Offshore Drilling: How to Lose a Partner in 10 Days
Cody Warner | June 24, 2015
An awful reference to a 2003 Matthew McConaughey movie? Check. And I apologize.
Pemex has been in the news again however causing their current and potential private drilling counterparts to question them as partners in future ventures. "Akal-H" a platform in the supergiant oil field Cantarell experienced a fire and explosion (Reuters 2015). The incident did not result in any casualties.
The severity of this incident is not what is of concern. This is the third incident involving a Pemex platform this year (Maritime News 2015). "One incident is understandable and tolerable," said Miriam Grunstein, an energy specialist with the Mexico Center at Houston-based Rice University. But several in a matter of months "is not acceptable under any national or international standard," she said (Reuters 2015).
There is no word yet on the cause of this, but it is easy to connect the dots. This platform used to produce more than 2 million barrels per day and now it is down to 177,000 (Reuters 2015). The field has been in production since 1981 and will only continue to decline in production. As a good business owner, if you have a declining asset you do not want to invest more money into something that gives you a declining return. It would be reasonable in most circumstances, except that oil platforms are extremely dangerous when not maintained properly. Pemex saw just how dangerous on April 1st when a platform explosion resulted in 4 deaths and 45 injuries (CNN 2015).
With the price of oil struggling to bounce back, oil companies are looking to cut costs and this results in cutting corners. The problem is that this is the time where the maintenance and protection of their current assets is most important; accidents like this make a competitive market even more competitive. The cost to replace or perform a major repair on a platform is exponentially higher than to stick to a routine maintenance plan.
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