Chevron exec sees ‘new normal’ in deepwater Gulf, analyst says

Drilling activity in the deep water Gulf of Mexico, though still not back to levels seen before the BP spill,  may represent a “new normal” for the U.S. offshore region, said George Kirkland, a senior vice president at Chevron Corp., according to an analyst report today from Deutsche Bank.

The prediction came in a meeting in Boston with the investment bank and as tougher safety and environmental regulations enacted after the deadly Macondo well blowout in April 2010 continue to slow the pace of new drilling permits, forcing producers to scale back exploration programs.

Amid the slowdown, some smaller players, including Murphy Oil, have weighed exiting the deepwater Gulf amid the slowdown and rising operating costs in the region.

This could be a good thing in the short run for oil majors like Chevron, as it would lessen competition, reduce service costs, expand exploration opportunities and crimp oil supplies, boosting prices, Deutsche Bank analysts said.

But such a situation would likely prompt the U.S. government to intervene with less onerous regulations, they said.

Thirty-three deep-water drilling rigs were idled when the Deepwater Horizon drilling rig exploded, killing 11 workers and triggering a massive oil spill. Since then, nine have departed the Gulf for contracts elsewhere.

Today, the deepwater drilling rig count — that is, rigs that are actually drilling, rather than doing plug-and-abandonment work or other workover activity — is at 60 percent of levels seen before the accident, according to oil field services firm Schlumberger.

5 Comments

  1. anonymous CHAD

    Finally! After reading so many news articles claiming “the rig count is UP” I get to read one that reflects what I see going on around me for real in the business! Sure “the rig count is up” but these rigs aren’t being used to drill exploratory or production wells. They’re basically doing maintenance work. This is why all my oil brethren aren’t finding decent-paying jobs in Houston! There are none to be had!

    Until the Democrats are run out of town in the next election and Republicans lift the regulatory activities which have stymied the oil business… we’re stuck. The Obama administration claims we’ll power our world on things like “wind-power” but the hot air coming out of the nation’s capital and that administration isn’t doing a very good job of that so far! Let’s all tell the Dumb-o-crats to go hug a tree and leave our industry alone.

    #1
  2. txloanguy

    Does anybody wonder why offshore production is predicted to continue to decline when there are so many fields that we can explore and produce from? Why does the Obama Administration block our attempts to be oil dependent? Does that make the alternative energy projects they are backing look feasible and less a waste of our money than it seems? Why is Obama against our economic prosperity?

    #2
  3. hgnis

    The new normal is slim to no new activity unless you are rubbing shoulders with POTUS. End of story.

    #3
  4. 42

    One thing is due you really leave it to corporation for there safety? What if another one blows up? This rig and many others from what I have been told operated the same way. Yet your griping about drilling away. I say safety first. When the oil spills onto the coast your ruining the fish industry and tourism in states like florida. Just ask Louisiana. Open the rigs back up will not help are current economic state, it goes beyond the gulf. It would just help Texas and LA. I do not want another spill because maybe the next time it hits the Texas coast instead of Louisiana. We all know how corporations love to clean up there mess. BP and the other corporations involved have not even finished the Louisiana mess.

    #4
  5. NoFewwLunch

    42: “What if another one blows up?” Another plane can crash too, so let’s ground them all. If we ban driving, people won’t be killed in car crashes.

    The continuous oil natural seepage in the Gulf is 1/3 Marcondo blowout rate. Should we try to stop it? Or maybe we will just come to our senses and Whole Foods will start selling a oil in barrels because it really is a natural quantity.

    #5