Deepwater Gulf of Mexico may have 60-plus rigs by 2017: analyst
Houston (Platts)--11Dec2012/306 pm EST/2006 GMT
The deepwater Gulf of Mexico could be the strongest offshore market in
the world through mid-decade with more than 60 rigs working there by 2017, up
from the mid-30s today, despite being one of the world's most mature
hydrocarbon basins, according to a long-time US Gulf analyst.
"After essentially being left for dead following the devastating Macondo
blowout ... the deepwater Gulf of Mexico is in the early stages of an
extended growth cycle and is poised to be the strongest offshore market in
the world through 2015," International Strategy and Investment's Jud Bailey
said in an analysis released late Monday.
Further exploration and also development of discoveries such as Anadarko
Petroleum-operated Lucius, ExxonMobil-operated Hadrian, Chevron-operated Big
Foot and Jack/St Malo and BP-operated Tiber and Kaskida should fuel that
growth, Bailey said.
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In April 2010, the BP-operated Macondo well blew out, causing
Transocean's semisubmersible Deepwater Horizon rig to explode and sink,
leading to the largest marine oil spill in US history. The accident caused
the deaths of 11 men aboard the rig, and led to a federally mandated
nine-month ban on deepwater drilling while the US government formulated and
then implemented stricter safety standards. The temporary ban on deepwater
drilling was lifted in February 2011, with issuance of the first post-Macondo
The Gulf remains a source of "significant" growth potential for large
integrated oil companies, large independents, and also oil service, capital
equipment and rig companies, Bailey said.
"While an increase in deepwater drilling activity is widely expected in
the Gulf of Mexico, the magnitude of the increase is under-appreciated as
well as the revenue and profit potential for [oilfield] service companies due
to the higher concentration of ultra-deep and highly service-intensive wells
to be drilled in the Lower Tertiary and Miocene trends," which are large plays
located respectively in the southwest and central US Gulf, said Bailey.
Based on ISI Group's evaluation of discoveries and future drilling plans
by the majority of operators in the area, the brokerage predicts the
deepwater rig count in the US Gulf will grow from about 36 floating rigs
currently to roughly 50 such rigs by mid-2014 and 60 or more by 2015-2017,
said Bailey. That should be fueled by development and further appraisal of
"multiple" Lower Tertiary and Miocene finds in the last five years, he said.
"In fact, we forecast the balance between exploration and development
wells drilled in the deepwater Gulf of Mexico to return to roughly 50/50 for
the first time since the early 2000s, which implies almost three times the
annual development activity as the peak of the last deepwater cycle in
2006-2008," said Bailey.
While the analyst foresees exploration activity to "only modestly"
outpace levels found during the last cycle, the "primary catalyst" for growth
in the deepwater US Gulf should be the "significant" ramp up in development
activity, "which we forecast to increase to roughly 70 wells per year," he
Moreover, Bailey predicted the number of deepwater exploration wells
drilled in the region would rise to about 60-70/year over the next three
years. That is "modestly" higher than the number drilled each year from
2002-2008 but a "significant step-up" from under 30/year in 2010-2011, he
--Starr Spencer, email@example.com
--Edited by Lisa Miller, firstname.lastname@example.org