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Onshore Advances

Burke: Positive indicators point to potential recovery first for shales; offshore must wait longer

The drilling industry is seeing some positive signals. One is that CAPEX reductions, a leading indicator for the industry, are starting to slow down, 
Thomas Burke, President and CEO of Rowan Companies and 2016 IADC Chairman, said at the IADC Houston Chapter Luncheon on 11 October.

In hindsight, the indicators of an impending downturn were clear back in 2014 or even earlier. Still, when it hit, the downturn caught most of the industry by surprise. This has caused massive disruptions as companies realized that their assumptions and projects were flat wrong, Thomas Burke, President and CEO of Rowan Companies, said at an IADC Houston Chapter luncheon on 11 October. Further, Mr Burke, who also serves as 2016 IADC Chairman, pointed to the difficulties that drilling contractors face in planning for their business. “When you have to make investments in expensive assets that are going to last a long time, it takes a lot of capital, and you have to make assumptions about what’s going to happen,” he said. “We have to make long-term decisions based on short-term oil prices.”

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Caterpillar eases Tier 4 transition with 3512E engine

The 3512E, Caterpillar’s Tier 4-compliant engine, has a similar skid size to the commonly used 3512C for an easier transition from Tier 2 to Tier 4 engines.

By the end of 2017, drilling contractors will need to have transitioned to engines compliant with the US Environmental Protection Agency’s (EPA) Tier 4 standards for non-road diesel engines. The EPA’s flexibility provisions had allowed onshore drillers and OEMs in North America to continue using Tier 2 engines, but the flexibility period will end next year.

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Barclays survey: 2017 spending poised to grow 3% to 8% at current prices

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A mid-year survey of more than 200 companies shows that global upstream spending is poised to grow in 2017 after consecutive years of declines. The Barclays Upstream Spending Survey estimated that spending will increase by approximately 3% to 8% at current oil prices. Large-cap E&P companies are expected to increase North American CAPEX by as much as 50% next year, although international oil companies (IOCs) – particularly those in the offshore sector – will still be very cautious in their spending.

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Garvin: Systems, processes must be in place to keep workers safe as rigs go back to work

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It’s been approximately 20 months since the downturn began, and uncertainty persists over how much longer the market will remain depressed. Dayrates are down by approximately 40% on average, and many contractors are operating on negative margins. Some have even been pushed out of the market altogether, Mike Garvin, Senior Vice President, Operation Support at Patterson-UTI, said at the 2016 IADC Asset Integrity and Reliability Conference on 31 August in Houston. “Back at the peak, there were 171 drilling contractors operating at least one rig in the United States. Today, we're at 87, so half of the drilling contractors have quit working over the last two years,” he said.

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BP signs second Chinese shale gas contract with CNPC

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BP announced that it has signed a second production-sharing contract (PSC) for shale gas exploration, development and production with China National Petroleum Corp (CNPC). The PSC, signed on 27 July, covers an area of approximately 1,000 sq km at Rong Chang Bei in the Sichuan Basin. In March 2016, BP and CNPC signed their first shale gas PSC on the adjoining Neijiang-Dazu block. As with the earlier contract, CNPC will operate the Rong Chang Bei PSC. “We are pleased to be making further progress in our strategic partnership with CNPC and deepening our business in China. This second shale gas PSC in China builds on the successful cooperation we are already seeing with the Neijiang-Dazu PSC signed in March,” Bob ...

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Shale to carry critical geostrategic implications for US for coming decades

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With the US assuming a new role as a swing producer due to the unconventionals, the nation is gaining far more influence over the global oil market than before, Baron Lukas, CEO of EnviroLogic Solutions, said at the 2016 IADC Drilling Onshore Conference in Houston. In addition, shale could allow the US to become fully energy-independent. In this video from the conference on 19 May, Mr Lukas explains the geostrategic implications of US shale production. He also discusses demographic trends, such as aging populations in developed countries, that could have an impact on long-term energy demand.

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BP: Operating on model of independent operator helping to weather downturn in Lower 48

BP has been able to speed up the company’s decision-making process and innovation by forming a separate business entity for the Lower 48, said Tripp Edwards, BP VP Drilling, during the Operator’s Outlook panel at the 2016 IADC Drilling Onshore Conference in Houston on 19 May.

International supermajor BP is weathering the downturn in the Lower 48 by operating this segment of the business more like an independent. This has been achieved by forming a separate business entity for this market, allowing for faster decision making and adoption of innovations, said Tripp Edwards, Vice President...

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US onshore rig count to pick up in 2017, but recovery will be gradual

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The US land rig count is expected to remain flat for the remainder of the year, but approximately 200 rigs will go back to work in 2017, James West, Senior Managing Director at Evercore ISI, said at the 2016 IADC Drilling Onshore Conference in Houston. This signals a recovery, but it’s like to happen gradually rather than immediately. In this video from the conference on 19 May, Mr West explains some of the factors that will moderate the onshore drilling market recovery, including challenges around labor and equipment.

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