OIL Now $60/barrel! How effect GOM mariners?


#1

Hi All,
Everything in the stockmarket is crashing after a nice long spiral down all year. Now oil is down too.
For the old timmers who went through this before how is this going to effect hiring and promotions in the GOM?
Bob


#2

It won’t


#3

Im no old timer, but I heard from one that this is how it goes.

Hiring freeze
Lose Bonuses and extras
cut non essential crew, like safety departments
major layoffs
rigs and vessels laid up with only skeleton crews.

I dont think OPEC will let oil get too low before they start cutting production in a major way.


#4

What i think most people forget is that while oil might be falling in price right now, the world is still consuming more and more everyday. Oil companies relize this and will continue to develop new fields and mantain old ones because the price will go back up. It makes no sense to for the oil companies to raise up there hands and go “We’re not making enough PROFIT to keep this up.” I mean the profatibility for most of these deep water projects are around $40-$50 a barrel, and i just dont see it getting that low. As long as the oil companies are making profit it will keep rolling.


#5

What people are forgetting is that the number of exploratory vessels is DOUBLING. I’d agree with kjun and Jemplayer if it was a 25% or 50% rise but a 100% rise in the number of new ships is trouble.
That being said they will need people to work these new rigs but CaptKai has it right. They will lay off any extra personel, retire any rigs more than 10-15 years old, cut bonuses and freeze pay. They will also start moving vessels overseas to cover for the older ones they retire.


#6

It won’t…

I agree. Even at $20 a barrel, Americans are sick of giving away money to the arabs for something that is sitting in their own backyard.

Recession =Clarity


#7

<font class="printtitle]US drilling activity dips</font>

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				 					 					 					 					 					[b]By OGJ editors[/b]

HOUSTON, Oct. 17 – US drilling activity fell this week, down 14 rotary rigs to 1,976 still working, wiping out the net gain of 11 units the previous week, said officials at Baker Hughes Inc.
<!–endclickprintinclude–> <!–startclickprintinclude–>
That’s up from 1,764 rigs making hole during the same period a year ago. Last week offshore drilling had the biggest gain, up by 6 rigs; it remained unchanged this week with 78 rigs working in federal waters, including 75 in the Gulf of Mexico. Land drilling registered the biggest loss this week, down by 11 rigs to 1,878 active. Inland waters activity declined by 3 rigs to 20.
<!–endclickprintinclude–> <!–startclickprintinclude–>
Of the rigs still working, 1,537 were drilling for natural gas, down 11 from the previous week; there were 428 drilling for oil, a loss of 1 unit. There were 11 rigs unclassified. Horizontal drilling was down by 2 to 624 rigs. Directional drilling increased by 12 rigs to 384.


#8

"Americans are sick of giving away money to the arabs for something that is sitting in their own backyard."
Since oil is a world commodity,priced according to the world supply and demand drilling in the USA will have no effect on the Arabs, Europeans, South Americans or any mulitnational corporation unless enough oil is pumped from US sources to increase the total available and drop the world price. No oil company in the USA would do this as they know OPEC, Russia, etc., would cut supply [to a point] in order to maintain prices. What increased production in USA waters would do [assuming they find the drillships and MODUs] is decrease USA transportation costs and somewhat reduce royalties. This would lower the USA refiners cost and increase their profit margin, which is good for stockholders, but would not reduce the price of gasoline or diesel since that is tied to the world oil price per barrel, as we are constantly reminded. Only politicians have implied there may be relief at the pump, I’ve yet to talk to a candid petroleum expert who thinks that will happen. Decreasing demand will lower prices for sure though.
For mariners and regular folks the eventual expansion of USA drilling/production would spread the industry out while maintaining employment as the GOM matures and also provide for other strategic reserves. Those are very good things.


#9

Tengineer,
You have some valid points, and I agree with you, but I never said it would lower gas prices.
It’s about tapping our own natural resources instead of buying so much of something we already have. Not to mention the plus to us mariners and the economy as you mentioned.
That fancy new bill last month the House passed does very little for us where it counts the most.

The bill would allow drilling 100 miles from the Atlantic and Pacific coasts and within 50 miles if affected states agree to it. The bill, however, would preserve a ban on drilling for 125 miles OR MORE along the Gulf Coast of Florida.
"We know that south of the Panhandle, about 30 miles out, lie as much as 3 trillion cubic feet of clean-burning, low-carbon natural gas. That’s enough to supply the electric generating needs of a city the size of Tallahassee for more than 140 years."
Eight wells drew 740,000 barrels of oil out of the everglades last year, and roughly 700million to 1 billion may lie just off the west coast in the South Florida Basin (the sunniland rock formation).
Nice to see China exploring 60 miles offshore and gearing up to drill very soon though. That pisses me off, lower gas prices or not.


#10

PatrickM,
The oil companies and oil producing countries are in business to make a profit, NOT supply any particular country with oil. The USA Congress has done little over the years to force the oil companies to supply USA domestic needs even though they cut royalties for certain areas at one time and you are absolutely right that the most recent bill changes little. The oil companies remain one of the most socialized/subsidized businesses in the USA with little benefit for the average citizen. Coming up with a reasonable enviornmental standard for new refineries and facilities would have helped more than the recent bill. For example, the current governor of Alaska wants to export Alaskan LNG to Japan because there are no west coast facilities, therefore the profit margin is higher by exporting USA gas to another country. At last report our top oil import dollars go to the following countries. 1. Canada 2. Mexico 3. Saudi Arabia 4. Venezuela 5. Nigeria.


#11

I, as many of you spend a great deal of time offshore. I possess a very limited understanding to what effect most things impact the GOM oil industry. I imagine, (possibly incorrectly), the greatest contributing factor that could upset the GOM, would not be the decreased price of oil, but the increased potential of available drilling sites. More US states wishing to compete for the drilling industry could establish local incentives to attract the major players. This would shift the production from being heavily concentrated in the gulf, to being spread out along the entire US coast. Even federally mandated policy could be offset by local states reducing costs for support elements that would free capital. I am a career mariner via the hawsepipe. I am not educated, but I am no fool. The question in the original post should have addressed this concern, not the price of the bbl. What will happen to our jobs when the drilling moves to Alaska, Maine or California?
On a recent flight from my home in WA state, (a connection from Houston to New Orleans) I sat next to a VIP in charge of one of the major oil companies, GOM operations. We had a discussion about the presence of the top corporations currently drilling in the gulf. He said there are two disadvantages working against us. The US government, both Federal and local, overregulate the industry so much, the profit margin for invested capital is in the single digits. This may be attractive in many industries, but not to the superpowers of the oil industry. secondly, the oil in the Arab nations is sweeter and less expensive to refine and the oil from Africa and other nations is cheaper to collect. This drives the profit margin up into the double digits.


#12

On a different note, effectivethis past Monday. We just recieved a 10% raise across the board. I imagine the powers that be (in this particular unnamed gulf maritime company) know ooddles more about the near future of this industry than I.


#13

My friend Cheng

Last time I Checked Alaska, Maine and California are still part of the U.S. Unless your license restricts you to the GOM you should be ok. Your company will more than likely be working their and they will need you to run their vessel over there just like in the good old GOM. Don’t worry jobs are plentifully.

concerns about oil???

Countries like India and China are emerging markets. Their consumption of oil will soon surpass the U.S. OPEC will be having a meeting on Friday and I expect them to cut production to force the price of oil up.


#14

<span class="header]Drillers Say Offshore Outlook is Positive</span>

<span class="bodytext][i]Source: Houston Chronicle

Publication date: 2008-10-24

[/i]</span>

<span class="bodytext] Oct. 24–The long-term outlook for offshore oil and gas drilling remains strong despite the recent meltdown in the financial and commodity markets, three major offshore drillers said Thursday after reporting improved third-quarter earnings.

And economic headwinds may force some less-established drillers out of business, creating opportunities for major players to scoop up rigs on the cheap.

But rig companies are also girding for what they say could be a more challenging environment in coming months.

“I don’t know that we have seen the impacts of oil below $65 yet,” said Larry Dickerson, chief executive of Houston’s Diamond Offshore, in a conference call discussing the company’s quarterly financial results.

The word of caution comes after a free fall in the price of crude that has prompted some oil companies to cut planned spending on drilling programs in 2009. It also underscores the abrupt change that has taken place in an industry that in the third quarter was still riding high, as earnings reports in recent days have made clear.

Oil hit a record close of $145.29 per barrel during the quarter, and is now trading at less than half that July peak. Sweet, light crude for November delivery closed up $1.09 at $67.84 a barrel in trading Thursday on the New York Mercantile Exchange.

On Thursday, Diamond Offshore said third-quarter profits spiked 51 percent to $310.7 million, while Dallas-based offshore driller Ensco International said profits rose 5.8 percent to $282.3 million. Noble Corp., a Sugar Land-based drilling contractor, reported on Wednesday that its third-quarter earnings jumped 20 percent to $382.5 million.

The stock prices of all three companies rose Thursday on the news.

The profit gains came despite losses from hurricane damage, as offshore drillers continued to benefit from high rig rental rates and tight rig supplies. This year, rental rates for highly sought after deep-water drilling rigs approached $700,000 a day.

But analysts on Thursday asked executives at Diamond, Noble and Ensco how firm such contracts will be if commodity prices continue to plummet and oil companies want out.

Noble CEO David Williams said he has not “received so much as a phone call from anybody saying they have a problem.”

He also made it clear there would be consequences if a customer tries to break a contract. “If he walks, he’s going to get sued,” he said.

Diamond Offshore’s Dickerson said he has not seen any deterioration in rental rates for either shallow-water or deep -water drilling rigs.

“Even in the face of declining product prices, we see strength,” he said.

Reinforcing the point, the company announced Thursday a two-year, $452 million contract with France’s Total for Diamond’s semisubmersible Ocean Valiant rig.

The company’s board also increased its special cash dividend to $1.88 per share, from $1.25, and declared a regular quarterly dividend of nearly 13 cents per share.

Ensco CEO Dan Rabun also sought to downplay fears of a broad pullback in activity.

“As of today, we have not seen much impact on the offshore market, and customers in international markets continue to discuss increases in spending for 2009,” he said.

Angeline Sedita, analyst with Macquarie Capital, said even with oil prices between $50 and $60, the economics of deep-water drilling are still attractive.

“We believe this market should remain intact given the long-term focus and large scale of the major oil companies drilling in this market,” she said Thursday in a note to investors.

Drillers with exposure to more volatile shallow-water regions and that do business with less-established oil and gas companies are likely to be hardest hit by the current downturn, said Michael Drickamer, industry analyst with Morgan Keegan & Co.

Large offshore drillers are better insulated because of their diversified international presence and focus on specialized deep-water drilling, he said.

In recent years, a global boom in oil and gas exploration and easy access to credit spurred startup drilling companies and financial speculators to place orders for offshore rigs, particularly those that can operate in deep​ water and command high rates.

Today, 83 rigs are capable of operating in more than 5,000 feet of water, but more than 120 have been ordered for delivery by 2012, according to ODS-Petrodata.

“We expect some of those will not be built,” said Tom Kellock, head of consulting and research at the firm’s Houston office.

He cited a recent analyst report by another firm, predicting 32 of the rigs under construction and on order are at risk of being significantly delayed or not delivered.

Offshore driller executives said some of those rigs are already being shopped around by companies that can no longer afford to build them. But they suggested the prices are too high at the moment.

“So far, I don’t think they’re as hungry as they should be,” Noble’s Williams said, noting that Noble can build a deep-water rig for $150 million less than the $740 million he has heard quoted.

Noble, Diamond Offshore and Ensco were the first major offshore drillers to report third-quarter earnings. Pride International releases quarterly results Oct. 30, while Transocean, the world’s largest offshore driller, reports on Nov. 5.

Also Thursday, National Oilwell Varco, a Houston-based supplier of oil and gas equipment and services, said third-quarter net income jumped by about 50 percent to $547.7 million, or $1.31 a share, from $366 million, or $1.02 a share in the same quarter a year ago.

Revenue increased 40 percent to $3.61 billion from $2.58 billion in the year-ago period. Analysts expected earnings of $1.31 a share and revenue of $3.6 billion, on average.

</span>


#15

What I am wondering is if anyone here knows how many offshore vessel jobs in the GoM are being filled with foreign nationals in the guise that there are NO qualified US seamen available! This is obviously BS!

This situation needs to be fought, but until US mariners are aware of the violations being committed, it will continue for the forseeable future.

Concerned mariners here need to write to the House Coast Guard and Maritime Transportation Subcommittee at:

2165 Rayburn House Office Building
Washington, DC 20515

or the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security at:

508 Dirksen Senate Office Bldg
Washington, DC 20510-6125

or check and see if your Senator or Congressman is a member of either subcommittee and write to them directly to demand an investigation into this situation and to hold hearings

this needs to be ended so we can get the jobs we have a legal right to have!


#16

most of the platforms here in the GOM are natural gas. T. B. Pickens plan for LNG. I am a capt on a 150 ft lift boat used for well repair and plug and abandon. we are at full utilization and everything that floats is currently working. Also don’t confuse winter weather slowdown with current economic BS.
John schaffer
Jackup63@gmail.com


#17

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<td width=“100%” class="contentheading]BP makes deepwater discoveries offshore Angola, Gulf of Mexico </td>

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<strong>Sonangol </strong>and <strong>BP </strong>announced the Dione oil discovery in ultra-deepwater Block 31, offshore Angola. This is the sixteenth discovery made by BP in Block 31 and is located in the southern portion of the block, about 9 km southwest of the Juno-1 discovery. Dione was drilled in a water depth of 1,696 m, some 390 km northwest of Luanda and reached a total depth of 3,272 m below sea level. Well test results confirmed the capacity of the reservoir to flow in excess of 5,000 bbl/day.
Separately, BP America announced an oil discovery at its Freedom Prospect in the deepwater Gulf of Mexico. The well, located in Mississippi Canyon Block 948, approximately 70 miles southeast of the Louisiana Coast, is in about 6,100 ft (1,860 m) of water. The Freedom well was drilled to a total depth of approximately 29,280 ft (8,927 m) and encountered greater than 550 net ft of hydrocarbon-bearing sands in Middle and Lower Miocene reservoirs. Appraisal will be required to determine the size and commerciality of the discovery.
“The Freedom well is our third discovery in this part of the deepwater Gulf of Mexico following our Tubular Bells and Kodiak discoveries,” said <strong>Andy Inglis</strong>, BP chief executive, Exploration and Production. “This discovery further strengthens BP’s resource base and portfolio of potential development projects in the Gulf of Mexico. We believe that Freedom straddles Mississippi Canyon Block 948 and Mississippi Canyon Block 992, and we look forward to working with our various partners towards efficient development of these discovered resources.”


#18

All I can say is that there might well be some interest taken by the next Congress in these matters. I have made contact with my Congressman who is well placed in Washington and I encourage every American mariner regardless of whether he be deepsea or brown water to write to the leadership of the House Coast Guard and Maritime Transportation Subcommittee at:

2165 Rayburn House Office Building
Washington, DC 20515

or the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security at:

508 Dirksen Senate Office Bldg
Washington, DC 20510-6125

or check and see if your Senator or Congressman is a member of either subcommittee and write to them directly to demand an investigation into and to hold hearings regarding the violation of the established US Statutes and Federal Regulations reserving employment on the U.S. OCS for US citizens. In a very down economy, converting jobs from being held by foreigners to US citizens might be a no brainer even if the entrenched powers fight it. At least one can hope.

btw, next time you are in Fourchon, note how many foreign subsea vessels are there. I have noted at least 20 working full time in the Gulf and I know there are more. Also note how many of those are brand new Norwegian built and flagged. Do you really think there are no American mariners who are qualified or capable to operate those vessels? Do you think if an American company took their ship to the North Sea to work, that the Norwegians would allow that ship to work there with an all US crew? NOT!


#19

Cheng I knew there was something I liked about you. I’m a Washington boy too.