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Fear of spending hurting E&P Fear of spending
hurting E&P
O
IL COMPANIES CONTINUED RELUCTANCE TO
open their wallets to new exploration
spending is proving to be a more pressing
question for the offshore industry than
the ultimate cost of financing future E&P,
to judge by panelists remarks at OTCs
Energy Roundtable on Financing
Offshore Exploration and Production:
How Much Will It Cost?
There is plenty of capital out there [for
future exploration and production], said
Wood MacKenzie senior vice president
Simon Frame (pictured), but we might
question the industrys willingness to
spend it.
The spending in question is to find
reserves to replace those being drained
by world demand that continues to grow,
spurred mainly by the expanding
economies of emerging nations and led
by the likes of China and India.
Most new reserves, said panel
moderator, Institute Français de Petrole
chairman and CEO Olivier Appert in his
opening remarks, will have to come from
offshore, much of it from deepwater.
Appert cited two major challenges in the
coming decade besides demand growth
including the debate over the timing of
peak production and the affects of
burning hydrocarbons on the
environment.
As there are no real alternatives to
fossil fuels, or in the foreseeable future,
he said, if oil supply was to peak in the
next decade it would be catastrophic for
the economies so reliant on them.
Tom Petrie, CEO of Petrie, Parkman &
Co, weighed in on future pricing for oil
and gas, saying quite clearly oil will be a
large part of the energy equation
through the first half of the 21st century.
And, he added, while London-based
magazine The Economist has gone from
declaring the world awash in oil in 1999 to
declaring the end of the oil age in 2003,
the truth is somewhere in between.
We are in the high hanging fruit mode,
he said, referring to the fact that most of
easy to find and drill reserves had been
captured. So the mid-cycle [pricing
model] for around $20/bbl is unrealistic
and price stability should be around
$50/bbl, give or take about $3/bbl.
Dan Pickering, president of industry
analyst Pickering Partners, said the
industry is facing four distinct challenges
in its quest to meet the worlds growing
oil thirst including physical assets
primarily rigs, people, technology and
access to new acreage. Offshore rig
utilization rates are about 85% at the
moment, he noted, with about 6% warm
stacked (in preparation to work) and 9%
cold stacked (theoretically available).
Moreover, he said, since available rigs
are all at work in viable markets, it is
unlikely they would move from their
current locations. Further complicating
matters, Pickering added, is the by now
familiar demographic issue of an aging
and dwindling workforce, where SPE
members over 55 years of age outnumber
those under 40 as young professionals opt
for other industries. And though
improved technology has allowed the
industry to produce more oil per worker
in recent years, the problem persists.
The issue of access to new acreage has
been complicated in recent years by the
fact much of the best potential areas for
exploration are in the hands of
national oil companies who, Pickering
said, do not have the same agenda as
consumers.
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OTC .05 SHOW REVIEW
OTC .05 SHOW REVIEW
OTC .05 drew a 20-year record high of 51,320
par ticipants from 110 countries to Houstons
Reliant Center last month.
New technologies and new ideas to sustain
the growth of the industr y over flowed,
enthused conference chairman Rod Allan
(pictured), director of technical ser vices in
Transocean Offshores Eurafrican unit.
Industr y leaders gathered in sessions
focused on the future of financing the offshore
oil and gas industr y to meet the worlds
increasing energy demands and on recruiting
personnel to replace the aging workforce, he
added. Those who par ticipated in these
sessions took par t in creating
histor y some of the
industr ys brightest minds
discussed ideas that will
define the course of the
industr y during the next
decade.
OE writers were on hand
to capture the mood and some of the
highlights of a conference themed: A sea of
resources an ocean of knowledge. The next OTC, scheduled for 1-4 May 2006
will have as its theme: New depths. New
horizons. (www.otcnet.org/2006)
ISSUES JIP runs the rule
over riser integrity
DNV
HAS RESPONDED TO RECENT SPILLS AND
riser failures with the launch of a joint
industry project aimed at developing a
recommended practice on riser integrity
management. The JIP is supported by
five oil and gas majors, seven specialist
companies and the major regulatory
bodies.
An integrated lifecycle integrity
management approach for riser systems
is cost beneficial and an integral part of
good technical and business risk
management, said Knut Ørbeck Nilssen,
DNVs technology director.
The new recommended practice will
cover top tensioned risers (TTR), steel
catenary risers (SCR), flexibles and
hybrids, addressing both existing and
new risers for both shallow and
deepwater.
In developing the new recommended
practice, realistic riser integrity
management case studies for various
riser-floater concepts and different
environmental conditions will be used,
for example TTR in the Gulf of Mexico,
SCR in West Africa, riser towers in
generic deep waters and flexible risers in
the North Sea.
The motivation for focusing on riser
integrity management comes from the oil
and gas industry itself, noted Nilssen.
Production is moving to deeper waters in
new areas, and experience of operating
under new conditions is limited. The lack
of both validated and proven
instrumentation strategies for deepwater
risers and real-time data can significantly
increase the risk of critical riser
components failing.
US indies stay
the course
I
NDEPENDENT OIL AND GAS OPERATORS IN THE
US Gulf of Mexico have had a hand in the
vast majority of E&P efforts of the past
50 years and intend to remain at the
forefront of E&P and innovative
applications of new technology.
Independents, it was pointed out at an
OTC panel session, hold 90% of the shelf
leases issued in the US Gulf between 2000
and 2004 as well as more than 75% of the
deepwater leases. They are active in
water depths from a few feet to nearly
10,000ft of water.
The consensus of a group of chief
executives of the regions leading
independents is that the industrys
smaller operators will continue to
aggressively seek prospects, either
through their own E&P efforts or by
farming into blocks held by other
companies, including expiring deepwater
acreage that may be held by majors but is
viewed as low development priority.
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OTC .05 REVIEW
ISSUES
Subsea tiebacks
boldly go
T
HE LOW
-
HANGING FRUIT
is quickly dwindling
offshore and the
limits of conventional
subsea completion
technology are being
tested by ever longer
tiebacks and deeper
water and that means increased
risk, reliability questions and higher
capital and operating expenditures.
So said Intec Engineering CEO John
Reed in his keynote to an OTC .05
Topical Luncheon.
Conventional offshore technology
also is reaching its limit of
deepwater application, stated Reed
(pictured), speaking to the topic
Innovative approaches to gathering
systems for producing wells in
deepwater. He said the industry
needs a new development concept
that effectively incorporates the use
of existing floating systems while
opening new avenues for the ultimate
production goal: production from
subsea systems directly to shore.
To make the most of long distance
delivery management, certain
technologies currently on the
drawing board or in early stages of
commerciality must be perfected.
And to take advantage of the
concepts offered by subsea tiebacks,
ultimately to shore, added Reed, they
must be available, maximize return
on existing infrastructure, and less
expensive and safer than existing
options.
Technologies whose perfection may
prove key to the continuing
expansion of subsea tieback lengths
and depths include multiphase
pumps, subsea compression,
electrical flowline heating, subsea
separation, control buoys, power
boosting for long umbilicals and
subsea power generators, said Reed.
Testing time
for UKCS
S
COTTISH
E
NTERPRISE
and One North East
are giving financial
backing to Subsea UK
to carry out a major
study to size up the
need for a National
Subsea Test Center
that would serve as a portal to bring
new subsea technology to market and
pave the way for future subsea
developments on the UK continental
shelf. The study has as its mission to
provide a strong regional and
national picture of Britains subsea
business clusters and their present
and coming testing requirements, as
well as recommending prime
locations for a center and proposing a
preliminary budget.
The need for a wide-ranging subsea
test center has been the subject of
debate for many years, stated Subsea
UK chief David Pridden (pictured).
We now have the opportunity to
ass