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Pareto On The Cruel Offshore Drilling Summer Ahead
The best and most erudite investment bank in the offshore drilling space, Pareto, analyzes the impact of the 6 month offshore drilling ban. The firm observes: "With a 6 month drilling ban in the GoM and oil spewing into the sea at a rate of more than 12,000bpd, both sentiment and fundamentals for offshore drilling is challenged. The long term consequences are uncertain as it is still unclear how long the ban will eventually last and how many rigs will leave the region as a consequence. However, as long as the ban does not significantly exceed the current 6 months, we believe a large part of the US GoM fleet will remain in the area. Nevertheless, this unprecedented disaster will shape the future of the industry through a stricter regulatory climate and an increased environmental focus." Furthermore, as Pareto points out, with Ultra Deepwater day rates about to plunge to $50-75, EBITDA for most of the UDW exposed Gulf rigs will certainly be impaired. Nonetheless, with firms like NE, SONG, and SDRL all trading at sub 3x 2012 EBITDA, and with pretty decent asset coverage, there could be some good investment plays in either the stock or the first-lien space.
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Offshore Nfld. with the Stena Caron
http://www.theglobeandmail.com/report-on-business/industry-news/energy-a...
fransix, yah the government has ordered a review by an independent oil industry associate. 'associate'. we'll all be waiting for that one.
here's something that might not be in the review , if it is understandable, the last one from this independant wasn't comprehensable.
i expect we'll get more ,'drill baby drill, it will all be just fine. trust us'.
http://www.eutimes.net/2010/05/toxic-oil-spill-rains-warned-could-destroy-north-america/
BP will never destroy the well, even if it spills for a year. The potential for lucrative returns once the oil can be retrieved still far outweighs the costs of the disaster. They'll be allowed to finagle until they find a way. Meantime the environment and the economy will suffer.
BP knows that Exxon only spent $3 billion over 20 years to cover the Valdez spill, including all civil suits and cleanup costs. In 2007 the Supreme Court reduced punitive damages to just $500 million. Exxon kept cases tied up for 2 decades.
The benefits of waiting it out far outweigh the risks for BP. They have no affirmative duty to the environment, the public, the government, the states or anybody else.
I think you're right on that score. This is a huge find, and along with it, come the accidents. They'll be siphoning endlessly to their disadvantage, but if they manage to cap it, then you have control over a huge find.
Business Week article discussing BP:
http://www.businessweek.com/magazine/content/09_37/b4146000578301.htm
(sorry if its a repeat post)
not... Off Shore Drilling is totally screwed, at least anywhere near the coast of the US unless they are able to supress the photo opps:
http://i50.tinypic.com/2415zls.jpg
The new regulations are simple. Put some ass on that pipe. Much like every thing else, the models were not robust enough. Going long AK soon, steel that is, not 47. Got enough of that. I say 50 ksi - nothing less. I'd be curious what spikes the pipe can actually handle, but I'd say it's considerably less then 50.
Tyler - Thanks for posting this excellent research by Pareto.
Ye without a petroleum addiction cast the first stone.
According to the US Bureau of Transit Statistics for 2006 there were 250,844,644 registered passenger vehicles in the US. I am no math genius, but that is a lot of registered voters, and I am sure the DNC and RNC have that figured out.
Americans desire cheap gas over clean beaches any day, and they vote at the pump several times a month. The spill would have to affect NY, LA , and DC before anything significant changes. We are running out of options. Saudi Arabia and Mexico have both peaked.
Ask a Chicago cab driver to choose between tar balls on Miami Beach or $4.50/gal gasoline.
FL, AL, LA, MS...sorry but you're screwed. You too Cuba.
http://www.google.com/url?q=http://s0.ilike.com/play%23Metallica:Sad%2BBut%2BTrue:16081:m1986593&sa=X&ei=NMMJTJyzEILuMsLrnLYE&ved=0CBsQ0wQoADAA&usg=AFQjCNE1dmZtpUaK0URez8AO59nba2rIDQ
There's no oil anywhere else. Just make peace with that.
We have ANWR still there and offshore stuff. That's pretty much it.
Stayin long anything on the surface.
An April 2008 USGS report estimated the amount of technically recoverable oil within the Bakken Formation at 3.0 to 4.3 billion barrels (680,000,000 m3), with a mean of 3.65 billion.
Assuming the fallout from the BP Deepwater Horizon blowout in the Gulf of Mexico (GOM) leads MMS to require/enforce more stringent drilling safety and environmental impact regulations, how many of the drilling platforms in the GOM can perform deepwater (DW) riserless mud recovery (RMR) and ultra-deepwater (UDW) dual-gradient drilling (DGD) and how many may need upgrading?
http://finchannel.com/news_flash/Oil_&_Auto/55224_Statoil:_Environmental...
http://drillingcontractor.org/new-deepwater-riserless-mud-recovery-syste...
http://www.offshore-mag.com/index/article-display/1931523476/articles/of...
A six month down-time may be sufficient to upgrade existing platforms and provide crew training if a potential cost benefit can be realized to drill more profitable DW and UDW prospects. If such upgrading is warranted and can be performed in the GOM, then maybe the platforms may remain in GOM. Maybe the US government will provide incentives considering the importance of GOM prospects to US National Security.
The implication of a huge find in the Gulf, or deep water offshore drilling producing more than the expected amounts of oil, where the Caspian Basin was to have been the geopolitical panacea to oil shortages, and thus the motivating for geopolitical strife, now makes the entire war on terrorism look incredibly stupid.
http://video.google.com/videoplay?docid=-2871033510590191580#
Who cares about drilling and whatever oil reserves still exist (look at Africa 5 miles below the desert). Either mankind masters synthetic chemistry or mankind has no hope of getting off the planet anyways.
Disclosure: Short Gold.
Tha fuck you sayin?
http://www.youtube.com/watch?v=jTh63eUnGTo
There could also be "some good investment plays" in stored oxygen and dioxin cleansing and protective gear.
Cynical, but funny.
Chicken shits!
http://www.youtube.com/watch?v=FGYNvx9lqDQ
I would prefer that they would first drill out all the oil in the middle east and when that is all up, we start drilling offshore.
In that way, we'll still have cheap oil when everybody else runs out
Good point, but you have to consider what's offshore in the Persian Gulf as well.
CNN is reporting that 6000 "gallons" were collected in 24 hrs. Wow, that equates to just 142 barrels of oil. If the riser is leaking 20,000 barrels per day, we are collecting a whopping 0.7%????
The 2nd part says 6000 "barrels" - either it is a typo, or no one really knows. At either rate, 6000 barrels is only a 30% collection. An improvement, but not sure if one can call this a victory
The siphon can't be seen as successful, because that would mean basically free energy until the well pressure runs down. You know, Star Trek? Free energy? Advanced fusion? Very similar. But only more primitive.
Yeah, wasn't BP's original leak estimate 5000 barrels day?
What a-holes.
That is precisely the problem with the American MSM. I dont think they know the difference between a gallon and a barrel.
Useless ass-clowns.
Corruption and absolute corruption are the rule makers and umpires of this historical disaster to the Gulf and maybe into the Atlantic. The ban on offshore drilling will be quietly rescinded when it can go under the radar. Shallow drilling will be allowed with some attempt to figure out if and how they can go deep again. As with many of our present problems, there is good reason for no trust in anything. The PR of BP and Obama has been High school sub-par. A World Wide boycott of BP is in order. A take over of either side of Congress by any non-Democrat party is needed. Obama out after 4 years is necessary to prove the American public is not blind, stupid, or lazy. Transparency and honesty are beyond reach, but we must reach anyway.
Updated DOW charts :
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
That would be incredible if day rates went that low, 2007-08 peak rates were near $700/day.