Global Oil and Gas Drilling Hits 30-Year High

Tuesday, March 04, 2014

By John Kemp, Reuters

Drilling for oil and gas deposits outside North America has hit the highest level in three decades, led by big exploration and production programs in the Middle East and Africa.

More than 1,300 drilling rigs have been operating on average over the last six months, the greatest number since 1983, according to oilfield services company Baker Hughes.

The number of rigs is up 20 percent compared with 2008 and has more than doubled since hitting a nadir in 1999.
 
The boom is being led by the Middle East, where the number of rigs operating has tripled since 1999, and Africa, where the rig count is up almost four times.

Rig counts reported by Baker Hughes do not include onshore China, Russia, the Caspian and certain other countries.

According to the company, more than 400 onshore and offshore rigs were drilling in the Middle East in December and January, the greatest number since the 1970s.

Over the last six months, Iraq averaged more than 90, up from zero in 1999, when the country was still under U.N. sanctions.

Saudi Arabia also has more than 90, up from fewer than 20 in 1999.

Kuwait, too, is witnessing a drilling revolution, with more than 30 rigs, three times as many as at the turn of the century.

In Africa, the boom is led by Algeria (almost 50) and Angola (13 offshore). In both cases drilling has tripled over the last 15 years.

Old Oil

These five countries alone account for 30 percent of the increase in drilling outside North America since 1999.

All are very mature oil producers, with well-surveyed resources and large conventional oil and gas fields.

In recent years, observers have focused on the development of unconventional shale reservoirs and technically challenging frontier resources in ultra-deep water off the coasts of South America and Africa as well as in tough environments such as Central Asia and the Arctic.

But a sustained period of high prices is also revitalising some very old and decidedly conventional plays.

Some of this drilling is needed simply to replace falling output from ageing fields as the natural field pressure declines and the amount of produced water rises, so it will not necessarily translate into net additions in production.

Analysts note much of the easiest oil has already been produced, so more drilling is needed just to maintain output as producers target smaller, deeper and more geologically demanding reservoirs.

However, the point remains that exploration and production activity is rising strongly in some of the oil industry's most traditional areas.

The boom's extent has been masked by production losses from Iran, Libya, Syria and South Sudan resulting from sanctions and political unrest.

But putting aside these politically induced output disruptions, underlying production potential has expanded significantly in the past three years as a result of the heavy investment.

Capex Peaking?

Since mid-2013, most major integrated oil and gas producers have announced reductions in their capital expenditure programs.

Suppliers of a range of oilfield services, from seismic surveying to drilling contractors and pipeline producers, reported that the market is softening.
 
Rig counts could fall in the months ahead.

But the expenditure slowdown is likely to be concentrated in large-scale megaprojects, costing $1 billion or more, and employing groundbreaking technology.

For these complex projects, the risk/reward ratio no longer appears attractive in a world where shale oil is available for under $90 per barrel and engineering costs have spiralled.

Technologically straightforward conventional plays in the Middle East and onshore Africa are likely to be unaffected. In fact, the region's conventional plays will start to look increasingly attractive.

In some instances, such as Saudi Arabia, rigs are under contract to national oil companies so relatively immune to the capex cycle that affects the investor-owned majors.

The main challenge remains political risk, including contract negotiations, physical security and the potential for further unrest.

Like everything else in the petroleum industry, the full effects of the recent surge in exploration, production and development activity will be felt only with a delay.

Oil and gas output should therefore remain healthy for the next two-three years despite the sharp reductions in capex announced by the majors. If some of the political losses from Iran, Libya and South Sudan can be reversed, supplies will be ample.

The rush to raise petroleum production has stretched the global supply chain to the limit since 2006, with cost inflation leading to profoundly disappointing performance in the exploration and production business.

The industry is now moving into the next phase of the cycle, where producers should reap some of the benefits from expensive past investments, while costs begin to adjust down to a more sustainable level.

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Technology

Fortum Buys Stake in Wave Power Startup

Finland's top utility, state-controlled Fortum, on Monday said it has acquired a 14 percent stake in Finnish wave energy developer Wello. Wello has developed

Wärtsilä Reshuffles Two Top Managers

The following appointments have been made in the management inform Wärtsilä Corporation: Mr Rakesh Sarin (59), B.Sc. (Eng.), has been appointed President of Power Plants,

ABB Celebrates 125th Anniversary in Finland

ABB is celebrating today its 125th anniversary in Finland. Founded in 1889 in Helsinki by entrepreneur and inventor Gottfrid Strömberg, ABB Finland is today

Environmental

Fortum Buys Stake in Wave Power Startup

Finland's top utility, state-controlled Fortum, on Monday said it has acquired a 14 percent stake in Finnish wave energy developer Wello. Wello has developed

Cavernous Swiss Power Plant Undermined by Renewable Energy

Deep in a Swiss mountain, workers have blasted out a cathedral-sized hole for a power plant that will help keep Europe's lights on, but the profit outlook for the 1.

China's National Carbon Market to Start in 2016

China plans to roll out its national market for carbon permit trading in 2016, an official said Sunday, adding that the government is close to finalising rules

Energy

VIKING Steps Up Pace of Innovation at SMM

This year’s SMM in Hamburg will see VIKING release more innovations than at any other point in its 50-year history, including new developments in PPE clothing,

ClassNK's Noboru Ueda Attends KOTC Delivery Ceremony

Mr. Noboru Ueda, Chairman and President of ClassNK attended the delivery ceremony for the M/T Al Yarmouk, constructed at Daewoo Shipbuilding & Marine Engineering Co.

Fortum Buys Stake in Wave Power Startup

Finland's top utility, state-controlled Fortum, on Monday said it has acquired a 14 percent stake in Finnish wave energy developer Wello. Wello has developed

News

VIKING Steps Up Pace of Innovation at SMM

This year’s SMM in Hamburg will see VIKING release more innovations than at any other point in its 50-year history, including new developments in PPE clothing,

ClassNK's Noboru Ueda Attends KOTC Delivery Ceremony

Mr. Noboru Ueda, Chairman and President of ClassNK attended the delivery ceremony for the M/T Al Yarmouk, constructed at Daewoo Shipbuilding & Marine Engineering Co.

Ulrich Ganz of Bernhard Schulte Joins Tundra

Tundra Group is delighted to announce the addition of the former Senior Company Security Officer (CSO) of Bernhard Schulte Shipmanagement (BSM), Captain Ulrich Ganz,

Middle East

Iraqi Kurdistan Oil Shipments Reach 8.8m Barrels

Iraqi Kurdistan has shipped 8.8 million barrels of oil from the Turkish port of Ceyhan since May, Turkish Energy Minister Taner Yildiz said, as the autonomous region

ISS Celebrates ISO Accreditation in M.East and Africa

Inchcape Shipping Services (ISS), the world’s leading maritime services provider, is celebrating the awards of ISO 22000:2005 – Food Safety Management System and

SBI Offshore Negotiating Contract for Rig Builds

SBI Offshore Limited has announced that the Middle East-Chinese consortium, which recently awarded its subsidiary a contract to provide design and engineering services for a jack-up drilling rig,

Offshore Energy

A Boost for UK Offshore Drilling? DW Monday Muses

Drilling activity offshore UK is now expected to increase over the next few years as government and industry reacts to the recommendations in Sir Ian Wood’s report

Drydocks World to Participate in SMM 2014

Drydocks World, the leading provider of maritime and offshore services to the shipping, oil, gas, and energy sectors, will participate in the prestigious 26th edition of Shipbuilding,

SBM Offshore Completes Real Estate Divestment

SBM Offshore is pleased to announce that is has completed the sale and lease back of its Monaco real estate portfolio.  The last of the three buildings was sold

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Pod Propulsion Port Authority Salvage Ship Electronics Ship Simulators Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.6017 sec (2 req/sec)