Rigs, Workers Go Abroad Leaving GOM Operators in the Lurch

Though delays in federal permitting for new Gulf of Mexico drilling are shrinking, industry executives fear new opportunities abroad will draw staffing and equipment away from Gulf projects.

Operators are finding it more difficult to lure back offshore rigs chased away by the drilling moratorium that followed last year's BP oil spill. The increasing complexity of drilling in deeper waters is also making it more difficult to hire, train and retain qualified staff, companies report.

Speaking Dec. 1 on the future of offshore operations at an industry gathering hosted by Jefferies & Co. in Houston, oil and gas executives said they expect an active 2012 in the Gulf, especially in the deep waters of the outer continental shelf. Several new finds and an uptick in interest by big global players like Statoil and Petrobras are seen as particularly benefiting Houston-area offshore service providers.

But at the same time, some of the Gulf's most active drillers admit that they are being slowed down not only by a permitting backlog, but by the growing difficulty of deepwater operations and a boom in activity in Africa, Australia and Brazil.

Chuck Meloy, vice president for worldwide operations at Anadarko Petroleum Corp, said he doubts predictions by some that 2012 drilling activity will return to 2009 levels. Though the Gulf is an important target, Meloy said, Anadarko is more actively eyeing prospects in West and East Africa.

Duncan Peace, managing director at Crondall Energy Consultants, warned executives that staffing is now "the biggest constraint" in the offshore oil and gas industry. Though new opportunities abound, companies expect "real pressure on resources," he said. Offshore talent is being lured, he said, to Australia and Brazil in particular.

Company executives now experiencing these supply-side constraints concur.

"Frankly, the people are harder to replace, harder to train," said Kevin Robert, senior vice president for marketing at Ensco PLC, which operates the world's second-largest offshore rig fleet.

Though Ensco is bullish on the offshore market in the Gulf, he warned his peers that it will take at least another two years before rig availability is no longer a problem. He says active plays abroad are seeing rig suppliers less willing to commit equipment to wells that can take several months to drill, especially in light of the recent regulatory uncertainty in the U.S. offshore environment.

The BP spill and moratorium have pushed a large number of rigs away from the United States, and "it's difficult to get those rigs back," Robert said. "We don't really see any availability until 2013."

Gustavo Amaral, head of U.S. operations at Petrobras, agreed with Robert's assessment. The Brazilian oil giant is making its first forays into the Gulf, and navigating the new regulations and permitting procedures in the United States has been "a very fruitful learning for Petrobras," he said.

At the same time, Amaral also complained of a staffing crunch, expressing fears that it could slow down their Gulf drilling plans more than expected.

"It's hard to find good people and keep good people," Amaral said.

Technological advancements and, in some cases, a lack thereof, are also causing difficulties, insiders say.

Amaral said his company would still like to see much better subsurface seismic data to confirm their expectations for resource potential. Though Petrobras is growing excited about its expansion in the United States, its Gulf drilling in the coming years will be "on a much smaller scale" than what the company is pursuing in Africa and Brazil, partly because the hydrocarbon potential is better understood in those places, he said.

Still, growing demand for offshore drilling in more challenging environments is making equipment providers excited about the future.

James Harp, CEO of Hornbeck Offshore Services, told investors the future Gulf of Mexico development serves "as a proxy for the rest of the world," namely a push toward "deeper waters, deeper wells and further offshore."

To supply the coming boom, Harp said, Hornbeck is moving to build 73 floating rigs. Massive new drill ships that can operate in environments that take days to reach from shore are also being considered as Hornbeck and its competitors prepare for the demand they see coming.

"Hence our bullish outlook," Harp said.

Copyright 2011 Environment and Energy Publishing, LLC