BP Reportedly Agrees to Pay Record Charter Rate for Drill Ship

In an apparent effort to ensure adequate control of shrinking natural resources, BP has reportedly agreed to pay in excess of $500,000 a day for the continued use of a drill ship in the Gulf of Mexico. Starting in December of 2007, they will pay a day rate of $520,000 to charter the "Discoverer Enterprise." The rate, said to be almost triple the cost to charter the ship at present, is a clear indication of the lengths to which oil producers will go in their quest to meet oil production goals.

For some projects, exploration and production costs have doubled. As the oil majors grapple with their budgets, the oil services industry is experiencing good times, with some making record profits, as the oil industry's dependence on technology and equipment suppliers continues to grow.

Cost escalations caused by equipment and labor shortages are also delaying exploration programs in the North Sea. Meanwhile, the cost of offshore activity in the U.S. Gulf continues to climb, competing with - and fueled by - a marked surge in drilling in the Middle East, along with fierce competition between exploration firms to secure the latest in technology. The recent upward pressure on oil and gas prices has only exacerbated the situation, according to industry executives.