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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter March 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Technology

Symphony Sun’ Launched in Leer

On Friday the 29th of April, Nb. 420 was launched in Leer. She was christened ‘Symphony Sun’ and is the fourth vessel in a series of 6 that will be delivered to Symphony Shipping.

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

Voice-data Communications and HDTV in One System

PDQ’s OneSource System provides long range cell, wi-fi and high definition TV in one system for mobile users.   San Diego wireless company PDQ Connect has developed

Energy

India's Highest non-coking coal discharge at Gangavaram Port

Gangavaram Port, the deepest and the most modern port in the country, has created yet another historical milestone record by discharging 1,56,339 metric tons of Non-Coking Coal from the vessel M.

Floating Products Storage in Focus

For much of 2015, talk of floating storage was dominated by speculation that the contango in crude futures might support crude floating storage, says Gibson Tanker Report.

Olympic Subsea Vessel Bags Contract

Olympic Shipping has secured a contract for Olympic Delta, an inspection, maintenance and repair (IMR) vessel, with an international client  to work on a renewable energy project.

News

Italian Ship Rescues 26 Migrants off Libya

An Italian merchant ship rescued 26 migrants off the coast of Libya in rough seas and others were feared missing, the Coast Guard said on Saturday. The Coast

Symphony Sun’ Launched in Leer

On Friday the 29th of April, Nb. 420 was launched in Leer. She was christened ‘Symphony Sun’ and is the fourth vessel in a series of 6 that will be delivered to Symphony Shipping.

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

Middle East

Great Lakes Inks M.E., N.C. Coastal Protection Project Deals

Great Lakes Announces $55 Million in Subcontract Work in the Middle East and Award of $38 Million for a Domestic Coastal Protection Project Great Lakes Dredge

Blacklisted Oil Tanker Returning to Libya

An Indian-flagged oil tanker is returning to Libya, the North African country's rival oil corporation said on Thursday, after its failed first attempt to export

UK Navy Warship Escorts Queen Mary II

U.K. Royal Navy warship HMS Defender provided escort duties for transatlantic ocean liner RMS Queen Mary II through the Gulf of Oman. The Type 45 destroyer,

Offshore Energy

Subsea 7 Profits Dip in Q1

Subsea 7 S.A. announced its financial results for the first quarter ending March 31, 2016, reporting revenues of $746 million, down 37 percent from the prior year period.

Ulstein Verft's First Wind Service Vessel Launched

Shipbuilder Ulstein Verft has launched its first vessel within the renewable energy segment, and also the first with the newly-developed X-STERN hull line design.

Incat Crowther Supplies Crewboat Design, Build Kits

Incat Crowther has been awarded a contract with shipbuilder Astinave EP of Guayaquil, Ecuador for the supply of vessel design services and aluminum component kits for a pair of 22.

 
 
Maritime Careers / Shipboard Positions Navigation Offshore Oil Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Sonar Winch
rss | archive | history | articles | privacy | 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: 0.1272 sec (8 req/sec)