Drilling advances

	Vol. 223 No. 12
ROBERT E. SNYDER, EXECUTIVE ENGINEERING EDITOR

Rig construction and aging MODUs. The Directory of Marine Drilling Rigs in this issue doesn’t show a lot of changes from a year ago, and the number of newbuilds delivered is down from recent peaks in 1999 and 2000. And, as the Offshore International Newsletter (OIN) explains in a recent analysis, new construction will likely follow aging and attrition, not the essentially unpredictable market demand.

Historically, offshore rig construction booms were touched off only when operators indicated a need for rigs to work in new hydrocarbon basins. This was true in the building boom of the late 1970s / early 1980s, also in the deepwater drillship construction boom of the late 1990s. However, fleet replacement due to age, not demand for new markets, is likely to drive offshore rig construction in this decade. Of 391 jackups worldwide, 225 are over 20 years old; 69 are over 25; and 13 are more than 30 years old. Of 167 semis worldwide, 75 are over 20 years of age; 57 are over 25; and one is more than 30 years old.

OIN says, despite this proof of an aging fleet, rig owners do not seem to be overly concerned. What drillers do agree on is the lack of need for new submersibles, and limited need for more new drillships. Few owners believe that many, if any, drillships will be added to the fleet for some years. Many feel that if any newbuilds are built at all, they will likely be semis that will have deepwater development and intervention capabilities.

As for jackups, some owners feel that when the need arises, they will be built big. Thus, many believe an additional $20 to $50 million is nominal for the advantages of a rig that can drill in 400-ft waters. Despite the seeming ambivalence of owners about new construction, at some point, OIN notes, they will be forced to deal with fleet aging. By the end of the decade, well over 80% of the jackup fleet will be 25 years older, or more, and average semi age will be similar. The real question is not if new rigs will be needed, but how many?

Presently, 25 rigs are under construction; 15 jackups and 10 semis. Four of these are scheduled for delivery this year, ten for 2003, six for 2004, two for 2005 and one for 2006. That such a modest number of new rigs are under construction illustrates the point that there is little immediate need for significant new rig construction, and until fleet replacement begins in earnest later in the decade, no significant numbers of new orders will likely be placed.

Few rigs are going to be ordered in the near term as operators and owners make decisions based on short-term activity indicators. This will be followed by a modest number of semis and jackups in the mid-term, for fleet replacement and to meet niche requirements such as early production, harsh-environments and multipurpose units for specific long-term development / production. Look also for a few random orders for jackups or semis over the next few years from smaller companies who put together enough money to buy a new rig, or possibly from new entrants. And, OIN speculates, look for a majority of newbuilds to be placed with Far East shipyards, as these continue to offer competitive pricing and quality construction.

Hurricane Lili damage. The Minerals Management Service made a preliminary assessment of damage to the offshore oil / gas infrastructure from the storm, which recorded 145 mph winds in the direct path. Over 4,000 offshore facilities are operating in federal waters in the Gulf of Mexico, but MMS said damage was not significant. Of 800 facilities subjected to the full force of the hurricane, only six older platforms and four drilling rigs received substantial damage. No fatalities or injuries to the more than 25,000 workers evacuated occurred, no fires broke out, and no major pollution was reported. Only four of the 99 drilling rigs in the Gulf had substantial damage.

Many platforms, pipelines, and onshore facilities received minor damage, some requiring repairs that may take several months. In late October, about 94% of the production was back online – more than 25% of domestic oil / gas production comes from the area. All six of the seriously damaged platforms were more than 20 years old. The four rigs damaged included Diamond's Ocean Lexington, Rowan’s Rowan Houston, Transocean's RBF 204 and Nabors’ D-105, of which, the latter will be scrapped.

Energy legislation “still coming.” In mid-November, U.S. Senate conferees effectively killed any chance of passing comprehensive energy legislation in the 107th Congress when they rejected a scaled-down conference report offered by the House that addresses oil and gas pipeline safety and an extension of the Price-Anderson Act. Still possible, however, is stand-alone pipeline safety legislation, which could move independently of an energy conference report. The rejected House proposal, put together by Energy and Commerce Chairman Billy Tauzin (R-La.), would have eschewed virtually all of the issues being debated and focused on Price-Anderson nuclear industry insurance reauthorization and pipeline safety.

The Senate’s rejection of this proposal sets the stage for the House and Senate to work on a more comprehensive bill during the 108th Congress. Soon-to-be Senate Majority Leader, Trent Lott, R-Miss., has indicated that comprehensive energy legislation will be addressed by the new Congress, in which Senator Pete Domenici, R-N.Mex., will be Chairman of the Senate Energy and Natural Resources committee. Representative Tauzin will continue to chair the House Energy and Commerce Committee.

Record deepwater DST. Petrobras recently set a new ultra-deepwater record for a well test. The drillstem test occurred in an exploratory well in the Campos basin offshore Brazil. The test used Halliburton’s SeaLink Subsurface Electro Hydraulic System in 8,993-ft water. Utilized were the company's SeaLink Actuator Module, which can shut in, close downhole safety valves, and unlatch from the wellhead in less than 10 sec., in water depths up to 10,000 ft. Other new equipment and procedures used by the service contractor were its suite of downhole test tools, collaborative well-testing service, surface test equipment to obtain production data, and the Sea Emerald Burner – the new clean-burning tool used to burn off produced effluents.