Vol. 227 No. 12

Newbuild report

A flurry of new rig orders worldwide shows faith in a strong market for several years to come

Ron Lord, Contributing editor

The combination of 90%+ rig utilization rates offshore (Figs. 1 and 2) and the forced retirement of rigs built 30 years ago has spawned a resurgence in newbuilds not seen since the late 1970s. According ODS-Petrodata estimates (Table 1), there are about 40 new semisubmersibles or drillships under construction, slated to come to market through 2010, plus 60 new jackups to be delivered over the next three years. As noted by Thomas Marsh, ODS-Petrodata (see sidebar on page R-77), this is the sixth rig-construction cycle experienced by the offshore oil and gas industry since its inception in 1949.

Fig. 1. Floater (semis and drillships) utilization rates for GOM, rest of the world.

Fig. 2. Jackup utilization rates for GOM, rest of the world.

According to FBR’s Offshore Drillers Update, continuing shortage of deepwater rigs has forced operators to deal with the dilemma of either paying to lock up a rig or taking their chances that rigs will be available when needed. Fourth- and fifth-generation rig demand is predicted to exceed supply through 2007, and mid-water rigs are not far behind.

Rigs are moving to new locations as contracts are renegotiated. The GOM jackup market has gone from 143 jackups in 2001 to 100 today, stated Danny McNease, President and CEO of the Rowan Companies at a recent Lehman Brothers CEO Energy Conference. Of the 43 rigs taken off the market, 33 were independent cantilever rigs with the remainder commodity rigs. Many continue to leave the GOM, especially premium rigs, and will probably continue to do so in coming months based on more sustainable economics elsewhere, reports Energy and Natural Gas: Offshore Drillers. An example of this movement is the recent announcement by GlobalSantaFe that it will move four of its rigs, GSF Main Pass I, GSF Main Pass IV, GSF High Island I and GSF High Island II, from the GOM to the Middle East to supply Saudi Aramco for four-year terms commencing in the first half of 2007. Industry analysts report that the Middle East is the fastest growing jackup market in the world. Despite the movement of rigs out of the GOM, prices remain strong as evidenced by Ensco’s recent announcement that the ENSCO 86 (250-ft IC) was contracted at a day rate in the low $150,000s for work beginning in early 2007, above its current $120,000s rate.

Onshore, the dynamics of the US land industry have changed with the pursuit of non-conventional plays, as well as continued demand for conventional gas plays, says Patterson-UTI Energy. According to the company’s analysis, the average decrease in production per well dictates a greater demand for more wells and, therefore, more rigs. Meanwhile, Dennis Smith, Director of Corporate Development for Nabors Drilling, forecasts Saudi Arabia land-rig demand will continue to climb. Today, the Saudi’s are operating 90 rigs; however, they have 125 rigs under contract that are mobilizing into the region. This compares with 44 rig total rigs working in the region in June 2004. Continued rig demand is expected from the region, with ultimate demand reaching 160 rigs, says Smith. The company indicates that it is still seeing interest in newbuild land rigs, and those customers are willing to commit to long-term contracts into 2010.

With yards in China, Singapore and the US Gulf Coast nearing capacity, new yards, such as the United Arab Emirates’ QMG Group LLC and Maritime Industrial Services Co. Ltd. Inc. in Sharjah, have seen an opportunity.

OFFSHORE RIG NEWBUILD PROJECTS

Following are recent highlights on newbuilds.

Jackups. Venture Production contracted Noble for a new Friede & Goldman (F&G) JU-2000E enhanced premium jackup drilling rig. The Noble Scott Marks will be constructed by China Shipbuilding & Offshore International/ Dalian Shipbuilding Industry in China. This rig will be the third heavy-duty, harsh environment F&G JU-2000E rig, a high-specification jackup slated for Noble.

Previously, Noble reported contracts with Shell E&P Offshore Services B.V. for the first two such newbuild jackups, to be named the Noble Roger Lewis and Noble Hans Deul. Each of these harsh environment jackups has a 75-ft cantilever reach, rated water depth of 400 ft, and rated drilling depth of 30,000 ft. According to the International Association of Drilling Contractors, the three newbuild vessels for Noble will address the problems of the uneven phasing of leg cord racks that affect jackup drilling units, especially those with the newest leg designs. Jackup leg designs have now been streamlined to present smaller cross-sectional areas to environmental forces, including waves, wind, surface and subsurface currents. Uneven chord phasing, or the rack phase differential, is caused by uneven bearing loads and can lead to damaged leg braces.

Mercator Offshore Limited Singapore has selected Houston-headquartered Zentech Incorporated as its project management consultant for its first jackup rig now under construction at the KFELS shipyard in Singapore. The KFELS Class B design rig, to be delivered in early 2009, can drill to 30,000 ft in 350-ft water depths.

The first jackup drilling rigs to be built in the UAE comprise two units for Thule Drilling ASA and two units for Mosvold Drilling Ltd. The Thule rigs (Thule Energy and Thule Force) will be built at QMG Group rig construction yard in Dubai based on the F&G Super M2 rig design. The Mosvold rigs will also be Super M2 designs and will be built at Maritime Industrial Services. According to American Bureau of Shipping’s (ABS) Country Manager for the UAE, the rig designs are well-suited for Middle East operations. The rigs will be designated as +A1 self-elevating drilling units suitable for operating in all non-harsh environments with water depth capacity of 300 ft and drilldown capacity to 30,000 ft.

JackInvest I Pte Ltd has signed a contract with Jurong Shipyard for the construction of a Baker Marine Pacific Class 375 jackup rig. The rig will be based on PPL’s proprietary Baker Marine Pacific Class 375 Deep Drilling design and is expected to be delivered late 2008. It will be equipped with a drilling package that will enable it to drill high-pressure and high-temperature wells at 30,000 ft while operating in 375 ft of water. Another Baker Marine Pacific Class 375 jackup will be built by Jurong for Awilco Offshore ASA of Norway and is scheduled for delivery in the second quarter of 2008.

Great Eastern Shipping Company says it placed an order for its second 350-ft jackup with Bharati Shipyard in India. The MLT 116-E Class jackup is scheduled for late 2008 delivery.

Semisubmersibles. South Korea’s Samsung Heavy Industries received word from Eastern Drilling ASA of Norway that Eastern will exercise an option for construction of the West E-Drill II semisubmersible, with delivery in late 2008.

PetroBras has awarded contracts for six newbuild floaters with scheduled deliveries in 2009 and 2010. Brazilian drilling company Quieroz Galvao Perfuracioes won long-term contracts for two of the newbuild semis. The first rig, the GustoMSC, a Gusto TDS-2000 Class rig, (6,560 ft) will be built in Abu Dhabi by IMAC for a five-year contract expected to begin in third quarter 2009. The high-specification rig will have dynamic positioning capabilities and a rated water depth of 7,875 ft. The other semi, a Gusto DSS-38 Class vessel (7,875 ft) to be built by Keppel FELS shipyard in Singapore, is scheduled for delivery in 2010 for a seven-year contract.

The Schahin Group of Brazil won long-term contracts for two PetroBras newbuild semisubmersibles. The first rig (6,560-ft water-depth) will be built for a seven-year contract starting in 2010, while the second newbuild (7,875 ft) will be constructed for a five-year term contract beginning in 2009. Plans are for Schahin to place the orders for the two semis with Yantai Raffles shipyard in China.

PetroBras also awarded Construtora Norberto Odebrecht of Brazil a seven-year contract for a newbuild deepwater semi to be built at IMAC Abu Dhabi. The Gusto TDS-2000 Class rig is expected to be delivered in 2010.

Another Brazilian drilling company, Petroserv, ordered a newbuild deepwater semi from Daewoo Shipbuilding in Korea for a seven-year contract with Petrobras. The high-specification rig is scheduled for delivery by April 2009 and will be rated for drilling in 7,875-ft water depths.

A.P. Møller – Mærsk has also made a number of recent rig awards. Mærsk has contracted Keppel FELS, Singapore, to build an ultra-deepwater semisubmersible for $262 million. This will be the fourth semi built by Keppel for Mærsk, in addition to four jackups also underway. Mærsk will supply drilling and other equipment, and the rig will be built to the DSS-21 design, co-developed by Keppel’s Deepwater Technology Group. The semi will be equipped with a dynamic positioning system that can be attached to a pre-laid mooring system. It is suited for moderate environmental locations such as West Africa, Brazil, GOM and Southeast Asia in water depths to 10,000 ft.

GlobalSantaFe announced earlier this year that it has entered into a letter of intent with a customer to provide a new ultra-deepwater, semi drilling rig under a seven-year agreement valued at about $1 billion. GlobalSantaFe has contracted Keppel FELS Ltd. to build the new rig, to be named the GSF Development Driller III, for delivery in early 2009.

PetroMena AS, a Norwegian company under the management of Larsen Oil and Gas, signed a Letter of Intent with Jurong Shipyard for a second F&G Ex-D design semi. The rig will have specifications substantially identical to the first unit that was secured in October 2005. The sixth-generation ultra-deepwater semi drilling unit is capable of operating in 9,000-ft water depths in harsh drilling conditions. Delivery is set for year-end 2009.

Frigstad Discoverer Invest says it will have a sixth generation ultra-deepwater semisubmersible constructed by China’s Yantai Raffles Shipyard. To be named Frigstad Oslo, the semi is based on the Frigstad D90 deepwater design. Delivery is scheduled in the first quarter of 2009.

OffRig says it has signed a contract with Yantai Raffles Shipyard in China for the company’s second newbuild semisubmersible, the OffRig Innovator. The yard contract has a fixed price and expected delivery of fourth quarter 2008. Following this newbuild contract, OffRig has two additional rig options at Yantai Raffles. Earlier, OffRig negotiated a Letter Of Intent with BP for the Skarv-Idun field development program for its first newbuild, the OffRig Pioneer.

Fig. 3. Sixth newbuild cycle since 1949. (Note: 2006 – 2010 data based on units on order)

Drillships. Transocean announced that it was awarded a Hydro contract for construction of an enhanced Enterprise-Class drillship, for a four-year drilling contract to commence in mid-2009. Construction of the dynamically positioned, double-hull drillship is expected to take place at the Daewoo Shipbuilding and Marine Engineering Co. yard in Okpo, South Korea. The rig will feature Transocean’s patented dual-activity drilling technology, allowing for parallel drilling operations.

This technology, along with a new top drive system, an expanded high-pressure mud-pump system and other unique features of the drillship, facilitate the drilling of wells up to a total depth of 40,000 ft. The rig will have a variable deckload of more than 20,000 metric tons and is designed to drill in water depths of up to 12,000 ft.

The enhanced Enterprise-Class drillship will be the second unit to be constructed for Transocean in the Daewoo yard, following the previously awarded five-year contract from Chevron for the Discoverer Clear Leader. Both units are enhanced versions of the company’s three predecessor Enterprise-Class drillships, which have set drilling records in recent years, including the water-depth drilling record of 10,011 ft held by the Discoverer Deep Seas.

Stena Offshore of Sweden announced it has placed an order with Samsung Heavy Industries of South Korea for a drillship with 33,000-ft drilling capability. It is expected to be completed in mid-2008. Ferncliff Drilling of Norway will purchase a sister vessel of the same type from Samsung. Expected delivery is early 2009.

In addition, Mosvold Shipping of Norway ordered a drillship with a 33,000-ft drilling depth capability from Samsung, with delivery by the end of second quarter 2008.

Other offshore rig types. Sevan Marine signed an agreement with Hantong Shipyard of China for construction of the hull of its first Sevan Stabilized Platform drilling unit, Fig. 4. The fully completed rig, which will be capable of drilling in harsh environments and in ultra deep water, will be ready to drill in the first quarter of 2009.

Fig. 4. Sevan Driller – The first SSP (Sevan Stabilized Platform) newbuild drilling unit for Sevan Marine. The fully completed rig will be ready to drill in early 2009.

Also, Petrobras America Inc. awarded Sevan a drilling contract for the Sevan Driller for the GOM. The Sevan Driller will have a capacity of drilling 40,000-ft wells in water depths up to 12,500 ft, as well as a variable deckload of more than 15,000 metric tons and a high storage capacity for bulk materials. It will be equipped with an internal storage capacity of up to 150,000 bbl of oil. The six-year drilling contract is expected to commence in the first quarter of 2009.

Rig utility vessels. Technip announced a frame contract with Geo ASA for the provision of survey/ utility vessel services, to be provided primarily by a newbuild vessel, the MV Geoholm. The contract took effect in June 2006 and will last for three years. The new 280-ft vessel is specially designed for survey and light construction operations in harsh environments, such as deep water and the North Sea. It is equipped with a 90-t crane, state-of-the-art survey equipment and two new 9,000-ft ROVs.

SeaDrill says it will build the T-11, a new barge unit with a self-erecting tender rig scheduled for late 2008 delivery. It will be built by Malaysia Marine and Heavy Engineering. The new unit’s design has enhanced drilling capabilities and the capacity for parallel rig activities.

Star DeepWater Petroleum Limited, a Chevron company, announced it is inviting companies to apply for pre-qualification for provision of a multifunction intervention vessel for repairing, maintaining and inspecting subsea equipment for the Agbami FPSO in the Agbami Field, located in some 6,000 ft of water and about 70 mi offshore Nigeria. The vessel will be needed when the company’s five-year contract in the field commences in the first quarter of 2008.

R&R Marine Fabrication and Drydock announced an agreement with AET Limited-subsidiary Pelican Offshore Services of Galveston, Texas, to build four lightering support vessels with an option to build four additional vessels. Delivery of the first vessel is scheduled in June 2008 and will be followed by the remaining three vessels in four-month intervals, with the last vessel delivered in June 2009.

LAND RIG NEWBUILDS

The Abbot Group stated that its land rig design engineering and fabrication subsidiary, Bentec, won a contract by Eurasia Drilling, formerly the drilling subsidiary of Lukoil, for four 250-t fast-moving hybrid rigs, derived from Bentec’s original HR5000 design. Work will begin immediately, with the first rig scheduled for delivery within a year and the other three by the end of 2007.

Patterson-UTI Energy announced its intention to build 15 new land rigs during 2007. The additional newbuild rigs will increase the drilling contractor’s fleet of land rigs by 4% and should each cost close to $7 million to construct.

To continue the aggressive exploration program in the Disouq concession in the Nile Delta of Egypt, RWE Dea announced it has contracted for two 2,000-hp onshore drilling rigs from the Croatian firm CROSCO Integrated Drilling Well Services for a two-year period. RWE Dea, as contractor and operator, has a 100% participating interest in the concession that covers an area of 2,130 mi². The company is in the process of acquiring 385 mi² of 3D seismic to define the next drilling prospects.

Grey Wolf reports it has five newbuild rigs on order. The new 1,500-hp high-specification rigs are expected to cost $15.1million each. The company will also refurbish three rigs to 3,000-hp.

KCA DEUTAG has 17 newbuilds on order. Two of them are modular rigs with Bentec, says IADC. Among special features are containerized substructure with integrated equipment, vertical mast erection, a gear-driven drawworks, an ATEX-certified top drive, AC-drive technology, a modern drilling data acquisition system, and an anti-collision system.

Oil States International’s land drilling subsidiary, Capstar Drilling, entered into two-year drilling contracts with an independent E&P company to build two fit-for-purpose rigs for the Rocky Mountain region. The rigs under construction are expected to begin work in June and August of 2007.

The amount of capital pouring into the newbuild onshore and offshore rig market signals the hope for resilient commodity prices for the foreseeable future. These market dynamics suggest that rig demand will remain stable in the coming years, until the next cycle.