Stagnant oil prices have led some major energy companies to delay new offshore drilling projects while creating an opening for smaller independent oil and gas firms to take advantage of lower equipment costs, industry leaders said Wednesday during the opening day of the Louisiana Energy Conference in New Orleans.
Todd Hornbeck, head of Covington-based Hornbeck Offshore Services, said he has seen projects delayed as oil prices began sliding over the past six months, falling from about $110 a barrel to near $65 a barrel as of late.
Experts blame slumping prices on high domestic production — largely from ramped-up shale drilling — that’s added to an already strong global supply, made worse by weak demand.
But Hornbeck isn’t sure the market is beginning to turn a corner. “I think it’s not over yet,” he told a crowd of analysts, investors and industry executives at the Westin New Orleans Canal Place hotel. “I think we’re still in a market that’s still trending downwards.”
Guy Cook, an executive vice president at Superior Energy Services, a Houston oilfield services company, said his firm is trying to cut costs while maintaining its customer base, knowing that it may take some time before drilling picks back up to 2014 levels.
“We’re all trying to navigate what we consider pretty rough waters,” Cook said.
Superior has felt the pinch of declining oil prices, taking an $11.1 million loss for the first three months of 2015. That’s compared with a gain of $36.7 million in the same quarter a year ago.
“We’ve got to make sure as we manage our costs that we continue to operate at the highest capacity,” Cook said.
After a drop in its labor pool following the 1980s oil bust, the oil and gas industry faces the added challenge of hanging onto its newly trained workers amid the latest downturn, Hornbeck said.
“It’s going to be difficult, depending on how long the downturn lasts, on how adequately we can bring labor back onto the ships,” he said.
But in the wake of the Deepwater Horizon disaster in 2010 and new federal drilling regulations that were put in place afterward, some customers have increased the number of mariners they want working on each supply vessel — up to a point where Hornbeck believes it’s more than necessary. He said he expects those numbers to be scaled back in order to keep costs down.
Federal estimates released this week show U.S. crude oil production averaged almost 9.6 million barrels per day last month, up almost 400,000 barrels per day from the end of last year, even though 60 percent fewer oil rigs are working in the U.S. since October as producers work through a backlog of uncompleted wells.
Houston-based oilfield services company Baker Hughes said last week that 642 rigs were exploring for oil and natural gas in the U.S., down from 1,860 rigs a year ago.
Follow Richard Thompson on Twitter, @rthompsonMSY.