August 2016

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CARIBBEAN Petroleum Update A Publication of the Caribbean Energy Information System (CEIS)

August 2016 ISSUE

Exploring Oil Drilling Platforms Offshore

Oil is a very versatile commodity and is used in all facets of life, from the shipping, aviation and transportation industries to the manufacturing of products. Even though we know where oil comes from and how it is formed, do we know how it is extracted? Globally, drilling companies engage in either onshore drilling or offshore drilling. Whilst both extract the valuable commodity, either technique requires a specific type of rig. What is a rig you might ask? In this issue of the Petroleum Update we will examine the types of platforms used in extracting oil and gas offshore.

and by extension an offshore drilling rig. The oceans are enormously attractive to oil companies as they contain large deposits of oil buried deep beneath the surface. Offshore drilling as the name suggests is an extracting technique which allows oil companies to access deposits of oil or gas buried under the ocean floor. The first offshore oil drilling operation was established in 1938 in the Gulf of Mexico which gave birth to the offshore drilling industry.

The oil and gas industry is an extremely profitable industry, however high profits also mean high risks It is important to first understand what offshore drilling is and much needed capital expenditure as well as well

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Exploring Oil Drilling Platforms: Offshore thought out extraction plans. When drilling operations are to take place, there are certain preliminaries that are necessary. These include but are not limited to an exploratory drilling phase and the completion of a seismic survey. Using what is known as 3D seismic surveys, a scan of the seabed is done to collect data on rock formations and to identify offshore reservoirs of oil and natural gas. Once these are completed, oil companies prepare to establish an offshore production platform.

An offshore rig is also known as an offshore production platform which is a large structure used to extract oil or gas. There are several ways in which an offshore oil drilling operation can be run, however the type of oil rig used is usually dependent on the depth at the location, the type of oil, and prevailing conditions (wind and water movements).

shore drilling requires the construction of an artificial drilling platform. Oil industry experts classify water depth in three categories: shallow water (350 metres), deep water (<1500 metres) and ultra-deep water (over 1500 metres) below sea level. While there are several different varieties of offshore platforms the two major categories are fixed and floating structures. Fixed structures include: Jacket Platforms, Jack-Up Rig and a Compliant Tower Platform while Floating platforms include the use of a Semi-submersible, Drill-ship, Tension Leg Platform, and what is known as a Spar platform.

While we may think that offshore drilling only means drilling thousands of metres below sea level, however in certain instances, drilling takes place in shallow waters.

In this instance a fixed platform rig is used. A characteristics of these structure are â&#x20AC;&#x2DC;legsâ&#x20AC;&#x2122; that are made of conOne difference between drilling on land versus the crete or steel, extending down from the platform, and ocean floor is that with onshore drilling the ground pro- fixed to the seafloor with piles. There are many possible vides a platform from which to drill, while at sea, off- designs for these fixed, permanent platforms. The main

OFFSHORE DRILLING PLATFORMS

Image source: maritime-connector.com

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advantages of these types of platforms are their stability; as they are attached to the sea floor, there is limited exposure to movement due to wind and water forces.

However, these platforms cannot be used in extremely deep water; it simply is not economical to build legs that long.

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Another floating rig is the drillship. These are ships designed to carry drilling platforms great distances offshore and in very deep waters. Drill ships contain a hole called a “moonpool”, extending right through the ship down through the hull, which allows for the drill to extend, down into the water. In addition, Drill ships use ‘dynamic positioning’ systems. Which are integrated into the ships computer system, which uses satellite positioning technology, in conjunction with sensors located on the drilling template, to ensure that the ship is directly above the drill site at all times. On the other hand, the Tension Leg Floating Platform (TLP) is secured to the ocean floor by vertical steel tubes known as tethers. The long, flexible legs are attached to the seafloor, and run up to the platform itself. These tethers allow for significant side to side movement but little vertical movement, therefore the platform stays in place.

The first type of fixed structure is known as a Steel Jacket or Template Platform which mainly consists of jacket, decks and piles. This is anchored directly into the seabed, by a tall, steel structure known as a “jacket” that rises up from the ocean to support a surface deck.

The jacket provides the rig’s sturdy base and holds everything else out of the water. Another type is the Compliant tower platform which consists of a narrow tower, attached to a foundation on the seafloor and extending up to the platform. This tower is flexible which allows it to operate in much deeper water, as it can ‘absorb’ much of the pressure exerted on it by the wind and sea.

Despite its flexibility, the compliant tower system is Finally, for ultra-deep water exploration (depth of strong enough to withstand hurricane conditions.

10,000 feet or 3,048 meters), the Spar Platform is used.

With this structure, the drilling platform sits atop a giThere are some offshore deposits that a permanent ant, hollow cylindrical hull. This platform uses a lateral platform is not required. These include offshore oil de- catenary system which is essentially a network of cables posits or drilling exploratory wells in which a “Jack-Up and lines extended from the cylinder to secure it to the Rig” is better suited. Essentially, this rig uses the same ocean floor. The drill string descends down through the principle employed by a tire jack (hence the name) length of the cylinder’s interior and down to the ocean where the platform can be adjusted to varying heights floor. along its tall legs. The rig’s floating platform is towed into position by barges, and then lowers its support legs Offshore platforms are huge steel or concrete structures down to the sea floor, raising the rig above the water’s used for the exploration and extraction of oil and gas surface. from the earth’s crust. These structures may be made of steel, reinforced concrete or a combination of both.

Oil companies also utilize different types of floating Offshore platforms are among the tallest manmade platform structures.The most common movable off- structures on the earth. The two major types of platshore drilling rig is the semi-submersible rig. It func- forms used for offshore drilling are fixed and floating tions in a similar manner to the submersible rig, with a platforms. The use of either type is dependent on the lower hull that can be filled or emptied of water. How- depths being considered to be drilled at the location, ever, this type of rig floats partially submerged and is the type of oil, and wind and water movements. As held in place through a number of anchors. This type technology improves, oil companies today can choose of rig provides a stable and safe working platform in from a variety of methods that allows them to explore deeper and more turbulent offshore environments, and and drill into the oceans subterranean depths. when high reservoir pressures are expected.

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Prices at the Pump AUGUST 2016

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Retail prices for Regular Unleaded Gasoline in the thirteen Caribbean countries reviewed at the end of August 2016 showed decreases in prices for Bahamas, Barbados, Belize Cayman Islands, Dominica, Grenada and S.Lucia between 0.6% and 4.7%. The highest price increase was recorded in St. Lucia of 4.7% while prices increased 2.8% in Jamaica. Prices in the remaining five countries were stable. The average retail price at the end of August 2016 was 1.3% lower when compared to the period ending July 2016.

Regular Unleaded Gasoline: Average Retail Price (US$/Litre) January - August 2016 COUNTRIES ANTIGUA/ BARBUDA BAHAMAS [91 OCT] BARBADOS BELIZE [87 OCT] CAYMAN ISLANDS (Joined in Jan 2016) DOMINICA GRENADA (95 OCT) GUYANA JAMAICA 87 Octane[E10] MONTSERRAT ST. LUCIA ST. VINCENT/ GRENADINES TRINIDAD/ TOBAGO [92 OCT] AVERAGE RETAIL PRICES

1.60

JAN 1.11 1.01 1.36 1.07 1.08 0.80 1.06 0.95 0.91 0.87 0.86 0.87 0.42 0.95

FEB 1.03 0.95 1.35 1.03 1.08 0.78 1.04 0.85 0.86 0.76 0.80 0.78 0.42 0.90

MAR 1.03 0.97 1.32 1.09 1.03 0.74 1.01 0.85 0.88 0.76 0.78 0.78 0.42 0.90

MAY 1.03 1.05 1.36 1.21 1.06 0.76 1.10 0.88 0.98 0.92 0.82 0.78 0.42 0.95

JUN 1.03 1.09 1.42 1.24 1.12 0.84 1.13 0.90 1.03 0.92 0.92 0.78 0.42 0.99

JUL 1.03 1.09 1.47 1.25 1.13 0.87 1.14 0.90 0.97 0.92 0.92 0.78 0.42 0.99

AUG 8 Mths 1.03 1.04 1.05 1.02 1.45 1.39 1.23 1.16 1.13 1.08 0.83 0.80 1.11 1.08 0.90 0.88 1.00 0.94 0.92 0.88 0.88 0.85 0.78 0.79 0.42 0.42 0.98 0.95

Comparative Retail Pump Prices Regular Unleaded Gasoline August 2016 vs. 8 Mths Avg (Jan-August 2016)

1.40

AUG

1.20

US$/Litre

APR 1.03 0.94 1.39 1.16 1.03 0.76 1.05 0.85 0.91 0.92 0.82 0.78 0.42 0.93

8 Mths AVG

1.00

NOTE: *US Gallon = 3.785 L *Imperial Gallon = 4.546 L *As at November 1, 2009 MTBE was phased out from all gasoline blends in Jamaica and replaced with 10% Ethanol.

0.80 0.60 0.40 0.20 0.00

13 Caribbean Countries

See prices for all products at www.cippet.org

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International OIL PRICES

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60.00

Average Weekly and Monthly Crude Oil Prices June - August 2016 50.18

US$/Bbl

50.00 40.00 30.00

47.05 40.82

44.54

20.00 10.00 0.00 Period WK1

Jun-16

WK3 Jul-16

WK4

MTH AVG

Aug-16

Average Monthly Crude Oil Prices 2013-2015 120.00

106.61

105.78

100.00 US$/Bbl

Analysis of International Crude Oil Prices from June to August 2016 period showed an average price of US$44.54/bbl . This average price was 9% lower than the price seen in June 2016 and 3.4% lower than the average price in July 2016.

The highest weekly price seen in August 2016 for the commodity was US$47.05/bbl-reflected in week four while week one accounted for the lowest price of US$40.82/bbl. Overall, the lowest price recorded for the period was US$40.82 recorded in week one of August 2016. However, the highest price recorded for the three month period was US$50.18/bbl. The average price reported in August 2016 was 4.6% higher than the average price recorded in August of the previous year.

WK2

80.00 60.00

59.91

40.00 20.00

2013

2014

2015

0.00

Period

FEATURED OFFERS: P E TS TATS - t h e Ca r i b b e a n E n e rg y I n fo r m at i o n System (CEIS) primary report of historical annual petroleum energy statistics provided for 18 Caribbean Countries. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, electricity, as well as financial and environmental indicators for over twenty years.

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