Listening to a panel of experts recently, it was clear that the robust growth of the modern floating rig fleet is by no means over. Nearly 190 new floaters are expected to be delivered between 2008 and year-end 2016, with the demands of deepwater drilling now overwhelmingly favoring modern high-specification units.
Edward Muztafag of Societe Generale, speaking at Quest Offshore’s MCE Deepwater Development event in The Netherlands, posed the question, “Does the industry need more newbuild high-specification floaters? We believe the answer is yes, possibly 50 to 70 more over the next 10 years but at a more steady and protracted pace.”
Identified deepwater drilling and completion demand still appears to exceed available floating rig capacity by 35 to 50 rigs through year-end 2016, he added.
There is no doubt that operator preference has shifted firmly to new generation high-specification rigs post-Macondo, with these new dynamically positioned floaters comprising half of the activity worldwide today compared to 20% in 2008.
The knock-on effect is that older generation (legacy) rigs are simply falling out of favor with operators. Muztafag said that a significant number of legacy floaters (second- and third-generation) were cold- or warm-stacked following Macondo, and “virtually none of the cold-stacked legacy rigs have found work in the last two years despite the strong increase in deepwater drilling demand.”
Numerous third- and fourth-generation rigs, meanwhile, are undergoing significant modifications in an attempt to make them more competitive with newer units. “The outlook for legacy rigs and some early fourth-generation units is likely facing declining work prospects in the coming years,” he said.
With the average retirement age of floating rigs typically around 30 years, that means that nearly 76 units – comprising 30% of the actively marketed floating rig fleet – are now in their sunset days. A further 15% of actively marketed floaters are between 20 and 30 years old, and most can be viewed as “near-legacy” in the next five years.
“A retooling cycle is likely to occur at a more tempered pace than the flurries of orders since the mid-2000s, but with nearly 45% of the floating rig fleet up for possible retirement in the next 10 years, we expect an extended cycle,” Muztafag said.
With the continued growth in global exploration drilling activity and with operators continuing to favor high-specification rigs as much of the activity extends into water depths beyond 1,220 m (4,000 ft), this shift only places the older legacy units and some of the fourth-generation rigs at a further significant disadvantage.
It has been a good run, but time appears to very suddenly be up for the majority of the offshore industry’s aging floating rig workhorses.
E&P Tech Trends: Universal's Cementing Sector is Growing Rapidly - Here's Why [WATCH]
2023-02-28 - In this week's episode of Hart Energy LIVE's E&P Tech Trends, Hart Energy technology reporter Jaxon Caines explores the future of Universal's cementing business with director of cementing Deepak Khatri.
E&P Tech Trends: Patterson-UTI's Cortex Automation Sensation [WATCH]
2023-02-14 - In this week's inaugural E&P Tech Trends episode, join Hart Energy senior technology editor Jennifer Pallanich as she explores Patterson-UTI's Rig 567.
Tieback Bounce-back: Subsea Market on the Rise
2023-02-07 - After an economic downturn and rough period with COVID-19, the market for subsea tiebacks looks to grow stronger than ever.
Innovation at Forefront of 2023 SPE HyFrac Conference
2023-02-03 - Engineers from different corporations gathered during the HFTC Plenary Session to discuss different approaches to fracking, including the benefits of fiber optics and geothermal fracking.
Raising the Bar for ROV Operator Performance by Lowering the Bar for Entry
2023-01-31 - Technology companies Greensea and Blue Ring’s partnership helps ROV operators become situationally aware without having to “context switch” from task to task.