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

  • 24 October 2014

    GDF SUEZ, BP discover new Central North Sea Field

    “This is an encouraging exploration discovery in a part of the Central North Sea that needs additional volumes of hydrocarbons to open up development options…

  • 24 October 2014

    Chevron, BP discover oil in deepwater US Gulf of Mexico

    The discovery well, on Keathley Canyon Block 10, was drilled by operator Chevron on behalf of the Guadalupe co-owners. The well encountered significant oil pay…

  • 22 October 2014

    Shell discovers gas in pre-salt reservoir offshore Gabon

    Shell announced a frontier exploration discovery offshore Gabon, West Africa. The well Leopard-1 encountered a substantial gas column with around 200 m net gas pay…

  • 22 October 2014

    Statoil proves new oil resources near Grane field in North Sea

    Well 25/8-18 S, drilled by the rig Transocean Leader, proved an oil column of 25 m in the Heimdal Formation. The estimated volume of the discovery…

  • 21 October 2014

    IADC Cybersecurity Task Group to provide industry guidance to assess risks

    The oil and gas industry is not immune to cybersecurity threats, from computer viruses and malware to targeted attacks. The IADC Advanced Rig Technology (ART) Committee…

  • Read more news