Low oil prices are challenging oil and gas operators. Two Houston-based companies, Fieldwood Energy and Schlumberger, whose operations are mainly in the Gulf of Mexico (GoM) discussed some challenges that their companies face due to today’s environment during an Offshore Technology Conference (OTC) discussion on 5 May.
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McCarroll, Teipner speaking at OTC. Image from OE Staff. |
Fieldwood CEO Matt McCarroll said that some of the challenges for the company, which is the largest operator on the GoM shelf, are regulatory issues and hurricane risks.
“We are regulated by a number of different federal agencies, neither of which have no coordination between them, neither of which propose a rule that overlap and complete one another,” McCarroll said. “BOEM, BSEE, ONRR, EPA, and the US Coast Guard are the main agencies that we deal with. There are a number of proposed rules which we think have a severe impact on the Gulf of Mexico going forward.”
Some of those rules include additional safety environmental management system (SEMS) requirements; new and pending rules and regulations concerning blowout preventers and well control with unproven new requirements; and new bonding and insurance regulations that could impede operator liquidity.
When it comes to BSEE or BOEM, McCarroll said that the headquarters people in Washington who aren’t close to the business, are telling regional people what to do and they don’t understand the oil and gas industry and it’s a big concern.
“We have to do a much better job informing the administration and elected officials and the people in Washington of what we do and how we do it. NOIA does a great job of that,” McCarroll said. “People in Washington don’t recognize the jobs that we create or the money we generate in this country. The Gulf of Mexico is probably the second or third largest source of revenue for the federal government, behind the IRS (Internal Revenue Service).”
Fieldwood’s challenges that come from hurricane risks that can heavily impact GoM operations include the limited ability to be fully insured, the ability to drill during the season due to restrictions by rig contractors, and the lack of comprehensive and cost-effective risk transfer solutions.
However, the low oil prices have not affected Fieldwood’s employees. In fact, the company is heavily investing in its people and in the future. McCarroll said that within the past two days, the company hired 60 new employees, have experienced no layoffs, and is hiring undergraduate students to invest in the future of the company and the oil and gas industry as a whole.
Tom Teipner, Schlumberger VP North America offshore, said the oil and gas industry is producing a total of about 1-1.5 MMb/d that is not being consumed globally. Oversupply comes from massive and over-spending, complexity, and design inefficiencies, he said.
Some risks for Schlumberger include technology, specifically research and development; people; and integrity and assurance, specifically well integrity, which Teipner said must remain a priority.
Deepwater exploration for the company is complex, challenging and high risk due to several factors, which consist of geological risks, reservoir risks, challenging economics and zero tolerance for catastrophic events.
Teipner said that Schlumberger’s main focus is risk mitigation to improve return on capital beginning with early collaboration and integration with its customers, which the company calls “slow loop planning.”
The drop in commodity prices has accelerated the need for operators to undergo their own transformation to focus on a more simplified and standardized design with the aim to reduce project cost, Teipner said.
“Integration and collaboration based on line objectives will drive efficiency that delivers much more measurable cost reduction than a current focus on unit cost reduction,” Teipner said.
“There is no one best model to fix issues that we have today. We (Schlumberger) have to align our goals and objectives with the operator’s goals and objectives. Then you have the perfect match,” he said.
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