Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bearcatbob who wrote (137420)	7/14/2010 10:34:28 AM
From: Dennis Roth	Read Replies (1) \| Respond to of 206281

New Deepwater Moratorium: If You Don't Succeed, Try Try Again Comment from Credit Suisse BOEM issues new moratorium. The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) issued a new moratorium to suspend deepwater drilling activities until November 30 so safety reforms can be completed in the aftermath of the Macondo oil spill. The new moratorium was issued following the lifting of the May 28 moratorium by the Southern District Court on June 22 and subsequent rejection of the ban by the Fifth Circuit Court of Appeals on July 8. New moratorium has similar elements, but removes water depth test. While the new moratorium restricts the drilling of new wells in the U.S. GOM using subsea or surface BOPs on a floating facility (i.e., MODU or platform), it continues to allow drilling activity necessary for completions, workovers, abandonment/intervention operations, waterflood, gas injection, and/or disposal wells. In contrast to the May 28 moratorium that suspended activities in greater than 500 ft of water, the new deepwater suspension activities are not based on water depth, but on “the basis of drilling configurations and technologies” for floating facilities. Department of Interior (DOI) open to lifting moratorium prior to November 30, but bar appears extremely high. The new moratorium includes a potential olive branch to the industry that could allow the resumption of certain deepwater drilling activities prior to November 30, but the ‘burden of proof’ is clearly on the industry and the bar appears extremely high. The industry will be able to participate with the BOEM on safety reforms related to deepwater drilling, well intervention and blowout containment technology, and oil spill response plans. New moratorium includes a tougher permit process. The BOEM will establish interim safety rules by September 24 to address safety issues that have come to light from the Macondo well. The permit process will become much more stringent, with operators required to demonstrate an ability to effectively respond to an oil spill in the GOM and document blowout containment strategies. We believe the combination of a tougher permits process plus a reexamination of joint operating agreements by E&Ps will lead to a slow recovery in activity. We reiterate our cautious stance on the deepwater drillers as the continued mobilization of rigs from the GOM such as the Ocean Confidence, Ocean Endeavor, and Transocean Marianas will have a knock-on effect internationally. What is the impact to floating rig activity? At the time of the May 28 moratorium, there were 33 drilling rigs that were operating in water depths of 500 ft or greater, including 26 floating rigs and 7 platform rigs. 21 of these rigs have suspended drilling operations after reaching a safe stopping point, while 12 rigs are conducting drilling operators that are allowed under the moratorium. Shallow water activities not impacted by the new ban. The new moratorium does not impact shallow water drilling as long as operators comply with recently enhanced safety and environmental regulations (NTL-N05 and NTL-N06). That said, it appears permit approvals for jackup rigs appear to be moving at a glacial pace. Research Analysts Arun Jayaram, CFA Brad Handler Eduardo Royes Yvonne Fletcher