The offshore oil industry is 70 years old this year, and industry analyst Matt Simmons says rust is becoming a bigger threat than oilfield depletion. The CEO and founder of investment bank Simmons & Co. International spoke at OTC 2008 this week in Houston. "If the world wants to keep using energy from oil and gas, it will have to rebuild the infrastructure and the cost of doing this could rival the combined cost of the World War II war machine, the post-war Marshall Plan that rebuilt Europe, and the post-war buildout of the U.S. interstate highway system." Simmons said the costs could be enormous--in the $50- to $100 trillion range. Triage needs to happen immediately to prioritize which links in the system are the weakest and need to be repaired or replaced first. Pipelines are old, some dating to World War II. The average age of the drilling rig fleets onshore and offshore is 24 years. Refineries are even older. "No single U.S. state has drawn up a blueprint of how to replace its aging energy infrastructure." Simmons cited infrastructure construction on the drawing board for the Middle East alone is as much as $1.5 trillion. Simmons also said that if and when we start to build back what the energy industry needs, there will be a severe blue-collar personnel shortage that will hamper progress and cause huge cost overruns. "We face a twin challenge," he said. "We need to end our addiction to oil at the same time that we need to rebuild our entire energy infrastructure." --Leslie Haines, Editor in chief, Oil and Gas Investor, lhaines@hartenergy.com
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.