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Floating Production Holds Promise
International Maritime Associates (IMA) has completed a detailed assessment of the floating production sector. The study examines the impact of the global economic downturn, assesses the underlying long term market drivers and forecasts production floater orders over the next five years. The market for new floating production systems has frozen as a result of the abrupt downturn in the global economy. Over the past quarter no orders have been placed for production floaters. This is the first time since 1996, when IMA began tracking the floating production sector, where no orders have been placed during a reporting quarter. As a result, order backlog for production floaters has dropped 30 percent from the same time last year. Several orders for production floaters have been delayed, including three FPSOs and a MinDoc. One FPSO operator has filed for bankruptcy and a second has sold its interest in an FPSO under construction. At least one other FPSO operator looks in tenuous condition. Many suppliers and conversion yards are increasingly concerned about workload. Is the recent absence of orders and financial turmoil in the production floater sector a short term market aberration? Or is a structural change taking place that will impact the long term prospects for production floater contracts? As detailed in IMA's new study, the downturn appears temporary and the long term outlook for the production floater sector remains very strong. The long term fundamentals have not changed. Energy demand is widely expected to continue to grow at 1 to 1.5% annually over the next several decades. Oil is expected to be the primary source of future energy supply. Sources of oil are constrained. The finding and lifting cost of oil will continue to increase as more difficult oil sources are tapped. The futures market is indicating that oil will return to a $70 level within three years and $80 within eight years. While the immediate price of oil impacts cash available for investment, the expected price provides the basis for measuring project merit. Deepwater development has been constrained by rig availability. With almost double the number of deepwater drill rigs operating by 2012, the number of deepwater finds will undoubtedly increase. This will produce a growing requirement for floating production systems. Solid indication of future prospects is provided by the number of projects at various stages of planning that involve the potential use of a floating production/storage system. In its study IMA identifies more than 155 projects that involve floating production sytems. About one third of these are at an advanced stage of bidding or final design. All are valid projects that are likely to move forward. IMA has published more than 35 reports on the floating production sector since the mid 1990s. In each report IMA identifies upcoming floater projects, evaluates developments impacting future floater system requirements and tracks industry market share. Visit IMA's website at
www.imastudies.com
Contract to Drill Well in GOM
Atwood Oceanics, Inc., a Houston-based international drilling contractor, announced that the Richmond has been awarded a contract by Applied Drilling Technology, Inc. to drill one well in the U.S. Gulf of Mexico at a dayrate of $52,500. This well (estimated to take 40 days to complete) will be drilled immediately following the completion of the rig's current contract which is expected to terminate in late April 2009 or early May 2009.
12 MTR
May 2009
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