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Deep Water Oil Drilling Scaled Back, May Tighten Crude Supplies |
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Sunday, 22 March 2009 |
 Oil and gas explorers postponing or scrapping deep water drilling projects are potentially reducing crude supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said. Deep water ventures that were planned as of August would have added 6.3 millions barrels a day to global oil supplies, and so far projects that would have
provided 2.4 million barrels have been canceled or delayed, analysts
Martijn Rats and Robert Pulleyn said in a report today. The amount of
future production lost is about 90 percent of India’s demand.
“Lower oil prices and the weaker credit market have had a detrimental
impact on the offshore construction market,” the analysts said.
Contracts for new floating platforms may halve to 10 this year from 19
last year, they said.
No new contracts have been awarded since last August when Morgan
Stanley estimated that companies needed 139 new production platforms to
develop fields in deep seas, the report said. Since then 11 orders were
canceled and 46 delayed by an average 15 months, it said. Crude oil has
declined 65 percent since reaching a record $147.27 a barrel in July.
Drilling activity has dropped, with 2,753 rigs operating worldwide at
the end of February, 19 percent fewer than a year earlier and 221 below
January’s level, according to Baker Hughes Inc, the third-largest
oilfield services company.
Oil climbed above $50 a barrel yesterday to close at a three-month high
after the Fed said it was seeking to purchase U.S. Treasuries,
mortgage-backed bonds and other debt. Crude has fallen more than 65
percent since a record last July.
“We maintain a particularly bearish stance on crude oil into the second
quarter, suggesting further volatility in coming months before a
sustainable recovery starts later in the year,” the analysts said.
Source: Bloomberg
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