It’s been about four years since we saw the first signs of an offshore downturn emerging. What most at the time viewed as a temporary slowdown has, unfortunately, turned into the worst downturn many have ever witnessed in the U.S. Gulf.
In our annual cover story in the May issue, Bill Pike again searches for a silver lining in the depressed offshore sector. Amid all the negative news he did find a small sliver. The Gulf is still the dominant offshore play in U.S. waters, with several big projects and several more major untapped discoveries. Recent discovery announcements from major operators offer some optimism in the deepwater market.
One is from Royal Dutch Shell, who said its U.S. unit made one of its largest oil discoveries in the past decade from the Whale deepwater well in the U.S. Gulf. Deepwater is an “important growth priority” for Shell, Andy Brown, the company’s upstream director, said. The announcement, he said, “shows how, through exploration, we are sustaining a strong pipeline of discoveries and future projects to sustain this deepwater growth.”
Shell has three U.S. Gulf deepwater projects under construction and has added more than one billion bbls. of oil in the last decade in the Gulf.
Another significant oil discovery in the deepwater Gulf was made by Chevron, with partner Total, at the Ballymore prospect. Other companies with recent deepwater discoveries in the Gulf of Mexico include Anadarko Petroleum Corp., Byron Energy Ltd., Deep Gulf Energy Companies, W&T Offshore Inc., and Cobalt International Energy Inc.
Even with these positive developments, the near-term outlook for the offshore sector is still murky. As of April 20, the Gulf rig count stood at just 18, down from 20 at the same time last year.
The workboat market “is still in the gutter,” Peter Romero, operations manager at Aries Marine Corp., Lafayette, La., told us.
“The market is not getting better,” Matt Rigdon, executive vice president and COO at Jackson Offshore Operators, said.
Despite this, there is still hope, with most analysts calling for a slow recovery. It can't happen quickly enough.