Wednesday, July 9, 2008

JP Morgan Upgrades Transocean



JP Morgan upgrades Transocean

July 9 (Reuters) - J.P. Morgan Securities upgraded Transocean Inc (RIG) to "overweight" from "neutral" on Wednesday, a day after the world's biggest offshore drilling contractor said it received a lucrative five-year contract.

Transocean said on Tuesday one of its deepwater drill ships was given a contract worth a record $650,000 per day. The contract is expected to start in March 2010 and generate revenue of $1.19 billion over the five years.

JP Morgan said recent contracts including the Transocean one indicated the deepwater market is strong.

"(Transocean's) valuation does not reflect visibility and strength of deepwater market," the brokerage said in a note to clients.

20 comments:

Anaconda said...

JP MORGAN UPGRADES TRANSOCEAN

JP Morgan is one of the largest financial houses in the United States, and a leader in the financial community.

It's significant when JP Morgan upgrades a stock.

All the above is simply restating the obvious, but the implication is huge -- JP Morgan does its homework before upgrading a stock.

So while publically, some have dismissed ultra-deepwater, deep-drilling; privately, others have given a vote of confidence to deepwater oil exploration.

The oil industry certainly believes in the viability of deepwater oil, as ENI SpA (Milan Stock Exchange), the Italian oil company, signed this contract, and others, notably BP, have also signed contracts with Transocean for ultra-deepwater, deep-drilling rigs.

And the contract amounts have steadily risen.

In an interesting turn of affairs, Mathew Simmons' company has told it's clients: "The new Eni contract represents a new record day rate for the industry and a meaningfully positive datapoint for Transocean and deepwater peers ... ," Bill Herbert, oilfield services analyst with Simmons & Co Int'l, wrote to clients.

Why is the Simmons & Co Int'l vote of confidence significant?

Because, while as recently as 2003 Mathew Simmons was a big supporter of deepwater exploration, more recently he has publically downplayed if not dismissed ultra-deepwater, deep-drilling.

Yes, this is the same Mathew Simmons of "Peak" oil infamy.

Author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Simmons made a presentation: The Peaking of Offshore Oil And Gas: Is The Party Over? Or Just Beginning To Get Exciting.

To the Offshore Technology Conference Houston, Texas, April 30, 2007.

This is a powerpoint presentation, and as always, the historical review is excellent, as is the graphics, but the conclusion was decidedly mixed if not outright pessimistic.

Has Mathew Simmons changed his tune?

The above quoted letter to clients suggests Simmons has reversed course on ulra-deepwater oil.

Sure, the letter is not from Simmons, himself, but you can bet he approved the letter to clients.

Frankly, Simmons is late to the party, but at least for the sake of his clients he has changed course.

Ultra-deepwater, deep-drilling full speed ahead.

Anaconda said...

ULTRA-DEEPWATER, DEEP-DRILLING HAS HUGE PROFIT POTENTIAL

By Walter Brandimarte

NEW YORK, June 10 (Reuters) - Brazilian oil company Petrobras forecast lifting costs in its Tupi oil field will be lower than its current average $8.20 a barrel by the end of 2010, when the giant subsalt reserve is expected to start producing some 100,000 barrels per day (bpd). (full article available by link at side-bar under Brazil: Deep Abiotic Oil Discoveries, listed as Tupi: $8.20 per barrel)

Some have fretted that the cost of "lifting" deepwater oil would be economically prohibitive, particularly if an oil "bubble" collasped, and prices dropped precipitously.

As unlikely as that event were to happen (at most a price 'correction' could occur), with a lifting cost of $8.20 a barrel, deepwater oil will always be economical to "lift" and more likely to generate huge profits.

Tupi is a deep oil field, both in terms of water depth and depth below the mud-line (depth below the sea-floor).

This sets a model of cost for lifting oil from deepwater fields all over the world.

Transocean is at the heart of this technology advance. So Transocean can likely provide services that are in line with the $8.20 a barrel lifting cost at Tupi.

The economic viability of deepwater oil keeps rising.

Anaconda said...

MATHEW SIMMONS "KING" OF THE PEAK OIL PUSHERS

Editorial note: the first comment on this post noted Mathew Simmons' client letter touting "Transocean and deepwater peers," this contrasts with his "Peak" oil mantra for the last several years. Reviewing his speaking schedule: Recent speeches and papers presented by Mathew R. Simmons, it's clear Simmons has been the pied piper of "Peak" oil in the investment community.

And as the previous comment noted, Simmons gathered popular notoriety by authoring the book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Simmons has been riding that horse ever since.

Simmons main thesis: The Saudis are secretive, data is scare, the oil fields are "mature" and rumors are that "water cut" is increasing at alarming rates.

As recently as April 8, 2008, Simmons made a presentation at Connecticut College, New London, Ct., entitled: Are We Nearing The Peak Of Fossil Fuel Energy? Has Twighlight In The Desert Begun?

"Twilight" is Simmons' euphemism for "Peak" oil.

Interestingly, Simmons mentions Abiotic Oil in the New London presentation:

Beyond Oil Shale Is "Abiotic Oil"

x Over the years, believers in Abiotic Oil arise to refute "Hubbert's Peak."

x Abiotic Oil Theory: Oil is being constantly created from migrations of magma gasses.

x Newest Theory
-- Saturn's Titan
-- Atlantic Trench

Have vast hydrocarbons

x No one, thus far, has figured how to produce Abiotic Oil.

The intellectual pressure to discuss Abiotic Oil must be mounting.

Because the scientific evidence for Abiotic Oil keeps mounting like an "echelon" stacking ever higher.

The question that needs to be answered is whether Simmons is right about Saudi Arabian oil, specifically Ghawar, the largest oil field in the world?

Simmons' evidence: lack of hard data and rumors of "water cut."

Let's look at Ghawar:

Ghawar: The Anatomy of the World's Largest Oil Field* By Abdulkader M. Afifi (2005).

(Partial) Abstract:
Aramco initially discovered oil in Ghawar in 1948, based on surface mapping and shallow structure drilling. Ghawar is a large north-trending anticlinal structure, some 250 kilometers long and 30 kilometers wide. It is a drape fold over a basement horst, which grew initially during the Carboniferous Hercynian deformation and was reactivated episodically, particularly during the Late Cretaceous. In detail, the deep structure consists of several en echelon horst blocks that probably formed in response to right-lateral transpression. The bounding faults have throws exceeding 3000 feet at the Silurian level but terminate within the Triassic section. The episodic structural growth influenced sedimentation of the Permo-Carboniferous sandstone reservoirs, which onlap the structure and the Jurassic and Permian carbonate reservoirs, which accumulated in shoals above structural culminations.

Please review the entire paper, as it's an excellent and informative paper.

Let's focus on the following quotes:

"It is a drape fold over a basement horst, which grew initially during the Carboniferous Hercynian deformation and was reactivated episodically, particularly during the Late Cretaceous."

"In detail, the deep structure consists of several en echelon horst blocks that probably formed in response to right-lateral transpression."

It is these "en echelon horst blocks" that are the point of discussion of this comment.

(This writer has previously commented on Ghawar, pointing out the significance of the "reactivated episodically" horst on this website.)

An "echelon" looks like the "chevron" insignia for a sargent's rank on the sleeve.

So we have a stack of repetitive layered sedimentary rocks.

What we do know is that Ghawar has produced a 19 mile cube of oil over its 50+ years production span.

See a commercial jet at cruising altitude, 33,000 ft. -- looks pretty high up there, doesn't it? Try a cube three times as high -- nearly, a 100,000 feet high.

That's a lot of oil.

What we don't know is how deep have the Saudis drilled into the field?

There are many trapping structures (layers) in the stratigraphic column of Ghawar.

And even if "water cut" has been increased as rumored, is that only at a shallow layer of trapping rock?

How many more layers of trapping rock is left to go?

Are the current well holes drilled down to only a 1000 feet deep?

We don't know, and the point is neither does Mathew Simmons.

There are, undoubtedly, virgin untapped layers in the "echelon" formations in Ghawar, with petroleum flowing up from below constantly all the time.

Mathew Simmons: "No one, thus far, has figured how to produce Abiotic Oil."

Sorry, Mr. Simmons, I got news for you: all the oil in the world is Abiotic Oil.

Ghawar is Abiotic Oil.

But for purposes of this post: Ultra-deepwater, deep-drilled oil is definitely -- Abiotic Oil -- and you just advised your clients to invest in Abiotic Oil.

Mr. Simmons: Get to know it -- and for the world's sake -- like it!

Oil is Abiotic, and it always has been, and always will be.

Anaconda said...

THE HYDROCARBON CYCLE

The hydrocarbon cycle has been identified and described, here, on Oil is Mastery.

But here on this comment is the "quicky" version:

Hydrocarbon Cycle:
- Formation
- Transport
- Travel
- Repose

Formation: The process of chemical bonding as a function of chemical affinity. The kinetic energy dynamic that forms hydrocarbons is a direct function of the "activity level" of the Crust-Mantle Heat Gradient, of which the pressure/temperature environment is central. All minerals, their formation, and their chemical reactions are controlled by temperature and pressure dynamics.

Transport: The mechanism which raises the hydrocarbons to the crust. hydrocarbons take their turn with the rest of the minerals to rise to the surface by way of fluid dynamics, kinetic forces, and also because as minerals go -- hydrocarbons are less dense -- so are buoyant relative to other minerals, therefor hydrocarbons tend to "step in front of the line."

Travel: The mechanism and "pathways" that hydrocarbons take upon expulsion from the mantle and entering the crust -- rising into faults and fissures in in the crust following roof rock sedimentary layers, squeezing up at various cracks in the roof rock at a particular stratigraphic level and repeating the process, thus traveling up the stratigraphic column.

Repose: The final reservoir structure where the petroleum is arrested in its travel to the surface (where it eventually emerges if not stopped in a 'trapping' structure).

Of course the the key for the oil industry is to locate these trapping structures.

And knowing the cycle will help the oil industry discover oil.

Oil geologists should "get to know" this cycle.

JeffreyLin.Net said...

Thanks for responding to my TransOcean post on SeekingAlpha. Sadly, this is exactly why I think Wall Street analysts are a joke. I came to the same conclusion and wrote that note in less than 5 minutes WHILE eating breakfast. Other than getting paid a lot, I'd actually feel degraded doing that kind of job because it doesn't require knowing much...

JeffreyLin.Net said...

sorry for sounding like a jerk...have just learned the hard way you have to be ahead of these analysts, not after...because the ones acting on the analysts' call is usually late..and thus the sucker.

OilIsMastery said...

Jeffrey, I agree 100%. Furthermore RIG, NOV, and PBR are exactly where you want to be. Thanks for stopping by.

BrianR said...

OilIsMastery, Anaconda, and Quantum Flux (or anyone else reading) ... I'm going to be super busy for a while and apologize if I don't engage in the discussions that have been occurring on this blog the past few weeks.

Just a clarification to help me understand a bit more, if you don't mind.

What most closely represents your view?

(1) biogenic oil is a 100% scientific fact with zero uncertainty!

(2) the theory that oil has a biogenic origin is consistent with the vast majority of observations and data. I remain unconvinced that biogenic theory is invalid but am open to new data.

(3) some oil is biogenic and some is abiogenic but we don't yet know enough to distinguish.

(4) the theory that oil has an abiogenic origin is consistent with the vast majority of observations and data. I remain unconvinced that biogenic theory has any validity but am open to new data.

(5) I am convinced that biogenic theory is invalid so oil must, therefore, be abiogenic.

(6) ALL oil is definitely abiogenic. Not a single shred of doubt. It is scientific fact!

I know it's difficult to categorize what's typically a continuum, but feel free to place yourself between numbers or whatever. FYI - I'm a 2.

Anaconda said...

RESPONSE TO BRIANR'S QUESTION

To BrainR: Answer #4 is my response; not because I have doubts of Abiotic Oil, but because one MUST AlWAYS be open to new Data.

(4) the theory that oil has an abiogenic origin is consistent with the vast majority of observations and data. I remain unconvinced that biogenic theory has any validity but am open to new data.

Anaconda said...

IRAQ OIL LITERALLY "BUBBLES" TO THE SURFACE IN POOLS

To BrianR:
Questions were raised in a prior post, Serpentine Plugs, June 27, 2008, about the sufficiency of oil seeps to cause 'leaching' that would be the 'source' of heavy hydrocarbons for "shale oil" as I hypothesized, as a response to a question raising the "Abiotic Problem" of shale oil.

(See Serpentine Plugs for a further detailed response.)

Below is the challenging question.

Cam Snow said: "Anaconda - How many exposed tar pits do you know of? I can only think of the Trinidad and La Brea examples off the top of my head - they are certainly quite rare." (July 5, 2008 1:47 PM)

Cam Snow said: "Would you advocate that there were an abundance of tar pits during this time? If so, why don't we have the 100's to 1000's of large tar pits scattered around the US now?" (July 5, 2008 1:47 PM)

This article provides additional evidence of open oil seeps.

This article:
The Wall Street Journal, July 9, 2008
Wildcatters Plunge Into North Iraq
By Neil King Jr.

The Canadians are squeezing oil from sand. The Brazilians want to nurse it up through miles of seawater, sandstone and salt. But here in the far north of Iraq, oil is literally bubbling to the surface.

Oil executives lament that the age of "easy oil" is over. It isn't over here. For companies that have stumbled into this corner of Iraq known as Kurdistan, it's an era that has just begun. "Look at this," said Magne Normann, Middle East director for DNO International ASA of Norway, as he stood beside a pond of oil oozing up on a hillside. For fun, he heaved in a stone. "What a sight," he said, as the liquid shot three feet high. "Pure oil."

Iraq is well known as one of the planet's last great oil repositories, with more than 115 billion barrels of reserves, by most estimates. The surprise is how much oil -- and easily accessible oil -- there appears to be in Iraq's Kurdish region, a rugged, Switzerland-size area that has seen centuries of conflict but essentially no oil exploration, until now.

One of the world's most prolific oil fields, the Kirkuk field, sprawls for more than 70 miles just to the southwest of the Kurdish region's border. After 74 years in production, it still churns out over 400,000 barrels a day. Dozens of similar geological structures extend far to the north in Kurdistan, undrilled and almost entirely unexamined.

"I am not expecting to find another Kirkuk," says Ashti Hawrami, Kurdistan's plain-talking minister of natural resources. "But I think we will find a lot of fields that add up to Kirkuk."

The hubbub is in sharp contrast to the rest of Iraq, where an exploratory well hasn't been drilled in 15 years, thanks to neglect throughout the Iran-Iraq war, the period of international sanctions and then the war that began in 2003. Major oil companies have entered talks with Baghdad over ways to boost output in the huge fields in Iraq's south. But the Iraqi government remains loath to grant outsiders the right to explore for new oil or to share in the profits. ...

Companies signing deals under the Kurds' law have since been barred by Baghdad from doing business in the rest of Iraq, where the biggest of the country's oil fields lie. That threat is keeping the major oil companies out of Kurdistan, despite their ardor for new terrain to drill. Meanwhile, until Iraqis can agree on a national oil law, the companies drilling in Kurdistan have no way to export oil they unearth.

-----------------------------------

Highlight: "But here in the far north of Iraq, oil is literally bubbling to the surface."

Highlight: "Look at this," said Magne Normann, Middle East director for DNO International ASA of Norway, as he stood beside a pond of oil oozing up on a hillside. For fun, he heaved in a stone. "What a sight," he said, as the liquid shot three feet high. "Pure oil."

Highlight: "After 74 years in production, it still churns out over 400,000 barrels a day. Dozens of similar geological structures extend far to the north in Kurdistan, undrilled and almost entirely unexamined."

Could there have been enough oil seeps to supply the heavy oil leaching into the raparian watershed of lakes that formed "shale oil" sedimentary layers?

The factual evidence is more eloquent than words.

-----------------------------------

Postscript: 74 years is a long time to be producing 400,000 barrels of oil per day.

BrainR or anyone else reading: Is the above production run more consistent with Abiotic Oil or fossil fuel?

OilIsMastery said...

To Brian: I'm tempted to choose 6 because that's what I honestly believe but to be safe I'd choose 4. The future is pregnant with potentiality and my own human stupidity is just as infinite as hydrocarbons in the universe.

Anaconda said...

To BrianR:

I appreciate your position on the Abiotic/Fossil theory debate: " FYI - I'm a 2." --

(2) the theory that oil has a biogenic origin is consistent with the vast majority of observations and data. I remain unconvinced that biogenic theory is invalid but am open to new data.

BrianR believes "the theory that oil has a biogenic origin is consistent with the vast majority of observations and data."

Since you do believe biogenic origin is consistent with the vast majority of observations and date, you have an obligation per the scientific method to present those "observations and data" that support biogenic origin. In the alternative, when challenged with observations and data that contradict biogenic origin, you are under an obligation to distnguish those contradicting observations and data, and explain why the observations and data are inacurrate, or don't invalidate the theory your are supporting -- in this case, biogenic theory, per the scientific method.

It is not a "diversion" to ask you to explain the details of the concepts you subscribe to and back them up with observations and data that support those concepts.

Rather, it is a basic obligation of the scientific method.

This soliloquy is in response to your comment on a seperate post:

"You have unequivocally said, over and over again, that biogenic theory is 100% false. It is a done deal, right? All your writing says this. Why explore the details of that theory. You asking me to explain details of those concepts (e.g., migration of oil from source rock) is a diversion. You've already thoroughly debunked this! As Anaconda said, all the evidence is on this website.

Do you want to spend your time critiquing a widely-accepted theory over and over or pushing the envelope with NEW science? The former might be fun on internet forum debates full of non-scientists, but does absolutely nothing to progress science."

"Widely-accepted" means nothing if the theory can not be defended from challenging questions that explore the underlining scientific basis for the theory.

"Science is not a popularity contest." -- Fermi

BrianR said...

Anaconda ... I'm not exactly sure what you want from me ... to do this right would take me many months of analysis and going through the literature. I'm not interested in the back-and-forth debate as it stands now. I think we've reached a point of diminishing returns in our exchange. I will try and compile what I think is the relevant information ... I'm not trained in geochemistry, I know my limits ... so it may take a long time.

I am fairly anal-retentive and simply don't have the time right now to do this correctly. The reason it will take a long time is that there are literally thousands of papers/reports/studies to sift through. I prefer to look through the more rigorous peer-reviewed articles rather than abstracts and internet op-eds. As you know, this takes considerable effort.

I simply don't have the time right now to devote to that endeavor. If you'd like to "declare victory" and the final "nail in the coffin" for biogenic theory based on me saying that, go right ahead. If you think I'm "scared" or whatever ... that's fine too. If my comment right here is "proof" of something, great ... I'm glad to provide you with more op-ed fodder. Proceed with your next comment. When things get less busy, I promise I'll revisit this. Enjoy.

Anaconda said...

To BrianR:
You want to be able to test Abiotic Theory by asking questions. That's fine, that's what science is about.

But science is not a one way street.

You refuse to answer questions about the theory you support.

And make a big deal about refusing to answer, to boot.

I ask this question rhetorically:

How can you claim "the vast majority of observations and data" support biogenic theory when you don't have a sufficient grasp of the material to feel confident in responding to direct questions?

And, in fact, you make excuses, time after time, that take more time to write than simply being polite and engaging in discussion.

An honest, "I don't know" is better than threadbare excuses.

Or even: "I don't have an explanation for that -- good point, Anaconda."

But in reality, it appears you want to be free to challenge Abiotic Theory without the burden of defending "fossil" theory.

Sorry, I'm not going to play that 'game' with you.

It does make me question your dedication to the scientific method.

Meanwhile, I will explain & demonstrate Abiotic Theory in the manner I see fit.

Quantum_Flux said...

I believe, for the most part, that oil is completely of abiogenic origins on other hydrocarbon rich planets and moons in our solar system.

I believe that it may be possible for crude oil to be synthesized by GM organisms....if that turns out to be the case with the LS9 company.

I do lean towards the abiogenic origins of oil on Earth (like on other planets and moons), and that the oil companies are keeping their reservoir specs a secret because they intend to make profits on the false-notions of peak oil.

I am not entirely certain about the process of how hydrocarbons are produced on Earth though, since I am still learning the theories. I think that Russian Oil geologists are more likely on the right track than Western oil geologists simply because Russia produces much more oil. Also, it is interesting that the Middle East is continuing to produce oil long after their oil fields were estimated to run down based on fossil theory.

BrianR said...

Anaconda says: "And, in fact, you make excuses, time after time, that take more time to write than simply being polite and engaging in discussion."

I apologize ... I'm trying to be polite. I am telling you that I don't have the time to delve into what I think is far more complicated than simple statements (this is why 100s of peer-reviwed papers and numerous textbooks were written). As I said above, if you think this is an "excuse" ... so be it. From my point of view, we've gone back and forth and reached a point where we understand each other and I don't have much to offer without doing more research. After a certain point, I don't see a huge value in continuing the "armchair" discussions that rehashes the same points. At this point, we are discussing about how we are discussing. Waste of my time.

I need more info and personally need to learn more ... if you think that's an excuse as well, fine. You may have all the info, data, training, and expertise you need ... I don't. I'm fine with that ... being a scientist, I'm humbled every single day by how much I don't know.

Proceed to trash me and question my dedication all you want.

Anaconda said...

BrianR:

The above, July 14, 2008 10:34 AM, comment is basically the same as your July 12, 2008 2:51 PM, comment.

Why repeat yourself?

I "get it" that you want to appear reasonable -- everybody does.

But, here's the thing -- it doesn't take months and months to review the material.

And, yet, when I delayed in responding to questions over the 4th of July holiday, here was your comment:

"Cam ... thanks for your comments ... I think this thread has died however. I, too, am skeptical of the tar-pit-leaching mechanism.

Basically it needs data to back it up. Until then, it's speculation (admittedly creative).

The conclusion from this thread is that abiotic theory cannot adequately explain the occurrence of oil shale." July 5, 2008 6:50 PM

But here you are saying, I'd have to review mountains of data to give an opinion -- yet the above comment displays a completely different attitude.

Please, the conclusion is obvious enough -- at this time, "your tribe" weighs more on your conscience than the science -- it isn't the first time, and it won't be the last.

And, it doesn't surprise me in the least bit, you are from a rival "school" which with Abiotic Theory's wide acceptance will be discredited.

I also understand at present, you are on the cusp of being a full fledged member of that "tribe" (earning your Ph.D.) in geology.

Not a good time to "buck" the prevailing view.

So, I'll tell you what: You ask any questions you want and I'll do my best to answer them.

I won't "needle" you in the process with questions of my own.

Because as I said in the beginning:

"All comments are welcome."

All I ask is you allow me a chance to respond before you pass sweeping judgments.

Fair enough?

BrianR said...

Anaconda ... I am very sorry for everything you perceive as unfair to you.

You are being very defensive ... I thought the leaching hypothesis thread was dead (or dying) because I didn't see any data being introduced ... it seemed it was at that point. An idea was floated, it was discussed, the next part was to get into the nitty-gritty. Again, I apologize if that was still to come and jumped the gun.

You say: "But here you are saying, I'd have to review mountains of data to give an opinion"

Yes, I'm sorry but that's the case. I do indeed want to look at mountains of data. And, because of other things going on that take up my time, it will take me time to do that. I've read a lot of your comments and some (but not all yet) of the articles you refer to on this site. I have a decent understanding of what you're talking about now ... is it unreasonable that I want to take time to study these things?

you say: "But, here's the thing -- it doesn't take months and months to review the material."

Perhaps not for you, but for most, including myself, it does. I've just had my two of my own submitted papers go through peer review ... one took 10 months, the other nearly a year (and this are on very specific things). I'm not saying I'm going to rigorously review and do the due-diligence on every last detail, but I think we've exhausted what can be learned from our opinions. We both want more info, right? You have this site, the world's most comprehensive abiotic theory website ... I don't have such a thing, I need to go through the literature and pull out information relevant to our discussions here. This will take some work (on top of other work I'm doing, which is on top of my day job).

I'm also trying to look the other way with these bizarre "tribe" comments ... I don't see what value they add at this point.

I'm sorry if I'm repeating myself. I will shut up now.

Anaconda said...

BrianR:

Number one rule when you are digging a hole for yourself:

Stop digging.

Quantum_Flux said...

Or keep digging until the mantle melts beneath your feet due to decompression melting and then ride the resulting liquified magma plume to the surface.