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The Offshore Frontier

BP’s Looney: To remain competitive, costs must be lowered sustainably, not follow oil prices

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World energy demand is likely to increase by a third by 2035, according to BP’s forecasts. However, oil and gas will face increasing competition from alternative energy sources over the coming years, BP Chief Executive of Upstream Bernard Looney said at the 2016 OTC on 2 May in Houston...

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GOM future unclear in face of Well Control Rule, falling rig count

The Maersk Valiant ultra-deepwater drillship is under contract with ConocoPhillips and Marathon Oil until July 2017. It is one of two Maersk ultra-deepwater rigs working in the US Gulf of Mexico. As Mexico gears up for its deepwater auction in December, contractors are looking to that part of the Gulf for additional work opportunities, as well. In particular, contractors like Maersk that have deepwater experience on the US side may be well-positioned because the US and Mexican sides of the Gulf are believed to be geologically similar.

Operators seeking to reduce their capital and operating expenditures in the face of sustained low oil prices are facing difficult choices. When it comes to either greenlighting or scrapping drilling projects – particularly those in the prolific but expensive Gulf of Mexico (GOM) Lower Tertiary – many are choosing deferment or cancellation. In its Q4 2015 earnings call, held on 29 January, Chevron announced that it was canceling the Buckskin-Moccasin deepwater project, citing difficult economic conditions. Anadarko is also delaying final investment decisions on its Yeti and Shenandoah prospects, located in Walker Ridge and Middle Miocene areas. The company had drilled appraisal wells for both projects in 2015.

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Offshore industry, beset by project deferrals, rig contract terminations, looks to standardization, reliability for long-term cost reductions

A 15k-psi subsea BOP stack is assembled in GE’s Houston BOP manufacturing high-bay facility.

Throughout 2015, the industry had remained hopeful that the downturn would be short-lived. During the summer, when oil prices temporarily buoyed, some believed that signaled that the market was on its way up again. However, prices trended downward after that, dipping below $40/bbl in the last quarter of the year. Many finally accepted the reality that this downturn would be lower for longer.

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Hand-picked components enable Marathon, ConocoPhillips to build fit-for-purpose MPD system for GOM project

MPD champions must continue to promote the technology’s benefits, as well as find ways to make it more economic, Kelly McHugh, General Manager of Drilling and Completions at Chevron, said at the SPE/IADC MPD and UBO Conference in Galveston, Texas, on 12 April.

In 2013, Marathon Oil and ConocoPhillips decided to retrofit the Maersk Valiant drillship for managed pressure drilling (MPD). Installation of the MPD equipment began in 2014, while the drillship made its way to the US Gulf of Mexico from the shipyard in South Korea.

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Financing secured for 2 jackups going to work for Pemex

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In one of the only financings of a newbuild offshore oil/gas unit so far this year, Milbank, Tweed, Hadley & McCloy has advised BBVA, HSBC, Sabadell and Santander in providing non-recourse project financing to fund construction and operation of two offshore drilling units to be owned by affiliates of Grupo R for oil and gas exploration by Mexico’s state-owned petroleum company Pemex (Petróleos Mexicanos).

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