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Transcript of Dismukes jones walker_banking_presentation_08-31-10
Center for Energy Studies
David E. DismukesCenter for Energy Studies
Center for Energy Studies Deepwater Horizon Oil Spill
GOM Offshore Oil and Gas – Economic Overview
2
Note: Gulf Coast states include Louisiana, Texas, Mississippi and AlabamaSource: Bureau of Economic Analysis, US Department of Commerce; Energy Information Administration, U.S. Department of Energy; and Baker Hughes.
• In 2008, over 420 MMBbls of oil and 2.4 Tcf of natural gas were produced in the Gulf of Mexico OCS.
• Employs over 200,000 workers in the Gulf Coast region. Over 100,000 workers associated with offshore activities.
• Contributes almost $100 billion to Gulf Coast states’ GDP.
• GOM accounts for 30 percent of total U.S. crude oil production.
• Deepwater areas produced 76 percent of all GOM crude oil production in 2007.
Center for Energy Studies Deepwater Horizon Oil Spill
GOM Offshore Oil and Gas – Deepwater Exploration Trends
3
Over the past 20 years, the water depth barrier has moved from 5,300 feet to over 9,500 feet.
Source: Bureau of Ocean Energy Management, Regulation and Enforcement, US Department of the Interior.
Center for Energy Studies Deepwater Horizon Oil Spill
GOM Offshore Oil and Gas – Recent Deepwater Structure Development
4
Has 5 independent E&P partners plus one midstream partner/operator. Operates in 8,000 feet water depth.
Enterprise and the Atwater Valley Producers Group, which includes Anadarko, Dominion, Kerr-McGee, Spinnaker and Devon Energy.
Process ultra-deepwater natural gas and condensate discoveries in the previously untapped Eastern Gulf of Mexico.
• 1 Bcf per day of processing capacity, the largest in the GOM.• Tie-back flow lines that are longer than 45 miles, the longest in the GOM.• 2.4 miles of mooring lines.• The Gulf’s deepest suction pile installation.• The Gulf’s largest monoethylene glycol (MEG) reclamation unit.• The Gulf’s deepest pipeline inline future tie-in subsea structure.• The Gulf’s longest single subsea umbilical order. (carbon instead of steel) • The flow lines are 210 miles in total length, and the umbilicals contain about 1,100 miles of stainless
steel tubing.
Source: Offshore-Technology.com
Center for Energy Studies Deepwater Horizon Oil Spill
GOM Offshore Oil and Gas – Economic Overview
5Sears Tower1,729 feet
Taipei 1011,667 feet
Petronas Towers1,486 feet
Mars Tension Leg Platform3,250 feet
Structures in the GOM are as large some of the world’s largest buildings.
Empire State Building1,472 feet
Center for Energy Studies Deepwater Horizon Oil Spill
GOM Offshore Oil and Gas – Deepwater Statistics and Considerations
6
• Over $1.5 billion in surface structure and equipment needed to service deepwater wells.
• Drilling costs $80 million to $120 million per well.
• Drilling crews between 200 to 300 for large drilling project.
• Structures and wells are typically 100 miles to 200 miles from the coast.
• Water depths between 5,000 feet to 8,500 feet.
• Drilling depths of 15,000 feet to 28,000 feet (lower tertiary).
Center for Energy Studies
GOM OCS Deepwater Wells
0
50
100
150
200
250
1992 1994 1996 1998 2000 2002 2004 2006 2008
> 7,500 ft5,000 - 7,499 ft1,500 - 4,999 ft1,000 - 1,499 ft
Num
ber o
f Wel
ls
Active deepwater wells are down relative to the earlier part of the decade, but still make considerable contributions to OCS production levels.
Deepwater Horizon Oil Spill
7Source: Bureau of Ocean Energy Management, Regulation and Enforcement, US Department of the Interior.
Center for Energy Studies
GOM OCS Deepwater Crude Oil Production
8
Deepwater Horizon Oil Spill
0
100
200
300
400
500
600
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
Deepwater Oil
Shallow-water Oil
Oil
Pro
duct
ion
(MM
Bbl
)
The significant increase in deepwater crude oil production has been a major new source of domestic crude oil supply.
Source: Bureau of Ocean Energy Management, Regulation and Enforcement, US Department of the Interior.
Center for Energy Studies
GOM OCS Deepwater Natural Gas Production
9
Deepwater Horizon Oil Spill
0
1,000
2,000
3,000
4,000
5,000
6,000
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
Deepwater Gas
Shallow-water Gas
Gas
Pro
duct
ion
(Bcf
)
Deepwater natural gas production has remained relative constant in recent years, despite the overall GOM gas production plummet in 2002.
Source: Bureau of Ocean Energy Management, Regulation and Enforcement, US Department of the Interior.
Center for Energy Studies
GOM OCS Deepwater Top Producers
10
Deepwater Horizon Oil Spill
Source: Bureau of Ocean Energy Management, Regulation and Enforcement, US Department of the Interior.
Center for Energy Studies
U.S. Offshore Capital Expenditures
11
Deepwater Horizon Oil Spill
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$0
$5,000
$10,000
$15,000
$20,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Cru
de O
il P
rice
($ p
er b
arre
l)
(mill
ion
$)
Exploration Development Production WTI Crude Oil Price
Source: Energy Information Administration, U.S. Department of Energy.
The federal OCS, and its deepwater regions, account for a large share of the increasing capital investments for major oil companies.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Onshore Lower 48 GOM - Deep Water GOM - Shallow Water
Offshore Pacific & Atlantic Alaska
Center for Energy Studies
U.S. Crude Oil Production Forecast
12
Deepwater Horizon Oil SpillC
rude
Oil
Pro
duct
ion
(MM
Bbl
spe
r day
) Projection
Potential moratorium-created production risk
Deepwater production is forecast to increase by almost 20 percent between 2010 and 2030.
Center for Energy Studies
Source: Baker Hughes. 13
Deepwater Horizon Oil Spill
Active Drilling Rig Trends in Louisiana
0
20
40
60
80
100
120
140
160
Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09
N. Louisiana - Land S. Louisiana - Inland WaterS. Louisiana - Land S. Louisiana - Offshore
Num
ber o
f Rig
s, S
. Lou
isia
na
$-
$20
$40
$60
$80
$100
$120
$140
$160
0
10
20
30
40
50
60
70
80
Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10
Pric
e of
WTI
per
Bar
rel
Num
ber o
f Tot
al A
ctiv
e G
OM
Dril
ling
Rig
s
Historical Rigs Baseline Forecast Attrition ForecastPrice of WTI WTI Futures
Center for Energy Studies Deepwater Horizon Oil Spill
Gulf of Mexico Offshore Rig Forecast – Moratorium Impact
Apr-20:Accident
Sources: Dept. of Interior, Energy Information Administration, Baker Hughes, CME Group (NYMEX)
Moratorium-forecasted reductions in activity
Forecasted activity
Center for Energy Studies
Moratorium Impacted Rigs
15
Deepwater Horizon Oil Spill
Total pre-spill shallow-water activity currently down by about 31 percent.
0
10
20
30
40
50
60
70 Other StandbyActive - Other Active - Drilling
Note: “Active-Other” includes Completion; Recomplete; and Workover categories; “Standby” includes Assigned; Circulate; Under Tow; Waiting on Location; Orders or Weather; Mobilizing, Monitoring and Standby categories.“Other” includes Plug & Abadon; Run Casing; Rigging Up; Logging; Moving On and Other categories.Source: RigData.
Apr-20:Accident
Lost Activity
Center for Energy Studies
Moratorium Impacted Rigs
16
Deepwater Horizon Oil Spill
Total pre-spill shallow water activity currently down by about 72 percent.
0
10
20
30
40
50
60 Other StandbyActive - Other Active - Drilling
Note: “Active-Other” includes Completion; Recomplete; and Workover categories; “Standby” includes Assigned; Circulate; Under Tow; Waiting on Location; Orders or Weather; Mobilizing, Monitoring and Standby categories.“Other” includes Plug & Abadon; Run Casing; Rigging Up; Logging; Moving On and Other categories.Source: RigData.
Apr-20:Accident
Lost Activity
Center for Energy Studies
Moratorium Impacted Rigs
17
Deepwater Horizon Oil Spill
Impacted rigs anticipated to operate in very close proximity to Louisiana ports and support services.
Center for Energy Studies
Gulf Coast Oil and Gas Employment – All Activities
18
Deepwater Horizon Oil Spill
Center for Energy Studies
Gulf Coast Oil and Gas Employment - Production
19
Deepwater Horizon Oil Spill
Center for Energy Studies
Gulf Coast Oil and Gas Employment - Drilling
20
Deepwater Horizon Oil Spill
Center for Energy Studies
Gulf Coast Oil and Gas Employment – Support
21
Deepwater Horizon Oil Spill
Center for Energy Studies
Potential Moratorium Impacts – Louisiana Only
22
Deepwater Horizon Oil Spill
Center for Energy Studies
Potential Moratorium Impacts (Short Run) – Potential Parish Level Impacts
23
Deepwater Horizon Oil Spill
Center for Energy Studies
Some longer-run issues for Louisiana and Gulf Cost include:
• Intermediate-run implications (12-36 months) of current drilling moratoria andthe decreased economic activity.
• The impacts that likely regulatory changes will have on GOM operations andcosts that will impact investment profitability.
• Changes in operator liability requirements and the cost of insurance for GOMoperations, particularly for independent operators that have a relatively large(in total) economic presence in Louisiana than the majors.
• New excise taxes, fees, surcharges, and the elimination of drilling incentivessuch as the Deepwater Royalty Relief Act and Energy Policy Act of 2005 EPActdeep-gas drilling incentives (shallow water, well depths in excess of 20,000feet).
• Impacts on opening the Eastern GOM and elimination of potential economicopportunities for Louisiana service ports (Venice, Fourchon) and LA-basedservice companies.
Long Run Issues Associated with Spill
Deepwater Horizon Oil Spill
24
Center for Energy Studies
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Deepwater Horizon Oil Spill
Questions, Comments, & Discussion
www.enrg.lsu.edu
Center for Energy Studies