Surprised this isn’t up yet.
http://petroglobalnews.com/2014/11/hercules-offshore-downturn-forces-mass-layoffs-rig-shut-downs/
Too bad for those guys, but hopefully they can get work elsewhere drilling on land or whatever.
Chouest is still giving a $100 raise regardless.
Well we knew the shelf market wasn’t booming lately so this isn’t a huge surprise. They predict things to pick back up in spring of next year. I’m sure everyone working out of Fourchon has seen the rigs stacked out to the west among other places. The blowout they had last year couldn’t have been good for business either.
Saudi Arabia is offering US refineries a discounted price to try to maintain marketshare, and to see how low the price has to go in order to slow the growth of US exploration and production. Saudi Arabia is still pumping 9 million bbl per day. It may take a few months of price cuts for them to find out how low the price has to go to discourage US E&P spending, especially shale oil, and deepwater.
It could be that Saudi is also trying to put the price, production, and budget squeeze on Syria, Iraq, and Iran, or others in the Mideast. At least they are unwilling to cut production in order to support the OPEC price or let others, such as Iran and Iraq gain marketshare.
Personally, I’d like to see the US put an import duty on imported oil, and continue the ban on exports of US oil to maintain a stable oil price at about $100 to encourage domestic E&P that moves the US further toward energy independence, but that will never happen.
I do not have any inside information, and I’m certainly not an economist or oil price expert, but things don’t look good for at least the first half of 2015.
[QUOTE=tugsailor;147403]…
Personally, I’d like to see the US put an import duty on imported oil, and continue the ban on exports of US oil to maintain a stable oil price at about $100 to encourage domestic E&P that moves the US further toward energy independence, but that will never happen.
…[/QUOTE]
You’re right. It won’t. That oil and gas is headed overseas. Every politician that should think about the long term benefits for America is long ago paid off to look the other way.
And yes, sorry to hear about Hercules. I’ve run across some nice folks there.
For obvious reasons I’ve just started paying attention to and trying to understand the oil markets. There are so many factors – including the strength of the US Dollar, how fast China’s economy is growing, OPEC production and prices, (over)supply in domestic onshore production – well, it’s dizzying, and not a little confusing to a layman. Apparently to some of the experts, too, one of whom wrote in an article I recently read that “I am loathe to make predictions about oil markets” but then preceded to use words like “crash” and “freefall” and “market correction.”
The confusion is perfectly illustrated, I think, by the variety of news stories on gCaptain’s front page. On the one hand, we have a story from Bloomberg talking about the sharp decline in imports at LOOP that then does a neat pivot to how great sub-$3 gasoline is for the economy and jobs generally. On the other hand, we have the announcement from Hercules.
Part of the problem with understanding the news reports and market analysis, for me, is that while cheap and abundant domestic energy may in fact mean a net increase in manufacturing jobs, transportation, and (on the fornt-end anyway) onshore drilling, none of that necessarily translates to what I do for a living. A business writer somewhere may simply say: “Great for the economy, great for jobs!” only, not so much for my little slice of the industry, my job.
On the one hand it seems that the Gulf OSV fleet is overbuilt with new orders continuing relatively unabated; also, actuaries tell us that the mass exodus of Baby Boomers from the workforce began last year and should continue for another decade or so. That would seem to argue for plenty of employment opportunity for mariners in this industry.
On the other hand, everyone working in the Gulf has seen the Ensco rigs stacked west of Fourchon, the boats on the mud and on the pilings. Reportedly HOS has warm-stacked some of its boats, and now we have a post in another thread from a Seacor captain who says he was just laid-off in a “first round.”
I haven’t been out here long enough – nor do I have the depth or breadth of knowledge – to have a good handle on what is happening much less predict what will happen next year. But guys I work with who were out here in the 1980s are growing increasingly concerned.
I have to think that if I work hard, keep my nose clean and keep plugging away on my upgrades and endorsements, I’ll always be able to find a spot somewhere. I also have to think that I’m glad I’m already here and not just starting out, and if I were I might take a real hard look at towing rather than what I am currently doing.
Hopefully the Hercules guys will be able to transition right over to the on-shore side of things. Unfortunately for us, there are no boats in Falfurrius, Texas, or in North Dakota.
We stacked some boats? Which boats?
Per a friend at HOS, three of the DP1 vessels. He said one crew to maintain all three, everyone else going to active vessels, so no net loss of people.
Oh the old 220’s, those boats are good for shelf work only. That’s no big loss to the fleet. They stack and unstuck those things all the time.
[QUOTE=txh2oman;147430]For obvious reasons I’ve just started paying attention to and trying to understand the oil markets. There are so many factors …
I have to think that if I work hard, keep my nose clean and keep plugging away on my upgrades and endorsements, …[/QUOTE]
Good idea.
Oil & gas are commodities that trade with deals closing on the best combination of price and transactional costs. All the rest is a side effect or vendors reacting to the demand of a particular upstream or downstream sector.
Vessel / rig construction projects are 6 - 12 month lagging indicators. Utilization rates are shorter term leading indicators.
The maritime sector brings together the efforts of man through engineering, materials, production, skill, lessons learned and hard work. Just look at what went into the design, build install and operation of any tanker, rig or production platform. Incredible. Awe inspiring and I love being a part of it - for my entire career.
But alas, it takes money, and when it comes to funding, maritime is just the tail of the dog — nothing more than the best forgotten appendage of a trading desk that put the oil in the pipe on the date at the place specified. The traders and their bosses couldn’t care less if it is Bakken Crude or ISIS Sweet, as long as it doesn’t make a legal stink, meets the quantity, specs and price point.