The E&P labor market is very difficult today, says Norsk Hydro ASA's Gulf of Mexico business chief. Professionals are trading camps like soccer players-they're with BP (NYSE: BP) one year and ExxonMobil (NYSE: XOM) the next, Helge Hove Haldorsen told Norwegian American Chamber of Commerce members in Houston recently. Norway-based Norsk Hydro (NYSE: NHY) made a giant splash in the Gulf of Mexico last year, acquiring Houston-based, Gulf-focused Spinnaker Exploration Co. for cash in a deal valued at some $2.5 billion. Its newly expanded Gulf business unit, Houston-based Hydro Gulf of Mexico LLC, now has 80 employees. Additional people used to be a problem for E&P companies when making acquisitions, he said; many had to be laid off. Today, buyers depend on people coming with the assets they buy. Norsk Hydro is expected to apply a great deal of the expertise it has gained from operating in the North Sea and elsewhere offshore to the new Gulf unit. It acquired production of some 23,000 BOE per day from Spinnaker, and total reserves of 129 million BOE. More key in the deal is Spinnaker's extensive exposure to Gulf exploration acreage. There have been challenges since closing, however. Gulf dayrates have soared in the past several months, and finding a rig available for work is difficult at any price. "They're sold out," Haldorsen said. Also, insurance costs have rocketed since hurricanes Katrina and Rita. "Anyone here from an insurance company?" he asked the audience. "How can you do it to us?" And, other risks remain, such as dry holes. Haldorsen presented an image of Edward Munch's "The Scream" in his slide show to reflect sentiment about that. "This is how you feel." As for continued hurricane-related risks, an "easy button" would be the use of FPSOs (floating production, storage and offloading vessels) with a quick-disconnect feature, he said. Eventually, offshore operations may be bound to the ocean floor, and there is no super-surface facility. And, there are other ideas that may be costly but worthwhile. "The cost of doing nothing different is probably higher than the cost of doing something different."
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