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 Martin.Flojgaard@rigforceglobal.com or +618 9389 2800.

 

Celebrating Christmas Offshore

Drilling Xmas

The holiday season doesn’t often involve a lot of ‘holiday’ for the guys working offshore. It’s also one of the toughest times to be away from home, when we know we’re missing out on special time with family.

That’s why every year we try to bring a little bit of festive cheer to our crew on the rigs – and what better way to do it than with a proper Christmas feast? Getting everyone together for a big meal is a festive tradition all over the world, and we make sure the kitchen crew have everything they need to cook up a storm.

And no Christmas get-together would be complete without presents! Last year we teamed up with clients and rig operators to give away some impressive swag, including iPads and gift vouchers. Everyone is in with a chance to win and there are always a few surprises in store…

We want to wish our personnel the very best this Christmas, and we hope you all enjoy the time out to celebrate with the rest of the crew! It’s a small way for us to show you how much we appreciate you and the sacrifices you make for the job.

 

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