I picked this up off the Yahoo FLC board. With North Sea and Gulf of Mexico drilling activity picking up, an uptick in boat rates won't be far behind.Latest Comment
North Sea rig market revival underway
By Carina Shiel, General Managing Editor
Monday 20th March, 2000
Twelve rigs are expected to return to work in the North Sea over the next four weeks, which should lift utilisation rates in the region from 65% to 80%. After a long period of inactivity, the tide has finally turned for some sections of the North Sea rig market, with jackups and deep water semis leading the way.
Recovery in the jackups sector got underway in the US Gulf of Mexico last summer as independent oil companies reacted to high gas prices and increased their drilling expenditure. The North Sea jackup market was subsequently helped considerably by the relocation of equipment to the US Gulf. With several tenders and enquiries outstanding and availability of suitable tonnage shrinking rapidly, R&B Falcon recently decided to reactivate its FG McLintock unit. The rig had been cold stacked in Rotterdam since May 1999 but is now expected to be available and ready for action by the end of the second quarter.
The region is also awaiting the arrival from Singapore of newbuild Ensco 101 which was delivered to its owners mid-February. Ensco hedged its bets as long as it could regarding the final destination of the unit, but given current demand for jackups in the region and the fact that the rig was built for harsh environment conditions it is not too surprising that it eventually plumped for the North Sea. Ensco is keen to secure work for the rig as soon as possible to get its 'shake-down' well on the cards, as it is likely to be as apprehensive as any owner over a newbuild's first spud. In any case, it would be surprising if the 101 is idle for very long after its planned April 1 arrival in the region.
Availability of deep water units is expected to remain tight until late third quarter or into the fourth quarter when Jack Bates, Sovereign Explorer, West Navion and Transocean Prospect will have completed their contracts. Should North Sea demand for this type of rig drop again during the winter months, then it is almost inevitable that some, or indeed all, of these rigs will move to West Africa or South America where demand is expected to remain high throughout this year and next.
A worldwide lack of demand for mid-water semis means overcapacity in the standard floater fleet persists. Relocation of this grade of North Sea equipment to other regions is thought very unlikely. If, however, oil prices remain robust through 2000 and 2001, firmly restoring oil company incomes and confidence, then demand growth will follow. The strong oil price upturn has already revived operator profits and continued high prices will produce further cash builds. Many operators have set their budgets on the assumption that oil prices would be around $16 or so for 2000. Next year's drilling budgets could well be much more generous. |
