As of January 2018, the Gulf of Mexico presents the most number of offshore rigs of 175, followed by 159 in the Persian Gulf and 152 in Southeast Asia. The recent high prices of $100 per barrel reflect the growing scarce supply for oil and gas. Major oil and gas companies such as Shell, Exxon and BP are looking for alternative sources for oil production, and investing in deepwater projects to keep up with production.
With the activity in the Gulf region picking up, Shell announced in April that they were building a deepwater platform named Vito. Chevron Big Foot project is expected to produce its first oil by the end of the year. BP has also announced its plans through the Mad Dog project, which have moved on to phase 2 recently.
“Chevron and BP have cut operating expenses in the Gulf by half since 2013 by a combination of using standardized equipment, applying better technology, eliminating jobs, and selling higher-cost assets. Shell has also reduced spending substantially” – Harry Brekelmans, Shell’s Projects and Technology Director.
The combination of new technology and smarter design makes deepwater drilling an economical option to produce oil today. Previous investments in technological development has paid off as companies can now focus on drilling projects and utilise the technology to keep costs competitive. The estimated cost for a barrel are between $35 to $40, which are competitive compared to the lowest-cost shale assets. These low costs now allow operators to tap oil reserves that were previously uneconomic to exploit. In the Gulf for example, oil fields can produce as much as 100,000 barrels a day for decades.
Growth in Asia
With Malaysia leading the way for Southeast Asia countries, the exploration blocks in Malaysia are well defined and continues to attract a significant level of interest among foreign companies to bid for and operate. Malaysia led the first deepwater project in APAC with the The Kikeh field, and has a good understanding of the best practices in oil production that meet international standards.
Countries in Southeast Asia including Indonesia, Thailand, Vietnam and Malaysia are ramping up drilling activities to make up for the deficit in domestic production and to avoid any shortages. There is also a shift for Southeast Asia countries from being a net exporter to a net importer. With new technology making offshore drilling more economical, major companies are seeking to diversify into deepwater exploration and development.
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Interested to read other Oil & Gas articles? Check out: Southeast Asia Is The Next Hot Spot for Offshore Decommissioning
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