Africa leads demand for offshore ultra-deepwater drilling rigs

Offshore staff

HAMILTON, Bermuda – Seadrill (XOSL:SDRL) sees strong demand for ultra-deepwater floating drilling rigs (up to 7,500 ft, or 2,286 m) from Africa over the next few years.

There will likely be a sharp increase in drilling activity off Angola and Nigeria, the contractor claims, due to a backlog of exploration work and the need to develop several large discoveries.

Seadrill also foresees increasing activity in East Africa with active exploration programs planned off Mozambique, Tanzania, and Kenya.

In Brazil, the recent license awards in frontier deepwater regions should further drive demand for ultra-deepwater rigs, while in the US Gulf of Mexico, development work is growing as the market returns to normal operating conditions following Macondo. Seadrill expects a knock-on requirement for longer-duration drilling contracts.

The market for harsh environment drilling rigs remains very tight, the contractor adds, with increasing demand offshore northern Norway, Russia, and other Arctic regions likely to tighten supply further.

The supply/demand gap is rising too for premium jackups, operating in 350 ft (106 m) of water depth and built after 2005. There has been an increase in the number of open tenders, Seadrill says, combined with upward pressure on day rates and longer contract durations worldwide.

Over the past two years more than 30 rigs have left the market, and with roughly 60% of the global contracted fleet more than 30 years old, Seadrill foresees a positive outlook for newbuild jackups.

The contractor has committed this year to build a further eight jackups. It sees Asia and the Middle East remaining the main source of demand for high-spec jackups, with increasing demand also offshore West Africa and in the Gulf of Mexico.

During the past 10 years, 552 wells have been drilled offshore Mexico while 4,653 wells have been drilled in the US Gulf of Mexico, Seadrill says. Mexico has similar geology, but initial growth will come in the shallow-water sector, the contractor believes.

8/28/2013

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