Watching the World Next: A fifth generation semi

April 29, 1996
With David Knott from London Deep Sea AS, a unit of Odfjell Drilling AS of Bergen, has let a 300 million kroner ($46 million) contract to Kvaerner Rosenberg AS, Stavanger, for construction of a hull for a semisubmersible drilling rig. Norway's first newbuild semi since 1988, it is billed as the world's first fifth generation rig. The hull will be built to the Bingo 8000 design of Maritime Group AS, Kristiansand, Norway.
With David Knott
from London

Deep Sea AS, a unit of Odfjell Drilling AS of Bergen, has let a 300 million kroner ($46 million) contract to Kvaerner Rosenberg AS, Stavanger, for construction of a hull for a semisubmersible drilling rig.

Norway's first newbuild semi since 1988, it is billed as the world's first fifth generation rig. The hull will be built to the Bingo 8000 design of Maritime Group AS, Kristiansand, Norway.

Charter rates for semisubmersibles in the last few years have been too low to encourage newbuilding. So at first sight this contract appears to indicate that good times are back for the drilling industry.

However, Deep Sea has so far committed only to fabrication of the hull. The company is marketing the planned rig but is believed unlikely to commit to installation of drilling equipment without a firm charter.

Economics gap

Ian Mitchell, rig markets manager at Petrodata Ltd., Aberdeen, said Deep Sea has kept open the option to complete and market the rig as a production unit.

He said there is still a gap between current day rates for semis and what is thought necessary to justify speculative building of a rig.

"If a newbuild semi costs $250 million, charter rates would need to be higher than the current $120,000-130,000/day to support newbuilding," Mitchell said

There were 41 semis on hire in the North Sea at the end of March, Mitchell said, and the number is likely to climb to 46 or 47 by yearend. Rigs are steadily being mobilized to the North Sea, and more are to come.

For example, Mitchell said, two units operating in Southeast Asia, the Jack Bates and West Delta semis, are booked for North Sea drilling in the next 6 months.

Rig shortage

Mitchell said there has been a shortage of semis in the North Sea for the last 9-12 months, and there is a mixture of semi rig types moving in.

"A year ago there were only 31 semis on hire in the North Sea," Mitchell said. "Worldwide rates for deepwater drilling rigs have risen, reaching $120,000-130,000/day on a number of occasions this year.

"A year ago $75,000/day was the top rate for a fourth generation semi, and a number of contracts were being fixed at $60,000/day. In mid-1994 semi operators were lucky to be getting $55,000/day."

Mitchell said there is still a tight market for high specification rigs in the North Sea and worldwide: "The pressure on rates is upwards, but it is a moot point whether projects could stand higher rates."

The new semi's hull is slated for completion in mid-November. The project involves fabricating support columns and bracing for use with two existing pontoons.

Kvaerner Rosenberg Pres. Erik Groenner said the contract could be expanded if Deep Sea later decides to order a complete rig. In that case, the rig could be in service in early autumn 1997.

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