA gives the president the authority to withdraw some areas from oil and gas leasing consideration, but not the authority to put those lease considerations back on the table. After the announcement, environmental groups Earthjustice and the Natural Resources Defense Council said they were drafting a lawsuit to challenge the Trump administration. “Trump’s short-sighted order reverses climate progress and imperils coastal communities, irreplaceable wildlife, and our shared future,” Earthjustice President Trip Van Noppen said in a statement. “It is also against the law.”
Will Trump Spark An Offshore Drilling Boom?
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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/seattlepi.com 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 […]