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Wednesday, 23-Feb-2011 01:21 Email | Share | | Bookmark
Offshore Oil Drilling

Among all of the undertakings on the planet, this could easily rank among the riskiest ventures - offshore oil drilling. Let me explain why: In 1983, twelve companies invested nearly $2 million drilling for oil within the Beaufort Sea, Located North of Alaska. The exploration was depending on the discovery of new oil fields, but the well ended up being a dry hole without any oil. Little question then that this industry is not only dangerous for the workers, but expensive for investors and consumers alike.

Based on an Arizona Geological Study, oil drilling within Arizona costs in between $400, 000 and $1, 000, 000, with respect to the depth of the hole and it is location. A rig effective at drilling most exploratory openings typically costs $8, 000-15, 000 daily. Well then, exactly why is drilling for crude oil so expensive?

Here are a few examples of some from the costs involved:

* Payments for contractors, welders, technical engineers, supervisors, mud loggers, geologists, researchers
* Personnel with regard to drilling, logging, cementing, casing along with other logistics
* Clearing all of the dues with the actual landowner (territorial obligations if offshore), repayment of taxes, charges for attorney representation, in addition to drilling the actual well
* Expenses for maintenance: There will end up being three shifts along with personnel employed twenty-four hours a day, so amenities for that crew like hotels, restaurants, transport, drinking water and food are often included.

Onto the procedure of drilling, how may be the well drilled?

The drilling rig bores a hole in the earth so that steel pipes can be inserted. Pipes or casings such as cement would then be placed in between for strength in addition to for separating various pressure zones, when they exist. Now the well is drilled deeper, and more casings tend to be added. At occasions, 2-3 layers of casings will be built with respect to the geological composition of the area. The turn table then goes by the drill chain onto the pit. The drill chain rotating by 'top drive' or even 'power swivel' system extends the reach of drill's bit. This extension is done by using the derrick (the framework holding the drill string). The bit then slashes the rock in to smaller particles.

Drilling liquid, also called mud-mixture associated with fluids, chemicals, abrasives as well as solids - is actually then pumped on the drill chain. This fluid clears the actual cut rock bits onto the top. Compressed air is substituted for that fluid, at occasions. In turbo-drilling, a turbine is positioned in the drill string. Mud moves through this generator causing the drill bit to turn.

We saw previously that oil drilling is extremely expensive, so would be the drilling contractors simply because:

* Discoveries associated with new oil wells is extremely rare
* Reduced yields from old/mature wells
* High risks active in the exploration process
* Fluctuating price of gas and oil
* Increased need for oil in addition to for drilling companies

The drilling functions are done through specialized drilling businesses like Transocean, Gemstone Offshore Drilling, Inc as well as Noble. In common, these drilling businesses rent or rent their drilling rigs to gas and oil companies like ExxonMobil, Regal Dutch, BP as well as Shell. In return, they will earn income through day prices.

Average well cost in the united kingdom continental shelf within 1998-Northern North Ocean £ 8-12 zillion, West of Shetland £ 5 -- 15 million, The southern area of North Sea £ 7 -- 12 million, Irish Ocean £ 2 -- 3 million. To get a better picture of the costs involved, let's check out some of the actual drilling companies:

Transocean: This is actually the world's second biggest offshore oil drilling service provider. Recently the organization penned a contract for any well in Western Africa for $630, 000 a day and it is Deepwater Pathfinder may be the most expensive drill ship on the planet. It also authorized a three year contract from the consortium of companies at $460, 000 each day in the Q3 associated with 2009. Most of Transocean's drilling is happening in cina, the U. NITED KINGDOM., Middle East, the actual U. S., in addition to parts of The african continent and Asia. Typical day rate associated with Transocean has risen from $211k in 2007 to $283k within the third quarter associated with 2009.

Diamond just offshore drilling, Inc: Working as offshore agreement drilling, the company focuses more on the Gulf. It has regarding 45 rigs, 30 semi-submersibles (11 high- specification effective at working in water depths in excess of 4000 ft, 19 intermediate rigs-work at depths under 4, 000 foot., 15 jack-ups- works at water depths as high as 400 feet). Your day rate was $386, 000 within the fourth quarter associated with 2008 which elevated to $360, 000 daily in the very first quarter of '09. In the Q2 associated with 2009, the day time rate was $381, 000 with regard to high specification floaters, $286, 000 with regard to intermediate semis as well as $146, 000 with regard to jack-ups.

Noble: It's the third largest just offshore oil exploration as well as production company along with presence in Indian, Mexico, Brazil, Center East and Western Africa. It offers 63 drilling models (13 semi submersibles, forty-four jack-ups and 3 submersibles). The day time rate was $83, 417 within 2006 and $164, 000 last year (by comparison typical day-rates for Noble's worldwide fleet was $60, 922 within 2005 and $83, 417 within 2006).

Ensco Worldwide: It has forty five jack-ups, one semi-submersible, 1 barge rig as well as three ultra heavy water semi submersible rigs. In addition to the US, the organization has presence within Europe, Asia Pacific and Africa and also the Middle East. Your day rate of the organization rose to $155, 000 within 2008, a dramatic increase in the rates of $114, 762 within 2006 and $139, 882 within 2007.

Seadrill: This particular Norway based organization received contracts really worth $4. 1 billion with regard to three deepwater rigs through Brazilian Petrobras -- day rates was a lot more than $600, 000.

Though the price of crude is rising, the companies nevertheless earn profit, actually, their profit offers surged- as seen in the above discussion-- since many of their contracts run through 2011. However, one thing is certain: Offshore Oil Drilling will continue to struggle to overcome cost issues in the future.


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