Diamond Offshore orders drillship, sells jack ups

Diamond Offshore Drilling Inc. ordered a $655 million ultradeepwater drillship from Hyundai Heavy Industries Co. Ltd. with delivery scheduled for fourth-quarter 2014.

The Ocean BlackLion drillship will be built using the same design as Diamond Offshore’s three units already on order with Hyundai.

The drillship will feature two, seven-ram blowout preventer (BOP) stacks. The second BOP will be available for use as a spare in case of a well control incident.

Analysts suggest an increasing number of companies will be ordering offshore drilling equipment featuring spare BOPs.

The BlackLion specifications include dynamic-positioning, dual activity capability, a maximum hook-load capacity of 1,250 tons, and operating capability in 12,000 ft of water, although it initially will be outfitted for operation in 10,000 ft.

“We are principally a floater company, and during 2012 we have sold five jack up rigs for a total of $95 million, which is being reinvested in our fleet,” said Larry Dickerson, president and chief executive officer.

Spare BOPs more likely

Diamond Offshore also announced it has placed orders for spare BOPs for its three drillships already on order.

“We view the additional BOP orders as particularly noteworthy and believe other contract drillers could add additional BOPs to ultradeepwater rigs to get in front of forthcoming BOP regulations,” said James C. West, analyst with Barclays Capital Inc.

Speakers told the Offshore Technology Conference in Houston that new government regulations for BOPs are coming this year, West said.

BP PLC raised its global standards during July 2011 in the aftermath of the April 2010 blowout of the deepwater Macondo well and subsequent explosion on Transocean Ltd.’s Deepwater Horizon semisubmersible. BP operated Macondo.

“We expect other operators to follow suit as greater clarity emerges regarding the new rules,” West said.

The Macondo incident resulted in a massive oil spill in the gulf, prompting changes in US government safety regulations and a renewed industry response to offshore spill prevention.

In a May 14 research note, West estimated industry currently has 87 deepwater floaters under construction for which it could add backup BOPs.

“If all rigs under construction added backup BOPs, we estimate this would represent roughly $3 billion in potential BOP sales,” West said.

In addition, the global fleet has 170 deepwater and ultradeepwater floaters.

West said the US Bureau of Ocean Energy Management during April issued 56 total permits for floating rigs in the Gulf of Mexico, up from 47 permits announced during March and compared with 58 permits in February.

There were 13 new well permits issued in April (up from 5 in March) and 30 revised new well permits (up from 23 in March). Of the 58 permits issued in April, 39 permits were for exploratory work and 17 were for development jobs.

Contact Paula Dittrick at paulad@ogjonline.com.

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