Although not as high as it once reached, the price of crude has been steadily trading in the mid-$70 range for about a year now, supporting new exploration and production investments worldwide.
When a barrel of crude hit $100 and above, that price helped to support more expensive exploration and development projects, including oil sands, ultra-deepwater, EOR and unconventional plays. When companies are making more money, they can spend more money; and budgets reflect this.
But when the price of oil plummeted, so did investments in new or technologically advanced projects. Companies worldwide contracted, delaying projects and laying off employees.
While the market has not fully recovered, the steady price of oil in the $75/barrel range certainly helps encourage development dollars to be spent. OPEC has kept production curtailed effectively to support a more manageable (than $30/barrel or $50/barrel) price for a barrel of crude.
As the ramp-up begins, we see major acquisitions and industry moves taking place across the board. Oil services companies are merging (, major producers are acquiring interest in new projects, and the employee marketplace is heating up.
Hot opportunities for both companies and investors have very clearly emerged. Major dollars are being spent in the US onshore shale plays, and the Canadian oil sands market is certainly heating up.
Major international companies, such as India's Reliance, Royal Dutch Shell and Norway's Statoil have committed billions of dollars to shale in the US. Experts have predicted that the massive natural gas resources of the shale plays in the US may very well turn the typically regional commodity into a global one, like oil is today.
China's Synopec recently agreed to pay $4.65 billion to acquire a stake in ConocoPhillips Syncrude development in Canada, while French major Total is spending $1.1 billion to acquire a slice of Canadian oil sands. At the close of 2009, South Korea's KNOC agreed to pay $3.9 billion for Canada's Harvest Energy.
Additionally, new oil provinces are garnering attention, with companies turning toward the Atlantic Margin for exploration opportunities. The first drilling offshore Greenland in more than a decade is currently under way, with Cairn Energy spudding its first well offshore Greenland earlier this month.
Also, exploration offshore the Falkland Islands has gotten the attention of many, with the first two wells in this South Atlantic region discovering hydrocarbons. Desire Petroleum found gas at its Liz prospect, and Rockhopper Exploration discovered oil at Sea Lion. Presently, Rockhopper is readying to spud another well, this time in the Ernest prospect; and Falklands Oil & Gas (LON:FOGL) is looking, along with its partner BHP Billliton, to hire a deepwater rig to drill in the area.
...............................................
Phaedra
Friend Troy is the content director for PennEnergy.com, an all-energy website that
provides oil and gas, power and infrastructure news, analysis, reports and more.
Sign up for a free
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Thursday, July 22, 2010
Thursday, July 15, 2010
If the legal system, industry and Americans are against deepwater drilling suspensions, who is for them?
I'm not one to talk politics, truly. I vote, and I am very proud to be an American and profoundly grateful to our men and women who have served our country in war and peace, as soldiers and government officials. Difficult decisions are being made every day about the future of our country, and I have always had trust that those decisions were being made with the utmost consideration and using every resource available.
That does not seem to be the case when we consider our energy sector. I am flabbergasted that the DOI and BOEM have instituted another deepwater drilling moratorium, after two courts threw out the first one.
I am concerned that a course of action has been plotted, and no considerations are being made along the way.
I am completely supportive of green energy. Bring on the wind, waves and sun! But I am also aware the our country's infrastructure, utilities and transmission lines are not currently able to support such a change. Additionally, coal and oil both support so much of our current economy, it is unreasonable to force a switch when the country cannot support it.
On that note, on June 30, the DOI declared a deepwater drilling moratorium. After collecting and canvassing some of the leading experts in the field, Interior Secretary Salazar went against their esteemed opinions and shut down deepwater drilling in the waters offshore the US.
This has so many more ramifications than the 33 drilling rigs that were operating in the US Gulf of Mexico. The drilling moratorium severely affects so many coastal communities and economies, families' livelihoods dependent on the petroleum industry in the Gulf.
Additionally, it discourages any future investments in the US oil and gas sector by companies, because the government does not support it. In other words, companies will choose to spend their exploration and development budgets in countries that are more supportive of petroleum developments.
(This can very clearly be seen in the first two deepwater offshore rigs being moved from US waters to Egypt and West Africa.)
Calling the moratorium a 'second manmade disaster,' Louisiana's Governor Jindal has come out loudly against the drilling shut-down, as well as other government representatives from the Gulf Coast.
Furthermore, two courts threw-out the drilling moratorium.
Yet, Salazar and his staff re-instituted it, this time under the nomenclature of a "drilling suspension" that focuses on the BOPs rather than the water depth. The placement of the BOPs on the ocean floor or on floating facilities is largely determined by water depth, and the staff at the DOI should be completely aware of that.
As the chairman of the NOIA said, "If it looks like a moratorium, acts like a moratorium, and the effect is the same as a moratorium, it is a moratorium."
Even the American public, which is watching the oil spill in the Gulf of Mexico unfold with a very heavy heart, is against the deepwater drilling suspensions.
According to a report from Bloomberg, 73 percent of Americans say the ban is unnecessary, calling the oil spill a "freak accident." While 44 percent of the American public thinks BP is to blame for the oil spill, another 19 percent think the cause of the accident should be pinned on lax federal regulations and oversight.
What does this say?
The US government is going against industry experts, the legal system and everyday Americans by declaring another drilling ban.
Furthermore, is this ban somehow a way to point the blame in another direction -- away from the now-defunct MMS, as well as the powers that run it?
That does not seem to be the case when we consider our energy sector. I am flabbergasted that the DOI and BOEM have instituted another deepwater drilling moratorium, after two courts threw out the first one.
I am concerned that a course of action has been plotted, and no considerations are being made along the way.
I am completely supportive of green energy. Bring on the wind, waves and sun! But I am also aware the our country's infrastructure, utilities and transmission lines are not currently able to support such a change. Additionally, coal and oil both support so much of our current economy, it is unreasonable to force a switch when the country cannot support it.
On that note, on June 30, the DOI declared a deepwater drilling moratorium. After collecting and canvassing some of the leading experts in the field, Interior Secretary Salazar went against their esteemed opinions and shut down deepwater drilling in the waters offshore the US.
This has so many more ramifications than the 33 drilling rigs that were operating in the US Gulf of Mexico. The drilling moratorium severely affects so many coastal communities and economies, families' livelihoods dependent on the petroleum industry in the Gulf.
Additionally, it discourages any future investments in the US oil and gas sector by companies, because the government does not support it. In other words, companies will choose to spend their exploration and development budgets in countries that are more supportive of petroleum developments.
(This can very clearly be seen in the first two deepwater offshore rigs being moved from US waters to Egypt and West Africa.)
Calling the moratorium a 'second manmade disaster,' Louisiana's Governor Jindal has come out loudly against the drilling shut-down, as well as other government representatives from the Gulf Coast.
Furthermore, two courts threw-out the drilling moratorium.
Yet, Salazar and his staff re-instituted it, this time under the nomenclature of a "drilling suspension" that focuses on the BOPs rather than the water depth. The placement of the BOPs on the ocean floor or on floating facilities is largely determined by water depth, and the staff at the DOI should be completely aware of that.
As the chairman of the NOIA said, "If it looks like a moratorium, acts like a moratorium, and the effect is the same as a moratorium, it is a moratorium."
Even the American public, which is watching the oil spill in the Gulf of Mexico unfold with a very heavy heart, is against the deepwater drilling suspensions.
According to a report from Bloomberg, 73 percent of Americans say the ban is unnecessary, calling the oil spill a "freak accident." While 44 percent of the American public thinks BP is to blame for the oil spill, another 19 percent think the cause of the accident should be pinned on lax federal regulations and oversight.
What does this say?
The US government is going against industry experts, the legal system and everyday Americans by declaring another drilling ban.
Furthermore, is this ban somehow a way to point the blame in another direction -- away from the now-defunct MMS, as well as the powers that run it?
Thursday, July 8, 2010
Weather delays offshore operations, strains onshore expectations
Major advancements in technologies have allowed the oil, gas and renewable energy sectors to expand offshore, but good ol' Mother Nature continues to keep the industry grounded.
Serious weather not only affects offshore drilling and installations, but it also can shut-in production and affect refineries and transmission. Power lines are regularly snapped from serious storms, and an unbelievable heat wave has ramped up temperatures and strained the power grid in the northeastern US.
The 2010 Atlantic hurricane season is heating up with the first two storms rolling through the Gulf of Mexico. Hurricane Alex hit last week as a Category 2, and a tropical depression is now threatening to become Tropical Storm Bonnie.
These storms have shut-in production and stalled efforts at the blown-out Macondo well.
While we usually look to the Gulf of Mexico to produce hurricanes this time of year, adverse weather has been tearing through another part of the world, as well.
Investors and industry insiders who have been eagerly awaiting the results of the Falkland Oil & Gas Limited (LON:FOGL) drilling at the Toroa prospect in the South Atlantic will have to wait some more.
While results from the well were expected this week, adverse weather has delayed the drilling operations on the Toroa F61/5-1 exploration well. Expected to take 35 days, the exploration well was spud on May 31.
Targeting a total depth of 2,700 meters, FOGL reported that drilling is not yet complete because of adverse weather and "minor operational issues."
Stay tuned to PennEnergy and its daily Global Offshore Weather Reports powered by ImpactWeather to learn the latest information about weather systems worldwide.
Serious weather not only affects offshore drilling and installations, but it also can shut-in production and affect refineries and transmission. Power lines are regularly snapped from serious storms, and an unbelievable heat wave has ramped up temperatures and strained the power grid in the northeastern US.
The 2010 Atlantic hurricane season is heating up with the first two storms rolling through the Gulf of Mexico. Hurricane Alex hit last week as a Category 2, and a tropical depression is now threatening to become Tropical Storm Bonnie.
These storms have shut-in production and stalled efforts at the blown-out Macondo well.
While we usually look to the Gulf of Mexico to produce hurricanes this time of year, adverse weather has been tearing through another part of the world, as well.
Investors and industry insiders who have been eagerly awaiting the results of the Falkland Oil & Gas Limited (LON:FOGL) drilling at the Toroa prospect in the South Atlantic will have to wait some more.
While results from the well were expected this week, adverse weather has delayed the drilling operations on the Toroa F61/5-1 exploration well. Expected to take 35 days, the exploration well was spud on May 31.
Targeting a total depth of 2,700 meters, FOGL reported that drilling is not yet complete because of adverse weather and "minor operational issues."
Stay tuned to PennEnergy and its daily Global Offshore Weather Reports powered by ImpactWeather to learn the latest information about weather systems worldwide.
Thursday, July 1, 2010
Petroleum industry steps-up as 2010 Atlantic hurricane season kicks off
I can't help it: Hurricanes are exciting. I have lived on the US Gulf Coast my whole life -- from South Texas to New Orleans to Houston. I know that hurricanes can cause major damage; I've lived through them.
Nonetheless, just as the wind picks up outside my door, my sense of excitement has been lifted with the first major storm of the hurricane season.
Making landfall in northern Mexico as a Category 2 storm Wednesday night, Hurricane Alex raged through the Gulf Mexico, leaving little damage to offshore oil and gas installations in the US Gulf in its wake-- a testament to the safety and improved design measures enacted over the last several years by the petroleum industry.
Kicking HSE efforts into high gear, multiple oil and gas companies evacuated offshore production platforms, while drilling companies brought staff to safety onshore. Additionally, the BOE reported that more than a quarter of the oil production and nearly 15 percent of the natural gas production was shut-in in preparation for the storm passing.
In less than 24 hours, oil companies have already started assessing their facilities, restaffing offshore platforms and moving toward restarting production. In its efforts to step up safety and oversight, the BOE plans to inspect all facilities in the path of the storm.
Even the oil spill measures far east of the storm were affected by adverse weather, high waves and strong winds. While oil spill containment efforts plowed on in the face of the severe weather, oil spill clean-up processes were curtailed. Oil skimmers and controlled burns were halted, and onshore clean-up efforts were stymied by the weather -- although they are expected to ramp back up with the storm's passage.
One down, 22 to go. The 2010 Atlantic hurricane season is expected to be "extremely active," with up to 23 named storms, 14 hurricanes and seven major hurricanes (Category 3, 4 or 5) predicted.
I hope and pray in the face of all the negative press surrounding the offshore petroleum industry in the US Gulf, that the operators, service companies and drillers escape this hurricane season without major damages -- not only for the companies' sakes, but also for the country's sake.
The industry may not be able to withstand another blow to oil and gas exploration and production in the US Gulf. With opportunities abounding abroad, my fingers are crossed hoping that companies continue their efforts in the waters of the Gulf of Mexico.
Nonetheless, just as the wind picks up outside my door, my sense of excitement has been lifted with the first major storm of the hurricane season.
Making landfall in northern Mexico as a Category 2 storm Wednesday night, Hurricane Alex raged through the Gulf Mexico, leaving little damage to offshore oil and gas installations in the US Gulf in its wake-- a testament to the safety and improved design measures enacted over the last several years by the petroleum industry.
Kicking HSE efforts into high gear, multiple oil and gas companies evacuated offshore production platforms, while drilling companies brought staff to safety onshore. Additionally, the BOE reported that more than a quarter of the oil production and nearly 15 percent of the natural gas production was shut-in in preparation for the storm passing.
In less than 24 hours, oil companies have already started assessing their facilities, restaffing offshore platforms and moving toward restarting production. In its efforts to step up safety and oversight, the BOE plans to inspect all facilities in the path of the storm.
Even the oil spill measures far east of the storm were affected by adverse weather, high waves and strong winds. While oil spill containment efforts plowed on in the face of the severe weather, oil spill clean-up processes were curtailed. Oil skimmers and controlled burns were halted, and onshore clean-up efforts were stymied by the weather -- although they are expected to ramp back up with the storm's passage.
One down, 22 to go. The 2010 Atlantic hurricane season is expected to be "extremely active," with up to 23 named storms, 14 hurricanes and seven major hurricanes (Category 3, 4 or 5) predicted.
I hope and pray in the face of all the negative press surrounding the offshore petroleum industry in the US Gulf, that the operators, service companies and drillers escape this hurricane season without major damages -- not only for the companies' sakes, but also for the country's sake.
The industry may not be able to withstand another blow to oil and gas exploration and production in the US Gulf. With opportunities abounding abroad, my fingers are crossed hoping that companies continue their efforts in the waters of the Gulf of Mexico.
Thursday, June 24, 2010
US shale plays take center stage
Despite all the negative news coming out of the Gulf of Mexico, US onshore is seeing a revival of activity centered around the massive natural gas assets contained in the many shale plays across the nation.
In fact, America's Natural Gas Alliance just reported that the shale plays make the US the largest producer of clean energy in the world. Furthermore, a study by Penn State University found that the Marcellus Shale alone is injecting billions of dollars into the economy and providing tens of thousands of jobs.
In reviewing traffic and trends on the energy website I manage PennEnergy, shale stories consistently rank as the biggest drivers of page views. In addition, shale deals have earned the biggest dollar amounts for contracts and JVs -- a new trend. For the past couple of years, offshore -- and namely deepwater -- has typically seen the most activity.
Although I don't think the change can be solely pinned on the Deepwater Horizon incident and subsequent deepwater drilling moratorium, certainly it helped.
When Anadarko announced last week that it was going to have to force majeure three of its four ultra-deepwater drilling rigs contracted in the Gulf of Mexico, the company said that it would refocus that exploratory budget onshore the US, specifically on its Marcellus, Haynesville and Eagle Ford shale plays.
"Although our Gulf of Mexico drilling activity has been suspended due to the moratorium, we are evaluating opportunities to reallocate some of the 2010 capital from the Gulf to other areas of our global portfolio, including our numerous onshore liquids-rich opportunities, and we remain committed to our worldwide exploration, appraisal and development programs," said Jim Hackett, Anadarko chairman and CEO.
Just today, India's Reliance Industries committed $1.15 billion in a joint venture agreement with Pioneer Natural Resources to enter into its Eagle Ford Shale acreage in South Texas. This is the second major investment the Indian major has made in the last few months. In April, Reliance paid $1.7 billion to form a JV with Atlas Resources on its Marcellus Shale properties.
The work the US shale plays offer has been bulking up jobs and company backlogs for months. In addition to a growing number of onshore rigs working in the US, pipeline construction contracts abound.
Also, Cheniere has decided to add liquefaction capabilities to its LNG terminal at Sabine Pass in Louisiana. The company has contracted Bechtel for the design and construction of the liquefaction facilities to be able to export excess natural gas produced by the prolific shale plays.
In fact, America's Natural Gas Alliance just reported that the shale plays make the US the largest producer of clean energy in the world. Furthermore, a study by Penn State University found that the Marcellus Shale alone is injecting billions of dollars into the economy and providing tens of thousands of jobs.
In reviewing traffic and trends on the energy website I manage PennEnergy, shale stories consistently rank as the biggest drivers of page views. In addition, shale deals have earned the biggest dollar amounts for contracts and JVs -- a new trend. For the past couple of years, offshore -- and namely deepwater -- has typically seen the most activity.
Although I don't think the change can be solely pinned on the Deepwater Horizon incident and subsequent deepwater drilling moratorium, certainly it helped.
When Anadarko announced last week that it was going to have to force majeure three of its four ultra-deepwater drilling rigs contracted in the Gulf of Mexico, the company said that it would refocus that exploratory budget onshore the US, specifically on its Marcellus, Haynesville and Eagle Ford shale plays.
"Although our Gulf of Mexico drilling activity has been suspended due to the moratorium, we are evaluating opportunities to reallocate some of the 2010 capital from the Gulf to other areas of our global portfolio, including our numerous onshore liquids-rich opportunities, and we remain committed to our worldwide exploration, appraisal and development programs," said Jim Hackett, Anadarko chairman and CEO.
Just today, India's Reliance Industries committed $1.15 billion in a joint venture agreement with Pioneer Natural Resources to enter into its Eagle Ford Shale acreage in South Texas. This is the second major investment the Indian major has made in the last few months. In April, Reliance paid $1.7 billion to form a JV with Atlas Resources on its Marcellus Shale properties.
The work the US shale plays offer has been bulking up jobs and company backlogs for months. In addition to a growing number of onshore rigs working in the US, pipeline construction contracts abound.
Also, Cheniere has decided to add liquefaction capabilities to its LNG terminal at Sabine Pass in Louisiana. The company has contracted Bechtel for the design and construction of the liquefaction facilities to be able to export excess natural gas produced by the prolific shale plays.
Tuesday, June 15, 2010
Hot Topic: Falkland Island Offshore Drilling
In addition to the strife built up by Argentina before drilling ever started, the Falkland Islands are a hot topic for petroleum experts and investors, alike.
While Argentinian President Cristina Fernandez may have been trying to stop exploration offshore the Falkland Islands in the South Atlantic Ocean, she really just turned up the volume on the buzz that was already humming about this new exploration areas. And to top it off, she wasn't successful at stopping the drilling rig and supplies from getting offshore the Falklands.
Now, Desire Petroleum, Rockhopper Exploration and Falklands Oil & Gas Limited (FOGL) are drilling successfully offshore the Falkland Islands. Desire reported gas after drilling its exploration well at the Liz prospect, and Rockhopper has confirmed oil at the Sea Lion prospect.
Now FOGL is drilling its first well in the South Atlantic with Australian major BHP Billiton, targeting the Toroa prospect. The oil and gas community, as well as investors in the know, are eagerly awaiting the results of this well -- hoping that the Falkland Islands and the South Atlantic prove an altogether new oil and gas region.
In fact, Desire Petroleum has already tagged Rachel, Ninky and Anna prospects as similar to the Sea Lion discovery -- with plans to drill Rachel next.
...........................................................
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
While Argentinian President Cristina Fernandez may have been trying to stop exploration offshore the Falkland Islands in the South Atlantic Ocean, she really just turned up the volume on the buzz that was already humming about this new exploration areas. And to top it off, she wasn't successful at stopping the drilling rig and supplies from getting offshore the Falklands.
Now, Desire Petroleum, Rockhopper Exploration and Falklands Oil & Gas Limited (FOGL) are drilling successfully offshore the Falkland Islands. Desire reported gas after drilling its exploration well at the Liz prospect, and Rockhopper has confirmed oil at the Sea Lion prospect.
Now FOGL is drilling its first well in the South Atlantic with Australian major BHP Billiton, targeting the Toroa prospect. The oil and gas community, as well as investors in the know, are eagerly awaiting the results of this well -- hoping that the Falkland Islands and the South Atlantic prove an altogether new oil and gas region.
In fact, Desire Petroleum has already tagged Rachel, Ninky and Anna prospects as similar to the Sea Lion discovery -- with plans to drill Rachel next.
...........................................................
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
Wednesday, June 9, 2010
How will BP overcome hurricane threats?
It's official, the 2010 Atlantic Hurricane Season has begun, and it's expected to be a big one. Experts predict that the Gulf of Mexico could be hit with a record number of storms this year.
In addition to threatening offshore facilities, subsea pipelines and coastal refineries with huge winds and waves, this year's hurricane season could pose a real threat to the ongoing oil spill containment efforts in the Gulf of Mexico.
Not only would an oncoming hurricane stop the oil spill clean-up efforts at sea and onshore, a hurricane would most likely threaten the oil spill containment successes we have seen in the last week with the LMRP oil spill cap.
The LMRP oil spill cap involved severing the damaged drilling riser from the top of the BOP and placing a cap on the cut, connected to a new riser. This new riser transports the oil and natural gas that is spilling from the Macondo well to the Discoverer Enterprise drillship 5,000 feet above.
Today, James Watson, US Coast Guard Rear Admiral and federal on-scene coordinator of the oil spill response gave BP a 72-hour deadline to submit contingency plans should a hurricane threaten or vessels/facilities fail.
Should the Discoverer Enterprise fail, another rig can be on site to pick up the slack; additionally, BP has a number of coals in the fire in efforts to enhance its current oil spill containment efforts.
Nonetheless, the oil and natural gas that is spilling from the Macondo well needs to be collected by a facility on the water's surface. If a vessel is located in the direct path of a hurricane, it would have to move out of the way. Thus, disconnecting from the Macondo well and again spilling the hydrocarbons into the water.
Or would it? Would BP be able to acquire an FPSO to retrieve the captured oil and gas, offload it, and face a hurricane?
In general, FPSOs are popular both because pipelines are not needed because the vessels can offload to tankers, and because the FPSOs can unhook and travel out of the way of threatening storms. FPSOs have been widely used in Asia Pacific, where typhoons actively threaten offshore oil and gas production.
Here, hydrocarbon flow is shut-in via a valve on the BOP, but as we all know, the shut-off valve on the Macondo BOP is not operable.
I'm interested to see what BP comes up with ... stay posted.
In addition to threatening offshore facilities, subsea pipelines and coastal refineries with huge winds and waves, this year's hurricane season could pose a real threat to the ongoing oil spill containment efforts in the Gulf of Mexico.
Not only would an oncoming hurricane stop the oil spill clean-up efforts at sea and onshore, a hurricane would most likely threaten the oil spill containment successes we have seen in the last week with the LMRP oil spill cap.
The LMRP oil spill cap involved severing the damaged drilling riser from the top of the BOP and placing a cap on the cut, connected to a new riser. This new riser transports the oil and natural gas that is spilling from the Macondo well to the Discoverer Enterprise drillship 5,000 feet above.
Today, James Watson, US Coast Guard Rear Admiral and federal on-scene coordinator of the oil spill response gave BP a 72-hour deadline to submit contingency plans should a hurricane threaten or vessels/facilities fail.
Should the Discoverer Enterprise fail, another rig can be on site to pick up the slack; additionally, BP has a number of coals in the fire in efforts to enhance its current oil spill containment efforts.
Nonetheless, the oil and natural gas that is spilling from the Macondo well needs to be collected by a facility on the water's surface. If a vessel is located in the direct path of a hurricane, it would have to move out of the way. Thus, disconnecting from the Macondo well and again spilling the hydrocarbons into the water.
Or would it? Would BP be able to acquire an FPSO to retrieve the captured oil and gas, offload it, and face a hurricane?
In general, FPSOs are popular both because pipelines are not needed because the vessels can offload to tankers, and because the FPSOs can unhook and travel out of the way of threatening storms. FPSOs have been widely used in Asia Pacific, where typhoons actively threaten offshore oil and gas production.
Here, hydrocarbon flow is shut-in via a valve on the BOP, but as we all know, the shut-off valve on the Macondo BOP is not operable.
I'm interested to see what BP comes up with ... stay posted.
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