The drilling industry this year will use newer, more-efficient, and more-powerful rigs and tools to test new plays and develop reserves in challenging environments such as arctic conditions and deep, high-temperature, high-pressure regimes. Service companies and academia will continue to develop new ideas and technologies to support operators’ programs.
Rig fleets are growing and gaining in quality worldwide with mostly incremental improvements. Interesting new designs in conventional and coiled-tubing land rigs will continue to appear.
Rig renovation programs are even more prevalent than the newbuilds being touted; almost all will encompass new automated systems that make the drilling workplace safer and more environment-friendly. Zero-discharge equipment is being slimmed down.
Tool development to drill in high-pressure and high-temperature environments is under way, and a 20,000 psi BOP soon may be proved commercial.
Operators are testing the depth and reach limits of existing equipment, especially on Sakhalin Island in Russia and in Alaska.
Mooring systems are changing. There are new requirements for additional mooring lines in the Gulf of Mexico following the 2004-05 hurricanes and damage from wayward rigs. Brazil has already implemented a dynamic positioning-only regime to protect its subsea equipment. The use of dynamically positioned floaters in US waters might expand.
The gulf continues to be the hotbed for floater technology, featuring spars, tension-leg platforms, and production semisubmersibles. Petrobras’s commitment in 2006 to try Sevan Drilling’s pioneering SSP (Sevan stabilized platform) floater design suggests that some operators are comfortable enough in other regions to directly adopt innovative technologies.
Beyond technology, joint drilling ventures between national oil companies (NOCs) and international operators will continue to expand. For example, Saudi Aramco’s 5-year plan to add 50 tcf of gas reserves involves four ventures with non-Saudi companies:
- Sino Saudi Gas, working with Sinopec.
- South Rub Al-Khali Co., with Royal Dutch Shell.
- Luksar, with Lukoil.
- Enirepsa, with Eni SPA and Repsol YPF.
The foreign operators will drill 300 development wells and more than 70 exploratory and delineation wells. In 2006, Saudi Aramco announced deployment of its 100th rig, and the new plan will undoubtedly require additional rigs.
Among other partnerships involving NOCs, National Iranian Oil Co. is working with Austria’s OMV on the Mehr Block and with Norsk Hydro on the Anaran Block.
In northern Iraq’s Kurdistan region, Turkey’s Genel Enerji and Canada’s Addax Petroleum have started a three-well drilling program.
In Asia, China’s CNOOC Ltd. and PetroVietnam have agreed to joint exploration in disputed waters of the South China Sea. They will drill the first wildcats late in 2007 after reprocessing existing data and shooting a 3D seismic survey in the Beibu Gulf.
And Petrochina is looking for partners to tackle problems in Luojiazhai gas field, Sichuan Province.
In Venezuela, most foreign operators have agreed to modified contracts that give controlling shares to Petroleos de Venezuela SA, allowing activity to resume.
In another business trend likely to continue this year, a flush of profits and the desire to secure access to rigs are encouraging acquisitions among drilling contractors. Norway’s Seadrill, which has already acquired privately held Smedvig, Ocean Rig, and Eastern Drilling, has recently raised enough capital for another buying spree and might target a US contractor.
Norway’s Awilco Offshore is buying OffRig Drilling.
And Russian service company Integra is taking over driller Prikaspiyburneft, with land fleets active in Russia and Kazakhstan.
In the US, meanwhile, interesting new plays are being tested. Contractors are using new or renovated land rigs with enhanced capabilities, working with smaller crews. Large and small operators and contractors have been investing in the Rockies. Wood Mackenzie forecasts that more than 43,000 wells will be drilled in the Rockies over the coming 4 years, representing a $25 billion investment. Analysts predict that 130 tcf of gas reserves might be proved in the Rockies by 2030.
In the Gulf of Mexico, small companies continue to drill the Miocene in shallow waters, and the stable regulatory environment attracts foreign operators. An emerging emphasis on the Lower Tertiary trend in deep water, requiring floaters capable of drilling beyond 30,000 ft, has the industry’s attention. GlobalSantaFe has extended commitments for the Development Driller I and the CR Luigs drillships to BHP Billiton.
And off Alaska, seismic data acquired recently in the Beaufort Sea in 2006 will lead to more drilling in 2007. Shell has been bringing rigs to the area and will drill this year.