Oil & Gas Industry Round up
28 June 2010
Despite whatever trials and tribulations BP may be going through, demand for oil continues its relentless rise. According to Baker Hughes, which a range of services to the worldwide oil and gas industry, drilling activities remain encouraging. The international rig count for May 2010 was 1,090, up 16 from the 1,074 counted in April 2010, and up 97 from the 993 counted in May 2009. The international offshore rig count for May 2010 was 298, down 10 from the 308 counted in April 2010 and up 27 from the 271 counted in May 2009.
The US rig count for May 2010 was 1,513, up 34 from the 1,479 counted in April 2010 and up 595 from the 918 counted in May 2009. The Canadian rig count for May 2010 was 147, up 24 from the 123 counted in April 2010 and up 75 from the 72 counted in May 2009.
The worldwide rig count for May 2010 was 2,750, up 74 from the 2,676 counted in April 2010 and up 767 from the 1,983 counted in May 2009.
The Baker Hughes Rotary Rig Counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and international markets. Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of US and Canadian drilling activity.
Platt’s record increase in China oil demand
China’s apparent oil demand continued its 2010 climb at a steady clip from a year ago to reach 36.48 million metric tons (mt) or about 8.6 million barrels per day (b/d) in May, according to a Platts analysis of official data just released. This is 9.8% higher than the corresponding month of 2009. The country’s oil demand in May, though higher than the April figure of 35.42 million metric tons, averaged 8.62 million barrels per day, lower than the previous month’s 8.65 million b/d average, which is explained by May being a longer month.
Chinese refiners boosted their combined crude throughput to a new record high of 35.79 million metric tons (8.46 million b/d) in May, beating their previous record of 34.41 million metric tons set in April and more than offsetting a decline in net refined product imports, customs statistics showed.
Compared with a year ago, crude processed in May was 14.74% higher. Increased indigenous production helped China squeeze its net refined product imports to just 690,000 metric tons in May from more than one million metric tons in April and two million metric tons a year ago.
"The on-year increase in monthly Chinese oil demand has been progressively easing since January’s 17.6% growth, and shrank to a single digit for the first time in May, according to Platts records," said Vandana Hari, Asia editorial director at Platts. "But the growth rates looked higher at the start of 2010 because of a low comparison base at the beginning of 2009, when Chinese oil consumption briefly felt the effects of the global economic crisis." "If you look at absolute figures, the 36.48 million metric tons of apparent demand in May is the highest the country has ever recorded."
"However, resurgent debt woes in Europe, China’s largest trading partner, could temper Chinese oil demand growth in the coming months if it dampens exports, which leapt by a strong 49% in May versus a year ago," Hari added.
China’s oil demand growth this year has received a major boost from consumption of naphtha, feedstock for the country’s growing petrochemicals capacity, but also the product most susceptible to a decline in overseas demand for Chinese goods.Meanwhile, China’s apparent oil demand in the first five months of 2010 totaled 174.07 million metric tons, compared with 153.07 million metric tons in the corresponding period of 2009 says Platts.
Noble Corporation has entered into an agreement to acquire Frontier Drilling in a cash transaction which values the enterprise at $2.16 billion. Plus the company had announced agreements with Shell. Noble is a leading offshore drilling contractor for the oil and gas industry. Noble through its subsidiaries carries contract drilling services with a fleet of 62 offshore drilling units (including two rigs currently under construction) located worldwide, including in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, and West Africa.
Frontier is an independent drilling company with three dynamically positioned drillships (including two Bully-class joint venture-owned rigs under construction), two conventionally moored drillships including one which is Arctic-class, a conventionally moored deepwater semisubmersible drilling rig, and one dynamically positioned floating production, storage, offloading (FPSO) vessel. As a result of the transaction, which is expected to close by the end of July 2010 and is subject to customary closing conditions, Noble will acquire a fleet that is currently supported by approximately 23 rig years of contracts generating approximately $3.2 billion in gross contract backlog ($2.0 billion net to Noble).
Noble’s acquisition of Frontier and its agreements with Shell significantly enhance Noble’s stature as a major deepwater service provider and cements its position as the world’s second largest offshore drilling contractor. The addition of the Frontier fleet along with two newly constructed drillships of its own supports the company’s stated goal of moving the fleet toward technology.
Noble also had a number of agreements with Shell including a 10-year contracts for two
ultra-deepwater drillships (one Globetrotter-class currently under construction and one additional newbuild) and multi-year extension on the deepwater semisubmersible Noble Jim Thompson, each subject to Frontier closing. Other Shell agreements add additional estimated $4.0 billion in contract backlog over more than 25 rig years
Finally there is a resolution of status of units operating for Shell in the U.S. Gulf of Mexico during the current period of imposed restriction allowing Shell to suspend contracts during this period, if necessary, in exchange for a reduced suspension rate and operations support with resumption contracts at original dayrates and without reducing contract term
"Frontier is an excellent strategic addition to Noble’s existing asset, customer and employee base," said David W. Williams, Chairman, President and Chief Executive Officer of Noble. "This acquisition is a highly complementary extension of our mid- and deepwater presence and positions us for additional growth in new market segments that can provide further opportunities for Noble and our customers. Noble’s historical hallmark of a strong safety culture and our reputation for operational excellence should benefit Frontier’s existing customers and drive value for our shareholders."