Newbuilds entering Middle East market at rapid pace

Posted on 25 April 2011

An AlMansoori well testing package is perched in the Western Zagros mountains of Kurdistan, northern Iraq. Drilling activity in northern Iraq is expected to continue growing at a brisk pace during 2011 as companies shift from seismic data gathering into exploration and appraisal.

An AlMansoori well testing package is perched in the Western Zagros mountains of Kurdistan, northern Iraq. Drilling activity in northern Iraq is expected to continue growing at a brisk pace during 2011 as companies shift from seismic data gathering into exploration and appraisal.

The Middle East region is the destination for many newbuild rigs, according to Ibrahim Al-Alawi, deputy chief executive officer for AlMansoori Petroleum Services. “At the rate they are coming in, it looks like they will be arriving every two months for the next couple of years.”

The arrival of the newbuilds “is going to push dayrates up, that’s for sure,” he said, though the impact may not be felt immediately. “Here, the rigs are on long-term contracts for two to five years. That won’t put pressure on the older rigs until contracts expire. There will be a gradual phased in increase in dayrates.”

“Most of our customers have expanded drilling programs this year and in 2012,” Mr Al-Alawi said. “There will be at least a 30% to 35% increase in on-land rig activity in the UAE. Saudi is at about 100 rigs now and planning to increase by about 25 to 30 rigs. In Abu Dhabi, seven to 10 more rigs will be put to work this year. In northern Iraq, we’re looking to see about five or six rigs on top of approximately 30 rigs right now.”

In the United Arab Emirates (UAE), Saudi Arabia and northern Iraq where AlMansoori Petroleum operates, Abu Dhabi will have the greatest growth in terms of percentage. “They have ambitious plans set a few years ago, and they need to increase their production capacity. They are just now setting those plans into action,” Mr Al-Alawi said.

In addition to the newbuilds, available rigs will be snatched up on the condition that they have modern technology, especially in the UAE and Saudi Arabia, he continued. While demand for rigs is growing and available rigs will be put to work, he believes some will need to be upgraded before they will be put into operation. Contractors and oilfield service companies in the region are putting emphasis on high-tech capabilities.

Activity in the region is still centered on oil exploration. “There’s a lot of talk about gas these days, but activity is about two-thirds oil and about one-third gas in the areas where we work,” Mr Al-Alawi said. “The majority of the wells being drilled are horizontal.”

“There is a lot of interest in extended-reach wells to achieve maximum reservoir contact. We are upgrading our technology to cope with these new types of wells. For example, we perform production logging operations, and to go into these long horizontal wells, we’ll need to use more coiled tubing and tractors to deliver the tools into the horizontal section. This is the kind of technology that’s not so common in this region,” Mr Al-Alawi said.

“Well testing packages are in high demand in Kurdistan because each well needs to be tested,” he continued. AlMansoori Petroleum has seven well testing packages and five slickline units operating in Kurdistan and recently set up a directional drilling workshop.

Other developments in the UAE, Saudi Arabia and northern Iraq include a trend toward increased emphasis on safety. “Because of the highly technical nature of the wells being drilled here, pipe inspection standards are moving from API RP 7G toward DS 1 standard and higher,” Mr Al-Alawi said.

“There’s going to be more emphasis on safety training, especially as the drilling contractors have to bring in all of these ‘green’ hands to run the new high-tech rigs,” he said. “Finding people, training them and keeping them are probably going to be the three biggest challenges that contractors face here over the next couple of years.”

More information on drilling activity in the Middle East region, including exclusive interviews with Nabors Arabia, Rowan Companies, Hercules Offshore, United Gulf Energy Resources, Egyptian Drilling Company, Iran’s PEDEX, El Paso Energy and more, will be available in the upcoming May/June 2011 issue of DC.

1 Comments For This Post

  1. Mike Lynch Says:

    First class information

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