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Orlando Sentinel: Deep-sea rig shortage slows oil work in Gulf

Chevron and other oil companies have to postpone projects because of the lack of such vessels.

Joe Carroll | Bloomberg News
Posted December 26, 2006 

Bill Thornburg, a senior drill-site manager for Chevron Corp., opens a steel door on a floating oil rig off the Louisiana coast and stops dead in his tracks.

Red plastic tape warns that crews are hauling pipe and wrenches the size of baseball bats across a deck slick with sea spray. If it were up to Thornburg, there would be a dozen more $1 million-a-day rigs plying the Gulf of Mexico.

He’ll have to wait. A global shortage of deep-sea drilling rigs is costing Chevron precious time as it taps the Gulf, and the equipment deficit may keep oil prices high.

“There’s a lot of prospects out here we’d like to drill but can’t yet because there aren’t enough rigs,” says Thornburg, 58, who’s overseeing drilling on the rig Cajun Express in the Tahiti field.

The Cajun Express is one of just 18 rigs worldwide capable of tapping the deepest discoveries. For the test well earlier this year at another Gulf field, the platform-shaped vessel, which motors from site to site, needed to drill four miles below the sea floor.

The rig shortage is forcing oil companies to postpone new offshore wells in the Gulf of Mexico and elsewhere, says Peter Jackson, an analyst at Cambridge Energy Research Associates in Cambridge, Mass.

As a result, crude prices will remain high and U.S. reliance on imports from Africa and the Middle East will increase over the next decade, says David Foley, who manages $600 million at Grove Creek Asset Management in New York.

Crude oil prices have tripled in the past five years. The year’s low for benchmark oil futures on the New York Mercantile Exchange is just under $56. Futures closed Friday at $62.41 a barrel.

The Cajun Express is owned by Houston-based Transocean Inc., the world’s biggest offshore driller. While record lease rates of as much as $520,000 a day are funding expansions by Transocean and other rig operators, shipyards from South Korea to Singapore to Scandinavia are backlogged with orders.

Even when available, the rigs are costly to operate. Chevron and its partners on the Tahiti field, Statoil ASA and Royal Dutch Shell PLC, are spending $1 million a day to rent, staff and supply the Cajun and another rig, Discoverer Deep Seas, with fuel, food and hardware. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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