Shell could abandon Arctic after this season


#161

[QUOTE=highseasmechanic;177557]While in Everett, The disco was visited by quite a few different companies. Most of these companies were asking about hours on the new equipment that had been installed. Other questions included how much steel was in the ship and what certain equipment was made of material wise.[/QUOTE]

Was some of these visitors wearing doti and carry a magnet in their pocket??

Back in the last down turn I took one like that to look at one of two Pelican class drillships that was for sale at a very low price.
On deck was a brand new thruster unit, still in the open shipping crate. I pointed it out and said; That is worth a lot of money.
He took out his magnet, put it against the thruster housing and stated; Ferrous
Me; Yes but it cost many thousands of $.
To which he replied; Do you have a buyer??

A quick lesson in the scrapping business was learnt and remembered; if you don’t have a buyer everything has only scrap value.


#162

[QUOTE=ombugge;177608]Was some of these visitors wearing doti and carry a magnet in their pocket??

Back in the last down turn I took one like that to look at one of two Pelican class drillships that was for sale at a very low price.
On deck was a brand new thruster unit, still in the open shipping crate. I pointed it out and said; That is worth a lot of money.
He took out his magnet, put it against the thruster housing and stated; Ferrous
Me; Yes but it cost many thousands of $.
To which he replied; Do you have a buyer??

A quick lesson in the scrapping business was learnt and remembered; if you don’t have a buyer everything has only scrap value.[/QUOTE]

And which company would want to buy such an old drilling vessel (despite some updates in Korea) anyway, haunted by mishaps and a bad reputation due to the 2012 drilling season.

I bet if Shell would go back to AK at some point, they’ll come in with a new/different piece of kit (not to be associated with any of the not too successfull heritage from the past). They killed Kulluk partly for that reason as well, methinks.


#163

[QUOTE=Drill Bill;177614]And which company would want to buy such an old drilling vessel (despite some updates in Korea) anyway, haunted by mishaps and a bad reputation due to the 2012 drilling season.

I bet if Shell would go back to AK at some point, they’ll come in with a new/different piece of kit (not to be associated with any of the not too successfull heritage from the past). They killed Kulluk partly for that reason as well, methinks.[/QUOTE]

Who would?? The Indians in dhoties, that is who.


#164

[QUOTE=Drill Bill;177614]And which company would want to buy such an old drilling vessel (despite some updates in Korea) anyway, haunted by mishaps and a bad reputation due to the 2012 drilling season.[/QUOTE]

No one would want to buy the vessel except for scrap.

His point was that the buyers don’t care about possible resale value of gensets, thrusters, etc if there is no buyer. To them, everything is the value of the scrap metal it contains, period.


#165

The generators met Tier IV with the exhaust filters and urea injection were installed. By themselves they met Tier II. All generator engines had less than 6500 hours on them. The MAN-B&W 6S42MC main engine has less than 3100 hours on it. Cranes are new. RO units have less than 1000 hours. A couple of people who came to check out the vessel came with magnets.


#166

that’s great content


#167

[QUOTE=z-drive;177667]that’s great content[/QUOTE]

Being on the night shift, I only got the info from the guys working days. The companies that came were looking at potential for chartering, but mostly for scrap value. They would ask about tonnage of vessel, what piping was made of what material, and what kind of precious metals were in certain components.


#168

[QUOTE=highseasmechanic;177666]The generators met Tier IV with the exhaust filters and urea injection were installed. By themselves they met Tier II. All generator engines had less than 6500 hours on them. The MAN-B&W 6S42MC main engine has less than 3100 hours on it. Cranes are new. RO units have less than 1000 hours. A couple of people who came to check out the vessel came with magnets.[/QUOTE]

Sounds like most of that kit is still ‘shiny’. You wouldn’t think that Noble will let that all go down to waste, right? Couldn’t at least cranes and RO units be removed for future use or refurbishments on other vessels in their fleet? (I assume taking out the whole engine again - after Korea - could be quite an expensive operation?).

Additionally and what I didn’t mention in my previous post: the situation may be slightly different here compared to the Kulluk one. That MODU did belong to Shell and they could decide to have it scrapped just like that. In this case, the Disco is owned by Noble so it will have to be them making the final call (though I wouldn’t be too surprised if Shell would influence that decision somewhat).


#169

In the backwards ways the financial/tax world works, it maybe a better deal to get rid of stuff at a loss so the can buy new stuff. Who knows.


#170

[QUOTE=Drill Bill;177682]Sounds like most of that kit is still ‘shiny’. You wouldn’t think that Noble will let that all go down to waste, right? Couldn’t at least cranes and RO units be removed for future use or refurbishments on other vessels in their fleet? (I assume taking out the whole engine again - after Korea - could be quite an expensive operation?).

Additionally and what I didn’t mention in my previous post: the situation may be slightly different here compared to the Kulluk one. That MODU did belong to Shell and they could decide to have it scrapped just like that. In this case, the Disco is owned by Noble so it will have to be them making the final call (though I wouldn’t be too surprised if Shell would influence that decision somewhat).[/QUOTE]

As of the 1rst of December, Shell had paid off the rest of the contract and the vessel was returned to Noble. I do believe Shell covered the heavy lift to Singapore. There is a small cold stack crew on board though, and rumor was they might keep it around to possibly find a contract or tax purposes.


#171

well, looks like it’s really official now. RIP Noble Discoverer …

Noble Corporation scraps two and stacks two


#172

While prospecting for oil and gas has stopped off Alaska and in the Canadian Arctic, the first Norwegian Oil field in the Arctic has started production, after a number of setbacks and cost overruns: http://www.oedigital.com/component/k2/item/11899-video-goliat-finally-achieves-first-oil?utm_campaign=Fuel+For+Thought&utm_source=hs_email&utm_medium=email&utm_content=27242750&_hsenc=p2ANqtz-92k7Q2mcjyRytHI5xa3uAJzeWLsocpI9JWvlRMNenfL3OW4waATHgKabNyGk4gcd1sO-CUTe_qsPELcH3ZGHU8hvC2sg&_hsmi=27242750


#173

In the meantime, Shell is having problems off Nova Scotia with Stena IceMAX:

“Dude, where’s the riser?”


#174

More on arctic drilling off Norway: http://www.bloomberg.com/news/articles/2016-03-22/oil-search-in-norway-s-new-arctic-area-is-safe-statoil-says


#175

[QUOTE=ombugge;181160]While prospecting for oil and gas has stopped off Alaska and in the Canadian Arctic, the first Norwegian Oil field in the Arctic has started production, after a number of setbacks and cost overruns: http://www.oedigital.com/component/k2/item/11899-video-goliat-finally-achieves-first-oil?utm_campaign=Fuel+For+Thought&utm_source=hs_email&utm_medium=email&utm_content=27242750&_hsenc=p2ANqtz-92k7Q2mcjyRytHI5xa3uAJzeWLsocpI9JWvlRMNenfL3OW4waATHgKabNyGk4gcd1sO-CUTe_qsPELcH3ZGHU8hvC2sg&_hsmi=27242750[/QUOTE]

well, not the greatest start there up north!

Eni’s Goliat field hit by gas leak


#176

well, this is the end then. Still crazy they still have stuff up there from the 2012 operations they need to recover … some more $$$ in the books this year.

http://gcaptain.com/big-oil-abandons-2-5-billion-in-u-s-arctic-drilling-rights/


#177

[QUOTE=Drill Bill;184261]well, this is the end then. Still crazy they still have stuff up there from the 2012 operations they need to recover … some more $$$ in the books this year.[/QUOTE]

AND HOW! This certainly is the bitter end to a long and painful saga

[B]Shell, others abandon $2.5 billion in US Arctic drilling rights[/B]

By Bloomberg News - Jennifer A. Dlouhy 5/10/2016

After plunking down more than $2.5 billion for drilling rights in U.S. Arctic waters, Royal Dutch Shell, ConocoPhillips and other companies have quietly relinquished claims they once hoped would net the next big oil discovery.

The pullout comes as crude oil prices have plummeted to less than half their June 2014 levels, forcing oil companies to slash spending. For Shell and ConocoPhillips, the decision to abandon Arctic acreage was formalized just before a May 1 due date to pay the U.S. government millions of dollars in rent to keep holdings in the Chukchi Sea north of Alaska.

The U.S. Arctic is estimated to hold 27 billion barrels of oil and 132 trillion cubic feet of natural gas, but energy companies have struggled to tap resources buried below icy waters at the top of the globe.

Shell last year ended a nearly $8 billion, mishap-marred quest for Arctic crude after disappointing results from a test well in the Chukchi Sea. Shell decided the risk is not worth it for now, and other companies have likely come to the same conclusion, said Peter Kiernan, the lead energy analyst at The Economist Intelligence Unit.

“Arctic exploration has been put back several years, given the low oil price environment, the significant cost involved in exploration and the environmental risks that it entails,” he said.

80 Percent

All told, companies have relinquished 2.2 million acres of drilling rights in the Chukchi Sea — nearly 80% of the leases they bought from the U.S. government in a 2008 auction. Oil companies spent more than $2.6 billion snapping up 2.8 million acres in the Chukchi Sea during that sale, on top of previous purchases in the Beaufort Sea.

Shell relinquished 274 Chukchi leases and dozens in the neighboring Beaufort Sea. In doing so, the company forfeits what it paid the U.S government for the rights to drill in those tracts — and the millions of dollars it spent on annual rent since then.

“These actions are consistent with our earlier decision not to explore offshore Alaska for the foreseeable future,” Shell spokesman Curtis Smith said by e-mail. The decision also reflects the high costs of operating off Alaska’s northern coast and evolving regulatory standards, Smith said.

Other energy companies have followed Shell out of the Arctic, according to Interior Department records obtained by the conservation group Oceana under a Freedom of Information Act request and reviewed by Bloomberg News.

Stopping Appeals

ConocoPhillips formally relinquished its 61 Chukchi Sea leases on April 26, and spokeswoman Christina Kuhl said the company will end Interior Board of Land Appeals proceedings that aimed to extend their life.

Statoil dumped 16 Chukchi Sea leases and its working interest stakes in 50 others in the U.S. Arctic last November, conceding the portfolio was “no longer considered competitive.”

Iona Energy Inc., a Canadian oil and gas company that began insolvency proceedings last November, ceded its one lease in the Chukchi Sea on March 31. Italy’s Eni SpA also gave up four leases in the Chukchi Sea on April 28.

Shell indefinitely halted oil exploration in the U.S. Arctic, but is seeking an extension of leases that begin to expire in 2017. That legal battle, playing out in the Interior Board of Land Appeals, will continue.

Final Lease

Shell is holding on to one lease in the Chukchi Sea: the tract it drilled last year. Smith said Shell is maintaining that lone lease — at a potential cost of $132,456 over the next four years — because there is value in the data the company gathered during its 2015 exploratory drilling. Companies generally have to give the U.S. government the geological information they glean from oil and gas development in federal waters, but they can get an extra two to 10 years to turn over that data as long as they still hold the territory.

The rash of relinquishments means “we are an important step closer to a sustainable future for the Arctic Ocean,” said Michael LeVine, Pacific senior counsel for Oceana, which opposed government decisions to authorize oil development in the area and wants science to guide industrial development there. “Hopefully, today marks the end of the risk, litigation and expense caused by the push to drill in the Arctic Ocean.”

Now, only 535,586 acres remain locked up in the Chukchi Sea. Besides Shell’s one lease there, the tracts are in the hands of just one oil producer: Spain’s Repsol SA. Spokesmen for the company did not return requests for comment.

The news was a blow to political leaders in Alaska, which derives much of its revenue from oil development. Democratic Governor Bill Walker said in a statement that Arctic oil and gas “represent incredible potential for American energy security, jobs and revenue for the government.” But tapping those resources requires a stable permitting and regulatory regime that gives certainty to would-be investors, he said.

Next Auction

It could be years — if ever — before oil companies get another chance to buy drilling rights in the region. The United States could turn around and resell the forfeited leases if any companies actually wanted to buy them, but the Interior Department canceled upcoming lease sales amid low industry interest last year.

The Interior Department is considering selling leases in the Beaufort Sea in 2020 and the Chukchi Sea two years later, but those auctions are far from certain, and environmentalists are pushing the Obama administration to rule them out entirely. Oceana’s LeVine said oil companies’ decision to forfeit Arctic drilling rights shows “there is no compelling reason to schedule new lease sales.”

Cindy Shogan, executive director of the Alaska Wilderness League, said the lease forfeiture illustrates that “no oil company should drill in America’s Arctic Ocean” and should convince President Barack Obama to cancel potential sales there.

Even beyond the U.S., there are strong headwinds discouraging oil companies from sending drill bits spinning below Arctic waters. Last month, Shell withdrew an application for a drilling license in Norway’s share of the Arctic Ocean.

The high costs of working in the area mean it is generally attractive only to large oil companies with big balance sheets. But evolving regulatory environments in the U.S. Arctic can discourage those businesses, said Richard Ranger, a senior policy analyst with the American Petroleum Institute.

“There are only so many companies that are going to be interested in the Arctic,” he said by phone. “To the extent they are, they can look at other jurisdictions. With regulatory uncertainty and price uncertainty, you start looking at other opportunities – and you re-rank what your longer term, more frontier prospects look like. That’s what’s happening.”

All those opportunities now gone just like dust in the wind…


#178

[QUOTE=Drill Bill;184261]well, this is the end then. Still crazy they still have stuff up there from the 2012 operations they need to recover … some more $$$ in the books this year.

http://gcaptain.com/big-oil-abandons-2-5-billion-in-u-s-arctic-drilling-rights/[/QUOTE]

stil 55 (!!) anchors to retrieve in both the Chukchi and Beaufort Sea! Looks like some folks will still get to spend quite some time up north this summer.


#179

They sent the Dino up there to join the fun.


#180

All is not lost for Arctic exploration.
Norway open new territory by awarding 10 licences for exploration in the Eastern Barents Sea : http://www.npd.no/en/news/News/2016/Thirteen-companies-are-offered-ten-production-licences-in-the-23rd-licensing-round/

This is in mostly ice fee waters, but well into the arctic zone. (74.5 degr. N):