Page 35: of Marine News Magazine (May 2015)

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OFFSHORE n the Gulf of Mexico, vessels serving offshore oil-and- 18, results of the feds’ Gulf lease sale--which was mostly for gas exploration and production are being stacked or deepwater--were smaller than recent sales, with just $583

I idled as the rig count there declines. Oil companies are million in winning bids coming from 42 companies.

retrenching while crude prices remain weak, with smaller operators and the shallow-water sector scaling back the Gulf rig count shrinks most. As the situation unfolds, MarineNews asked David Louisiana’s Gulf drilling provides most of the nation’s off-

Barousse, general manager at Fleet Operators, Inc., a ma- shore oil. Before the recent downturn in crude prices, the rine transportation ? rm in Morgan City, La., for his take Gulf rig count had rebounded from its weak, post-BP-spill on today’s predicament and what the future holds. The level. This winter, the rig count shrank again, however. In 40-year-old company owns and operates utility and sup- its weekly release on April 6, Gulf rigs were down by 4 to ply vessels used in offshore exploration, production and 29, and that was well below the 60 recorded last summer, construction. It also provides crew quarters. And, all of it – Houston-based oil? eld-services ? rm Baker Hughes said. Be- like the rest of the offshore support industry – is impacted yond this, and in January, the number of U.S. rigs searching by today’s market situation. offshore and onshore for oil and gas dipped. The national count suffered its seventeenth straight decline in the week

Oil and oil? eld-service operators pare down ended April 2. All U.S. rigs engaged in exploration and pro- “As 2015 budgets rolled out, every company I can think duction totaled 1,028 by the end of that week. That was of announced cuts in capital expenditures because of the down by 20 from the prior week and was the lowest in nearly drop in oil prices since last summer,” Barousse said. “Chev- six years. U.S. oil rigs fell to the lowest levels since early 2011, ron announced a 13-percent cut, Exxon a 12-percent cut and those seeking natural gas were the weakest since 1987.

and ConocoPhillips a 20-percent cut. These are all mul- These declines in the rig count, of course, hurt demand tiple, billion-dollar reductions that impact a wide range of for energy services, including drilling, completion and pro- service companies, including vessel operators.” duction from providers like Dubai- and Houston-based “Information about our main client segment – the pri- Halliburton Co. This winter, oil-service companies Sch- vately-held exploration and production companies, oper- lumberger Ltd. in Houston; Halliburton; Baker Hughes; ating in and beyond the Inner Continental Shelf – isn’t and Ireland’s Weatherford International, with an of? ce in as publicly available as the major oil-company announce- Houston, each announced thousands of layoffs, including ments,” he said. Louisiana’s Inner Continental Shelf ex- many for Gulf personnel. By February, the four compa- tends three miles from the coast. “But their response to nies together had said more than 22,000 workers would be lower oil prices has been the same, just on a slightly smaller laid off, with many of them in the United States.

scale,” he said. “We’ve seen signi? cant reductions in their Halliburton and Baker Hughes, meanwhile, are prepar- oil-and-gas production operations. I haven’t heard any- ing to merge, probably by the end of this year.

thing about actual cuts in output, however.”

Large, deepwater operators typically have bigger pockets Day rates for OSVs slide than shallow water players, and can maintain production “Depending on a boat’s size, we’ve seen up to a 30 per- during oil price declines. On the other hand, says Barousse, cent drop in day rates for the Gulf’s larger offshore supply “Deepwater projects take a great deal of planning – more vessels,” Barousse said. “For our production vessels work- than shallow water operations, Equipment is more special- ing on the inner shelf, the rates have declined by up to 10 ized, and these projects are technically complex. Deepwater percent. They typically work on a much smaller margin operators typically have stronger cash ? ows because of their than OSVs do.” diversi? ed, worldwide portfolios. They can keep moving for- A day rate is the cost of a vessel for 24 hours. “Day rates ward with plans during a downturn in product prices.” That’s include the vessel and the U.S. Coast Guard-required because, while Gulf offshore wells are usually expensive to crew,“ Barousse said. “The makeup of the required crew drill, they can at the same time have long production lives. depends on the vessel’s type. Fuel, lube, catering and ad-

In 2014’s last quarter, three deepwater projects by Stone ditional crew for speci? c operations, such as cooks, rig-

Energy, Chevron and Murphy Oil began in mature ? elds in gers and cargo handlers, are separate from the day rate,” he the Gulf, according to the Energy Information Administra- said. Insurance is needed to hire a vessel. “Before you get tion (EIA). More new, deep projects are slated to become to the point of charging a day rate, insurance requirements operational in the Gulf this year. Nonetheless, on March are worked out in the contract,” Barousse said. 35 www.marinelink.com MN