Good times

It's a good time to be in the oil and gas industry.

David Paganie • Houston

It's a good time to be in the oil and gas industry. Among the positives, total global upstream spend is expected to reach a record high this year, exploration and production activity in the US Gulf of Mexico is recovering, and technology is evolving to sustain production from maturing assets and to tap previously unattainable resources. Global upstream capex and opex are set to reach a combined record of $1.23 trillion for 2012 and expected to rise to $1.64 trillion in 2016, according to a recent IHS report. North America is expected to lead all regions for total upstream spend, the report finds, but the US GoM was not cited as a major contributor. Drilling activity in the GoM, however, is regaining momentum and could reach pre-Macondo levels as early as the end of this year. Of note, the first drillship designed with the capacity to perform dual gradient drilling arrived in the GoM last month. Under contract with Chevron, the rig is equipped with technology that, it suggests, could change the way deepwater wells are drilled. Keep an eye out for the feature editorial on dual gradient drilling technology in a future edition ofOffshore. Meanwhile, in this issue, Offshore Managing Editor Bruce Beaubouef looks at the status of well permitting in the GoM, drilling trends, the backlog of field development projects, and what to expect in the coming months. His detailed report begins on page 34.

As industry seeks new resources in increasingly complex and remote environments, technology needs to keep pace. A good example is real-time seismic-while-drilling. Operator African Petroleum employed the technology to reduce uncertainty and risk in a deepwater target offshore Liberia. A description of the technology and the results of the wildcat well, begins onpage 48.

An example of a developing technology is the dry-tree semisubmersible production system. In short, the concept is being developed as an alternative to conventional floating production systems to increase recovery and reduce subsea well intervention costs in ultra deepwater. In this issue,Ming-Yao Lee, Chevron Energy Technology Co. and his co-authors, make the case for a dry-tree semisubmersible production system. The results of joint-industry studies and the authors' recommendations to mature the concept, begins on page 56.

Meanwhile, OTC attendance, widely considered a barometer of industry health, drew 89,400 people, 14% higher than last year's attendance and the highest total since 1982. Opportunity drives innovation, and there was no shortage of it on display.Offshore Assistant Editor Jessica Tippee reviews a sample of the new technology that was showcased at the event this past May. Her report can be found on page 80.

There are challenges, too, and the one that continues to resonate in the industry is the shortage of skilled labor. Australia, in particular, is desperate for talent and it is struggling to find it domestically. Last month, the government's Immigration and Citizen Department held a job fair in Houston to fill more than 650 job vacancies in Australia's oil and gas, mining, and construction industries. Developing economies are also aggressively seeking industry resources and investors. Malaysia and Korea, for example, are offering tax breaks and other incentives to encourage international investment. Mexican national oil company Pemex continues to plea for international resources to help offset its declining domestic production. To date, its terms have not been favorable to the international community.

Retaining skilled labor is equally challenging in the current market, from an employer perspective. Typically the underlying market conditions promote competitive salaries and other financial incentives; thus, from an employee perspective, you might say it's a good time to be in the oil and gas industry.

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