Given the shortage of oil rigs . . . .

In the past week or so there have been a number of posts relating to the growing shortage of oil drilling rigs.  This problem has been made worse by the losses in the Gulf, following the Hurricanes.

But it is also influenced by the declining production that comes as oilfields lose driving power.  This means that, to sustain production, an increasing number of wells must be drilled each year, since, in a given reservoir, the production from each will be less.   In addition smaller fields decline in production faster, since they do not have as much volume.  

But it is also in the largest fields that we see the problem.  Yesterday we talked a little of Ghawar, today consider Cantarell

This story is a little old, but consider the situation south of the border
Increased E&P spending has made contract work an increasingly attractive prospect, with good day rates being applied to long-term contracts. Independent leg jackups are paid $50-60,000/day, while semisubmersibles fetch $70-80,000/day. Pemex is paying a premium of almost 10% compared to the US Gulf, and activity is picking up. The company foresees growing activity on its offshore Ixtal-Manik, Kanaab, Tabasco Littoral, and Ku-Maloob-Zaap projects in the coming months. The mobile offshore drilling unit market in the Mexican Gulf has almost tripled over the last three years, with 55 rigs (27 jackups, 11 semisubmersibles, 13 platform rigs, three inland barges, and a drillship) working in Mexican waters, according to a July count.
However, they must find a way to replace the falling production from Cantarell.
Pemex has set a production goal of 3.44 MMb/d for 2005. Output for the first half of the year averaged 3.37 MMb/d, down 0.9% year-on-year, but picked up to 3.43 MMb/d in 2Q. Offshore output for the first half averaged 2.8 MMb/d, also marginally down year-on-year. . . . . .Cantarell accounts for 62% of the nation’s total output and 74% of offshore output. A recent Pemex report says, “Pemex’s challenge is to maintain the production levels on Cantarell close to 2.0 MMb/d.” The report, meanwhile, acknowledges that output from the field is expected to fall from 2.08 MMb/d in 2Q of 2005 to 1.99 MMb/d in 2006, mainly due to well shut-ins. Cantarell output has already dropped by 64,000 b/d year-on-year, down from 2.14 MMb/d in 2Q 2004. A decline in Cantarell output is a given in coming years, yet it remains to be seen just how fast the decline will happen. For some time now, Pemex officials and documents have referred to a likely long-term decline, which could pull Cantarell output down to about 1.0 MMb/d before the end of the decade. . . . . .The magic political date of December 2006, when a new government will take office, may well be the key to understanding much of the current Pemex administration’s efforts. Pemex has been rushing to drill 53 new wells on Cantarell to ensure that there will be no major decline in output from the field before year end 2006. It seems likely Cantarell’s demise could be more pronounced after that. . . . . Pemex says it expects that increased output from other offshore projects, particularly heavy crude from Ku-Maloob-Zaap and light crude from the Tabasco Littoral fields, will offset lower Cantarell output, with overall Mexican crude oil production increasing by 80,000 b/d next year.
So there will be an increased demand for drilling im Mexican waters. At the same time the SEG was hearing of the increasing shortages of manpower, equipment and services. Industry will rely heavily on new technologies, the meeting was told, though again it is hard to find much evidence of an investment outside their own companies of much money in such new technology by either industry or the government, and most of their own research seems to focus on computer models, which are obviously the big thing these days. But beware of false prophets
Allegations of a peak in world oil production don't hold water, Gould and Cejka said. "The trouble with peak oil theories is that geologists know nothing of economics and economists know little about geology," Gould said. Neither do investment bankers, said Cejka. "The Saudi fields are world scale fields.
- I wonder whom they could have been thinking of? Wonder if he will mention it in Denver?

Oh, and for those of us who worry about the ageing work force, the article ends with

Gould and Cejka said Schlumberger and ExxonMobil have taken actions to see that expertise is transferred from an aging work force to newer employees.

Cejka said, "A large number of our most experienced staff will retire in the next few years. We have taken steps to maximize the efficient transfer of learning to the next generation of geoscientists, pairing mentors with new employees. Our recruitment has remained constant over time and has not been dependent on oil prices. "For the last 10 years we have successfully managed a new-hire development program that puts graduates through an initial 2-year program with three real work assignments in very different parts of our business." More than 1,200 geoscientists took more than 8,300 workdays of training at an ExxonMobil Houston facility in 2004, he said. ExxonMobil spends $200 million/year supporting graduate and undergraduate work in university earth science programs.

The lack of exploration and production professionals is as acute on the service side as it is in the operators, Gould said. "The service industry is not particularly ready to meet the needs of a rapid ramp-up in activity."

Cejka said every able US drilling rig is working, the world deepwater rig market has never been tighter, and the number of full service geophysical vendors has declined 70% in the last 10 years. "The industry's about flat out," he said.

Re: " models, which are obviously the big thing these days..." Young new experts (they are "the hope") are writing software models and not doing seismographic analysis of potential sedimentary source rock formations. I am very encouraged by the good news that video games have replaced actual exploration and the drilling of wildcat wells. And why not? There's not much to find, is there?

Re: "The trouble with peak oil theories is that geologists know nothing of economics and economists know little about geology..." Excuse me for saying this so bluntly, but if lots of recoverable oil does not exist in these hypothetical computer generated sedimentary source rock formations based on geological survey data, no god damn amount of money is going to put it there. On the other hand, you can buy an IPOD/cell phone/digital camera cheap and as we all know, life is impossible without one. Video games in which fossil fuels are abundant could surely be a growth industry (at least in the short-term).

Mea culpa, please forgive me, perhaps I am bitter. I look forward to ASPO-USA starting tomorrow evening and hope to report on stuff that I learn there.

best to you all, Dave
First, I seriously doubt a combination of new, smller fields will come close to replacing Cantarell production even in 2006. We will see.

Regarding Exxon, It was just last Feb or March when they capped off their most expensive, deep exploratory well, a $100 million well in the Caspian. It came up completely dry - no commercial hydrocarbons at all. So much for their wonderful computer models that will solve all our problems.

Actually, I guess it was last October 2004 when Exxon had the above failure (how time flies). See the link if curious:
Re: ExxonMobil, so now you see that computer modelling of what is supposed to be there really is not in many cases (here, the Caspian Sea). As far as Canterell goes, it is in decline, that is irreversible and that's all there is to it. Case closed.
So, if we need to increase drilling at ever-increasing rates to minimize decline, how much of a difference will the lack of rigs make in the post-peak decline rate? Has anyone looked into this?
The problem is that the longer you delay decline (maintain output) through infilling the steeper the decline will be later.  Total production curves can be broad and flat or narrow and steep but the area under them is the same, or nearly so.  This has been dissected many times at TOD.  By "artificially" maintaining output after peak production you steepen the backside of the depletion curve for all wells.  

In aggragate the field will decline at a faster rate independant of number of wells drilled.  By not admitting that fields have peaked and having to alter demand to meet gradually reducing supply on the backside, we (society at large and the owners of Cantarell in particular) are setting ourselves up for a much, much more rapid decline in oil supply at a later date.  Working harder to extend the plateau makes the decline that much worse, when it finally can't be put off any longer.

In my mind this is the greatest danger of not accepting (as oppossed to theoretically believing in) peak oil.  Not dealing with the issue makes it worse in the long run.

Read my posting and let me know if you or someone you know have a knowledge of offshore oil rigs here in the USA.
8300/1200 = 6.9 workdays per scientist per year. A whole week every year to updating your staff on what's new. How generous of them.
I have recently stumbled across an opportunity to supply offshore oil rigs that drill from 4000 to 7500 meters. I am looking for someone who knows this market and can help me satisfy the demand here in the USA. I am in the process of learning the market myself. If you know about rigs and the US market please respond to my comments. I have noticed from reading your comments that there seems to be a shortage of rigs. If this is true I can help fill the demand. Please respond to