Steven Poruban
Senior Staff Writer
HOUSTON, Oct. 24 -- Owners of deepwater drilling rig will be unable to contract their rigs at rates previously expected, according to the biannual study, The Deepwater Rig Market Report, compiled and released by Houston-based ODS-Petrodata Consulting & Research. This is because deepwater drilling rigs will be in an oversupply situation "until at least 2007," the research firm reported.
"After falling for two years, demand for deepwater rigs is expected to grow slowly over the next several years," ODS-Petrodata said. "However, with four new rigs poised to join the fleet in the next 18 months, an excess of equipment will exist until at least 2007."
ODS-Petrodata went on to say that, "although utilization of the newest and best-equipped rigs will remain high, day rates for these units will be lower than was expected when they were built. Along with the impact on day rates for all deepwater units, older and less sophisticated deepwater rigs will bear the brunt of the extra capacity in terms of utilization."
Tom Kellock, a senior consultant in ODS-Petrodata's research practice and project manager for this report, said, "There is no doubt that the deepwater rig construction frenzy of the last few years was overdone. Now that the majority of the initial long-term contracts are drawing to a close, it is more readily apparent that the utilization rates of the past few years were artificially high, and that the underlying demand was more modest than it appeared."
"Underpinning" the deepwater rig market, ODS-Petrodata concluded, will be the "steady string of major discoveries" by the likes of ExxonMobil Corp., ChevronTexaco Corp., BP PLC, and Total SA in areas such as West Africa, where an "enormous amount of work" is expected to take place. "However, as oil and gas companies focus more on the bottom line and less on simply expanding reserves and production, rig owners will be under continuing pressure to keep day rates from rising substantially from today's levels," ODS-Petrodata said.
Weekly rig count
Total drilling activity in the US wavered from the rig count's 2-year high, reached just 2 weeks ago. Baker Hughes Inc. recorded 1,090 rotary rigs working in the US and its waters, 25 fewer than the previous week and up from the 856 during this time last year.
Land operations accounted for the decrease, down 25 units with 970 drilling this week. Drilling barges working inland waters increased by 1 to 15. The number of rigs actually drilling in offshore waters decreased by 1 in the gulf at 101 and declined by 1 at 105 in US waters as a whole, Baker Hughes reported.
In Canada, the number of rotary rigs working fell by 2 rigs to 389 this week, up from 235 a year ago.
Among the rigs working in the US, the number drilling for oil decreased by 2 to 158. Drilling for natural gas fell by 21 rigs to 930; 2 rigs were unclassified this week. Directional drilling decreased by 15 rigs to 253, while horizontal drilling decreased by 1 to 93.
Texas registered the biggest loss, down by 13 rotary rigs to 462 working this week. Oklahoma gained 1 to 142, and New Mexico was down 6 to 63. Rig counts in Alaska and Louisiana were unchanged at 10 and 158, respectively. Drilling activity in California, meanwhile, increased by 1 rig to 26 active. Wyoming's rig count was down 2 to 68 this week.
Retirement of the 2 semisubmersibles in the Gulf of Mexico reduced the world fleet of mobile offshore rigs to 652, while the global number of contracted units showed a net gain of 2 to 523, boosting utilization to 80.2%, said ODS-Petrodata. In European waters, the number of contracted rigs declined by 2 to 79 while the available fleet was reduced by 2 to 97. That lowered the utilization rate to 81.4% for Europe.
Mobile offshore drilling rig demand, meanwhile, declined this week in the US sector Gulf of Mexico and offshore Europe, reported ODS-Petrodata Friday in its weekly mobile offshore rig count.
The utilization rate among mobile offshore rigs in the US gulf fell to 71.5% this week, down from 72.6% previously. The number of units under contract in the gulf declined by 4 to 118; the fleet size fell by 3 to 165.
ODS-Petrodata's Deepwater Rig Market report is available by subscription. For more information, e-mail [email protected].
Contact Steven Poruban at [email protected].
