OUTLOOK 2003: International
Offshore Drilling

Offshore investments looking better

 World Oil's estimate of worldwide offshore drilling for 2003 – based primarily on survey results-indicates a moderate 3.6% increase to 3,202 wells. Drilling is most active in countries with new field developments. The largest area, the US Gulf of Mexico, will see a moderate increase. Mexico, will support North American drilling with 30 wells. 

    US Gulf of Mexico. The US Gulf should see a moderate 3.5% increase to 831 wells. Most drilling there is done by jackup and platform-based rigs on shallow-water shelf developments. This area is supplied by an infrastructure of platforms and pipelines. It is also gas-prone and, thus, highly responsive to gas prices which, in one year, have significantly improved. Major operators are investing in deep water where the lure of 20,000-30,000-bpd oil wells warrants $100-million well costs. Deep water, however, does not account for a large percentage of US Gulf drilling.

 In January, Offshore Data Services’ (ODS’s) The Offshore International Newsletter noted 75 of 147 jackups working; 29 of 38 semis active; eight of eight drillships working; and only 36 of 74 platform rigs contracted. Higher gas prices and minimal dayrates should entice operators to invest in shelf gas-well drilling. However, rapid depletion is a major concern. For deep gas, MMS is offering some royalty concessions. Lease Sale 185 in March will indicate operator interest in Shelf drilling and any new incentives. 

    Western Europe. A decrease of 3.3% to 581 wells is forecast for this area, primarily containing the North Sea. Recent activity has focused on satellite developments and improved recovery for existing fields. This type of work and a minimal exploration effort supported 79 mobile offshore rigs in late 2002, according to the Offshore Rig Locator (ORL), of which 65 were working or contracted, and 14 were idle. The working rigs included 34 jackups, 30 semis and one drillship. The UK expects the strongest activity, with 340 wells, down 10; and Norway will drop 18 to 150. Denmark will drop three wells to 32, but the Netherlands, and Italy (not in the North Sea) will see increases of two and five, respectively. 

    The Far East. In this category, which includes the Indian Subcontinent, SE Asia and the Far East, the ORL reported 95 mobile offshore rigs active or contracted, out of 111 units in the areas. The working units included 63 jackups, nine semis, six drillships, one barge, one Arctic barge and 15 tenders. The leading driller is Indonesia with a 14.3% increase to 240 wells. Malaysia plans a 7.3% increase to 206, but Thailand expects a 14.9% drop to 205. China will stay flat with 75 wells; and India and Viet Nam see increases to 75 and 48, respectively. The objectives in most countries are to develop new gas discoveries. Major gas trunk lines will open many such fields for development. 

    Africa, the 4^th largest regional driller, expects a 12.2% increase to 312 wells, led by Angola (80 wells), Nigeria (80), Egypt (50), and Others (57). The ORL notes 56 units working or with contracts, out of 66 available. West Africa had 24 jackups, 15 semis, five drillships and seven tenders active. The Gulf of Suez and Red Sea had 11 jackups working; and four semis were working off South and East Africa. 

 The Middle East expects to drop 4.3% to 179 wells, principally due to a 25-well cut in Qatar. Iran, Saudi Arabia and Abu Dhabi expect increases to 33, 30 and 27 wells, respectively. ORL reported 58 jackups and one inactive semi in the Persian Gulf, with 49 of the jackups drilling and six with contracts. 

    South America expects a 6-well decrease to 223 wells, primarily due to the 175 in Brazil, down 11. Brazil’s fleet of 43 mobile rigs includes seven jackups, 24 semis and 12 drillships, of which 38 were drilling in late 2002. Many of the jackups were drilling development wells in various basins; the semis were principally active on developments in Campos basin.