Drillers may hit rock-bottom as projects dry up
Aberdeen Press & journal, July 10
THE North Sea drilling sector can expect a rough ride through to the end of the year, even though oil prices have staged a strong recovery of late.
The consensus view is that the active semi-submersible population in the UK sector will bottom out around 15, though there are currently 29 available for deployment.
Latest Arthur Andersen figures reveal a dramatic fall off in UK sector activity ... with exploration drilling down a massive 54% during the first six months of the year compared with 1998 first half. Overall, the number of new wells started was 59% down to just 41.
This is the deepest slump since 1983, according to Arthur Andersen analysts. The last trough occurred in 1994.
Dave Crowley of Schlumberger Sedco Forex said yesterday that, with so few UK projects in the pipeline and with oil companies unlikely to loosen up purse strings for some while, the situation could only get worse before it got better.
However, the Norwegian sector held greater promise.
"Fifteen is the most pessimistic number," said Mr Crowley. "If someone (an oil company) puts money back on the table, it could be around 18."
The situation is reckoned to be just as bad for jack-ups, perhaps even worse. There are 17 units being marketed at present, but the active population could drop to nine by February, before recovering.
But while the situation remains grim, Mr Crowley said he was more optimistic than six months ago.
Following a long period of uncertainty stacked in the Cromarty Firth, the Sovereign Explorer is booked to go west of Shetland to work on the Suliven discovery for Conoco/BP Amoco.
Understanding is that final paperwork is currently being dealt with.
Drillstar is also back in business ... working for Phillips in the Renee field.
This leaves just the Sedco Explorer lying idle in the Cromarty Firth.
However, Sedco Forex is hopeful of winning Norwegian sector work where two additional rigs are required, plus probably every drilling major is currently bidding for work on the Terra Nova development offshore Canada.
Because of the shortage of new heavy duty drilling tonnage, a source has indicated that Norwegian state operator Statoil is now prepared to accept existing drilling units that have been upgraded.
Statoil said at the Offshore Northern Seas oil show in Stavanger last year that it was actively weeding older rigs out of the Norwegian oilpatch in favour of new tonnage.
A significant number of new rigs are under construction for different companies.
Sedco Forex has three currently being built, two of which are due for completion at the turn of the year.
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