Global Layoffs

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Oil prices have been slipping over the past half year from a surplus in product across the world. Prices at their peak were lingering around $100 a barrel, which saw the industry grow in leaps and bounds with new jobs being offered often. Since its peak price in 2012, price per barrel has fallen to half its value, prompting oil and other commodities companies to implement cost cutting measures, one of which being layoffs.

Tensions are high for those employed by oil companies as the industry has seen over 100,000 jobs lost worldwide. Confidence has taken a further hit as the oversupply of engineers are being met with no job openings. Citigroup inc. has predicted that despite the price per barrel making its way over $50 a few weeks ago, it may drop to the $20 range around April. The surplus of crude has continued to rise as producers are not cutting output any time soon.

Big oil companies such as BP Group and Woodside Petroleum have announced that they have measures in place to tighten costs further if the market does not rebound to their liking. these two firms have been operating out of Australia, who with the current industry climate have taken a big economic hit. $70 billion has been poured into AUstralia to increase its natural gas export, an expense that is now seeing its beneficiary projects delayed, or cancelled. In Brazil, and Mexico the economic climate has been taking a hit as well. With no quick recovery predicted, many international schools are closing along with a reduction to government royalties.

Petroleos Mexicanos has a workforce of 153,00 employees has vowed to take care of their own during these tough times. Reductions to purchases and contracts have been able to save the company between $2 and $3 billion, but 8,000 workers were still laid off.

North Sea job oil production has also felt the same woes as the rest of the world. The region offers jobs to those who live in Aberdeen, Scotland, Stavanger, and Norway. So far, 11,500 jobs have been lost with another 30,000 looming below the axe with the reduction of value to the region being cut by $3.6 billion.

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Documentary Reveals Oil Flaws In China

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After Under The Dome was released in China recently, the Chinese officials and government advisors were under fire by the environmental board to go over and understand why the standards of China’s production of oil and gas is so subpar compared to other continents in the world like North America and Europe. The problem lies in the air pollution that comes along with producing oil in China. They are not up to standards which are seen in the United States, Canada, and even the United Kingdom. Due to the standards being so low, Beijing is known for having mass air pollution and smog in the city constantly.

Chinese People’s Political Consultative Conference (CPPCC) spokesman, Cao Xianghong, who were under fire explained the solution with the following statement to the Wall Street Journal, “This is a highly technical exercise and needs time, It can’t be done just with me talking here today.” The documentary director of Under The Dome, Chai Jing came to ask ‘why can countries on the western hemisphere able to produce safer air than China?’

Even though her questions was not wrong to ask, China National Petroleum Corp. (CNCP) explained, “Sinopec, the nation’s largest refiner, had spent more than $33 billion upgrading fuel quality during the past decade. The company said it was investing $3.7 billion in more than 800 environmental-protection projects between 2013 and 2015.”

Unlike China, The United States and Canada are able to provide clean, safe energy by taking the steps which China is taking now and investing in environmentally focused projects in the past. These actions taken in the past and keeping the oil industry out of major cities has helped North America keep their air pollution clean to a certain extent.

For more oil updates, you can visit Maritime Drilling School‘s Official Website.

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Gas Prices to Hit All Time High?

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Back in 2010, John Hofmeister, former President of Shell Oil, predicted gas prizes would soar to $5 a gallon in 2012 due to rising crude oil prices. However, Hofmeister missed his mark as they only reached $4 a gallon. Now today, Hofmeister is preaching that people should look out for that $5 a gallon scenario again.

Today, gas is $2.14, it’s lowest price since May of 2009. Hofmeister wants drivers not to get too comfortable with this price as he believes things will be very different later this year. With crude oil hitting below $46.50 a barrel today, Hofmeister believes crude oil will rebound back to its $80-90 price range and with that rebound, people will again be paying at the pumps. While the price of oil continues to decline, we did however see some resistance. Last week, the price of oil had its first rise in almost two months. This could be just the first of many signs to come.

Hofmeister believes that if we do not see $5 a gallon this year or early next, that it will at least happen sometime this decade. If demand growth continue to climb towards 100 million barrels a day and industry production falls short, we can very well see $5 a gallon. To help instill confidence in this theory, Ryan Lance, CEO of ConocoPhillips, also believes oil prices can rebound faster than anticipated, much like they did in 2009.

While Hofmeister is a credible person and we have every reason to believe him, other credible sources in the industry have different views on the future of gasoline prices. The US Energy Information Administration predicts an average gasoline price of $2.33 this year and $2.72 in 2016. Obviously this a very different prediction compared to Hofmeister. While Hofmeister was wrong in 2010, he still was not far off. Prices did in fact rise to $4, so do we take what he has to say seriously this time around?

For more, please visit CNBC‘s take on the issue. For more information on drilling and oil news, please visit Maritime Drilling School.

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Oil Projects: Come To Screeching Halt

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With oil and gas prices the lowest since 2009, many companies are being forced to shut down future projects. The uncertainty of the oil industry has put doubt in typically certain oil investing companies. Around $60 billion worth of projects have already been shelved, assuming many more to follow. With oil barrel prices half the price they were at this point a year ago, it is no surprise many investors are afraid to spend billions of dollars. From $115 USD to now $53 USD a barrel, The energy consultancy claims they “expect $12-billion worth of projects in the Canadian oil and gas sector to be deferred this year.” This number is expected to increase, $20 billion in 2016, and $27 billion in 2017. oil-302563_640

The loss of these projects in Canada is a cause for concern for everyone in the oil industry. Thousands of jobs are in jeopardy due to the drastic drop in cost per barrel. According to the Financial Post, the following list are expected to face delays, “Cenovus Energy Inc.’s Christina Lake Phase H and its Narrows Lake Phase A; expansion work at Husky Energy Inc.’s Sunrise SAGD plant; and PetroChina’s MacKay River project.”

Even though many projects will be delayed, many companies are going to continue production in hopes the price per barrel begins to stabilize. By 2017 these projects are expected to come to fruition according to the Financial Post, “the $13.5-billion, 165,000-bpd Fort Hill venture owned by Suncor Energy Inc., Total E&P Canada Ltd. and Teck Resources Ltd.; Canadian Oil Sands Ltd.’s $3.9-billion 100,000-bpd Mildred Lake replacement project that had been expected to start in 2014; Imperial Oil Ltd.’s 110,000-bpd Kearl Phase 2; ConocoPhillips Canada Ltd.’s 109,000-bpd Surmont Phase 2; and Royal Dutch Shell Plc.’s 100,000-bpd Jackpine expansion.”

According to Bob Brackett, an analyst at NY — Sanford C. Bernstein & Co. explained, if the price per barrel averages $80 USD for the remainder of 2015, the global spending of oil will drop 20% and would surpass the fall in price faced in both 1999 and 2009. In 2009, the oil and gas sector dropped 20% but luckily for Canadian producers, they were able to bounce back and regain control. With only a 10-15% drop expected in 2015, economists are hopeful the numbers do not rise about 20%.

The reaction prompted by the decreasing value of oil has caused the United States and Canada to decrease their spending plans and challenge the industry to settle itself before putting back into the economy.

For more, please visit Financial Posts take on the issue, and please visit Maritime Drilling School‘s official page.

 

 

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Oil Prices Dropping in 2015

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With gas and oil prices so slow these past couple of months, it’s no surprise that barrel prices are at $70, which is 40% lower then it was in June earlier this year. These prices are based to what The North Sea Benchmark, Brent crude. These low prices have caused energy stocks to lose an estimated $500 billion this past week alone. In order for the North Sea Benchmark to balance the budget in 2015, they must be selling their barrels at $93 in Saudi Arabia, and as much as $120 a barrel in Russia.

According to analysts there are three major factors that have gone into these dramatic spikes in oil prices are:

1. US oil and drilling is more efficient

Recent US pipelines and fracking that have been growing the US has been highly effective  the past few years which has dropped the need to get oil and gas from other international distributers. This and the high number or electric and hybrid cars trending in the US has caused consumers to need less gas. Since the North Sea Benchmark prices are so low though, the US gas and oil suppliers have been buying these barrels at $70 a barrel. If this trend continues, gas prices will continue to further drop and be at a low that has not been seen since the early 2000′s.

2. No demand needed in developed countries

Developed countries which have a stable oil economy and are able to hold off on buying oil. This is because of the low oil prices around the globe, so rather then selling the oil at a very low price, keeping it for their own economy and selling it at their normal prices, keeping their domestic oil economy stable.

3. China’s economy is down

China accounts for about a third of all the worlds gas consumption alone. The Chinese economy has been in a slump recently so the usage of gas and oil has dropped drastically. It goes hand in hand that with China’s falling economy that gas prices will be downsince the demand for gas and oil is not there in the most demanding country in the nation.

For more please visit: MarketWatch

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Quanta and Banister Join Forces

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PipeLine deal could change the Canadian Oil Industry

A major acquisition took place in the Oil pipeline industry in Canada. Banister Pipelines was acquired by Quanta Services. This acquisition will expand Quanta’s Canadian Pipeline across Canada and will continue to provide service to Banister’s current customer base, but now with Quanta’s energy infrastructure resources.

Both sides are very pleased with the deal since both Quanta and Banister will benefit off one another.“We anticipate unprecedented levels of investment in pipeline and related infrastructure to occur in Canada over the next several years, driven by the development of the Canadian oil sands and unconventional shale formations. Banister’s operations significantly enhance our ability to provide pipeline infrastructure solutions to our customers,” said Jim O’Neil, president and chief executive officer of Quanta Services. Quanta respects Banister and their management structure and understand the great reputation that Banister has built over the years. Jim O’Neil also understands this collaboration of the two companies will boost both in their respective fields and can use this collaboration to continue the Canadian Pipeline system. 

The deal closed at the end of business November 21, 2014. Quanta will now be run under the name ‘Banister Pipelines Constructors Corp.’ Together they are estimated to make $350 million in revenue in the year 2015.

More background information about the two before the merger, Quanta Services is a contracting company which specializes in infrastructure solutions in the power, oil and gas industries. Quanta has the ability to design, and construct projects which are local, national and even international. To read more on Quanta, visit their site at http://ift.tt/1gy3IJH.

As for Banister Pipeline Constructors, they are located in Nisku, Alberta. A company which is known for their safe and regard for natural resources as well as landowners properties. They are considered the best value for pipeline construction based on their management and operations. They have over the years became a leading mainline pipeline construction service in the Canadian oil and gas industry.

This deal should bring two leaders in their respective industry together and create a pipeline which supports all of Canada in a safe and efficient way.

For more on this acquisition, visit MarketWatch

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A Look into Land Drill Preparation

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A look into land drill preparation

After surveyors have selected a site for oil drilling there are a number of things that go into the process of preparing a drill site.  Mounds of logistical hurdles and physical obstacles are encountered along the way. 

First the surveyors will determine the boundaries of the site and arrange environmental impact studies of the location, should they be required.  From the oil company’s side of things, they’ll need to sign lease agreements in most cases as well as right of way accesses and titles for access to drill the area on land.  Offshore, legal jurisdiction of the site will have to be arranged.

Once legal issues are cleared up there the drilling team can prepare the site for the drilling procedure.

On land, crews will have to:

  • Make sure that the land is cleared and leveled.  If unaccessible, access roads will have to be built for equipment to get to the site.
  • Find a water source.  Because drilling requires a water source there will have to be one that is made available to the site.  If there isn’t a natural source nearby, the crew prepares the site by digging a well.
  • Dig a reserve pit.  A reserve pit is used to dispose of any excess rock and mud that comes from the drilling process.  To avoid harm to the environment the pit is lined with a sturdy plastic sheet and should the site be in an ecologically sensitive area, the remaining rock and mud will be disposed of in a safe location and placed in a mobile truck.
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Cellar

The hole must then be prepared by digging a cellar.  You can see an example of what a cellar looks like to the right.  It is dug around the actual location of the hole in a square or rectangular fashion.  This, paired with a succession of other holes around the site, allows the rig to rest safely on the ground and provides a work space for those near the hole made for drilling. 

A small truck then usually takes the drilling responsibilities on first.  Because the first hole will be shallower than the main section of the drilling, a small truck handles the responsibilities before the main rig then comes on.  This first hole is a shallow and larger hole from what will be the final product.  Other holes will also be dug nearby to help store equipment.  After this initial process the land rig is brought on to finish the remainder of the drilling.  You can find a numbered key here to see the different pieces of equipment on your average land rig.

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Land Rig Parts

How equipment is brought to the site is determined from its remoteness.  It isn’t uncommon for equipment to be brought in by helicopter or barge and in some cases barges become the drill site, as they are able to access inland water.  An example of this would be a lake or a marsh.

For even more information on the preparation process of oil drilling be sure to conduct this source.

Finally, enjoy the following video from Industrial3D for a visual representation of the process.

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South Africa

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maritimedrillingschool_southafrica

South Africa could be the next big thing in offshore oil and gas drilling.  Durban President Jacob Zuma mentioned on Wednesday that research shows a high number of oil reserves off the coast of South Africa, potentially 9 billion barrels of oil and 11 billion barrels of natural gas, these numbers provided by IOL.  It’s a number of barrels that could supply South Africa for many years in the future, 40 years matching with current South African oil consumption and 375 years of the country’s current level of gas consumption.

It was also on Wednesday that President Zuma announced, because of their findings, his plan to drill in these deep-water reserves for the next 10 years.  30 rigs will be deployed to exploit the rich resources located off the coast.

The reserves could bring production coming from the South African coast to 80 percent of its current oil and gas imports, up to 370,000 barrels of fossil fuels per day for the foreseeable future with a max prediction of 20 years of production.

With the amount of production that is scheduled to happen in the next 10 years, there will be many new jobs coming to the country as well, boosting its economy at a very important time.  Predictions are coming in and it is expected that there will be 130,000 new jobs coming to the country, boosting its GDP growth by 1 percent each year the drilling takes place.

The oil and gas exploration has not been the only thing taking place in the vast sea of the coast.  President Zuma stated that the reason all of this new found information is coming to them now is due to the fact the ocean in the area has remained untapped and mostly unexplored.  Discovered resources should lead to aquaculture, an extension of South Africa’s economic area and more room for ship repairs.

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Powder River Basin in Wyoming

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With flagging industry exacerbated by the economic downturn in 2007, many areas in the United States have become economically depressed over the last fifty years. In areas that once provided blue collar workers with a plethora of factory or mining jobs, such as West Virginia, but have been in decline, many have cashed in on the expansion in domestic oil and gas drilling. Wyoming, too, has been in decline for decades, but now finds itself a potential poster child for oil- and gas-driven economic revitalization.

maritimedrillingschool_basinOil production in the Powder River Basin in northeast Wyoming had been flagging since the mid-20th Century; however, according to study released by the U.S. Energy Information Agency, this trend of decline has effectively been reversed thanks to advancements in extraction technologies such as hydraulic fracturing. In 2009, production reached an average of around 38,000 barrels per day during the first quarter, with a yearly total of over 17 million barrels.

Since then, 590 new wells have been built. In 2013, figures supported by data from both the U.S. E.I.A. and the Wyoming Oil and Gas Conservation Commission show that the new wells and improved practices drove production to around 78,000 barrels per day, reaching 30 million barrels by the end of the year. Much of this increased production has actually come from the older wells in Campbell and Converse counties, where newly improved methods have once again made it profitable to extract. In effect, oil production has been doubled over the last five years, a welcome return for oil and gas companies and a wave of relief to workers feeling the strain from the economy.

Plans for expanding the extraction operation are ongoing. Currently, the U.S. Bureau of Land Management is studying the potential for Converse County, Wyoming to support the construction of over 5,000 additional wells over the next 10 years. With production having doubled in the last five years from just under 600 wells, the prospects of the increased production that would come from the addition of 5,000 wells over ten years are tantalizing.

There is sure to be oil and gas ready to be tapped for years to come, but industry economists acknowledge that their profitability will be largely predicated on domestic oil prices. Domestic oil prices have been declining over the last quarter, but as long as the price remains above $90 per barrel (the price is currently at $92 per barrel), experts say that production will still be viable.

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