Uncertainty rules

Jennifer Pallanich
Monday, August 9, 2010

The Macondo oil spill will have a lasting impact, but not the same repercussions on the petroleum industry that the Three Mile Island accident had on the nuclear industry. So said Douglas Becker, director oil services & equipment, global research for Bank of America, during Houston's Decision Strategies' Oilfield Breakfast Forum on 23 July.

‘We don't think it's a Three Mile Island type of incident,' said Becker, adding that he doesn't expect the environmental disaster to lead to a three-decade shutdown on drilling off the coasts of America in the way that Three Mile Island has hampered nuclear efforts for 30 years.

However, Becker said he does expect to see Gulf of Mexico rig counts declining – ‘not today, not tomorrow, but as we go forward' – largely as a result of the six-month moratorium on deepwater drilling the US government put in place in the wake of the Deepwater Horizon tragedy.

Life pre-Macondo in the deepwater Gulf of Mexico was in pretty good shape, recalled Oceaneering president and CEO T Jay Collins, with floater utilization at high levels. On 1 April 2010, he said, there were 35 ROVs serving Gulf drilling rigs while on 9 July that number was down to 11.

‘The moratorium doesn't really matter, if you can't get permits,' Collins said. ‘It's still about permits, even if the moratorium ends.' Becker noted the government has numerous means of preventing drilling in the Gulf if it wants to, and that confusion and uncertainty reign in the region. ‘This is not good in an industry that requires the kind of capital' the petroleum industry dedicates to its multi-million and multi-billion projects, Collins said. ‘The question is, what kind of market will we have in the Gulf of Mexico?'

Becker noted the Gulf was on track to have about 40 rigs working in the region by year-end. Now, he said, that number may be halved, because of the moratorium. Most of those rigs will likely go to established oil regions, such as West Africa. Brazil could be another destination, he added, noting Petrobras may welcome the opportunity to lock up deepwater rigs ‘at pretty good prices' instead of – or maybe in addition to – continuing to invest in its planned newbuild drilling rig campaign.

Helge Hove Haldorsen, VP of strategy for Statoil, said the uncertainty could linger quite a while, given the possibility no new drilling permits will be issued until after a congressional commission investigating the incident is complete and the report issued. ‘That's a long time from now,' he said. ‘How do we deal with that uncertainty?'

At the same time, he said, the industry should contribute more to an R&D fund, perhaps at a rate of a certain percentage of the drilling costs of a well. ‘That's one possibility to beef up R&D that many feel is not going on enough these days,' he said. Some research, he noted, may help the industry ‘crack the Paleogene,' or Lower Tertiary, play in the Gulf of Mexico.

Perhaps tougher to crack is the industry's continued poor public relations image.

‘We are in a love-hate relationship with the people we serve,' Deanna Goodwin, Technip CFO, said, noting the industry in 2008 ranked just above the tobacco industry in a poll gauging public perception about how well the petroleum industry serves its customers.

She wondered where the industry would rank if the poll were to be repeated now, in the aftermath of Macondo. OE

Categories: Activity North America Gulf of Mexico Rigs

Related Stories

Leading Light Wind Bids for New York Offshore Wind Contract

Equinor and BP Jointly Bid for New York's Third Offshore Wind Solicitation

Vessel Conversions Gaining Favor in US Offshore Wind

Current News

Eni Pens $8b Libya Offshore Gas Deal

TotalEnergies, Partners to Start Drilling Offshore Lebanon in Q3 2022

New Petrobras CEO Says to Drive Energy Shift while Expanding Oil and Gas

Aker BP Awards Edvard Grieg EPCI Contract to Moreld Apply

Subscribe for OE Digital E‑News