The Gulf of Mexico and Soft Oil Prices

Posted by PortVision

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The Gulf Coast is a major economic driver with two of the busiest ports by cargo volume, globally: the Port of South Louisiana and the Port of Houston. In total, there are 68 ports in the Gulf in three countries, according to World Port Source (fun fact: Cuba is the third). The heart of the US petrochemical industry, there are more than 4,000 oil platforms in the Gulf.

The Gulf of Mexico is the ninth largest body of water in the world covering approximately 600,000 square miles. As reported by the EPA, the US coastline is 1,631 miles long, not counting bays and inland waterways; with these included, the US shoreline covers 16,000 miles. The Gulf Ports Association calculates that US Gulf port interests contribute $50 billion to the US economy annually. Add to that number the economic importance of shipping, oil mining, and refining, and it is easy to see that any negative impact on the Gulf affects the US in general.

Current soft oil prices have affected shipping in the Gulf and driven the shipping industry to look at cost efficiencies everywhere. Monitoring vessel speeds to save fuel, reviewing archival vessel tracking information to create more efficient vessel paths, and optimizing vessel usage for oil drilling operations are just some of the tools ship owners, offshore operators, and port operators are utilizing to protect themselves against economic losses.

A recent article in Maritime Executive cites that global oil demand is stagnant, there is an oversupply of vessels, and the trend to green energy sources all combine to put pressure on the economy of the Gulf. Drilling rigs are being cold-stacked (mothballed temporarily) and drilling firms are using as few vessels as possible to keep rigs operational.

There is a bright spot, however, in all the gloom about falling oil prices and their effect on Gulf activity. As reported in January, Greater Lafourche Port Commission director Chett Chiasson sees a busy time in the near future. Deepwater drilling plans in the Gulf of Mexico may shield this area from the hurt that the drop in oil prices is exacting on the industry. Unlike the shale oil production in South Texas and North Dakota that relies on steady crude prices for financing, deepwater operations are long-term projects with a multi-year horizon to come online. Fluctuating markets typically do not bring these enterprises to a halt.

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According to the Bureau of Safety and Environmental Enforcement, the entity that oversees this type of drilling, the number of permits for deepwater drilling increased from 14 in 2010, to 274 in 2011 to 603 in 2014. These numbers appear to confirm the reality that in spite of softness in the market, there is still a base of stability in mining company activity.

PortVision and our parent Oceaneering International are major players in the subsea oilfield services sector in the Gulf of Mexico.  You can learn more about our activities, services, and commitment to the region at www.portvision.com and www.oceaneering.com.

 

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Posted on Jul 8, 2015, 9:05:00 AM

Topics: Blog, oil