Rig Shortage Means Record $4.5 Billion Blowout Binge: Energy
The five-story-tall valve that failed to stop the biggest offshore U.S. oil spill is heading toward a $4.5 billion surge in orders as deep-water oil explorers seek to minimize costs on the world’s most expensive drilling rigs.
Cameron International Corp. (CAM) and National Oilwell Varco Inc. (NOV), the two top makers of blow-out preventers, are racing to meet the biggest wave of investment in the 90-year history of the 400-ton fail-safe device that attaches to the well head on the ocean floor. The surge comes as growing demand for deep- water rigs has spurred record rental rates and safety concerns put greater emphasis on time-consuming maintenance.
Blow-out preventers, known as BOPs, are used by oil companies as insurance against explosive blow-outs such as the one that destroyed BP Plc (BP/)’s Macondo well in the Gulf of Mexico two years ago. Some drillers have begun doubling up on the $45 million machinery to minimize maintenance delays and shorten drilling time for the most modern rigs that can cost more than $600,000 a day.
“If you’re shaving four days off of each well, that may be several hundred thousand dollars a day” in savings, Clay Williams, chief financial officer at Houston-based National Oilwell Varco said in a telephone interview....MUCH MORE