CATEGORIZED | News

Drilling industry 2007 vs 2009: so similar yet so different

Posted on 18 June 2009

 There is a strange sense of déjà vu about the situation that the drilling sector finds itself in today compared with mid-2007, so similar yet at the same time so different, Tom Kellock of ODS-Petrodata told the IADC World Drilling 2009 Conference and Exhibition in Dublin on 17 June.

He said that, in June 2007, there were 134 mobile offshore drilling units on order worldwide; in June 2009 there are 159.

Oil was riding in the mid-$60 range then, as now.

There are 168 million more humans on the planet today, but 68 billion barrels more of oil have been consumed … roughly 4% of known reserves.

The market for ultra-deepwater rigs was robust in 2007 … it still is, with “extremely limited” availability today and likely to remain so for some years yet, despite the global recession.

However, Mr Kellock warned that that was pretty much where the similarities ended. The mid-water rig market is softening fairly rapidly and likely to prevail for some time, and the situation for jackups was becoming dire.

Out of a population of 444 jackups, he said, only 340 or so were contracted at the last count and, of those, just 316 are in fact working. Even super-jackups are finding the going tough.

Mr Kellock said the situation was especially bad in the US Gulf of Mexico … in terminal decline for jackups.

“There comes a time when it is no longer worth drilling a place … the Gulf of Mexico (shelf area) is at that place,” he said.

Moreover, Mr Kellock said the situation was about to get worse, with a significant decline in utilisation rates reported for June 2009 versus two years earlier.

The US Gulf of Mexico jackup market appears to be in a free fall.

Whereas the market for ultra-deepwater rigs will likely absorb newbuilds … even if Petrobras commits to a home-build program …  this would not be the case for the many jackups currently on order.

He said there were 70 such units still on order and that 57 don’t have work booked.

“We’re going to have more rigs than we know what to do with for a long time.”

Mr Kellock described the current situation as a mess, one that could be complicated further by oil companies potentially deliberately placing orders for new MODUs with the intention of destabilising an already unstable market.

And yet while some rigs have indeed gone into cold-stack, there was little sign of superannuated units heading for the scrap yard, though potentially a number of unemployed jackups could be converted to production units.

There may also be some consolidation of the fleet, given that there are around 100 organisations offering rigs to the market. However, Mr Kellock warned that not nearly enough consolidation was likely to take place to enable companies to achieve the kind of critical mass needed to operate successfully in an environment where operating costs of rigs have risen steeply of late.

 There is a strange sense of déjà vu about the situation that the drilling sector finds itself in today compared with mid-2007, so similar yet at the same time so different, Tom Kellock of ODS-Petrodata told the IADC World Drilling 2009 Conference and Exhibition in Dublin on 17 June.

He said that, in June 2007, there were 134 mobile offshore drilling units on order worldwide; in June 2009 there are 159.

Leave a Reply

*

FEATURED MICROSITES


Recent Drilling News

  • 28 July 2014

    SDI completes 500th MagTraC MWD Ranging project

    Scientific Drilling International (SDI) has completed the 500th MagTraC MWD Ranging project. MagTraC was introduced in 1998 to target challenging applications...

  • 28 July 2014

    Modular offshore rig design reduces deployment costs

    William Jacob Management (WJM) has introduced an offshore rig design that reduces deployment costs and improves speed-to-market for upstream operations. The 3,000-hp...

  • 23 July 2014

    Halliburton promotes Jeff Miller to President

    Halliburton has promoted Jeff Miller to President and has appointed him to the Halliburton Board of Directors effective 1 August 2014. Mr Miller is currently the...

  • 23 July 2014

    Statoil resumes production on Njord A platform

    Statoil has resumed oil and gas production on the Njord A platform in the Norwegian Sea, after a major reinforcement of the platform structure. Production had been shut down...

  • 22 July 2014

    Petrobras’ domestic oil production tops 2 million bbl/day in June

    Petrobras’ June oil production in Brazil averaged 2 million bbl/day (bpd), a 1.7% increase from May’s production of 1.9 million bpd. In addition, the production operated...

  • Read more news