OFFSHORE DRILLING

International activity increases

World Oil’s estimate of worldwide offshore drilling – based primarily on survey returns – indicates likely decreases in the U.S. Gulf of Mexico and Brazil will be offset by increased drilling in every other major world area, to hold 2002’s forecast of offshore wells to essentially the same level as 2001, or 3,103 total wells.

U.S. Gulf of Mexico. Despite an expected 50% increase of Mexico’s 2001 wells to 45, and minor drops in Canada, Alaska and California, the U.S. GOM’s 201-well drop to 767, will bring the North American total to 882 wells, 18.1% below 2001. This is a response to falling U.S. natural gas demand / prices, as most wells are drilled on the gas-prone Shelf area off Texas and Louisiana, using jackups and platform rigs. The infrastructure of pipelines and platforms gives operators ready transport to shore for marketing. Deeper-water drilling remains fairly stable with about 37 semis and drillships 80% utilized.

The ODS-Petrodata Group’s Offshore Rig Locator (ORL) noted, in January, only 71 of 147 jackups working in the U.S. Gulf, for a 48% utilization; in February 2001, 139 of 154 jackups were 90% utilized. And, in January, only 34 of 74 platform rigs were contracted, at 45.9% utilization. U.S.-Shelf gas-well operators face the economics of higher-cost drilling / development, with rapid depletion of discovered reserves, estimated to be as high as 50% the first year. With gas at $2.00 levels, the choice of many is to invest in international projects and save the Gulf.

Western Europe. A slight increase to 671 wells is expected. In the North Sea / Northwest Europe, ORL says all but one of 34 jackups were working in January, plus 39 of 48 semis. This is only a few more rigs working than a year ago, indicating a fairly steady utilization. The UK expects the strongest activity, with an increase of 12.5% to 360 wells, to keep up satellite- and gas-well development. Norway sees about level drilling, with a slight drop of four wells to 200, with lower crude prices probably delaying some field developments. Except for a six-well drop in the Netherlands, the other two principal drillers, Denmark and Italy, see increased activity.

Far East. Malaysia plans a major offshore drilling hike, from 36 wells last year to 169, in response to several new developments and satellite platform installations. Indonesia expects a slight 10-well increase to 210 wells; and Thailand will keep its 165-well level. China, India and Viet Nam see increases from 65, 55 and 43-well levels, respectively. This activity will boost Far East well levels by 26.4% to 756 wells. ORL data support this increase, with a steady SE Asia / Far East supply of 41 jackups, 76% utilized; and 16 semis, 63% utilized. A major trend in the Far East has been to find and produce offshore gas to offset crude oil imports

Other areas. Africa is the fourth largest regional driller. A 29% boost in Egypt and a 53% hike in "Others" offset declines in Angola and Nigeria to give an overall 7.9% increase to 300 wells. For the entire area, including the Gulf of Suez, ORL reports 79% utilization of 67 offshore rigs, primarily jackups; 13 semis are working off West Africa.

The Middle East expects a 15.5% increase to 179 wells, with a notable boost from Iran to 43 wells, from 17. Saudi Arabia sees a 10-well increase to 40 wells. These offset decreases in Qatar and Abu Dhabi. Of 57 jackups operating in the Persian Gulf, 46 were active in January; one area semi is inactive.

   South America will see a 27% drop to 179 total wells due to a predicted 33.5% drop in Brazil, to 129 wells. Offshore rigs in Brazil comprise 23 semis, 12 drillships and nine jackups. All but three units, one in each category, were working in January. However, Petrobras, reportedly expects a cutback due to low oil prices and budget restrictions.