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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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Onshore drillers pull all available cost levers to economize wells

Precision Rig 580, drilling in the Niobrara Chalk, is a 1,500-hp rig with a maximum drilling depth of 20,010 ft.

Even at the end of 2015, there had been some small hope that there would be a slight recovery in oil prices by mid-2016, lifting onshore drilling activities somewhat higher later in the year. However, when oil prices sank below $30/bbl in January, such optimism faded. Instead, the fall further motivated cost-reduction efforts across the industry. Operators were pressured to continue cutting back on their rig count and to seek additional ways to enhance efficiency throughout the well construction process. Drilling contractors appear to be ridding themselves of older rigs and directing resources toward maintaining their newer, high-spec assets.

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Competition for rig work ratchets up in Asia Pacific

The Opus Tiger 1 has completed sea trials and is currently located in Shanghai. The rig can operate in water depths ranging from 300 to 5,000 ft and can drill to a maximum depth of 32,800 ft. The rig is part of Opus’ strategy to focus on the midwater drilling market.

As oil prices fell to less than $30/bbl earlier this year, the associated reduction in rig demand severely stressed drilling contractors worldwide. The Asia Pacific was no exception. “It has been relatively quiet,” said Yun Yun Teo, IHS Petrodata’s Principal Analyst for Rigs, Asia Pacific. “I don’t think we are going to see that 2016 will be much of an improvement over 2015. In fact, it will probably be worse.” For example, although operators in the Asia Pacific normally send out multiple new rig tenders during the winter budget season, this time around drilling contractors saw “only a handful,” Ms Teo said.

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Beyond ROP: Industry taking systems view to drilling optimization

Interpretation of downhole data is a key focus at Weatherford, which recently established a global Drilling Engineering and Optimization group to ensure consistency and best drilling practices in addressing downhole issues, such as torque-and-drag and stuck pipe. Improvements in sensors to capture high-frequency downhole data have enabled the industry to move from recording one data point every five seconds to 1,000 samples per second.

Optimized drilling once meant drilling farther and faster to achieve high rates of penetration (ROP) using efficient, cutting-edge technologies and approaches like pad drilling. Today, with oil prices remaining low, that need for speed has given way to a more balanced approach, with operators taking a step back and a wider view of downhole drilling optimization.

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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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2016 Chairman: IADC to sustain engagement with public, regulators

In recent years, Rowan has expanded into the ultra-deepwater sector with the construction of four state-of-the-art drillships, including the  Rowan Resolute.

When someone graduates with a DPhil (PhD) from the University of Oxford, a typical career choice might be to go into academia, or perhaps a research institute. But Tom Burke is not a typical guy making typical career choices. Instead of following such traditional paths, he decided to go offshore and work on drilling rigs. He didn’t have family in the business, and the year was 1994 – a difficult time in the drilling industry.

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Raising the sand bar

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In virtually every well worldwide, operators have to contend with some degree of sand production, a phenomenon that more often than not leads to erosion, sand accumulation, plugging, formation collapse and contamination. These issues have serious financial, safety and environmental implications for operators, often resulting in clean-outs, reduced flow rates and production, and unplanned shutdowns.

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Dayrates are down, but rig count remains steady in Middle East

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While a downward trend in activity and rig count has been observed around the world in response to the oil price slump, the Middle East appears to be bucking this trend. According to numbers from Baker Hughes, the Middle East’s rig count has averaged 404 to date in 2015. That’s nearly the same as the region’s average rig count of 406 in 2014 and up from an average of 372 rigs in 2013.

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Pressures mount as industry goes deep into survival mode


The upstream oil and gas industry has gone into survival mode, and analysts appear to agree that things are going to get worse before they get better. With low and volatile oil prices leading to more and more postponed drilling projects and lower and lower rig counts, operators, drilling contractors and service companies alike are cutting costs wherever possible. However, it’s the drilling contractors and service companies that have bore the brunt of these reductions, and analysts are urging the industry to increase collaboration to reduce costs in a balanced manner.

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Geopolitical concerns cloud short-term global oil forecasts


Geopolitical developments, including China’s economic slowdown, the Iran nuclear deal and the potential lifting of the US ban on crude exports, will likely continue to be factors that prevent the oil price from recovering significantly in 2016. The effect these developments will have on the global oil supply and demand balance is unclear, which only adds more uncertainty to an already unpredictable market. “The level of volatility has increased substantially,” said Sam Ori, Executive Director of the Energy Policy Institute at the University of Chicago (EPIC). “That’s being driven by real uncertainty in the fundamentals of the oil market.”

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