Offshore Drilling Industry in the Americas to 2015 - New Deepwater Discoveries and Stringent Offshore Regulations Affecting the Future Industry Outloo

26 Aug 2010 • by Natalie Aster

GBI Research, a leading business intelligence provider, has released its latest research, “Offshore Drilling Industry in the Americas to 2015 - New Deepwater Discoveries and Stringent Offshore Regulations Affecting the Future Industry Outlook”. The study, which is an offering from the company’s Energy Research Group, provides an in-depth analysis of the offshore drilling market in the Americas and highlights the various concerns, shifting trends and major players in the region. The report provides forecasts for the offshore drilling industry in the Americas to 2015. The report also provides segmental forecasts of the offshore drilling market in the Americas by water depth and highlights the major countries in the region. The report provides in-depth analysis of the key trends and challenges in the offshore drilling market in the region. An analysis of the competitive scenario, data on the offshore wells and drilling expenditure in the region are also provided for each of the market segments. The report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts.

Offshore Drilling Expenditure in the Americas is Expected to Continue to Increase to 2015 After a Dip in the Previous Two Years

The major offshore oil and gas fields in the Americas are the Gulf of Mexico, off the US coast, the Newfoundland and Nova Scotia oil fields off the Canadian coastline, the Gulf of Mexico off the Mexican coast, and the Campos and Santos Basins off the coast of Brazil. The offshore basins of the islands of Trinidad and Tobago are rich in natural gas reserves. The Carina Aries and Perla oil field shallow water blocks off the Argentine and Venezuelan coasts, respectively, are abundant in natural gas reserves.

Other countries in the Americas which have offshore drilling investment potential are Suriname, the Falkland Islands, Uruguay, Cuba, Peru and Ecuador. Recent exploration attempts in the search for oil and gas reserves have indicated the potential oil and gas reserves in these countries.

Hectic shallow water activity off the South and Central American coasts are expected in the period 2010-15, as a result of previous as well as expected exploration investments off the coasts of Brazil, Mexico, Trinidad and Tobago, Venezuela, and newer regions such as Falkland Islands and Suriname.

Growth in Oil And Gas Demand in the Long Term And Increase in Offshore Oil And Gas Production are Driving the Growth of the Offshore Drilling Industry

The global demand for oil and gas decreased in late 2008 and 2009 due to the global economic slowdown. However, with the expected recovery of the global economy led by the emerging economies of India and China, the demand for oil and gas is likely to recover in 2010. Further, corresponding to the global economic growth, the demand for oil and gas is also expected to continue to increase in the future. This will result in a corresponding increase in production, especially from the offshore regions. With the global crude oil and natural gas demand not expected to subside and the onshore reserves facing depletion, the offshore crude oil and natural gas production is only expected to increase in the future. The offshore oil and gas industry in the Americas is expected to continue to increase in the future. The offshore crude oil production in the Americas was 2,441.1 million boe and the offshore natural gas production in the Americas was 943.7 million boe in 2009.

Offshore Drilling Industry in the US is Expected to be Temporarily Hampered Due to the New US Offshore Drilling Moratorium

On May 30, 2010, in response to the Deepwater Horizon Oil Spill, popularly known as the BP oil spill, which occurred in the Gulf of Mexico, the US Secretary of the Interior, Ken Salazar, issued a moratorium on all deepwater offshore drilling on the outer continental shelf for a period of six months. According to the Obama administration, the immediate stalling of offshore drilling operations was necessary to protect the American environment, and to "provide time to implement new safety requirements" and allow a new commission charged with investigating the leak to do its work. Deepwater oil production in the Gulf was allowed to continue, albeit under closer oversight and with tighter safety requirements, even as the drilling and instigation of any new wells was halted.

Categorically mentioning the need to eliminate real or perceived conflicts of interest in the Minerals Management Service, which oversees offshore drilling, in May, the US Secretary of the Department of the Interior, Ken Salazar, announced plans to split the agency into three parts: one to inspect rigs and enforce safety regulations; a second to oversee the leasing and development of offshore drilling; and a third to collect royalties from federal onshore and offshore leases, which average $13 billion a year. The restructuring creates three new bodies: Ocean Energy Management, which will oversee the licensing of drilling permits; Safety and Environmental Enforcement; and Natural Resources Revenue, responsible for the collection of royalties.

A review of offshore policies and regulations with regards to safety, environmental aspects, and crisis management and revision of offshore policies and regulations to stricter levels, has already begun in the US. One obvious change will be the push for stricter and inevitably more costly regulation to reduce risk and improve safety and damage to fragile environments.

On July 12th, 2010, the Department of the Interior of the Obama-led US administration issued a new, conditional moratorium on deepwater offshore drilling, not based on water depth criteria as in the previous moratorium, but based on stringent safety standards to be followed by offshore exploration operators, drilling contractors, equipment providers, and oilfield service companies to ensure safe, accident-free, and environmentally friendly drilling activity in the future. Apart from new safety regulations, the new moratorium will allow time to examine the spill response capabilities of exploration companies to ensure the minimum possible damage to ecology in the vicinity of the drilling area. New penalty tax laws on oil spills are expected to be introduced in the wake of the offshore drilling moratorium.

For the offshore drilling sector in the US, this will hamper business because of government interference and contribute to the global energy scarcity. The six-month moratorium will also wipe out thousands of jobs and millions of dollars of income from the offshore drilling business.