# News Gulf Oil Production Moving to Africa

1. Jul 16, 2010

### Staff: Mentor

It has now become less politically/economically risky to drill deep for oil off the coast of Africa than off the coast of the US:

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2. Jul 16, 2010

### Staff: Mentor

Isn't the Congo smack dab in the middle of Africa?

I'll be darned, there is a tiny piece that has a coast.

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3. Jul 16, 2010

### Ivan Seeking

Staff Emeritus
So in sixty days they could make it back when a safe method of managing drilling is found. Obviously they are highly mobile or they wouldn't be leaving so quickly.

Or maybe they have been shown that in the US, they will be held responsible for disasters. If that's the case, then good riddance.

4. Jul 16, 2010

### OmCheeto

Given that the gulf seems to be the # 1 holding tank for these types of rigs, and the Canadian Atlantic is at 100% utilization, I'd say the Congo is the wrong direction for those rigs to be moving.

Economically speaking of course.

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5. Jul 16, 2010

### Staff: Mentor

What is the financial loss to the US of these rigs leaving?

6. Jul 16, 2010

### Gokul43201

Staff Emeritus
Heard it on NPR a few days ago. And what exactly is a "nonstop bid to halt production here"?

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7. Jul 16, 2010

### OmCheeto

I suppose that depends on who owns them. At a utilization rate of only 38.3%, that mean that only 93 of the 243 rigs are being used. Which implies that 150 rigs are in some big "used car lot" somewhere in the gulf right now. 30 or 40 of them floating away probably won't make that much of a difference.

8. Jul 16, 2010

### KalamMekhar

Upwards and onwards, they always say. When you have a government that will ban any sort of drilling at the first sign of troubles, the first thing you want to do is get as far away from there as possible.

9. Jul 17, 2010

### Gokul43201

Staff Emeritus
Where do you have such a government?

10. Jul 17, 2010

### KalamMekhar

Would you wait around for 6 months while your "boss" sits on his hands, and doesn't allow you to work or make money?

11. Jul 17, 2010

### Gokul43201

Staff Emeritus
How does this answer my question?

You mentioned "a government that will ban any sort of drilling at the first sign of troubles". I'm asking you a very simple question: what government are you talking about?

12. Jul 17, 2010

### Staff: Mentor

First, a few points of clarification:
120 days - it is a 60 day trip each way. And that doesn't take into account the economic calculus, which has to weigh the losses from a second 60 day trip against the profits from 60 days worth of drilling off the shore of the Congo. They may not return, even if the moratorium is lifted.
I think you misunderstood. These are rigs that became idle due to the moratorium, not a rig that was already in a "parking lot" somewhere. These are deep water rigs and there aren't as many of them out there.

Last edited: Jul 17, 2010
13. Jul 17, 2010

### Staff: Mentor

Regarding opinions:
It was my impression that you were against expanded offshore drilling in the US and in favor of a ban in deepwater drilling 'until it could be made safe'....which is pretty open-ended, based on (my interpretation of) your characterizations that it is inherrently unsafe. I guess I figured you'd be happy that drilling platforms are moving from the Gulf of Mexico to Africa. Aren't you? Do you really hope they come back and do more deep water drilling in the Gulf?

This is an example of an issue where people like to ignore the consequences. We can't have it both ways: decisions - any decisions - to limit drilling off US shores has a direct result of expanding offshore drilling elsehwere, which directly acts to worsten two of the fundamental problems (interlinked) with oil: foreign dependence and the trade deficit.

If people - such as our President - want to improve the trade deficit and reduce our dependence on foreign oil, they should not be taking/supporting actions that directly do the opposite.

Last edited: Jul 17, 2010
14. Jul 17, 2010

### Staff: Mentor

Well, we can ballpark it. The rigs themselves rent for half a million a day, but they produce on the order of 20,000 barrels a day. At $75 a barrel, that's$1.5 million a day.

They also have a crew of around 150, so that's 150 jobs lost per rig, not including any on-shore support crew (I have no idea how many that would be).

15. Jul 17, 2010

### Staff: Mentor

Ok.
Not completely sure, but it may have something to do with Obama being on his second or third attempt at a deep water drilling moratorium. Or he may be saying something broader. I'm not really interested in his characterizations of the issue, though - I posted the article (the first I found on Google) for the factual content.

16. Jul 17, 2010

### Staff: Mentor

Regarding Obama's position on offshore drilling, hopefully people haven't forgotten already that Obama was strongly opposed to offshore drilling early in his campaign before the public opinion numbers pushed him toward begrudging support. It is not reasonable to believe that he actually supports offshore drilling, but rather he's shown support for it due to intense public opinion pressure. So anything that changes public opinion will have a chance of allowing him to go back to his core beliefs on the subject.

In addition, the "6 month moratorium": does anyone here actually believe it would only be for 6 months? Based on the games he's playing with his nuclear waste "Blue Ribbon Panel", it is not a stretch to believe he could stall in lifting the ban. In 6 months, he may just say 'meh - not safe enough yet - we're still working on it'. Then it goes into the black hole with the nuclear waste problem.

Those are the types of possibilities that a businessperson has to weigh when deciding to pick up a drilling rig and move it to the Congo.

17. Jul 17, 2010

### OmCheeto

hmmm... So 33 rigs have been idled, which implies that 117 rigs were already idle.
117 previously idle * 20000 bbls/day * $75/bbl * 365.25 days/yr - rental costs =$42.3 billion/yr in lost revenue, before the moratorium went into effect.

Why is it now that we are worried about lost revenue and lost jobs?

So it's only been 8 days since the first rig left.

And 4 days since the second one left:
$234 million isn't quite so significant as$42 billion.

Well that's a peculiar number. At 10 permits a week, 117 idle rigs should have been operational in 3 months.

That sounds prudent to me.
So it's not like we've shut down the gulf, just potentially deadly, environmental disaster, can't shut it down because we don't really know what we are doing at these depths, kind of wells.

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18. Jul 17, 2010

### Staff: Mentor

Again, you're comparing two different sets of rigs and calling something "lost revenue" that didn't exist anyway.

19. Jul 17, 2010

### edward

Here is an interesting PBS interview with the CEO of Diamond Offshore Drilling.

http://www.pbs.org/nbr/site/onair/gharib/larry_dickerson_of_diamond_offshore_drilling_100713/ [Broken]

It appears that their drilling rigs will be gone for at least a year.

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20. Jul 17, 2010

### KalamMekhar

My bet is they will be back in 850-1000 days.