Page 20: of Offshore Engineer Magazine (Dec/Jan 2013)

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FRONTIERS

Managing frontier risks

Strategic decision-making in

It notes that deepwater reserves are only available to nation states with the boardroom is vital for those offshore sovereignty. To date, it says operating on the new frontiers, that 60% of deepwater drilling has been in the US Gulf of Mexico, citing a new report says.

SubseaIQ. Elaine Maslin reports.

Although drilling technology has advanced, deepwater drilling is still too single event can transform the for- expensive to all but the largest compa- “

A tunes of an entire industry,” warns nies. Just 13 companies produce 84% a recent report on frontier hydrocarbon of worldwide deepwater capital expen- exploration. diture in the next four years in three

An oil spill on the scale of the Deep- dominant regions, Latin America, Africa water Horizon disaster, for example, and North America, according to Infeld would likely result in the imposition of Systems data, cited by Marsh. another moratorium on drilling on the One of the main costs are day rates,

Outer Continental Shelf, or worse, it for suitable drilling units, which have continues. signifcantly increased over the last

The report is by Marsh Risk Manage- decade, as availability has decreased ment Research, part of the Marsh & and local jurisdictions limit the age of

McLennan Companies, which provides rigs allowed to drill in their territories, risk management and insurance. Marsh says. It warns that the danger of a “low-like- The risks to companies from deepwa- lihood-but-catastrophic disaster” rises ter E&P activities has remained similar as demand pushes energy exploration over the past decade, however, Marsh into frontier areas such as deepwater, says. The main risks are: a well blowout; the Arctic regions and the Middle East. environmental liability; frst-of-a-kind

Shale gas exploration was also cited as a (FOAK) technology; availability of sub-sea “frontier area.” expertise and equipment; supply chain

MANAGING RISK: ENI NORGE

Simultaneously, the requirement for disruption; regulatory compliance; envi-

HAS AN OIL SPILL RESPONSE more sophisticated risk management ronmental tax; and oil/gas price volatility.

SOLUTION FOR THE GOLIAT OIL strategies becomes vital. Each frontier Meanwhile, the perception of risk has

FIELD. LAST YEAR, THE FIRM also poses its own set of risks. increased, US regulations have become

CARRIED OUT THE FIRST FULL-

Marsh identifed both deep water and more stringent, and the contractual land-

SCALE EXERCISE OF GOLIAT’S the Arctic regions as two areas pertinent scape has changed, due to the Deepwater

OIL SPILL CONTINGENCY to the offshore oil and gas industry that Horizon oil spill in 2010.

OPERATIONS. IMAGE: ENI. are new frontiers, or areas with previ- “Drilling contractors have organiza- ously untapped reserves due to reasons tional preservation as a main driver to from high capital requirements or envi- ensure high standards of operational To manage the risk, Marsh advises: ronmental concerns. and process safety,” the report said. 1. Develop an approach to identify and “Another incident on the scale of evaluate risk exposure, from a top-down

Deepwater Drilling

Deepwater Horizon would likely change perspective (such as scenario analysis)

According to Marsh, within a decade, the contractual regime forever, pushing that aims to assess risk and interdepen- 40% of the world’s oil is expected to some liability back onto the contractor, dencies across the whole organization. come from deep water, defned as water prohibiting all but the largest contractors This approach should complement a depths greater than 1500m. from operating.” bottom-up approach to risk management.

December 2013 | OE oedigital.com 22 022_OE1213_frontier2.indd 22 11/22/13 2:38 PM