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Maersk Bags Gulf of Mexico Contract for Its Under-Construction Drillship

More than one year prior to delivery Denmark’s Maersk Drilling has signed a contract with a major oil company for the first in a series of four identical ultra deepwater drillships currently under construction.

The contract duration is three years and commencement is expected by end 2013 upon delivery from Samsung Heavy Industries in South Korea and mobilization to the US Gulf of Mexico. The estimated contract value is USD 610 million including mobilization, but excluding cost escalation and performance bonus.

“With the signing of this contract for the first of our four ultra deepwater newbuild drillship we are able to add another USD 610 million to our contract backlog providing a solid basis for our further growth,” says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board of the A.P. Moller – Maersk Group. “The US Gulf of Mexico remains a focus area of Maersk Drilling, and we are pleased to enhance our presence in this attractive market. With permitting activity normalizing after the Macondo incident in 2010 and the lease sales in the region, we believe the fundamental demand for our services in this region is in place”.

Maersk Drilling has performed deepwater operations in the US Gulf of Mexico since 2009 with the ultra deepwater semi-submersible MÆRSK DEVELOPER.

Facts about the four newbuild ultra deepwater drillships

In 2011 Maersk Drilling ordered four ultra deepwater drillships at Samsung Heavy Industries in South Korea. The rigs will be delivered in 2013 and 2014. The total investment was USD 2.6 billion.

The design and capacities of the new drillships include features for high efficiency operation. Featuring dual derrick and large subsea work and storage areas, the design allows for efficient well construction and field development activities through offline activities.

With their advanced positioning control system, the ships automatically maintain a fixed position in severe weather conditions with waves of up to 11 metres and wind speeds of up to 26 metres per second.

Special attention has been given to safety onboard the drillships. Equipped with Multi Machine Control (MMC) on the drill floor, the high degree of automation ensures safe operation and consistent performance. Higher transit speeds and increased capacity will reduce the overall logistics costs for oil companies.


Push for permits in Gulf of Mexico

By Sheila McNulty in Houston

Sixty per cent of rigs contracted in the Gulf of Mexico are not working almost a year and a half after the Macondo disaster.

Industry participants are meeting on Tuesday with regulators to speed up permitting in the world’s most productive deepwater and oldest shallow-water basin, which was temporarily halted after the April 2010 rig explosion but has been slowly ramping up.

“We have the will to drill,’’ said Jim Noe, executive director of the Shallow Water Energy Coalition of companies drilling in the gulf’s shallow waters. “We just don’t have the permits to drill.”

Of 115 rigs in the gulf, 51 have no contracts, said Cinnamon Odell, senior rig market reporter at ODS-Petrodata, which provides data on the energy sector.

Of the 64 with contracts, she said, only 48, or 41.5 per cent of the fleet, are working.

That is down from the 74 contracted rigs in March 2010 – the month before Macondo. Sixty-five of those rigs – or 56.4 per cent – were working at that time.

Companies have complained that slow and unpredictable permitting costs them millions of dollars and has led some to pull rigs from the gulf.

Analysts said BP has for months been paying $2.4m per day for five rigs on standby.

BP Macondo oil well

BP has had a difficult time getting access to permits

The UK company has had a particularly difficult time getting access since it was in charge of the Macondo well that exploded.

In reporting its second-quarter results, BP said it had one rig back at work but added: “In the third quarter, we expect costs to continue to be impacted by rig standby costs.”

Bill Townsley, Royal Dutch Shell’s deepwater programme delivery manager, said it had seven rigs running, up from five when Macondo hit.

But the issue is having permits to drill new wells when a job ends, which is every two to five months.

“Right now, we’re receiving permits just in time,” Mr Townsley said. “We are working to get permits ahead of time. The Gulf of Mexico is one of our major heartlands.”

Shell would like to have 11 rigs in the gulf in 2013.

Analysts said at least nine rigs have left the gulf since the accident – six this year with two leaving this month.

“Once they leave, they typically leave on a long-term contract,” said Jim Dillavou, of Deloitte, the consultancy. He noted that several rigs destined for the gulf are going elsewhere.

Melissa Schwartz, spokeswoman for the Bureau of Ocean Energy Management, Regulation and Enforcement, said: “Personnel are working overtime to process pending permits.”

Since the moratorium ended, she said, regulators had approved 68 new shallow water permits, 112 permits for 34 unique deepwater wells requiring sub-sea containment and 45 permits for additional activities, including water injection.

“There are more rigs on contract today than there was a year ago,” she added.

But Mr Noe, also senior vice-president of Hercules Offshore, the gulf’s largest shallow water drilling company, said there was a moratorium on drilling in the deepwater gulf a year ago, so the comparison was meaningless.

“We have 18 of our 25 rigs working today but that may not last long,” he said. “We have 10 or 11 committed jobs for the rigs but we don’t have permits for the work yet. Without the permits, these wells won’t be drilled.”

Original Article

IER Presents the American Energy Act

Tom Pyle

Posted April 19, 2011

Over the last year, we have continually and appropriately criticized the Department of Interior for dragging their feet with respect to the issuance of permits for both shallow water operations and deep water operations in the Gulf of Mexico in the wake of the tragic, idiosyncratic Macondo spill last April.

That criticism was warranted by the immediate set of circumstances.  But it is also important to recognize that the bureaucratic delay that has been on display for the last year or so at Interior is emblematic and symptomatic of a larger problem.  The simple truth is that virtually the entire federal energy and environmental permitting regime is designed to enrich lawyers and environmental activists, empower federal bureaucrats, and impoverish the United States and her citizens.

To correct this, and to help ensure that the United States can access, use, and derive benefit from what is the world’s largest reserve of energy resources (see what we mean here), the Institute for Energy Research has crafted the American Energy Act of 2011.  This model energy legislation will:

  • Allow the United States and her citizens to access, use, and derive benefit from all of its energy resources, which constitute the largest supply of energy in the world;
  • Put the United States back in charge of its own energy destiny and improve our energy security;
  • Encourage innovators and entrepreneurs to create jobs (including manufacturing jobs) throughout the nation;
  • Lower the price of energy for Americans and American businesses by producing more of our own energy;
  • Improve our ability to compete globally;
  • Generate hundreds of billions of dollars in taxes to federal and State governments, helping to pay down the record deficits; and
  • Reduce reliance on lawyers and increase reliance on scientists and engineers in making decisions related to energy and the environment.

This model legislation is a dramatic departure from the current regulatory approach, which is characterized by glacial permitting processes, endless rounds of litigation, and bureaucratic indifference to potential job creation, tax revenue, or reduced pressure on energy prices.  In case you doubt that, take a look at the Obama Administration’s record (here and here).

In contrast, the American Energy Act will provide transparency, reduce bureaucratic and legal delays, ensuring that those who care about projects (one way or the other) will get prompt and meaningful decisions and limit litigation.

You can find a copy of the model energy legislation here and a section-by-section summary of it here.

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