Rigs report: Biden expected to place year-long moratorium on oil and gas leases

Two, however, will have an impact on the US oil and gas industry, with a third that is being finalised reported by The Washington Post to directly affect offshore drilling. On his first day in office, President Biden signed EOs joining the Paris climate accord and cancelled the Keystone XL pipeline, which would have transported Canadian tar sands to US Gulf Coast refineries for processing.

Now, the Biden Administration appears poised to place a one-year moratorium on new leasing for oil and gas drilling on federal lands. The EO would support the President’s climate change initiatives but would not impact existing leases in the US Gulf of Mexico.

Still, such an action would be a severe blow to an offshore oil and gas industry already reeling from the energy demand destruction caused by Covid-19 and slumping oil price. Several debt-laden drillers have entered bankruptcy protection over the last 12 months.

One of those seeking to emerge from Chapter 11 bankruptcy, Houston-based Diamond Offshore Drilling, entered into a plan to support a deal with holders of over 70% of each of its senior unsecured notes and revolving credit facility loans. The agreement would cut its debt by US$2.1Bn.

Baker Hughes reported 16 offshore drilling rigs were operating in the US Gulf as of 22 January, unchanged from a week earlier and five down for the same period, week-on-week.

More FPSOs in Brazil

Elsewhere in the Americas, Westwood Global Energy Group’s RigLogix data reported 18 rigs were actively drilling as of 4 January. With 48 floating production, storage and offloading (FPSOs) vessels, 15 drill ships and 19 semi-submersibles either producing or drilling, Brazil remains an active offshore market despite Covid and the oil downturn.

Among the deepwater rigs in Brazil are Transocean’s drill ships Deepwater Corcovado and Deepwater Mykonos. In November, Transocean announced Petrobras had exercised a 680-day pre-existing, fixed price option for Deepwater Corcovado, and an 815-day pre-existing, fixed price option for Deepwater Mykonos. Together the contract extensions added US$297M to Transocean’s backlog.

After a year delay due to Covid-19, Petrobras wants to charter Integrado Parque das Baleias’ FPSO and is negotiating with SBM for the lease of Almirante Tamandaré. SBM Offshore recently signed a lease extension with Shell for FPSO Espirito Santo in Brazil that will keep the vessel under contract until December 2028.

Additionally, Petrobras is tendering construction contracts for P-78/79 FPSO units.

To support exploration and production activity in Brazil, some 375 offshore supply vessels are operating, 175 of which are platform supply vessels (PSVs) and oil spill response vessels (OSRVs), according to data from the Associação Brasileira das Empresas de Apoio Maritimo. Line handlers and supply vessels (70), anchor handling tug supply vessels (44), and crew boats and fast supply vessels (24) make up a majority of the remaining fleet.