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Global and Regional Markets

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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ADIPEC 2016 to launch ‘Security in Energy’ program

ADIPEC

Experts are urging organizations in the oil and gas industry to adapt to an increasingly interconnected energy landscape by taking a streamlined and coordinated approach to security. Technology brings with it a growing concern of data and infrastructure protection that needs to be immediately addressed. The Middle East’s burgeoning security market is forecast to be worth US$34 billion by 2020, with more than 50% being spent on government, energy and critical infrastructure, according to a recent Frost & Sullivan report. Meanwhile, figures from MarketsandMarkets show that the overall critical infrastructure protection market in the Middle East will be worth $13.07 billion by 2018.

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ADIPEC 2016 to launch ‘Security in Energy’ program

ADIPEC

Experts are urging organizations in the oil and gas industry to adapt to an increasingly interconnected energy landscape by taking a streamlined and coordinated approach to security. Technology brings with it a growing concern of data and infrastructure protection that needs to be immediately addressed. The Middle East’s burgeoning security market is forecast to be worth US$34 billion by 2020, with more than 50% being spent on government, energy and critical infrastructure, according to a recent Frost & Sullivan report. Meanwhile, figures from MarketsandMarkets show that the overall critical infrastructure protection market in the Middle East will be worth US$13.07 billion by 2018.

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

Market stocks default

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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Troubled Brazil works to open pre-salt, ease regulatory restrictions

The Brava Star, QGOG Constellation’s ultra-deepwater drillship, can drill in waters as deep as 12,000 ft. The rig was delivered from Samsung Heavy Industries in 2015.

As of July, Petrobras had 39 floating rigs on contract in Brazil. That compares with 60 at the beginning of 2015 and 42 at the end of that year, according to Rudimar Lorenzatto, E&P Executive Manager for the Brazilian national oil company. Despite this fall in activity, Petrobras remains heavily focused on the pre-salt. Of the 60 wells planned for 2016 and another 60 planned for 2017, 60% are expected to be in the pre-salt areas. “Pre-salt is the main focus in the future for Petrobras’ business plans,” Mr Lorenzatto said.

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Shale, tight gas production from Argentina’s Neuquén Basin on the rise, while Venezuela suffers dramatic production declines

Figure 1: Tight gas production from Argentina’s Neuquén Basin more than doubled between January 2014 and January 2016, according to Wood Mackenzie. The Lajas and Mulichinco formations were responsible for the bulk of tight gas production during this period. Overall, there are 11 tight developments under way in the basin, including Total’s drilling program in the Aguada Pichana block and YPF and Petrolera Pampa’s $150 million investment in the Rincón del Mangrullo block.

While much of the E&P attention in Latin America is focused on Brazil’s pre-salt, Argentina and Venezuela both remain key E&P players on the continent, as well. In Argentina’s Neuquén Basin, tight gas production has already doubled since 2014, and production from the Vaca Muerta shale formation is expected to double between 2015 and 2018, according to Wood Mackenzie.

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IHS: Oil market now reaching bottom as supply, demand begin to balance out

Screen Shot 2016-06-21 at 11.47.24 PM

The downturn in oil prices that has led operators worldwide to reduce budgets and drilling programs has reached a bottom, as the oversupply of oil has begun to balance out with demand, according to IHS Vice President for Energy-wide Perspectives Susan Farrell. “We have oil supply going below what is needed for demand (this year), which means we are finally going to start rebalancing the market going forward,” Ms Farrell said at the 2016 IADC World Drilling Conference on 15 June in Lisbon. While spending is expected to remain flat in the near future, IHS expects an increase in drilling activity beyond 2017 as companies begin to finish paying off debt from pre-downturn investments. Watch the video to learn more.

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