Offshore drilling may prove unprofitable

Nov 30, 2020 Letters

DEAR EDITOR,

A number of recent studies have shown how difficult it has become to make money from offshore drilling. A break even of USD 55/bbl has been mentioned by Brazil and reducing capital expenditures while increasing production appears to be the volume play driving the continuation of this endeavour. Success is mixed and the current price pressure in the industry has led to significant losses for operators and a number of bankruptcies.
The current discussion on the reinjection of produced water/brine from the wells is an additional major environmental hazard and expense with a number of significant risks. Reinjection can lead to earthquakes if an error occurs, onshore treatment may cause land damage that is long lasting and dumping leads to marine life destruction. In addition, there is a cost associated with each approach that over the long term may lead to a loss for the resource owner. Some places, such as Texas have processed this byproduct to cater for water shortages and have produced salt for consumption. However, the benefit in our economy when considering transportation costs may be more measured. Completing the appropriate cost benefit analysis should be on the agenda to ensure an informed decision is being made.
Sadly, the bottom line for the offshore drilling industry, even with such lucrative contract terms as in Guyana’s case, may result in a net loss for our economy over the long term if oil prices never recover to above the break even level. Leaving us with an important decision to make. Do we shift to wave energy which is more predictable, dependable and environmentally safe or do we continue to pay the bill for Exxon to take our limited nonrenewable resources while negatively impacting our environment? The good news is that Exxon has already shown that they are capable of doing work on the sea floor. Being able to properly decommission the wells and place wave energy capturing technology should be an evolution that is within Exxon’s reach. If not Exxon then there is always the option of the leading companies in wave energy generation and transmission.
Our oceans have become more energized as a result of climate change, now is as good a time as any to take advantage of this new normal to provide energy for our coastal plains while also protecting our marine life and Ecosystem.

Best regards,
Mr. Jamil Changlee
Chairman
The Cooperative Republicans of Guyana

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Offshore drilling may prove unprofitable

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