Though worldwide rig utilization is down, the long-term global outlook for drilling is good. John O'Leary, vice president of worldwide marketing at Pride International Inc., told participants at the annual International Association of Drilling Contractors meeting in Houston, "the overall outlook is optimistic, but there are some hurdles to overcome."
Looking locally, the news is not so good. Rigs have been leaving the Gulf of Mexico for more lucrative areas of the world including Mexico, West Africa, India, and Southeast Asia, O'Leary said. The resulting reality for drilling contractors is that GoM utilization will remain flat for some time.
But while utilization in the Gulf slackens, other regions of the world are seeing increased activity. Low overall utilization obscures the areas of the world where drilling activity is strong, O'Leary said. He pointed out a number of areas around the world that belie the unimpressive worldwide rig count. Mexico, for example, is seeing rapid expansion, and there is strong jackup demand in the Middle East and India. Development activity offshore West Africa is cranking up, making it, in O'Leary's words, "probably the rosiest market of all."
The biggest plum globally is deepwater, O'Leary said. "Development trends are moving into deeper and deeper water, and development costs are reducing."
"Deepwater is here to stay," O'Leary said. This proclamation is music to the ears of major drilling contractors whose fleets contain a large percentage of deepwater assets.
The greatest promise is not in the near term, according to O'Leary. Operators will have to manage the mid-term challenges of meeting expanding energy demands and maintaining supply security. On the other hand, very strong growth trends in the demand for energy will mean more drilling in the long term, O'Leary said. And the drilling contractor competition will continue to be fierce.