Regional demand spurs steady growth of premium jackup fleet

In the two years since Offshore's last premium jackup rig survey, the offshore drilling industry has steadily added to its global fleet, and all indications point to this trend continuing.

Efficiency and extended reach among criteria for new rigs

Ted Moon
Special Correspondent

In the two years sinceOffshore's last premium jackup rig survey, the offshore drilling industry has steadily added to its global fleet, and all indications point to this trend continuing. However, demand for premium rigs, which are rated for water depths of 350 ft (106 m) or greater and drilling depths of at least 25,000 ft (7,600 m), varies dramatically by region.

The greatest demands are from the greater Asia/Pacific region, the North Sea, and Middle East. Roughly 31 of the 142 rigs highlighted in this year's survey are deployed in Asia Pacific (22% of the total), followed by 28 in the North Sea (20%) and 15 in the Middle East (11%).

"Operators in these regions share common drilling demands that typically cannot be met by older, lower-specification rigs," says Jan van Bohemen, senior director of marketing, Eastern Hemisphere, for Ensco plc. These include the ability to drill extended-reach wells to greater lateral distances and more high-pressure/high-temperature (HP/HT) wells, while achieving efficiency gains to lower drilling costs.

Many of the newer rigs coming out of the shipyards include design upgrades to meet these demands. For example, theEnsco 120, a Keppel FELS Super "A" class rig, boasts efficiency improvements such as a derrick system that automatically moves and racks pipe, which reduces operator error and improves safety by keeping rig workers off the floor while the derrick is in operation.

"Our engineers have further improved derrick efficiency by developing a new cantilever that uses nearly the full hoisting capacity of the derrick—up to 2.5 MMlb—when skidded out, even in the corners," says Bohemen.

The Super "A" rig design also incorporates improvements in pipe handling, allowing an operator to make up doubles and triples offline. The rig's racking system can store up to 7,000 ft (2,134 m) of 13 3/8-in. casing, 10,000 ft (3,048 m) of 9 5/8-in. casing or 13,000 ft (3,962 m) of 7-in. casing. Ensco has expanded the rig's capacity further to handle quad pipes.

"Once they are needed downhole, the derrick and cantilever can pick up, move and run these multi-joint casing strings, which is a huge efficiency gain," says Bohemen. "This reduces flat times by making fewer connections, which also makes for a safer operation. It lets the operator optimize the time they actually spend on bottom."

Another requirement, particularly for operators in the North Sea, is for improved rig accommodations, which includes both an increase in the number of sleeping quarters and upgrades such as private rooms with fast wireless Internet connections. This year's survey shows that many of the newer rigs are capable of accommodating 100 or more rig personnel, and new rigs are coming by 2015 that will house up to 140 people.

Going deeper

Many of the newer rigs currently under contract, and those still under construction in shipyards around the world, are designed for deeper waters and wells. Nearly 50 of the premium jackups in the global fleet are rated to water depths of 400 ft or greater, including Atwood Oceanics' Mako, Manta and Orca rigs, all BMC Pacific 400 class rigs rated for 400 ft (122 m) of water and 30,000 ft (9,144 m) of drilling depth. Similarly rated rigs include three Seadrill F&G JU-2000E rigs, theWest Castor, West Oberon, and West Telesto. Over the next two years, Seadrill will add five F&G JU-2000E rigs to its fleet, while Ensco will add at least one Super "A" class rig and Noble Drilling will add at least three JU-2000 rigs, the Tom Prosser, the Sam Turner, and Sam Hartley. Freide & Goldman, the engineering firm behind the JU-2000E design, states that there are currently more than 30 F&G jackup rigs under construction at various shipyards around the world.

These rigs will likely be secured for contracts before they leave the shipyard, if current utilization rates hold. In May 2013, the global supply of premium jackups was 166, while the total under contract was 158, for a utilization rate of 95%. This is a marked increase from May 2011, when 122 premium jackups out of a total of 142 were under contract (an 86% utilization rate).

This level of activity is not shared by so-called commodity rigs, those designed for water depths of 250 ft (76 m) or less.

"Our research has not uncovered any commodity rigs being built," says Cinnamon Odell, analyst, Rigs, for IHS Petrodata. "In fact, operators are cold-stacking more of these traditional rigs due to their age. Many of these rigs have been in operation for more than 30 years, and rather than try to upgrade or refurbish them, operators are instead opting for new, higher-specification rigs."

Declining numbers

The utilization rate in the US Gulf of Mexico (GoM), while higher than it was in 2011, is still only at 63%—much lower than the global average.

"Deeper water floaters are seeing a steeper incline in utilization and demand than jackups in US waters," Odell says.

The past two years have seen a significant drop in the US jackup fleet, as operators have sold off or simply decommissioned their older, smaller rigs. In late 2012, for example, Transocean completed its sale of 38 jackups to Shelf Drilling Holdings. Many of these rigs went into service in the mid-1980s and are rated to a maximum water depth of 300 ft (91 m).

"Sell-offs like this help confirm that there is not as much frontier acreage out there for jackups, particularly those rated for shallower depths," Odell says. "There will likely be a continued slight incline in premium jackup demand, but largely outside of the US Gulf."

At the same time, jackup builders are gearing up for a move into the Arctic. Keppel Offshore & Marine and ConocoPhillips are jointly designing a first-of-its-kind jackup rig to operate in the harsh and icy waters of the Barents and Beaufort seas. The joint design project, scheduled for completion by the end of 2013, may usher in a new class of rig that will soon find a place on future premium jackup rig surveys.

Additional information on the current state of the premium jackup fleet can be found in the poster contained within this issue ofOffshore.

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