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.

 

Farewell 2016, Hello 2017

shutterstock_377448043-leap-into-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.

Offshore On Topic

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Welcome to the Rigforce Blog; Offshore On Topic 

Offshore On Topic gives you regular updates on all things Rigforce, as well as keeping you abreast of industry trends and market forces. Each week we’ll send information, insights and updates from around the world and cover everything on:

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To get started here’s a snapshot of who we are and where you’ll find us this year.

Who is Rigforce?

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Where are Rigforce operating?

Rigforce are headquartered in Australia with offices in the UK and Singapore. We work with clients across major oil and gas regions worldwide, including Asia-Pacific, the Middle East, North Sea and Africa. We currently support crew rotating out of Saudi Arabia, Dubai, West Africa, Singapore and Australia.

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