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Global oil slump puts Africa’s drilling potential on hold

The Ensco DS-8 is contracted to Total until November 2020 for operations in Angola. Total expects to decrease its rig count in Africa from 12 in 2015 to fewer than 10 in 2016.

Although significant potential remains for increased drilling activity in Africa, the global oil price slump has left this market stagnant for now. Exploration activity throughout the continent was largely on hiatus in 2015, and if oil prices remain low through 2016, this trend is almost certain to continue. The drop in exploration activity is a result of reactionary budget cuts, as operator profit margins have become increasingly strained due to the still-falling oil prices. Such was the case for Total, an operator that spends a third of its total investments on the African continent. “The impact of the low-priced oil environment currently is that we have started the project of strong cuts and reduction of costs,” Benoît Ludot, Vice President Drilling & Completion for Total Exploration-Production, said.

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Shale won’t replace deepwater, but offshore industry must reengineer value chain to reach economic parity with onshore

Chris Beckett, CEO, Pacific Drilling

We noticed signs of weakness and a relative lack of contract availability as early as Q2 or Q3 of 2014. The ultra deepwater-focused companies were already considering how deepwater economics were challenged at $75-$80 per barrel price. As a result, we had seen a lot of our clients take a pause in exploration activity, but obviously, it’s gotten worse since 2014.

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2016 IADC Officers

IADCLogo

Thomas Burke was appointed Chief Executive Officer and elected a director of Rowan Companies in April 2014. He served as Chief Operating Officer beginning in July 2011 and was appointed President in March 2013. Dr Burke first joined the company in December 2009, serving as Chief Executive Officer and President of LeTourneau Technologies until the sale of LeTourneau in June 2011. From 2006 to 2009, Dr Burke was a Division President at Complete Production Services, an oilfield services company, and from 2004 to 2006 served as its Vice President for Corporate Development. Prior to that, he worked at McKinsey & Company and Schlumberger.

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Critical issues in drilling & completions

DC-DefaultGraphics-D&C-News

It’s a tough time to be in the drilling business. We always knew this was a cyclical industry, yet the consistently high oil prices over the past decade – save for the 2008-09 economic blip – had shoved any thoughts of a real market collapse far into the back of our minds. Initial optimism that there would be a quick recovery to this cycle has also waned, with many adopting the attitude of “lower for longer.” For most companies, the focus has shifted considerably toward cost reduction. Operators are cutting back on exploration and zeroing in on core assets, and drilling contractors are faced with significantly lower dayrates and the difficult decisions of warm stacking, cold stacking or even decommission

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Improved techniques, mixing units can minimize crew exposure to caustic soda on drilling rigs

Many companies in the drilling industry still use traditional techniques for mixing caustic soda. This includes using 55-gal barrels with connected paddles to facilitate the mixing operation. Some drilling companies, however, have upgraded their units by adding an electrical motor for agitation purposes, instead of using manual handles.

Hazardous substances cause 74,000 work-related deaths in EU countries each year. This indicates that more people die from dangerous substances than from workplace incidents. Caustic soda is one of the hazardous substances. A significant number of employees are away from work due to caustic soda skin burns, which can take weeks or months to heal.

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Safety goes hand in hand with performance, must remain top priority even in difficult market

GaryJones

Gary Jones is Head of Global Wells Organization of BP. What do you see as the most critical challenges facing the upstream oil and gas industry right now? The number one priority is to keep improving safety. It’s a very difficult economic environment right now, but we find that the same factors that contribute to strong safety performance also lead to strong performance in all aspects. We need to think about how we can work smarter together to take out waste from the system. We also need to think about how to encourage new talent to come into the industry w

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Opportunities to lower costs will abound if service companies are engaged at design phase, allowed to leverage expertise

Guy-Arrington

We did not need the decline in oil prices to know that the E&P companies’ investments were growing faster than commodity prices. There was no way that rate of investment could continue, and something had to change. All the downturn did was provide the push for all of us to move more quickly to confront this issue, so that’s what we’re doing now. The biggest challenge today is addressing the cost concerns for operators and ourselves. The profitability of the industry as a whole, and the service companies in particular, depends on the way we work together, adopt new technologies, learn from other industries and align our technical and commercial interests.

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Times are tough in unbalanced market, but industry should recognize, prepare for increasing volatility as the new norm

Trent Latshaw, President, Latshaw Drilling and Exploration Company

What do you consider to be the biggest challenges that drilling contractors face at the moment? The biggest challenge is simply rig rates. During downturns like this, just trying to stay alive and make it to the other side of this cycle is the No. 1 concern. Aging rig equipment may be an issue with some companies but not with us. About 99% of our rigs have been built new since 2006. Do you think the fundamentals of the industry are still good?

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Drive for efficiency must continue but comes with costs, may require industry to rethink how it drills and does business

NielsEspeland

Industry needs to find balance point where all stakeholders can achieve safe, sustainable operations, retain critical focus on people By Linda Hsieh, Managing Editor Niels Espeland is President, International, at Grey Wolf Drilling International, the international arm of  Precision Drilling. Mr Espeland also serves as IADC Division VP International Onshore and is a member of the IADC Executive Committee. From your perspective at Grey Wolf, what are the most critical issues that the industry is facing right now? We have an oversupply of oil driven by efficiency gains, high oil prices for several years and increased unconventional production in North America. At the same time, we have seen stagnation in demand and growth. If you look at other commodities like ...

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