Posted on 06/01/2012 4:25:23 AM PDT by Recon Dad
Two headline-grabbing oil prospecting failures in the past week offer a fresh reminder of the high-stakes gamble that is offshore drilling. First, an exploration well drilled at Anadarko Petroleum Corp.s Spartacus project in the Gulf of Mexico turned up dry. The company admitted the defeat on May 23, after reportedly sinking about $20 million into the project. Then, Spanish oil firm Repsol said it would be leaving Cuban waters after its first attempt to find oil off the northern coast of the island nation was a bust. Repsol first acknowledged the dry hole on May 18, after spending plenty of political and financial capital (about $100 million) to drill the exploratory well. Such failed bids for oil in deep Gulf waters arent uncommon. After all, by some estimates, just one out of every three to four exploratory wells drilled in deep Gulf waters hits pay dirt. And some analysts say the success rate is much lower, particularly in frontier regions, with sometimes as few as one out of every nine wells turning up oil. Oil companies count on their successes, however rare, to help recover losses from the dry holes hey drill along the way. The poor odds remain despite advancements in seismic research, computer modeling and geophysical surveys that have made it easier for oil companies to predict what lies thousands of feet below the sea bed. A drilling superintendent for Chevron told The Houston Chronicle in 2010 that even with plenty of preparation and geophysical survey data, drilling was a big gamble. You can do all the planning you want, Tom Jones said at the time. But theres only one way to find out, and thats to drill a well. In the case of Cuba, other companies may be willing to take the risk and explore in waters near Repsols unsuccessful well. At least one other firm the Malaysian state-owned oil company Petronas, is expected to drill in nearby waters with the same rig Repsol used. Two headline-grabbing oil prospecting failures in the past week offer a fresh reminder of the high-stakes gamble that is offshore drilling. First, an exploration well drilled at Anadarko Petroleum Corp.s Spartacus project in the Gulf of Mexico turned up dry. The company admitted the defeat on May 23, after reportedly sinking about $20 million into the project. Then, Spanish oil firm Repsol said it would be leaving Cuban waters after its first attempt to find oil off the northern coast of the island nation was a bust. Repsol first
Financial risk in the oil business? Who knew?
For the Deep Water Gulf of Mexico, this article is off by a factor of x10. Rig-related charges can be upwards of one million dollars per day. A very recent dry hole drilled in the Green Canyon protraction area of the Gulf was around $300 million plus the cost of acquiring the lease. Regulations added since the Macondo incident have significantly increased drilling charges by about 20 percent. These increases in drilling costs will eventually be passed on to consumers through increased gasoline prices.
Is it unfair to give tax break to an oil company that allows that oil company to recover dry hole expenses from oil produced on a successful well before taxes are collected on that successful well? Because that is what Obama is saying about the oil companies when he goes off about big oil having unfair tax breaks and not paying their fair share. There was another well recently drilled in the Gulf of Mexico that cost over $360 Billion and no oil was found.
Is it unfair to give tax breaks to an oil company that allows that oil company to recover dry hole expenses from oil produced on a successful well before taxes are collected on that successful well? Because that is what Obama is saying about the oil companies when he goes off about big oil having unfair tax breaks and not paying their fair share. There was another well recently drilled in the Gulf of Mexico that cost over $360 Billion and no oil was found.
I guess we’ll know when GM writes off the development and tooling costs of the Volt...
“...US oil companies expected to invest $200 billion in their business over the next few years...”
The fact that this translates into employment and energy independence is lost on most Liberals.
I am not any sort of expert on this but the 200 Billion actually seems conservative.
So much is involved and not the least of which would be insuring rig workers who are employed in the most dangerous environment I can think of.
I did a little flying for Chevron’s exploration in Southern Sudan back in 1980. I was told they spent $4 Billion on exploration, only to loose it all due to the war.
I’d heard that the Chinese came in and profited from Chevron’s work.
And all that I can see that has been accomplished by all the hand wringing and drama by oblabla and Saladbar is cost and confusion. I honestly can’t say that things are one bit safer but costs have certainly gone up by AT LEAST 20% and probably more than that.
Permits are still eeking out and it takes forever to get one. Some of the conditions are just downright foolish.
The events since BP screwed the pooch have been nothing but a show trial, grandstanding and punishment of the oil industry and ultimately the public.
oblabla is not the ideologue he is the power monger. He uses the ideologues to get and keep his power. I think he could care less about their causes. What he really cares about are his power, his luxury and his bully pulpit to punish the people he hates... whites first Americans second. oblabla is not an ideologue he is a nihilist, obalbla is not really for anything, he is against anybody that is not him. He hates anybody that is not him. Maybe his is really a hate monger.
Today, the stock market continues to crash. Our hard earned and meager retirement savings are disappearing along with our jobs. For the first time ever I see it does not matter and reaffirm we are powerless at this minute to do a thing about it. If oblabla wins in November we will lose massively and the our savings won’t matter one whit. If he loses we may be on the way to growth but the destruction will not have been completed... we will have to go through yet another crisis and struggle. I do not think a battle between right and wrong will be avoided and I don’t think the last three years are the worst we will see.
The Chicoms are all over the place throwing their money around. The good part is they are wasting a lot of it.
I could be wrong but I believe the $200 large was to be spent by them here in this country.
I got the $600 K number from another article on offshore drilling...
In March, Nobles Max Smith was awarded a three-year contract with Shell offshore Brazil that will generate $407,000 per day (including a 15% performance bonus). The 7,000-foot rated, fourth-generation, semisubmersible will commence work in December 2012.
Elsewhere, Transoceans 36-year old Discoverer Seven Seas, a 7,000-ft drillship, signed on with ENI for a three-well contract in Indonesia at $445,000/d beginning in May 2012. Analysts had modeled rates for the Transocean unit in the $385,000 range. The floater had a storied history following its commissioning in 1976 as the most advanced drillship of its time. The unit set a number of depth records, including several for Shell in the Gulf of Mexico (GOM) before being surpassed by newer higher-spec units.
A driver behind the recent inflection point for midwater or lower-spec deepwater rig rates is the rapidly diminishing visibility for UDW unit availability. That intensifying dynamic prompted Morgan Stanleys Ole Slorer to project a super spike in rig rates to greater than $700,000/d for UDWs.
Over the next 12 months, true UDW availability is down to three units while third-generation/fourth-generation availability stands at 25 units. With requirements for 30 floaters over the same period from current firm tenders alone, we see a short squeeze playing out over coming quarters, Slorer wrote in an early March research report.
Separately, Barclays Capital has identified 12-marketed deepwater units rated from 5,000 to 7,499 ft with some availability in 2012, including four that belong to Transocean.
Not the idiots running this country right now. Let’s hope there’s a change in management come November.
Welcome America to Communism and all the perks and benefits associated with it!
Consider Romney’s net worth is $250 million, the cost of one dry hole in the Deep Water Gulf of Mexico.
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