Ex CEO of OGDC comments regaridng offshore Oil n Gas drilling
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Baghial
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Exxon was just there to make sure no oil would be found...
Why free the IMF.and arab slave.
niaz
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A friend has sent me the following info about cost of operation an off-shore oil rig. This is for general info for the benefit of fellow members.
Oil rig rental is only about 40% of the cost of the off-shore drilling. Shallow water rigs (up to 200 meters) cost around $30k to $50 K per day whereas rigs for up to 3000 meters would cost in the region of $400K per day. Deeper water rigs could set you back close to $500K per day. Rental cost also varies with the cost of oil, the rig that cost $250 K per day at $30/- per bbl oil would probably go for $650K per day at $120/- per bbl oil.
Additionally, the drilling operation requires:
- Drilling services such as logging, mud logging, casing, cementing etc. which would cost $100K to $200 K per day depending upon the number of services used.
- Consummates such as drilling bits, wellhead, special chemicals for well and fuel ( up to 50K liter per day of diesel) would easily add up to another $100K to $200 K per day.
- One would need at least one Helicopters & a couple of supply vessels needing another $50- $100 K per day.
All of the above added together means that one needs to dish out $880K to $1-million per day for a single deep sea drilling operation. The above does not include the costs involved in seismic surveys and satellite imaging carried out before any drilling operation is undertaken.
All of this goes down the drain if it turns out to be a dry hole. Had there been even one commercially viable discovery; there would have been many oil firms willing to take the risk. However, since all of the 18 offshore wells have disappointed, one can understand why so few off-shore oil wells have been drilled in Pakistan during the last 70 years.
This operation cost about $100-million of the JV partner’s money. However, I see my naïve compatriots still arguing:
- One extreme thinks that substantial oil & gas deposits were found but the well is being capped because of the impending Gulf conflict. Firstly, the drilling site is nearly 1000 Km away from the Straits of Hormuz. Secondly, when the announcement that ExxonMobil had added sizeable reserves to their portfolio would have increased their share market value for more than a billion dollar, do people really think that after spending millions of the shareholder's money, oil companies would simply cement the well and disappear without even a whimper?
- On the other extreme, an ex-Head of a Pakistani company is declaring that there was never any possibility of discovering the oil and this was manipulation by Exxon & ENI to find a business for the oil riggers. In other words, ExxonMobil & ENI deliberately spent $50-million of their own money so that the rig rental company could earn additional $50-million of Pakistani funds!!!
Sometimes I wonder whether the majority of my countrymen are at all capable of rational thinking. Why can’t we accept the simple fact that Oil exploration is a calculated gamble? The risk was undertaken but it did not yield the desired result that is all.
Oil rig rental is only about 40% of the cost of the off-shore drilling. Shallow water rigs (up to 200 meters) cost around $30k to $50 K per day whereas rigs for up to 3000 meters would cost in the region of $400K per day. Deeper water rigs could set you back close to $500K per day. Rental cost also varies with the cost of oil, the rig that cost $250 K per day at $30/- per bbl oil would probably go for $650K per day at $120/- per bbl oil.
Additionally, the drilling operation requires:
- Drilling services such as logging, mud logging, casing, cementing etc. which would cost $100K to $200 K per day depending upon the number of services used.
- Consummates such as drilling bits, wellhead, special chemicals for well and fuel ( up to 50K liter per day of diesel) would easily add up to another $100K to $200 K per day.
- One would need at least one Helicopters & a couple of supply vessels needing another $50- $100 K per day.
All of the above added together means that one needs to dish out $880K to $1-million per day for a single deep sea drilling operation. The above does not include the costs involved in seismic surveys and satellite imaging carried out before any drilling operation is undertaken.
All of this goes down the drain if it turns out to be a dry hole. Had there been even one commercially viable discovery; there would have been many oil firms willing to take the risk. However, since all of the 18 offshore wells have disappointed, one can understand why so few off-shore oil wells have been drilled in Pakistan during the last 70 years.
This operation cost about $100-million of the JV partner’s money. However, I see my naïve compatriots still arguing:
- One extreme thinks that substantial oil & gas deposits were found but the well is being capped because of the impending Gulf conflict. Firstly, the drilling site is nearly 1000 Km away from the Straits of Hormuz. Secondly, when the announcement that ExxonMobil had added sizeable reserves to their portfolio would have increased their share market value for more than a billion dollar, do people really think that after spending millions of the shareholder's money, oil companies would simply cement the well and disappear without even a whimper?
- On the other extreme, an ex-Head of a Pakistani company is declaring that there was never any possibility of discovering the oil and this was manipulation by Exxon & ENI to find a business for the oil riggers. In other words, ExxonMobil & ENI deliberately spent $50-million of their own money so that the rig rental company could earn additional $50-million of Pakistani funds!!!
Sometimes I wonder whether the majority of my countrymen are at all capable of rational thinking. Why can’t we accept the simple fact that Oil exploration is a calculated gamble? The risk was undertaken but it did not yield the desired result that is all.
