I like John McCain. He should have been President. He would have been a hell of a lot better than either of the fools we got instead…
However, I do not understand why or how he can be so wrong about the Jones Act.
But it doesn’t matter, the Jones Act is here to stay.
Why do we put up with this a-hole? Go crawl in your hole and die already you bitter old man.
[QUOTE=Bayrunner;149193]I dont like Senator McCain either but I wouldn’t shit on Aviator McCain’s record. You wernt there and you dont know what happened. As far as I am concerned the years he spent being tortured more than made up for any mistakes he made while in the cockpit. Maybe instead of talking shit you could start holding your tongue once in a while.[/QUOTE]
NYAH! NUTS TO YOU…
even in his book, McCain says that standing orders were to abort if being tracked by a fire control radar but he wanted that powerplant so badly he could taste it
he didn’t get it…but then he sure as HELL GOT IT!
[QUOTE=beekerbetter;149197]Why do we put up with this a-hole? Go crawl in your hole and die already you bitter old man.[/QUOTE]
Joyous!..I love nothing more than to make little men like you have fits of apoplexy
I must ask, why do you have a photo of the Dude as your avatar when you obviously don’t abide?
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can we keep this thread on track about what is coming in the offshore business please and move everything concerning to the Jones Act and John McCain to its separate thread here?
Thank you
From what Im reading the GoM isn’t projected to take the beating other sectors will. Dont forget, its considered to be one of the most stable drilling areas, politically and economically. I could see some worldwide operators getting hurt pretty bad,(drillships and semi’s for example) but unless McCain has his way, the OSV market in the GoM should be somewhat stable.
C.captain, I read some interesting articles on Anadarkos position in the market right now, both onshore and offshore. I wish I would have saved the link, but alas, as you already pointed out…I’m a little on the slow side. Even with the plunge now, there is reason to believe that oil will stabilize in the mid 70’s and increase from there until 2030 eventually hitting 130. Im no expert on markets but it seems reasonable. We all know that OPEC nations can not sustain this price for too long. The Saudi’s are already into their cash reserves. I honestly have little doubt that the GoM will weather the storm a little better than many, if not most, other areas.
That being said, Fraq has it right…live below your day rate, dont be dead weight, and keep your head low…
I completely agree that of all the provinces to be cut back when if comes to E&P will be the GoM since the US government does not demand to be a part owner of the fields, exacts only a small royalty per barrel of oil produced, is right next to the biggest refining complex on the earth and a vast market to sell to. The only downside is that the cost to develop the deepwater has grown almost uncontrolled over the past decade so GoM oil from the distant offshore is still expensive to find and ultimately get to the market
C.captain, I read some interesting articles on Anadarkos position in the market right now, both onshore and offshore. I wish I would have saved the link, but alas, as you already pointed out…I’m a little on the slow side. Even with the plunge now, there is reason to believe that oil will stabilize in the mid 70’s and increase from there until 2030 eventually hitting 130. Im no expert on markets but it seems reasonable. We all know that OPEC nations can not sustain this price for too long. The Saudi’s are already into their cash reserves. I honestly have little doubt that the GoM will weather the storm a little better than many, if not most, other areas.
everything now is predicate on demand globally. If demand falls and no one is willing to reduce their production then all bets are off. If demand doesn’t fall then there will become a stable price and if demand increases so will the price. This was what happened in the 80’s when oil was being brought to market from all sorts of new sources and suddenly, down went the price. I would tend to agree that the $70’s seems about right for the price to settle at which seems to fit most of the other predictions. Will that be enough for the deepwater GoM operators to keep going full speed ahead on their plans? Likely but I bet they’ll demand to cut their E&P spending if they are going to keep the projects going. They are stoopid if they don’t and smart if once they have won lower costs to demand that they don’t go way back up in the future once good times return. Everyone is going to need to learn to live on a leaner diet in the offshore. Owners and labor both…
That being said, Fraq has it right…live below your day rate, dont be dead weight, and keep your head low…
no question that is what any smart man would do so I guess you aren’t as slow in the brain as I had first thought…must be all that mental weightlifting you’ve been doin? Good work!
speaking of weightlifting…coach demands 10 sets of 50 reps each of War and Peace tonight…DO IT!
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[QUOTE=c.captain;149159]so what number did you mean?
also, I need to point out that Joe Boss can’t just send everything overseas to work. Why do you think he’d have a viable market there for his vessels when global E&P projects are all getting axed or at least only postponed? Those who have built only on speculation believing that there will be high paying work for their new boats without contracts in hand are certainly in peril. Those who’s existing contracts are coming up for renewal are also in peril if the equipment isn’t paid off yet. In every downturn in the offshore, those companies that are overly leveraged are going to be the first to fall when the cash flow dries up. Some have said that HGIM is one of those as I would imagine is HOS. In the case of ECO, does Gary pay mainly cash for newbuilds or is he leveraged heavily as well? Little companies with big building plans underway could be in even worse condition to survive. Companies like Jackson and Adriatic.
One other shoe that could drop is the operators simply pulling the plug on existing charters and paying the lump sum to get out from under their obligations. Statoil is doing that already but there hasn’t been too much in the news about other majors paying the penalty to cut and run. If that becomes the norm then the boat owners will use the cash to paydown debt first and tie up all the out of work boats rather than keeping crews aboard for spot work. They could be stacking up in the Bayoo 5 deep before all this is over yet.
I guess the key question is where oil bottoms out at and where does it settle? If we go to $50 or less, expect everything new in the GoM to go into the freezer. Exploration and production both. Of course, a new major war could suddenly break out in Iraq against ISIS and oil shoot back up to over $100/bbl but face the fact that the US doesn’t want a huge new war and the economy is loving $70-/bbl oil. I would not expect the Administration to do a damned thing to help oil prices nor should they… The players in the oil game made their bed and now they must sleep in it.
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Jackson has contracts in hand for every vessel they have, are or will build. They’ll be just fine.
Adriatic, not so much.
[QUOTE=Saltine;149219]Jackson has contracts in hand for every vessel they have, are or will build. They’ll be just fine.
Adriatic, not so much.[/QUOTE]
since so few of the OMSA companies are public there is so little transparency in their financials and all one has is guesswork and the occasional insider report.
I did look at Hornbeck’s financials and their debt to equity ratio has been improving steadily over 2014. They have obviously been using earnings to pay it down which is very smart for them to have done…places them in a very good position for a downturn in operating revenues should that occur which I believe will be the case in 2015. I sure wish to hell I could look inside Harvey Gulf’s books at the moment. They must have one very substantial debt to equity ratio with all the acquisitions and newbuilds? Of course, one always wishes they had a telescope which could cut through all the solid lead insulation that ECO has surrounding their Galliano HQ!
Obviously, there is an offshore oil downturn underway. The questions are how deep and how long?
Personally, I have a feeling that this will be more like the Macondo downturn, painful, but not catastrophic, and not very long lasting.
While I see no practical reason why oil should go above $80 for several years, world events and/or OPEC manipulation will probably drive prices up to $100 within a year. OPEC has doubled the price of oil at least twice in the past; they could do it again. It would not surprise me to see $150 oil within the next three years.
We’ll just have to wait and see, but expect the unexpected.
What’s the true production cost of oil for large players now 25-45$/per bbl?
[QUOTE=rshrew;149224]What’s the true production cost of oil for large players now 25-45$/per bbl?[/QUOTE]
In the Middle East, it’s cheaper to produce, at a cost of less than $30 a barrel on average, according to the Norwegian firm Rystad Energy. But in the Arctic, producing a barrel costs $78 on average. From Canada’s oil sands, it’s an average of $74 a barrel. From http://www.npr.org/2014/11/04/361204786/falling-oil-prices-make-fracking-less-lucrative
Also, http://www.wallstreetdaily.com/2014/10/15/opec-lower-oil-prices/
The Utica Shale in Ohio has $80 production costs, which makes it the highest cost oil on land in the US. Most wells in Bakken are thought to break even at around $40, although some may be more. Bakken oil prices have already dipped under $50.
The Saudis have the cheapest oil at around $25 to $35.
I don’t have a good handle on what it costs to produce Deepwater Gulf of Mexico oil.
[QUOTE=tugsailor;149235]I don’t have a good handle on what it costs to produce Deepwater Gulf of Mexico oil.[/QUOTE]
I would think the cost to produce would be highly dependent on the field you are talking about. Old legacy fields have long ago amortized their original costs and only need to pay for ongoing operation, maintenance and pipeline access but a new field which has only been in production a few years has a very long period ahead to reach full amortization so the humungous costs spent in exploration and installation of production facilities is going to push break even for those fields to a number even $100/bbl might not even reach for full amortization to take place withing 10 years. How much did Thunderhorse cost BP to finally get producing?..I have heard it was close to $20 BILLION by the time all was said and done.
Thunderhorse is BP’s largest “fixed-asset.” It is producing a lot of oil. Its the last thing they will shutdown.
In a producing field, its mostly sunk costs (money that has already been spent). The long term amortization of those sunk costs is not a short term issue based upon the price of oil today. The question is what is the marginal cost of producing the next barrel of oil? Whenever the price of oil is above the marginal cost of production that next barrel of oil generates a positive cash flow. When the price drops to the point that cash flow becomes negative, the cash to cover those losses has to come from somewhere. This is a how deep are your pockets question. The cost of shutting down production and starting back up again is so high, that it still makes sense to keep producing at a negative cash flow in the short term. But that cannot go on forever.
The Saudi’s and Kuwaiti’s can afford to flood the market with cheap oil in an effort to drive out competition for a long time, but the rest of OPEC cannot. How long can this last? Six months or a year?
This is a rare time when I would be all for some major government spending…buy all the cheap oil we can when the bottom truly falls out and stick it in the reserves. Much better than our attempts to buy goodwill in the middle east with our foreign policies. Instead, if they want to treat their non renewable resource like its on a Cyber Monday sale, lets get some. Lol. We all know it WILL go back up. It simply has to. What a great investment compared to our SS system…
At the same time we would be turning the trend by increasing demand, on our terms.
Kinda like seeing a case of 5.56 or .308 for the prices you simply remember in a fog of the “good ole days”…gotta get it.
Yeah, well, you know, that’s just, like, your opinion, man. This will not stand, ya know, this aggression will not stand, man.
I do abide, but you insulting everyone in the industry is tiresome. Your an over opinionated blowhard, but have comfort in your legacy as “that asshole on G-Captain”.
[QUOTE=rigdvr;149244]This is a rare time when I would be all for some major government spending…buy all the cheap oil we can when the bottom truly falls out and stick it in the reserves. Much better than our attempts to buy goodwill in the middle east with our foreign policies. Instead, if they want to treat their non renewable resource like its on a Cyber Monday sale, lets get some. Lol. We all know it WILL go back up. It simply has to. What a great investment compared to our SS system…
At the same time we would be turning the trend by increasing demand, on our terms.
Kinda like seeing a case of 5.56 or .308 for the prices you simply remember in a fog of the “good ole days”…gotta get it.[/QUOTE]
Yes. Print more money to fill the strategic petroleum reserve with cheap Saudi oil. Its a no brainer to buy low and make huge gain when prices rise, especially when we can just print the money.
If its really necessary, buy high production cost US oil to keep the fields from being shut in.
Tanker prices ought to be plummeting. Buy newer tankers from troubled companies, fill them with cheap foreign oil, reflag them US, and park them in the Gulf. That way when oil demand and oil prices rise again, we will dominate the tanker market and be able to control oil transport.
Buy the newest and best drillships from troubled companies while prices are depressed, reflag them US, and offer them for charter to US E&P companies for domestic drilling at bargain rates.
This is an opportunity to buy oil and oil producing assets at bargain prices to bring the US closer to energy self-sufficiency and energy security.
Well I guess that makes me the Malibu Sheriff to your Dude…
You don’t draw shit, Lebowski…let me make something plain. I don’t like you sucking around, bothering our citizens, Lebowski. I don’t like your jerk-off name. I don’t like your jerk-off face. I don’t like your jerk-off behavior, and I don’t like you, jerk-off. Do I make myself clear?
btw, I would certainly say that for each here who label me with your rather timid epithet there are ten who think otherwise…I am not here to win Miss Congeniality but to speak openly and with candor. NOT sorry if you are offended by my plain speaking…SIR!
[QUOTE=tugsailor;149242]Thunderhorse is BP’s largest “fixed-asset.” It is producing a lot of oil. Its the last thing they will shutdown.[/QUOTE]
never said it would be shutdown but there is a very long payback period on a project as massive as Thunderhorse which must be taken into calculating what the break even price per barrel produced there is? If you don’t take into account capital costs to produce from the GoM deepwater then I would imagine that based on the size of the fields discovered and their flowrates, then I would imagine real operating costs of the fields is modest when calculated simply based on that metric. I will use an estimate of $250k/day for direct operations or close to $1B annually. BP sold bonds to finance the building and installation of the Thunderhorse platform and fields, paying the debt service on those bonds must be added to any calculation for what it costs to produce a barrel of oil from that one platform. I will use 6% interest on $15B bonds so close to $1B a year to service debt. Then to add pay down of that debt on say a 10 year schedule would add an additional $1.5B per year.
operations costs= $1B
debt service costs = $1B
paydown costs = $1.5B
all other costs = $0.5B
total annual costs = $5B
200k bbl/day @ $100bbl x 365d = $7.5B year revenue
200k bbl/day @ $50bbl x 365d = less than $4B per year revenue
I know this is as rough a calculation as can be made but it should give a small indication of where the break even is for a deepwater field which has not been fully amortized. Once paid for, then the numbers are much more forgiving to the operators. It is because of these extremely high upfront costs and long paydown periods that makes it such a long term gamble for the operators to make and whyu it is so hard for them to justify such spending to shareholders when times are lousy like right now. Certainly it is going to be hard to greenlight much with prices being what they are at present even though prices are likely to recover during the period before greenlight and first oil. I do not know how many deepwater fields are currently in development but I certainly would expect them to continue moving forward but possibly at a slower pace. Those not yet greenlighted are very likely to be put into the freezer as Rob’s original post here indicated. Faith in the future is one of the biggest driving forces in the energy industry and when that faith is rocked, then everybody has to dig in. The weak fall and the strong survive to be even bigger and stronger once the good times return.
You called out the entire Gulf of Mexico and basically said we are worthless. Yet you think 10 of 11 people here value your comments… I will add delusional to my epithet.
And I’m done with you yet again.
