Worldwide mobile rig fleet capabilities shifting toward deepwater

Fleet will reach 80 by year 2000

Jul 1st, 1999
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After a 15-year-long recession in the global petroleum industry, which caused serious aging of the global mobile drilling rig fleet, rejuvenation is taking the shape of increased deepwater capability. The trend is driven by the discovery of large oil and gas reservoirs in water depths exceeding 3,500 ft in the Gulf of Mexico, West Africa, and Brazil.

Age of rig (years) since construction or upgrade
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At present, a total of 39 existing mobile rigs with an age of three or fewer years are capable of drilling in depths greater than 3,500 ft. Another 32 units are under construction or conversion with that same capability.

In contrast, there is only one unit with that water depth capability in the 3-6 year old range; four units are in the 6-10-year-old range; three units in the 10-15-year-old range; one in the 15-20-year-old range; and none over 20 years old. Most of the deepwater fleet six years old and older consists of submersible and semisubmersible units being refurbished.

Deepwater fleet

In 1998, only 61 mobile rigs of all ages out of global rig fleet totaling 600 plus units were able to drill in water depths greater than 3,500 ft. By mid 2000, that fleet of deepwater rigs will grow to 80, a growth rate of 31% for deepwater rigs.

Of the 27 mobile rigs capable of drilling in water depths greater than 3,500 ft that are still under construction or conversion, 10 should be operational by the end of 1999. The remaining 22 will be activated in 2000 (see accompanying graphic).

By 2000, 71 new and upgraded mobile rigs will have been added to the fleet, all capable of drilling in water depths of 3,500 ft or greater. A small number of other types of rigs have been added to the fleet in recent years, but most of those are large jackups capable of drilling near the edge of the continental shelf.

As a result of the downturn in oil prices during the last half of 1998 and early 1999, a number of plans for mobile rigs, and some for which the steel had been ordered, were cancelled. By next year, the deepwater fleet (>3,500 ft) will consists of 26 drillships (33%) and 54 semisubmersibles (67%). A total of 49 (61%) will be dynamically positioned, and the remaining 31 (39%) are moored (see accompanying graphic).

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Rig locations

Of the fleet of rigs rated for water depths in excess of 3,500 ft surveyed in June 1999, 24 (or 30%) are working in the Gulf of Mexico (see accompanying graphic). The next largest contingent, 14 (or 17.5%) are working off Brazil. Eight units (or 10%) are working off West Africa. The remainder of the deepwater fleet is dispersed as follows: four in the North Sea; two in the Southeast Asia/Australia theater; and one off Japan.

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A remaining 27 rigs (or 33.8%) are still under construction or conversion. Most rigs under construction or conversion, and particularly the more expensive deepwater units, have lengthy contracts. Of the 27, most have initial contracts for work in the Gulf of Mexico, West Africa, and Brazil.

Record water depths

At the present time, Petrobras holds the record for the greatest water depth in which a well has been spudded (see accompanying table). Currently, the operator is using one of Noble Drilling's refurbished EVA vessels - the Noble Paul Wolff - to drill in 8,016 ft water depth in Campos Basin off Brazil. Previously, Chevron held that record, with a well in 7,718 ft in Atwater Valley Block 118 in the Gulf of Mexico, using Global Marine's Glomar Explorer.

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Shell holds most of the recent record wells, according to surveys conducted by Offshore Data Services (Houston). Shell drilled a well in Mississippi Canyon 657 block using Transocean Offshore's Discoverer 534; a well in Mississippi Canyon 305 using Transocean Offshore's Discoverer Seven Seas. Other Shell records were established in 6,794 ft and 6,660 ft water depths.

Amoco (now BP Amoco) has the largest number of deepwater records. They include a well in 6,998 ft, drilled by the Discoverer 534, a well in 6,590 ft drilled also by the same unit, and two more drilled in 6,530 ft and 6,410 ft. BP Exploration (now BP Amoco) has a well drilled in 6,725 ft water depths using the Discoverer Seven Seas.

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Contract expirations

Typically, in order to cover the cost of newbuilding and refurbishment of mobile drilling rigs, drilling contractors obtained five-year contracts from producers. Some have been contracted for less, but with higher day rates.

That five-year contract period is reflected in the contract expiration year for the 80 total deepwater (3,500 ft plus) units existing and coming out of fabrication or reburbishment in the coming years.

The peak in contract expirations (see accompanying graphic) for deepwater units occurs this year, with 14 mobile rigs likely to come off contract. A small number likely will go back to work fairly quickly, but probably at reduced day rates. The age of the vessel, plus capability should dictate the marketability.

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That contract expiration trend drops to four in 2000, and jumps up to eight in 2001 and 10 by 2002. Together, the years 2001-2005 will feature the expirations of contracts for 44 mobile units. By 2006, expirations drop to one, then up to two each in 2007 and 2008. Interestingly, there are 11 expiration dates not made available. Two deepwater units are reported as idle at the present time.

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