Offshore drilling could see resurgence

In light of recent political events in the Middle East and in the United States, oil prices have already seemingly found a floor with both global-benchmarks Brent crude and NYMEX-traded West Texas Intermediate (WTI) crude prices trading in a low to mid $60s range for an extended period of time. However, that trading average could easily trend upward into the low to mid-$70s range.
During the 2014-2016 global oil price crash, oil and gas exploration and production (E&P) companies, pulled back their endeavors because of the high costs of intensive offshore drilling activities. 

However, this has now changed. Now, it seems offshore drilling, at least in some areas of the world, such as the waters of Southeast Asia, could be positioned for a comeback. 

In late January 2018, industry analyst Rystad Energy, said that an estimated 50 oil and gas fields in Southeast Asia, with a collective four billion barrels of oil equivalent (boe) resources, would likely be approved for development between 2018 and 2020.

These fields will require US$28 billion worth of CAPEX from final investment decision (FID) to first production, the consultancy said. The US$28 billion is for greenfield opportunities available to 2020. However, many of these new fields are in later stages of earlier production, with the largest infrastructure already in place; hence so-called brownfield projects.

This trend could continue, at least according to oil services provider Baker Hughes GE (BHGE). Just recently, a BHGE senior executive said that the company was on the hunt for smaller oil and gas projects in the Asia Pacific region to replicate a project in Papua New Guinea (PNG) where it is providing services and financing.

Photo caption: A worker checks the valves at the West Qurna oilfield in southern Basra October 13, 2014.

Image courtesy of Essam Al-Sudani/Reuters
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