DRILLING OUTLOOK
“Gulf of Mexico Glow” by artist Crystal Wreden
Buoyed by strong oil prices and
rig demand, offshore drilling to
see continued comeback in 2023
Middle East, South America and US GOM
are all among regions expected to see
tight rig supply and rising dayrates next year
BY STEPHEN WHITFIELD, ASSOCIATE EDITOR
There is growing optimism around the
global offshore drilling market and its
prospects for 2023, with dayrates and uti-
lization both expected to increase and sev-
eral key markets either already rebound-
ing or set to rebound.
As of September, the global contracted
fleet consisted of 378 jackups, 68 semisub-
mersibles and 73 drillships, according to
Westwood Global Energy Group. The firm
is projecting modest increases for each rig
type in 2023, with jackups going up to 395,
12 semis to 75 and drillships to 78. Marketed
fleet utilization this year, as of September,
was 87.3% for jackups, 79.6% for semisub-
mersibles and 93.5% for drillships. In 2023,
utilization is projected to increase to 90%
for both jackups and semisubmersibles
and 95% for drillships, according to Terry
Childs, Head of RigLogix at Westwood.
These expected activity increases will
be directly tied to oil price, he added. As of
13 October, Brent crude was at $94.69/bbl,
which is a high enough level to encour-
age operators to increase activity, and that
should continue into next year.
“In most regions of the world, rig activ-
ity has picked up from increased opera-
tor demand,” Mr Childs said. “Obviously,
increased oil prices play a factor, and as
usual we’re seeing a bit of a lag time with
that – oil prices go up, then utilization
goes up and then, ultimately, dayrates go
up. That’s what we’re seeing right now –
oil prices have been strong, everything’s
going up for most every rig type in every
region, and that should continue in 2023.”
Esgian has a similar view of the offshore
market. It measured the global contracted
rig fleet in 2022 as averaging 317 jackups,
50 semisubmersibles and 65 drillships.
Cinnamon Edralin, Head of Rig Market
Research at Esgian, is also forecasting
modest increases for each rig type in 2023,
with jackups averaging 350, semis at 60
and drillships at 80. This will push mar-
keted utilization for jackups from 76% to
85%, semis from 60% to 80% and drillships
from 82% to 90%.
“It’s really nice to have conversations
with drilling contractors where they’re
actually enthusiastic and optimistic,”
Ms Edralin said. “Not only are they get-
ting to the point where they can just pay
their bills, we’re now seeing that they can
undertake new investment. It’s an exciting
time to be in offshore drilling.”
The Middle East
The Middle East will be the biggest driv-
er of jackup activity, with forecasts calling
for 150 active rigs in 2023, compared with
120 in 2022. The bulk of this increase
will come from Saudi Arabia, which is
planning to double its offshore fleet to 90
jackups by the end of 2024 as part of its
drive to boost production capacity by 1
million bbl/day. To that end, Saudi Aramco
has awarded 30 rig contracts since March
2022, with the majority of contracts going
for five years each.
Ms Edralin said this push from Saudi
Arabia could have a trickle-down effect
on other countries in the Middle East, par-
ticularly Qatar and the UAE. Both of those
countries have also expressed interest in
contracting additional rigs to bolster their
production, but Aramco may effectively
drive up dayrates to a point beyond which
those countries are comfortable paying.
NOVEMBER/DECEMBER 2022 • DRILLING CONTRACTOR