Drilling developments

Mar. 2002 Vol. 223 No. 3  Drilling Developments

Robert E. Snyder,  Contributing Engineering Editor

IADC urges industry stability in tough times. Although oil and gas prices might dip further before improvement is seen, the drilling industry should stabilize employment as much as possible to preserve its strength long term, said C. Stedman Garber, Jr., 2002 chairman of the International Association of Drilling contractors and president/CEO of the newly merged GlobalSantaFe Corp. Garber’s remarks were made during a Houston Chapter meeting in January.

"Given the current level of gas in storage, I’m afraid winter would have to last into the summer to have any substantial impact on gas prices through the first half of the year," Garber said. "My hope is that we will have enough cold weather to draw enough gas out of storage so that a combination of an upturn in economic activity, along with the continuing production decline, can create enough price pressure in the second half to increase drilling activity at home."

Regardless of the cycle, Garber called hiring, developing and retaining people "the most critical issue" facing the drilling industry today. "We must find a way to provide rewarding career paths to young people who are just starting out. We must be willing to retain people during downturns and use the time for rigorous training and other development activities. Creating a safe working environment requires a cadre of well-trained people. I believe a person who sees this industry as a career opportunity rather than simply a job is more likely to have a positive and constructive attitude toward safety," he said.

A special IADC task force published its cargo-handling guidelines in November, he noted, that should reduce accidents involving rig crews aboard work boats. These accidents accounted for about 7% of all lost-time injuries in the U.S. Gulf. IADC also has been working closely with API to design a system to share threat and security information on industry facilities; and it is working to maintain offshore security.

Garber expects further consolidation in the drilling industry to better serve larger customers, and also to acquire equipment at attractive prices. As major customers have consolidated, they are seeking efficiencies in their procurement, including drilling services.

On other issues, Garber touted IADC’s active involvement in the opening of Lease Sale 181 in the Eastern Gulf, but expressed frustration in the size of the final lease area offered. He called IADC’s work a success in offsetting protectionism in the U.S. steel industry, which has lobbied to limit imports on drill pipe. Now that five years of anti-dumping duties have ended on drill pipe from Argentina and Mexico, these countries are free to add capacity and competition for the U.S. drilling market, he noted.

IADC is dedicated to enhancing the interests of oil, gas and geothermal drilling contractors worldwide. Its membership comprises nearly 1,000 companies, including contract-drilling and well-servicing firms, oil/gas producers, and manufacturers / suppliers of oilfield equipment / services. Its contract-drilling members own most of the world’s land / offshore drilling units and drill most of the wells.

Founded in 1940, it strives to secure responsible standards, practices, legislation and regulations that provide for safe, efficient and environmentally sound drilling operations worldwide. IADC is headquartered in Houston; it also has offices in Washington D.C., the UK, the Netherlands and the Middle East, as well as chapters in the UK, Venezuela, Brazil, Australasia, South Central Asia, Southeast Asia, the Middle East and across the U.S. For more information, visit the web at http://www.iadc.org.

Outlook for new offshore rig orders in 2002. If one could predict the number of jackups and floating rigs ordered in 2002 – along with jackups and semis under contract in the Gulf of Mexico and worldwide at year-end 2002, Lehman Brothers says that would go a long way toward calculating earnings of offshore-related companies. For help in determining the answers to these questions, Lehman once again has turned to 50 "experts" in the business for their predictions. Also, similar to last year, the analyst has made it a contest and promises a "nice gift" for the winner.

Last year’s winner was Gavin Strachan of Bassoe Offshore Consultants. Not only did he predict that nine offshore rigs would be ordered in 2001, he accurately predicted the mix – five jackups and four semis. Four of the rigs ordered in 2001 were by Santa Fe Int’l., two jackups and two semis. As a "tiebreaker," the number of new land rigs to be ordered in 2001 was included. These estimates ranged wildly, from 0 to 100, with the actual number being 28.

For Lehman’s 2002 guessing contest, most of the industry experts estimate only a small number of jackups and semis will be ordered, with predictions ranging from zero to 14 – the average being three jackups and two semis. Where significant divergences occur are in estimates of the number of jackups to be under contract in the Gulf of Mexico, and semis under contract worldwide at year-end 2002. These range from 70 to 135 for jackups and 100 to 162 for semis. Year-end 2001 finished at 77 and 146, respectively, according to Lehman Brothers. In 11 months, we’ll see who the "smartest" was this year.

A history of Noble Drilling. Write Stuff Enterprises, Inc. has released its latest volume in the historical "Legend" series, The Legend of Noble Drilling, by best-selling author Jeffrey L. Rodengen. The book chronicles the amazing 80-year history of Noble, with its roots tracing back to 1921, when Lloyd Noble and Art Olson partnered to form the Noble Drilling Company. Against the odds, the company survived the Great Depression, only to face the grim reality of World War II, when it was able to help the Allies by developing hidden oil fields in war-torn England.

The company rode the ups and downs of the next few decades as a subsidiary of Noble Affiliates, until 1985, when the present company was spun off. The story of this evolution is one of perseverance in a highly cyclical industry. The book is now available at fine booksellers nationwide for $39.95, or directly from the publisher, Write Stuff Enterprises, Inc., at +1 (800) 900-2665.