What will be the offshore industry fallout if the price of oil doesn't rebound?


#1

Remember in 1999-2000 when there was a blip on the world economic radar somewhere over by Asia and the price of a barrel of oil went to $10.60?

Think that today’s economic calamity is on three orders of magnitude greater than what happened in 2000 but so far the price has not collapsed although the $40-45/bbl it’s hovering around today is not going to sustain the offshore business for very long. Yesterday they announced all available crude storage capability on land is nearing 95% and tankers are sitting on anchor acting as floating storage. Obviously this does not portend well for the oil price. Once there is no further storage to use then owners will have to dump oil just because they simply have no place to sit on it.

Can oil go down to under $20/bbl and if so then what will be the outcome for us working in the offshore Gulf? What projects will be suspended, postponed or outright cancelled? There is talk of lots of fancy foreign offshore vessels on order being cancelled do to lack of financing and companies who placed orders for jackup rigs getting out from under their commitments.

Still, the majors might have learned from their past mistakes which is to stop all exploration and developing new production during times when oil prices are low only to regret that when the demand (and prices) recover. I sure hope this is the case this time.


#2

Hi,
My same concern a sevearl months ago. Since then I have found several forcasters putting crude mean price $45/bbl for 2009 and $55 for 2010. even when DJ dove to 6700 Friday oil was holding steady at $44/bbl. So the question is, what is the impact on our jobs with $45 oil?

Joel


#3

I remember the 2000 dip well, that’s when my ship got pulled out of the Gulf and sent to India… all non-licensed were laid off within 6 months.

I tell you, I wouldn’t feel safe working on anything older than 10 years or foriegn. Most at risk are the guys working for Seadrill… all of John Fredeickson’s other companies are in trouble and he’s well known for being ruthless.

I’ve also heard a lot of guys say “I’m not worried, we have a long term contract with x”. What they don’t realize is the day-rate is less than half an oil company’s expenses… by pulling off a well they can save a lot of money, they can also end a contract early and take there chances in court. More realistically, they sell the contract for half off to a company in Nigeria or India and take a tax deduction on the remaining loss.

Any way you look at it, things could get ugly quick.


#4

I expect this pesimism from Lou Dobbs Jr (aka c. Capt) but not from John. Well at least we have a President that’s pro-drilling, oh wait, we’re screwed!


#5

I expect this pesimism from Lou Dobbs Jr (aka c. Capt)

Hey, I resemble that remark but I have greater ambitions that to just be Lou Dobbs

I know, I’ll change my username to Stink Cappy Dogg and I’ll rap my comments this time. Let’s see…anchorman can be my manager, elcapitan my tour promoter and the Norwegians can be my roadies.

on second thought being mini Lou Dobbs isn’t so bad afterall…

back to the matter at hand. I do believe that if there isn’t a rebound you’ll most likely see dayrates fall far for even big sophisticated vessels and rigs unless they are on longterm charters and even then, as John has said, that really doesn’t guarantee anything but does add a bit of protection to the owners and crews.

I have wondered about all these drillships having been signed up when oil was $120+/bbl at $500k+/day and some companies signing up a half dozen just to drill in one province like the Gulf. When will the operators say just too much?


#6

I can say that I am nervous about our nation’s situation and the Offshore Oil business. The big question on my mind is what can I do about it?


#7

Change your avatar to a unicorn?


#8

And don’t forget to include a rainbow…:slight_smile:


#9

[QUOTE=Shellback;9795]And don’t forget to include a rainbow…:)[/QUOTE]

One minute he acts like he has some, the next, he’s making a unicorn collage with Elmer’s and popsicle sticks, but don’t say rainbow. He’s afraid that might make him look gay.


#10

It may be too late for that!:):):slight_smile:


#11

I know you can take it, so I won’t pass up the opportunity.

Why are you worried about the state of offshore business? It can’t get any worse, out of work with a good economy is just as bad as out of work with a bad economy.

By the way rap is a good industry. I will send you my resume for manager, promoter and money manager. What fun!


#12

That is exactly my point Elliot, but please never use exogenerous in a sentence again! It makes an umbrageous medulla oblongata and I am not even sure it is really a word.


#13

Hey Lee,
FU is not a word, but I bet you know what I’m saying…lol


#14

Anchorman,

Comedy just isn’t your thing. Maybe you should stick to trolling the high school parking lots for impressionable and curious young boys.


#15

[quote=Capt. Lee;10646]Anchorman,

Comedy just isn’t your thing. Maybe you should stick to trolling the high school parking lots for impressionable and curious young boys.[/quote]

And you’re saying that because you have kindergarten and elementary covered already?