Rig construction boom continues

Karen Boman - ODS-Petrodata

The construction boom for mobile offshore drilling units (MODUs) continues in 2008 as record oil and natural gas prices and rising energy demand give operators ample incentive to drill for more oil and gas reserves.

As of late June of this year, 140 MODUs are under construction, 32 are on order, and 11 are planned worldwide. Just like last year, jackups continue to comprise the bulk of the rigs under construction, on order, or planned with 84 units; the remainder includes 52 semis, 43 drillships, and four tender rigs. So far this year, 30 orders have been made for MODUs, with more likely to follow as the year progresses.

Click here to enlarge image

Some companies continue funding rig construction on a speculative basis; this includes 86 rigs that are being built without contracts in place. Total estimated cost of all MODUs currently under construction, on order or planned is in excess of $72 billion. Costs for rigs actually under construction at this time are estimated at more than $49.6 billion.

Click here to enlarge image

Despite the surge in new rig orders, and even with more orders expected this year, the influx of new MODUs will not likely sink day rates, as global demand for jackups, semis and drillships is forecast to outpace supply in the next few months, according to data compiled by ODS-Petrodata. The 38 rigs under construction that are scheduled for delivery this year will bring little relief to a global rig market hungry for capacity, despite the number of rigs built on speculation.

Global demand for floating drilling rigs, especially deepwater capable rigs, will remain high, and short supply of these rigs will force some operators to plan their drilling programs around rig availability. Floating rigs scheduled for delivery will do little to alleviate the tight market, as many of these rigs already have contract commitments that start upon delivery.

The number of jackups entering the global offshore rig market may negatively impact day rates in some markets on a short-term basis. However, demand for jackups is forecast to grow in 2008, which should offset the effect of new supply coming into the market.

In response to demand, day rates have increased for all categories of drilling rigs in most regions. One exception is the US Gulf of Mexico, where the average jackup price declined from $82,625 in June 2007 to $72,188 this month. Jackups have been departing the region for more lucrative markets, but the market has recently shown signs of improvement.

In the North Sea, the average day rate for jackups rose from $206,250 in June of last year to $215,000 this month. The region’s rig fleet has enjoyed near perfect utilization over the past year. Demand in the region could begin outstripping supply soon, especially in the region’s jackup market.

Mid-water semisubmersibles and deepwater floating rigs also experienced increases in average rig day rates. The average day rate for mid-water semis rose from $325,427 in June 2007 to $354,625 this month. For deepwater floaters, the average day rate rose from $457,901 in June of last year to $500,292 this month.

The ongoing level of construction activity means that shipyard space remains at a premium worldwide. Just like last year, Asian shipyards continue to host much of the rig construction activity. Sixty-nine rigs are under construction in or on order with shipyards in the Far East, while 59 rigs are under construction or on order with Southeast Asian shipyards. Singapore is home to the largest number of rig construction projects with 44, followed by South Korea with 27 and China with 23.

Singapore-based Keppel FELS Shipyard has the most rig construction projects on its order book out of shipyards worldwide with 25 rig construction projects. South Korea-based Samsung Heavy Industries has 16 of the newbuild rig construction projects, while Daewoo, Yantai Raffles, and Jurong Shipyard have 10 each.

Related Articles

MOS awarded subsea construction contract

Dec 18, 2014 Mermaid Offshore Services Ltd., recently renamed Mermaid Subsea Services (Thailand) Ltd., has been awarded a subsea construction contract in the Gulf of Thailand, serving an international fabricati...

SPS Overlay provides side impact protection on three FPSOs

Dec 17, 2014

SPS Overlay has provided side impact protection for three FPSOs. The work was carried out at Enseada do Paraguaçu SA Shipyards (EEP) in Brazil and at the COSCO (Dalian) Shipyard in China.

2H Offshore to deliver lightweight conductor-supported platform

Dec 17, 2014 2H Offshore, an Acteon company, will deliver a lightweight conductor-supported platform for EQ Petroleum Developments Malaysia Sdn Bhd for installation in the Tanjong Baram field, offshore Malaysia.

QIC extends international expansion with new base in Malaysia

Dec 17, 2014

QIC Inc. has established new offices in Kuala Lampur and Labuan, Malaysia, to further serve customers in the Asia/Pacific region.

Blackhawk unveils wireless cement head

Dec 17, 2014

Blackhawk Specialty Tools has developed the Hawkeye, a wireless top drive cement head that enhances speed, efficiency, and safety in cementing operations.

Trending News

Offshore photo of the day

Ezra, Chiyoba ink subsea MOU

Aug 28, 2015

Under a binding memorandum of understanding with Ezra Holdings Ltd., Chiyoda Corp. will invest in Ezra’s subsea services business, EMAS AMC, to form EMAS CHIYODA Subsea, a 50/50 joint venture.

Seadrill defers deliveries of newbuild rigs

Aug 28, 2015

Seadrill has issued an update on its rig building program and market prospects for drilling.

Iona negotiating farm-out of Orlando in North Sea

Aug 28, 2015

Iona Energy expects cost for the Orlando tieback to the Ninian Central platform in the UK northern North Sea during 2015-2016 to be reduced from $215 million to $192 million. 

Ikon Science, PetroTrace Global extend JV scope

Aug 27, 2015

Building on its joint venture with PetroTrace Global, Ikon Science now has the availability to process seismic data workflows using a new high performance computing cluster in its UK office.

  Offshore
Digital Magazine
Look Inside
Cover
Current Issue

Oil & Gas Jobs

Search More Job Listings >>