# rumour offshore industry



## david freeman

the scuttlebut , is that times is getting hard, around the globe for those connected with the offshore oil and gas and its supply industry??? any truth in this? or is it just natural shrinkage of an old industry??? curious, I do not mean to pry!(Cloud)


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## Satanic Mechanic

Worst recessions in oil gas and shipbuilding I have ever seen


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## slick

All,
As i read it the Market now drives the price of Oil, not OPEC....
Yours aye,
slick


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## Satanic Mechanic

Hmmm - not sure about that - this downturn has got a great deal to with OPEC and a good few others as well


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## Duncan112

Upstream investment is picking up slightly but a lot of major projects are being delayed for trivial reasons at the do***entation stage that would have been brushed under the table 18 months ago. I am thankful that the majority of my work comes from Aramco who are still spending a bit.


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## D1566

david freeman said:


> the scuttlebut , is that times is getting hard,


Times is got hard already.


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## 5036

There are several factors. The amount of oil found as technology, skills, equipment and areas defined as interesting have ballooned, we currently have potentially over 2000 years of oil available with every company and nation involved trying to get cash for their asset. The Saudis produce not just to keep their share but if they cut back production or stop producing from an oil well, the reservoir drive, or momentum, is lost and because their oil is particularly viscous a recovery rate of only 8% is not unknown,(92% left in the ground) they potentially leave a large amount in the ground.
Add to that Iran who are out of sanctions and produce 500,000 barrels of oil a day in their desperation to get dollars and US shale oil turned on as soon as the price goes above $50 dollars a barrel, then that s where the price will stay for a long time to come. This has had a huge detrimental effect on the North Sea bringing to and end many mature fields, even the mighty Brent.
Interestingly, the UK has produced 45 billion barrels in forty years but the biggest discovery recently is under Gatwick airport where an oilfield has been discovered that is five times the size of the Brent field. It has a total oil in place of 117 billion barrels with a recovery rate of only 15% but that will give better than 15 billion barrels of recovered oil with no oilrigs, platforms, accommodation vessels, diving ships, helicopters, three crew rotas, subsea pipelines. It will cost around $30 per barrel to produce. This follows a reappraisal of the south coast geology and this area of the UK will be the new oil bonanza.


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## James_C

nav said:


> There are several factors. The amount of oil found as technology, skills, equipment and areas defined as interesting have ballooned, we currently have potentially over 2000 years of oil available with every company and nation involved trying to get cash for their asset. The Saudis produce not just to keep their share but if they cut back production or stop producing from an oil well, the reservoir drive, or momentum, is lost and because their oil is particularly viscous a recovery rate of only 8% is not unknown,(92% left in the ground) they potentially leave a large amount in the ground.
> Add to that Iran who are out of sanctions and produce 500,000 barrels of oil a day in their desperation to get dollars and US shale oil turned on as soon as the price goes above $50 dollars a barrel, then that s where the price will stay for a long time to come. This has had a huge detrimental effect on the North Sea bringing to and end many mature fields, even the mighty Brent.
> Interestingly, the UK has produced 45 billion barrels in forty years but the biggest discovery recently is under Gatwick airport where an oilfield has been discovered that is five times the size of the Brent field. It has a total oil in place of 117 billion barrels with a recovery rate of only 15% but that will give better than 15 billion barrels of recovered oil with no oilrigs, platforms, accommodation vessels, diving ships, helicopters, three crew rotas, subsea pipelines. It will cost around $30 per barrel to produce. This follows a reappraisal of the south coast geology and this area of the UK will be the new oil bonanza.


To bring some facts to the above rather than hyperbole, the better estimates reckon only as much as 15% of that field will be recoverable (circa 15 billion barrels). 
The next problem is that a huge tract of it is under either populated areas or green belt land. The environmental battle to actually begin extraction will be immense, with potentially many, many years of public inquiries and the like. 
Then there's the immense legal minefield of who actually owns any oil extracted - the license holder, or the person under whose land the oil is extracted.
There's a fair to even chance that very little of it (if any) will be extracted at all.


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## Duncan112

Ownership is vested in the Crown under the Petroleum (Production) act 1934, as to the extraction, once it becomes necessary any legal obstacles will be overcome - recovery techniques are improving all the time, in 10 years 15% may well become 25%,


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## BobClay

There seems to be little doubt the god loves the southeast of this country.. or could it be the other guy with the horns ? :sweat:


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## McCloggie

I have worked in the industry all over the world since the 1980s and although I have seen price crashes before, this downturn is probably the worst. The difference is that while previous downturns have been due to expainable market forces, this one is due primarily to the Saudis ramping up production to try and knock shale prduction down. The rehabilitation of Iran is another contributory factor.

It is not just the North Sea that suffers - Kepple shipyard has four FPSOs in at the moment but these will be completed by the end of the year and after that who knows where the next one will come from.

Any company basing a project on a lifting price of 80 plus USD a barrell would have been taking a major risk and my experience is that a 50 USD price over field life seems to have been used. That being the case, we are seeing some stabilisation. The problem however is that this current price must be seen to be stable and even if a company decides to go forward with a project from the first development phase today, you will be looking at 18 months to two years before even a FEED (Front End Engineering Design) study would be tendered.

In the meantime OPEX costs will continue to be reduced, maintainance will be cut back and cheaper solutions will be considered. Those companies that have aging FPSO assets which inevitably will require dry docking, Class Surveys etc. will be looking at potential costs and loss of production against against future returns.

On top of this, the offshore shipping markets appear to have crashed and construction barges, specialised vessels and indeed FPSOs are being laid up or scrapped.

All in all, I am afraid that it remains a pretty bleak picture.

McC


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## Satanic Mechanic

As McC says. 

Some ridiculous things going on, the Korean shipyards are in real trouble with a number of drilling assets just being left at the jetty.

There is also a frequently cited opinion that there is another more shadowy reason / desirable side effect of this price , it is seriously hurting Russia, who have been in a lot of people's sights since Crimea


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## chadburn

McCloggie said:


> I have worked in the industry all over the world since the 1980s and although I have seen price crashes before, this downturn is probably the worst. The difference is that while previous downturns have been due to expainable market forces, this one is due primarily to the Saudis ramping up production to try and knock shale prduction down. The rehabilitation of Iran is another contributory factor.
> 
> It is not just the North Sea that suffers - Kepple shipyard has four FPSOs in at the moment but these will be completed by the end of the year and after that who knows where the next one will come from.
> 
> Any company basing a project on a lifting price of 80 plus USD a barrell would have been taking a major risk and my experience is that a 50 USD price over field life seems to have been used. That being the case, we are seeing some stabilisation. The problem however is that this current price must be seen to be stable and even if a company decides to go forward with a project from the first development phase today, you will be looking at 18 months to two years before even a FEED (Front End Engineering Design) study would be tendered.
> 
> In the meantime OPEX costs will continue to be reduced, maintainance will be cut back and cheaper solutions will be considered. Those companies that have aging FPSO assets which inevitably will require dry docking, Class Surveys etc. will be looking at potential costs and loss of production against against future returns.
> 
> On top of this, the offshore shipping markets appear to have crashed and construction barges, specialised vessels and indeed FPSOs are being laid up or scrapped.
> 
> All in all, I am afraid that it remains a pretty bleak picture.
> 
> McC


Along with Brazil now telling Shipping Companies working their new offshore oilfields that they have to employ comparable Brazilian flagged vessels and cancelling the permits of the non Brazilian flagged which is now leading to another round of pay cut and redundancy talks certainly with at least one Company.
It certainly is a bleak picture.


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## Roger Harrison

A Good Barometer is in the offshore Supply Vessel business.
Estimates are that 30% of the worlds fleets are laid-up - with several hundred new-builds coming onto the market in the next 12 months to further de-stable the market. One operator previously with 15 vessels working offshore Australia now have zero vessels here. Another HK/Singapore operator is down to 4 vessels from 15 - all seriously affected as GORGON nears completion.

Anyone owed money by Offshore operators needs to watch them closely. 
I have one with unpaid invoices since January - could well be threatening arrest come July 1st. Tough times indeed

TRH

.


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## sam2182sw

Rig boats laid up all over the place 7 in Hull. and more in others ports around Eugland. sam2182sw


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## D1566

nav said:


> It will cost around $30 per barrel to produce.


Not quite as good as you might think; our major North Sea producer is costing around half that.


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## Ray Mac

sam2182sw said:


> Rig boats laid up all over the place 7 in Hull. and more in others ports around Eugland. sam2182sw


According to Westhouse Offshore, around 100 vessels laid up in North European ports.


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