Thread: Oil projects idle, supply of gear & staff runs dry

GLOBAL CAPITAL
Oil Projects Idle as Supply of Gear, Staff Runs Dry
A global shortage of drilling equipment has stalled production in Colombia. Delays of more than a year are common.
By Chris Kraul and Elizabeth Douglass, Times Staff Writers
September 9, 2006


BOGOTA, Colombia — Deep beneath the Caribbean Sea lies an oil field so promising that it could reverse this country's six-year slide in petroleum production and ease its economic problems.

But no one can get to the crude.

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A global shortage of oil-patch equipment has caused a two-year delay in plans by Petrobras to drill wells that would confirm early test results on the vast Tayrona field. The Brazilian company manages the site off Colombia's Caribbean coast.

"The bottleneck is certainly delaying Colombia's energy development," said Petrobras' Colombia chief, Dirceu Abrahao.

David Stangor, president of Occidental Petroleum Corp.'s operation in Colombia, added: "Prices for oil-field services and goods have steadily ratcheted up, as have delivery times." The Westwood company also has ramped up oil exploration here.

The drilling rigs, seismic equipment, technical personnel and other necessities of oil exploration have become so scarce that Colombia and other oil producers are being forced to idle key oil projects until they can scrape together the machinery and staffing. Hold-ups of more than a year are common.

"We're short supplies, people and equipment," said Claude W. Thorp, vice president at Collarini Associates, an energy consulting company in Houston. "It's a function of some significant down cycles in the last two or three decades, and of not enough young people coming into the industry. Suddenly we've got a booming, exciting industry with a lot of work to do."

More work is on the way too.

Last week, San Ramon, Calif.-based Chevron Corp. said a test well in the Gulf of Mexico proved there were vast oil reserves retrievable from ancient formations in deep-water regions of the U.S. Gulf — an area where dozens of companies have pending projects that could now move to the front burner.

The burst in demand for oil-field services and equipment was brought on by a three-year rise in oil and natural gas prices and the realization that worldwide supplies would be stretched for years by surging demand in developing countries such as China and India, as well as in the United States.

The demand leap came after two decades of declines in some kinds of equipment. An industry that had more than 4,000 drilling rigs operating in 1981 now has well below half of that to cover both oil and natural gas projects around the world. More than 100 new rigs are being built or are on order today, said Tom Kellock, head of consulting and research in the Houston office of ODS-Petrodata, a company that tracks rig activity.

"We had a 15-year period of relatively low activity, so the industry shrank down," said Bill Severns, senior consultant at Global Insight Inc.

A rash of mega-mergers among Western oil companies also gutted the workforce. Since employment peaked in 1981, the industry has dumped more than two-thirds of its employees, dropping to about 500,000 from about 1.6 million.

The shortages apply not just to offshore platforms and on-land drilling rigs but all manner of hardware. Raw materials such as steel are at a premium.

"We've heard all kinds of comments about the cost of steel. They find themselves competing with the factory developments in China or bridge-building in India," Severns said.

There's an acute shortage of ships outfitted to carry out offshore seismic studies, reports WesternGeco, a unit of New York-based Schlumberger that specializes in seismic data gathering and analysis and that is working for Petrobras in Colombia. WesternGeco owns 13 of the 60 ships worldwide that can perform the work, and all are booked for the next six months.

"The market will be more in balance in 2008 or 2009," said WesternGeco's Alex Almeda by telephone from Rio de Janeiro. The company has two ships under construction in Scandinavian shipyards.

Countries such as China, which just received an order from Venezuela's state oil company for 13 oil-drilling platforms, are rushing to fill the gap. But building the equipment takes time and money. For now, leasing an offshore oil platform can cost more than $400,000 a day and require a multiyear commitment.

To drill the Gulf of Mexico test well, Chevron paid $216,000 a day to lease Transocean Inc.'s Cajun Express drilling rig, a fee that will rise to $460,000 a day from 2007 through 2010.

Transocean, the world's largest offshore drilling contractor, is at the center of the rig crunch. It has a more than $20-billion backlog of rig leasing contracts — an industry record, spokesman Guy Cantwell said.
http://www.latimes.com/business/la-fi-c ... e-business

Globalization and killing off our work force and manufacturing, will and is, coming back to bite them!?

Oh Good Grief....you mean to tell me this wasn't planned?

Well, get the American Steel Factories OPENED NOW. Get the Steelworkers on the phone, get the Shipbuilders on the phone, get the Oil Riggers in OK, MO, and TX on the phone and GET BUSY.

For cryin' out loud.

What do these oil industry execs do all day long anyway? Sit around their plush office and restaurants and jets with their thumbs up this butts?

Apparently.



(They are all grossly overpaid in my book. Did you see that gang of oil execs at the gouging hearings in Congress after Katrina? They looked like a bunch of mafia thugs and frankly didn't speak any more intelligently. All they could say was that "I don't know. There's no way for us to know. We can't predict. We don't control."

The fact is you do know, you can predict, and you control the whole friggin' world.

Now you overpaid Jerks go earn your money and create some jobs...in America....or we'll start buying sugar cane from Brazil to fuel our cars and heaters.