OFFSHORE OIL INDUSTRY WAITING FOR TURNAROUND
The depressed offshore oil industry is
still waiting for a turnaround despite increasing optimisim
that world oil prices have stabilized around 18 dlrs a barrel.
     "The perception of a turnaround comes from the change in
prices," Charles Siess Jr, vice chairman of Marathon
Manufacturing Co, a subsidiary of USX Corp <X>, and chairman of
the National Ocean Industries Association, said in a press
briefing at the Offshore Technology Conference.
     "From the level of industry activity, there is no
turnaround," he added.
     John Huff, president of Oceaneering International Inc
<OCER>, was slightly more optimistic. "We are through the low
part of the cycle -- there's an increase in interest for
projects," he said, adding, "whether it comes to orders, who
knows?"
     The oil industry is recovering from last year's dramatic
fall in oil prices, from 30 dlrs a barrel in late 1985 to under
10 dlrs in mid-1986. Particularly hard hit were the service
companies that provide the oil rigs with keys products, such as
pipe and tools.
     Earlier in the week, Secretary the Interior Donald Hodel
announced -- at the Conference -- the government's new
five-year offshore oil and gas leasing program, proposing 38
sales, including tracts in the Gulf Coast, offshore California
and in the Arctic National Wildlife Refuge in Alaska.
     For the most part, the industry was disappointed with the
plan, with most arguing that additional areas should have been
included. At the same time, most were supportive of Hodel.
     Environmental concerns, particularly in California, had
lobbied strenuously against offshore oil development.
     "The (Outer Continental Shelf) leasing program fails to
take into account the environmental performance of the oil
industry," said Bill Bradford, executive vice president of
Dresser Industries <DI> and president of the Petroleum
Equipment Suppliers Association.
     Huff quoted National Academy of Science figures showing
offshore rigs contributed only two pct of petroleum pollution
in the oceans, while tankers were responsible for 47 pct and
municiple dumping 31 pct.
     "The OCS is the keystone of the domestic reserve
development program," said Siess, adding that with oil imports
rising to 50 pct of U.S. oil consumption, the issue was one of
national security.
     Looking ahead, Constantine S. Nicandros, president of
Dupont's <DD> Conoco Inc subsidiary, said, "We are more likely
to see a five pct increase in spending this year than the
widely-forecast five pct decrease."
     Other optimistic signs include the recent sale in New
Orleans of offshore tracts in the Gulf of Mexico which raised
290 mln dlrs against an expected 90 mln.
     However, Ronald Tappmeyer, vice chairman of Reading and
Bates Drilling Co <RB>, said the oversupply of rigs would
continue for the near-term, but added demand for
technologically advanced rigs would increase in the 1990s.
     Much of that demand is seen coming from the move into
icreasingly deeper waters, with the projects becoming ever more
expensive and needing five to ten years to develop.
     Over 50 pct of the sales in New Orleans were for deep
water tracts.
     Ronald L. Geer, a consultant with Shell Oil Co, a
subsidiary of Royal Dutch/Shell <RD>, and president of the
Marine Technology Society, said the technology existed to drill
exploratory wells in up to 10,000 feet of water.
     Geer said the industry was particularly interested in the
Green Canyon field offshore Louisiana where a number of
companies, including Shell, Conoco, USX Corp's Marathon Oil Co,
Standard Oil Co <SRD> and Placid Oil Co, are working, many of
them testing new deep-water technologies involving floating
platforms.
 Reuter
