Industry innovation rising to meet the Oil Price Mirage – AOG Conference 2017

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Last week, the annual Australasian Oil and Gas (AOG) conference took place in Perth, Australia,  It was an ideal opportunity to take the temperature of the current industry outlook in this part of the world.

Despite the reduced number of exhibitors and attendees on previous years, the temporal waves of panic from 2015/16 were replaced with a steely outlook of “the worst is behind us” in a spark of returning confidence. Companies having survived initially by trimming budgets are increasingly adopting an innovation mindset of “what worked previously may not apply now”, in a price environment that seems to have settled around the ‘new normal’ of $45-55 per barrel.

Analysts indicated $60 oil as a key tipping point fuelling additional spending on E&P activity while replacing gas reserves for LNG contracts in China and South Korea will remain a key driving force in Australia.

One area which may be of particular industry to our Drilling community, was a renewed focus on supply chain efficiencies and collaboration. A stream of the conference was exclusively set aside to share thoughts on this topic.

According to Wood Mackenzie a leading industry advisory specialist,  sanctioned projects for 2017 globally will double that for 2016. These approvals will generally apply to projects running at averages of just US$7 per barrel in capital costs as opposed to US$17 per barrel for 2014 projects.

These projects have a forecast IRR of 16% up from an IRR of 9% on 2014 projects (IRR is internal rate of return and is basically the interest companies earns on the money they invest in these projects).

Australia has been identified as one of the leading locations in the word for improved oil and gas expenditure. Australia’s strong LNG position is a catalyst for increased spending. Recent major discoveries at Phoenix South and Roc off the Northwest Coast of WA are also interesting blinks on the oil and gas radar.

Chevron’s proposed drilling campaign in the Bight Region and BP’s hunt for a new major gas field at the Ironbark Prospect all point towards a renewed buzz of interest for deepwater prospects.

Other projects are Greater Flank Phase 2, Greater Enfield, Gorgon Stage 2 and Waitsia Phase 2 all approved or in the process of getting the go ahead.

An increase in rig tenders also points towards increased activity that should lead to an increase in the number of rigs from its current 5 to perhaps 7-8 rigs at the end of the year and beginning of 2018.

All in all good news and a more positive atmosphere than the last couple of years with some tangible light appearing at the end of the tunnel.

Share your thoughts or feel free to get in touch at or +618 9389 2800.


Posted by Martin Flojgaard

Farewell 2016, Hello 2017


It’s fair to say it has been another challenging year squared away in the drillers pipe tally and another accented by unprecedented oil price volatility, an unlikely OPEC deal and a giant unconventional field discovery in West Texas. With crude prices the highest they’ve been all year above $53 a barrel, there’s signs to remain hopeful about 2017.

Since peaking in 2014, exploration budgets have been reduced by up to 40% globally, which raises the issue of an approaching reserves replacement cliff. Will this catalyse an upswing at the back end of 2017? Combined with a softer EIA forecast for production from 8.9 for 2016 to 8.8 million barrels per day for 2017 and the OPEC agreement, we could be in for a surprising year. 

Speculation on oil prices will bring us no closer to certainty. However, one thing we are certain about here at Rigforce HQ, is the sheer resolve in our drilling contracting community. Challenging markets, difficult decisions and tough conversations have been faced by all this year and one day in the future, we might just look back with a hint of acknowledgement, that this was a year that we all grew, but perhaps in ways that won’t be reflected on a balance sheet….

Wishing our community of drilling professionals and their families a happy and safe start to the New Year. We look forward to catching up with you all in 2017.

Posted by Alastair Haldane

OPEC output agreement at Algiers: Brent crude rises 6%


Yesterday’s OPEC meeting at Algiers reached an agreement many thought impossible: the cartel has agreed to cut monthly production by 240,000-740,000 b/d from August levels. The new output target is 32.5-33m bpd.

Russia and Saudi Arabia, two of the most powerful players at the OPEC meeting, reached a memorandum of understanding earlier this month at the G20 in China, indicating that they would work together to monitor the global oil market. While this raised hopes of a potential freeze agreement at the Algiers meeting, few were expecting a production cut. OPEC Secretary-General Mohammed Barkindo further dampened expectations by saying that the Algiers meeting would be informal, used for discussions, “not making decisions.

Instead, on Wednesday the leaders of OPEC decided to formalise the Algiers meeting, and made the decision to intervene with a production cut – something we haven’t seen since 2008 in the middle of the GFC. The oil market has responded with an overnight 6% rise in Brent crude, up to $48.85, with big oil producer stocks following suit around the world.

While it isn’t clear how exactly OPEC’s cuts will happen and who will be responsible for them, Saudi Arabia brought a more judicious approach to the table than it has in the past. Though Saudi officials maintain a production freeze in Iran as a deal-breaker, they have indicated that countries with a history of output issues like Libya, Nigeria and Iran, would not be as strictly bound to production cuts.

The coming weeks will tell how viable the agreement is, as discussions continue with member states around specific numbers and how OPEC plans to implement and enforce the agreement. For a lasting lift in oil prices, the cut would need to be at the highest end of the nominated range, an ambitious target which would see Saudi Arabia taking the majority of reductions – a position which might test the nation’s newfound even-handedness.


Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Alastair Haldane

Are we making the most of our graduates?


The energy sector has always had real appeal for new grads, especially engineers.

It’s an adventurous career which promises high rewards for hard work. It constantly pushes the boundaries of human achievement in terms of technology and ingenuity. It can offer huge opportunities and unique experiences in some of the world’s most incredible places.

But recently it looks as though much of the shine has come off the oil and gas industry for new grads, as the words ‘labour surplus’ dampen enthusiasm. Unfortunately, these words are quickly being followed up by two more, which are far more concerning for the industry as a whole: ‘skills shortage’.

It’s unsurprising that new graduates – and experienced workers – will start looking for work in other industries under the current conditions. But it’s also a trend that we need to address if we’re going to make good on the increasingly likely recovery in the energy market. It’s time to start building the next generation of exceptional talent now, before labour demand turns around – which it inevitably will.

History has something to show us here. In the 80’s, the oil price plummeted and new graduate/new entrant hiring went into a freeze for a decade. On the counter-cycle upwards climb in oil price from the mid 90’s, this caused a huge stranglehold on industry productivity as companies scrambled to find enough people to deliver their projects. Even today, you’ll notice a “bald” patch in oil and gas workforce demographics, where those 20-year-old graduates in the 80’s (now aged around 50) did not enter industry, causing all sorts of headaches in terms of succession planning. Thirty years later, faced with another downward market inflection, are we repeating the same mistakes? It certainly seems like it.

So why do we keep making the same mistake? Cost is certainly a big factor. It’s an undeniable fact that the cost of bringing graduates/new entrants into the oil and gas industry can be in the order of thousands of dollars, particularly when talking about the cost of training and supervision – and it makes sense to be frugal where possible. But if companies continue down the path of freezing hires, particularly in the graduate market, the industry will choke itself out – again – when the market turns.

The answer? It’s complex, and dependent on factors often outside of their control, but those companies that can master the art of building stock in these challenging times will be first movers on the other side. Management should be readying themselves to explore flexible modes of engagement. Part-time or internship roles are sound, cost-effective ways to engage graduates and build capacity in organisations, and these tactics need not be reserved for the super majors. Those companies that manage to maintain this trickle of workforce continuity now will be building resolve into the future.


Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Alastair Haldane

The Next Big LNG Project for WA?


There’s been more exciting news from the North West Shelf this month, as Woodside announced its planned acquisition of half of BHP Billiton’s stake in the remote Scarborough oil field.

The acquisition will give Woodside a 50 per cent stake in the WA-62-R permit, which it will also operate, and a 25 per cent stake in the WA-1-R offshore permit, which will be operated by ExxonMobil. Woodside will pay US$250 million in the initial transaction, and a further US$150 million contingent on a final investment decision to develop the Scarborough oil field.

Scarborough’s ‘stranded’ location has to this point made it difficult to develop and positioned it as a low priority for Scarborough Joint Venture partners ExxonMobil and BHP Billiton. The original plan for a floating LNG platform to develop the field, proposed by ExxonMobil in 2014, remains the official preferred option, according to Woodside Chief Executive Peter Coleman. But speculation continues that Woodside’s existing Pluto LNG processing infrastructure, as well as the upcoming Wheatstone facility, may offer more cost-effective alternatives.

It’s unlikely that Scarborough will be roaring into life with new production in the short term, given the differing priorities of the Joint Venture partners. But its proximity to the Thebe and Jupiter gas fields, which were acquired at the same time, could offer Woodside a long-term play for a significant LNG project in the future.

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Conor O'Brien

New technology is king as Shell begins production at Stones


Shell has announced the start of production at the Stones development in Gulf of Mexico.

Expected to produce around 50,000 barrels of oil equivalent per day, Stones is the world’s deepest offshore oil and gas project and marks a milestone for Shell.

The petrochemical giant is again pushing the boundaries of technology in the industry, using a specially designed floating production, storage and offloading (FPSO) vessel, named Turritella, as the host facility for Stones. Tankers will be used to transport oil from Turritella to US refineries, while a pipeline transports gas.

FPSO vessels are becoming increasingly prominent in the company’s fleet as their ability to unlock deep-water resources continues to grow. Turritella, Shell’s first FPSO in the Gulf of Mexico, has been specifically designed to withstand the Gulf’s highly changeable conditions and notorious storms. A disconnectable turret-and-buoy system allows the FPSO to turn with the wind during normal conditions, and it can detach to move freely to calmer waters during storms or hurricanes. The project also utilises a flexible pipe, known as a steel lazy wave riser, to carry oil and gas to Turritella for processing. Steel lazy wave risers have additional buoyancy, creating an arched bend in the pipes between the seafloor and the surface. This bend helps to absorb the motion of the FPSO and boosts production performance at extreme depths.

For more information about the Stones development, check out Shell’s fact sheet or the project overview page.


Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Alastair Haldane

Unlikely saviours: will Russia and Saudi Arabia join forces to end the oil glut?


The world watched in surprise this week as Vladimir Putin and Saudi Deputy Crown Prince Mohammed bin Salman agreed to cooperate in world oil.

Markets responded with a sharp spike in oil prices, which seemed to have settled as trading resumed on Tuesday and scepticism about Saudi-Russia cooperation reasserted itself.

The agreement was signed at the G-20 conference in China, well away from the limelight. The Russian President’s remarks earlier in the week hinted at the possibility of an output freeze – further fuelling the oil price rally – though this has now been discounted as the details of the agreement become clearer.

So what exactly does the agreement mean? In essence Russia and Saudia Arabia have signed a memorandum of understanding which will see them working together to monitor the market. No firm commitments have been established, but both nations will play important roles in talks in Algiers later this month, which will discuss (again) the prospect of limiting oil output for certain OPEC member states and other large-scale producers.

A similar agreement between the two nations failed in April, due to Saudi Arabia’s insistence that Iran – the nation’s chief competitor in the Middle East – be bound to its terms. Iran’s trade sanctions have only recently been lifted and the oil-rich nation has been upping production as much as possible to help boost its recovery. Iranian officials said that the nation has no plans to limit production based on a Saudi-Russia agreement.

For now, it seems that this latest glimmer of hope will remain just that. There are however a few signs that, when the leaders come together again in Algiers in a few weeks, some action may at last be taken. First, President Putin’s strong support for the agreement adds a level of legitimacy which has previously been missing. Second, all of the major parties – including Iran – are now producing at levels which they could be happy to sustain for a ‘freeze’ period. And third, there is increasing pressure on Saudi Arabia from other OPEC nations, like Nigeria and Venezuela, who are experiencing civil unrest as a result of oil price pain. So while there is plenty of well-founded scepticism around talks of an agreement – what better way to provoke a quick jump in oil prices? – there is still, as always, reason to hope.

Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Alastair Haldane

From Excavator to Roustabout to Crane Operator: Steve Gray’s Rigforce Profile

Steven Gray

For this month’s Rigforce Profile we caught up with Steve Gray, one of our New Zealand crew working offshore WA.

Steve is a Crane Operator on a jackup and he keeps busy with a team of six roustabouts and an Assistant Crane Operator. We spoke to him at home on the Gold Coast.

How long have you been working with Rigforce?

I’ve been with Rigforce for a couple of years now, initially in Singapore.

How did you break into the industry?

I started off probably ten years ago, working the mines as an offsider in a diamond core drilling rig up in Meekatharra. After that I started applying for jobs offshore. I eventually got a job on a rig down in the Bass Strait as a roustabout and moved up through the ranks from there.

What were you doing before?

Before this job I used to drive excavators. I actually really enjoyed the excavation work, I did it for a good ten years before I started offshore.

How do you find it working with a manning services provider?

It has its ups and downs like everything in the industry, but so far it’s been pretty good. They really look after us. I’ll put it this way: we’re in a job and a lot of people aren’t so I have to be happy with that!

What are best parts of your job?

The best part of my job is definitely the crew. There’s really good camaraderie among the guys and at the end of the day we spent a lot of time together. You learn to look out for each other in a way you probably wouldn’t with other jobs.

And the worst parts?

There’s not really a worst part to working out there! I guess it’s pretty high stakes and sometimes it can get busy and you end up working under a lot of pressure. But it always balances out with the quiet times, and you can make the most of that.

What else would you be doing if you weren’t in your current job?

I’d probably go back to the excavators!

What would your goals be for the future?

I just bought myself a property back in New Zealand on Waiheke Island. I’d like to get over there and settle down back home eventually. I’ve been in Australia for 12 years now and I know I’ll end up back in NZ one day.

Posted by Ellena Ray

Why the local approach is winning the global market

world with faces 1

There aren’t many industries more ‘global’ than offshore oil and gas.

Our personnel travel thousands of kilometres every year and our clients operate in every corner of the globe, every minute of every day. Oil, our raison d’etre, makes and breaks economies, sparks international incidents and remains a key requirement of industrialisation and development.

So it was interesting to see in our recent Customer Satisfaction Survey that the things people valued the most were traditional ‘local business’ qualities: personal service, loyalty and reliability. Many of these things were key focus areas for us in 2016, based on feedback from our last survey, and it’s encouraging to see our clients and personnel noticing the results.

This is also indicative of wider trends in the business world. Consumer trust is significantly skewed in favour of smaller operators, and larger businesses are proving less agile and more resistant to change in volatile conditions – a significant handicap in a global market in which time is quite literally money. These are some of the reasons that the local business approach is a winning strategy in an unpredictable environment – and one we’re very happy to champion!

  1. People trust people they know.

This is something that comes up every time we speak to clients or crew: people trust us because they know us. 70% of our clients responded that relationships and personal service were the key reasons they would recommend us, and a third of our personnel respondents gave direct acknowledgment to specific members of the Rigforce team. This trust is a critical part of the service we offer. We know the stakes are always high when we’re sending people offshore, and we want our clients and personnel to know that they can rely on us any time.

  1. Responsiveness matters.

Over 56% of personnel respondents told us that the Rigforce team had gone over and above to deliver an outcome for them, for circumstances ranging from pay queries to illnesses and family emergencies. We keep the chain of communication as short as possible and operate our support services in-house to make sure that when something needs doing, we have someone on hand who can respond as quickly as possible. From the client side this is just as important. Everyone is coming up with new ways to work smarter in the current unpredictable conditions, and our lean structure makes us far more adaptable to these changes.

  1. Good networks are good business.

Social capital is the driving force behind good business, and the local business approach is a natural foundation for strong social capital. The personal connections we make with clients and crew build on each other, and the exceptional quality of our personnel database is a direct reflection of the benefits of these networks.


Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by

Mitra Energy: New wells for Stag Oilfield in 2017


The Stag Oilfield looks set for a wave of new production, following its recent acquisition by Malaysia-based Mitra Energy Ltd.

Mitra purchased a 100% interest in the oilfield from sellers Quadrant Northwest Pty Ltd and Santos Offshore Pty Ltd, for US$10million. This follows the June termination of the sale to Sona Petroleum Bhd, who failed to secure shareholder approval for its proposed qualifying asset. The original sale price was US$25million.

The price reflects the significant abandonment costs attached to the oilfield, which has been in operation since 1998. Stag currently produces 3,750 barrels per day from 10 active wells, with 14.6 MMstb proved and probable reserves.

  1. Paul Blakeley, Executive Chairman of Mitra said “This is exactly the type of asset we are looking to invest in with deep value multiples, and we are very excited to be taking this first step towards building a business which takes advantage of the current market in a low oil price environment, with an increasing set of opportunities where we can best leverage our experience.”

This is great news for local industry and employment. Where Stag could be considered a marginal asset for Quadrant, it is newcomer Mitra’s main asset, and they’ll want to drive production to maximum capacity as soon as possible. Mitra has big plans already, including one appraisal pilot and three infill producers in the West area in 2017, and up to three further wells in the East area in 2018. Mitra will also consider appraisal activities in the undrilled low-risk exploration area of Hart and Stag South.

We’ll be publishing any news on Mitra and Stag on our Offshore On Topic blog, so keep an eye out for future updates.

Source: Press Release by Mitra Energy, 26 July 2016. Available at: [Accessed 08 Aug. 2016].


Rigforce communications are intended to provide general information and commentary and should not be taken as professional or legal advice.

Posted by Alastair Haldane