Business | Oil & Gas
Lifting drilling ban likely to put more strain on battered industry
Lifting the federal ban on offshore and other types of oil and natural gas drilling would likely place greater strains on an industry already struggling with shortages of equipment and workers.
- AP
- Published: 00:08 June 20, 2008
Houston: Lifting the federal ban on offshore and other types of oil and natural gas drilling would likely place greater strains on an industry already struggling with shortages of equipment and workers.
Because of record oil prices, exploration and production companies are trying to find new sources of hydrocarbons at a fren-etic pace, pushing the supply of rigs, engineers and other personnel and equipment to the limit.
Opening new areas in the Gulf of Mexico, Alaska and elsewhere to exploration and production, as President George W. Bush proposed on Wednesday, would only exacerbate those challenges, analysts say.
"Unless we have some sort of severe recession and demand drops considerably, equipment vendors, service vendors and engineers and construction labourers are likely to remain in very short supply," said Candida Scott, a senior director of cost and technology at Cambridge Energy Research Associates, the Massachusetts-based consultancy.
Process
However, Scott and others note, even if the long-standing ban were lifted immediately, it could be a couple of years and maybe longer before any marked activity would take place.
Companies first would have to secure leases and other permits.
After that, Scott said, they'd begin their searches, analysing potential reservoirs, drilling appraisal wells and conducting other field work - all of which requires boats and seismic equipment, geologists and engineers.
In a report late last year, CERA predicted global production of oil and natural gas will be hampered in the coming years because of a shortage of engineers and other project managers.
By 2010, the organisation said, companies trying to produce hydrocarbons can expect to find between 10 per cent and 15 per cent fewer engineers than they need.
Some oil companies and their contractors and subcontractors are considering partnering on projects and profit-sharing arrangements as a way to secure adequate engineering resources, CERA has said.
The supply of drilling rigs also is extremely tight.
ODS-Petrodata, which tracks the rig market, says every semisubmersible rig and drillship currently available in North America is in use.
"Others are under construction, but they're already under contract," said Tom Kellock, who heads ODS-Petrodata's consulting and research arm.
In some cases, oil companies would have to prioritise projects.
If an outfit were able to gain access to a field that looked to have long-term potential, it might shift resources from an older, maturing field, said Scott Mitchell, an analyst with research and consulting firm Wood Mackenzie.
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