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

Technology

NAVTOR, AWT Agreement Marks Next Step in E-navigation

NAVTOR has signed an agreement with maritime weather routing specialist Applied Weather Technology (AWT) that will see the two companies integrating their services

BCG Upgrades Virtual GMDSS Simulator

Buffalo Computer Graphics (BCG) Inc. released an updated version of its Virtual Global Maritime Distress and Safety System (VGMDSS) Simulation software. BCG’s VGMDSS

Australia, US Order Anti-ship Missile Decoys

Design of the next generation of anti-ship missile decoys is set to commence following the signing of two contracts between the Australian Defense Force and BAE Systems Australia Pty Ltd.

Environmental

NAVTOR, AWT Agreement Marks Next Step in E-navigation

NAVTOR has signed an agreement with maritime weather routing specialist Applied Weather Technology (AWT) that will see the two companies integrating their services

Emissions Scrubber Receives Class Approval

Langh Ship received final class approval from Germanischer Lloyd for its exhaust gas cleaning system on m/s Laura (pictured), a 1996-built a 6,500 DWT general cargo

‘Green’ Hybrid-powered Research Vessel Christened

The Maritime Aquarium at Norwalk christened a larger, “greener” new research vessel on Friday, September 26 in preparation for launching a new era in examining,

Energy

Leak May Sideline New Mexico Nuclear Waste Site

It may be five years before a nuclear waste dump in New Mexico closed by a radiation leak is fully operational again, and the facility will need at least $240

Imperial Oil Completes Maintenance at Kearl Oil Mine

Imperial Oil Ltd said on Tuesday it has completed a two-week major maintenance turnaround at its 110,000 barrel per day Kearl oil sands mine in northern Alberta.

Swissco Doubles Rig Fleet

SGX Mainboard-listed Swissco Holdings Limited an integrated, international marine services provider, today announced having completed the acquisition of four additional mobile offshore drilling units,

News

Livorsi Launches New Throttle Lineup

Livorsi Marine introduced the all new Platinum Series throttles, which they say are designed to be more ergonomically comfortable to the operator while being lighter

Henderson, Hanes & Associates Opens Doors in Miami

Ocean Engineering/ Naval Architecture Firm Brings Innovation to the Mega Yacht Community The Miami-based ocean engineering and naval architecture firm of Henderson & Associates, Inc.

Austal Launches Trenton (JHSV 5)

Second Joint High Speed Vessel to be launched at Austal in 2014 On September 30, 2014, Austal USA successfully completed the launch process of Trenton (JHSV

Middle East

DP World Mulls Senegal Free Zone

DP World  is looking to develop a free zone in Senegal, Chairman Sultan Ahmed bin Sulayem said on Wednesday. Sulayem was speaking at an African investment event in Dubai.

Hiab's Distribution Partnership in the Middle East

Hiab, part of Cargotec, and Gavelås Förvaltning AB have signed an agreement regarding a long-term distribution partnership in the Middle East region. As a part

Dubai Group Interested in Albania Deepwater Port Project

Dubai companies have expressed their investment interest in the development of Albania's Durres Port and Shengjin Port, according to Xinhua News Agency. Albanian

Offshore Energy

Swire Pacific Acquires 3rd L Class PSV

Shipowner and operator, Swire Pacific Offshore Operations (Pte) Ltd (SPO) celebrated the naming and delivery of its third L Class PSV vessel, Pacific Legend in Kyoto,

N-Sea Completes Inaugural System Diving Scope

Inspection, maintenance and repair (IMR) specialist N-Sea has recently completed its inaugural diving scope with the TUP Diving System (Transfer Under Pressure).

Norvestor to Become PG’s Largest Shareholder

Norvestor VI, L.P., a fund advised by Norvestor Equity AS, announced it has signed an agreement to invest in Ing Per Gjerdrum AS including its subsidiaries PG Hydraulics AS and PG Construction AS.

 
 
Maritime Careers / Shipboard Positions Offshore Oil Pipelines Pod Propulsion Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
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: 0.1518 sec (7 req/sec)