by Tanada » Thu 19 Oct 2017, 09:50:53
If the 'experts' are correct deep water is uncompetitive until after fracked shale beds peak out. On the other hand the EIA projected in 2013 that USA shale beds would peak out between 2018 and 2022. Now most of us know drilling and completion of fracked wells dropped to extreme lows in 4Q2015-3Q2016, but they also hit new highs in early 2015 and for the last four quarters in end 2016 and 2017 to date drilling and completion of shale beds has been picking back up. Right now we are drilling and completing somewhere over 50% of the early 2015 rates or about 70% of the 2013 rates when fracking was projected to peak out in 2018-2022. So IMO if the slow down in fracking caused by the price slump of 2015-2016 is already substantially reversing it seems reasonable that Fracking still has a peaking date delayed by a handful of years say 2023-2027. If fracking makes deep water uncompetitive then the big companies were looking at another 5-10 years of low demand for their rigs like Pathfinder, which is a lot of money invested in maintanence and crew training for that same period with little to show for it. On the other hand the USA government rewards companies that scrap "write off" equipment with substantial tax breaks or even capital loss tax maneuvers. By scrapping these rigs now they get a double boon, tax rebate on the one hand and eliminated cost on the other. Presuming deep water drilling picks back up circa 2025 or later they will be able to finance brand new rigs with whatever technology is then current for future exploration. I am sure in corporate board rooms it was presented as a win-win-win situation to scrap now rebuild later.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.