Oil Price, the cancellation of projects, the reduction of costs, and the closure of oil facilities are obstacles that have also affected the marine oil producers.
Despite significant improvements made by oil companies in the price area, offshore drilling has always been more expensive than onshore drilling. It is because the process of extracting oil in the sea is more complicated. The extraction of oil from the sea has been hit harder than land activity in the current condition.
Recent studies show that extracting nearly a third of the oil left on British platforms in the North Sea is not economically viable. Brent crude has not reached $ 45 a barrel for months and is unlikely to touch $ 40 by the end of the year. It means that extracting more oil is not cost-effective, and it is not just about the North Sea.
Baker Hughes estimates that the number of oil rigs in the American part of the Gulf of Mexico is 12, less than 10, compared to March. It is the lowest number of oil rigs in the last ten years, and if oil prices remain the same, their numbers will decrease.
As oil trades at $ 30 a barrel, shale producers have stopped producing since the price they need for oil is higher than that of the output. There are concerns that some of these oil rigs will be closed forever.
Producers in the Gulf of Mexico cut production last week and are worried that the decline in production will take years. The same thing is happening in other regions as well.
According to Restad Energy, there are three significant challenges in the offshore oil sector: a sharp decline in services and equipment in offshore oil fields, financial instability, and oversupply.
These factors are not specific to marine oil but have more severe consequences. Marine projects need more time to set up, and they need more time to reopen.
Marine oil makes up about a third of the world’s oil and is more expensive to extract, but has a longer lifespan than land-based oil rigs. Many of these companies are unlikely to survive the current crisis.