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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (826)	4/30/2001 1:26:51 AM
From: Tomas	Respond to of 206358

Industry to pay price of success. We were all excited as the Offshore Technology Conference came swinging round last year. Upstream, this week's issue The good times are here again, we said at the time, fearing that a commitment to capital discipline might become such a mantra that the industry would miss the opportunities in its path. We symbolised the new era of optimism by highlighting an upgrade in reserves on BP's wonderful Crazy Horse strike in the US Gulf of Mexico. Now as OTC rolls round again there are so many good signs that it is hard to single one out - but let's just choose to mention the largest oil and gas group in the world reporting that it had made a staggering $5 billion net income in the first 12 weeks of the year, or around $40,000 an hour. ExxonMobil, Conoco and Chevron, which all reported this week, comfortably beat Wall Street forecasts with record figures. However, it is not just oil companies that are enjoying the good times. The money is being spent further down the food chain with offshore rig operators witnessing a major upturn in revenues as demand for drilling units increases worldwide. Last week it was Diamond Offshore Drilling and Rowan Companies that beat expectations. Global Marine said it was now earning $51,200 a day for its premium jack-ups in the US Gulf compared with $47,000 in the last quarter of 2000. Oilfield services giant Schlumberger was also in the money during the first quarter of the new year with pre-tax operating income rising 134% to $402 million. Yet the first quarter is always a bit slow for service companies in the northern hemisphere, so the current period will show even larger gains. The biggest driver of optimism is, of course, high oil and strong natural gas prices. The election of a former oilman as president of the US has also helped, not least because he has inherited an almighty energy crisis that has swung the balance of argument against conservation and in favour of more hydrocarbon supply. Not everything in the garden, however, is as rosy as last time round. The US economy has moved into slowdown mode after a long sustained period of growth and no one can rule out the possibility of a recession. Alan Greenspan at the US Federal Reserve is doing all he can to keep the economic juggernaut on the road and has encouraged a significant resurgence in equity values from battered sectors such as technology and telecoms. However, oil and gas could still be hit by faltering demand while California's energy crisis represents both an opportunity and a curse to the industry. On one hand it should make it easier to open up new territories previously closed to drilling, on the other it has fed a deep cynicism within the public mind about the behaviour of the corporate sector. The conspiracy theorists - and they are not a tiny minority - believe energy companies have engineered the crisis to make money out of it. This is not a healthy development for our industry. Oil and gas is still regarded as 'polluter' not 'provider' in many quarters, which causes difficulty in an area we flagged 12 months ago - the skills and recruitment shortage. Which idealistic youngsters want to throw their lot in with what many see as a tainted profession? We predicted last year it would not be long before industry chiefs were worried about where their future personnel would be sourced. No surprise then that last week's 25th annual Marine/Offshore Outlook Conference in Houston found itself buried in discussion about a lack of qualified staff. There are practical problems as well. There is no doubt that the last oil industry downturn - which tipped 38,000 people out of their jobs at the top 10 oil companies - has both left a sour taste in the mouths of former staffers and put off new graduates. On the plus side, oil companies will not be fighting against the internet sector for staff. With the dot.coms becoming dot.bombs few bright young things are attracted by cyberspace these days. So what will things be like in 12 months' time? There is every reason to believe that oil and gas prices should remain at high levels and, even if there is a major economic slowdown, activity in the energy field should remain strong. Shortages of both capacity and personnel are likely to be even more acute, leading to higher costs and higher wages. The industry is likely to be paying a price for continued success.