Offshore Drilling Comes With Big Risk, Hit-or-Miss Return

Drilling companies often face blowback for offshore rigs—local citizens and environmental groups alike worry about the long-term consequences of these platforms. In response, oil companies have committed significant time and effort to improve safety and lower the risk of failure by increasing ongoing and predictive maritime industrial maintenance. As noted by Motley Fool, exploratory success is down to just 40 percent this year, meaning companies can’t afford any slowdown in production—let alone rig failure—if they want profit reality to match speculation.

Ups and Downs

According to the Motley Fool article, exploratory drilling wasn’t always so hit-or-miss. In 2010, for example, 70 percent of new well sites resulted in success. Some companies are still reaping the benefits of this legacy; as noted by Nasdaq, the Q3 profit for Diamond Offshore Drilling is up 159 percent for a bottom line of $136.42 million or $0.99 per share. Despite the bump in earnings, however, the company is still facing a revenue loss of 17.3 percent through 2015.

Other companies haven’t been so lucky. Drilling the arctic is at a standstill while other off-shore developments are under government scrutiny. In California, for example, Governor Jerry Brown just signed two bills into law that require more frequent oil pipeline inspection and improved oil spill response.

Changing Focus

While much is made of legislative efforts and the risks surrounding offshore platforms, the reality is that most companies are more focused on their bottom line—which means keeping people and equipment on their rigs as safe as possible. After all, injured workers or damaged equipment cause significant production slowdowns and often prompt negative press; companies prefer to operate under the safest, most efficient mandate possible. Consider that according to Offshore Technology, Production/Maintenance supervisor ranks among the top 10 most lucrative jobs in the industry: entry-level pay is almost $110,000 while experienced pros can earn up to $150,000 per year. It’s no surprise since these professionals are tasked with overseeing critical rig components: even a small drop in heat exchanger performance, for example, could have a significant impact on output.

Why the emphasis on human oversight of offshore rigs? Because companies know that in a world where just 40 percent of all new exploration leads to success, a rig going down for weeks, days, or even hours can make or break their bottom line. As a result, detailed maintenance schedules for everything from pumps to heat exchangers, all backed by industry-leading technology are the bread-and-butter of oil companies looking to balance the books and improve stakeholder confidence.

Bottom line? Ongoing and predictive maintenance on oil rigs is now the watchword for offshore drilling rigs. Catastrophic failure is no longer the big risk for oil companies since they’ve taken steps to safeguard technology and workers—production slowdown due to contaminated equipment or improperly-cleaned tools is the real killer for oil rig revenue.

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