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Analysis: Deepwater, Ultra-Deepwater Newbuilds for 2009 and Beyond

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An emerging industry trend, many exploration and development projects have been put on the backburner as companies wait out the current economic downturn. Whether oil and gas companies can't get financing due to the credit crisis or the projects are no longer commercially viable because of the lower price per barrel, the immediate result is the same: some projects are being postponed – or even worse – cancelled.

Fortunately, deepwater and ultra-deepwater drilling projects have not been as affected as onshore drilling and other E&P arenas. A key reason for this is deepwater and ultra-deepwater projects require such long lead times to both obtain a rig and develop the project.

Deepwater, Ultra-Deepwater Newbuild Rigs

According to data gathered from RigLogix, there are currently 88 deepwater floaters that are being constructed for delivery after January 2009. All rigs in this category are rated for more than 6,500 feet of water, and some are being built to work in waters that measure up to 12,000 feet deep.

Of the 43 drillships either being built or on the books to be built, 27 have been contracted before construction has been completed. Furthermore, of the 45 newbuild semisubs, 36 have received contracts prior to completion.

Delineating deepwaters as those measuring between 4,000 and 7,000 feet deep and ultra-deepwaters as those measuring more than 7,000 feet deep, of the 88 there are only two newbuild floaters that are rated for only deepwaters. The other 86 newbuild floaters are capable of drilling in ultra-deepwaters.

Both of the deepwater newbuilds, the Norbe VI semisub and the Schahin I semisub, are being built for waters measuring 6,561 feet deep. Ordered in August 2006, the Norbe VI is due to be delivered in March 2010, and the Schahin I is due in September 2009. Both rigs are contracted to work for Petrobras in Brazil.

GRAPH WITH RIGS BROKEN UP BY TYPE AND CONTRACT YES/NO
SOURCE: RigLogix

Halted Construction, Financing Problems

Completion of two ultra-deepwater rigs, including one semisub and one drillship, has been stopped. Both of the rigs were contracted to Petrobras.

Construction of the MPF 01 drillship was stopped because the rig builder, MPF Corp. Ltd., filed for bankruptcy. Currently, three rig brokers are attempting to sell the partially built rig. Scheduled for completion in January 2010, the drillship has a three-year contract with Petrobras, and the contract has not yet been terminated.

Also Scorpion has scrapped the construction of a yet unnamed semisub rated for water depths of 7,873 feet. Despite the fact that an LOI exists on the rig with Petrobras, Scorpion could not obtain financing to build the semisub. Although steel has not yet been cut on the rig, the completion date for construction was originally slated for December 2012.

Additionally, Sevan Drilling is having problems financing two of its contracted semisubs. Construction of the Sevan semisub contracted to ONGC to work in India by October 2010 and the Sevan Brasil semisub contracted to work for Petrobras in the Gulf of Mexico by October 2011 has been delayed. According to Sevan's fourth quarter 2008 report, the company is not going to spend money on the construction of the two rigs until certain criteria is met, including a longer contract with ONGC, a later delivery date and 80% finance backing.

Delivery Dates

Currently, there are 101 drillships and semis worldwide that are capable of working in waters deeper than 4,000 feet; so the additional 88 newbuilds will change the offshore exploration and production playing field substantially. When can the market expect to see these rigs?

Most of the floater newbuilds being delivered after the start of 2009 were contracted in 2006, 2007 and 2008. In both 2006 and 2007, 25 semisubs and drillships were ordered; and in 2008, 33 ultra-deepwater newbuilds were ordered. No deepwater or ultra-deepwater rigs have been ordered yet in 2009.

Of this category of drilling rigs, there are 14 newbuilds scheduled to be delivered in the first half of 2009 and eight newbuild floaters expected to be completed in the second half of 2009. The most of any, the first half of 2010 should see 17 newly built rigs hitting the market, and an additional 11 rigs will be delivered in the second half of 2010. Fourteen newbuilds are being delivered in the first half of 2011, and 11 rigs are scheduled to finish construction in the second half of 2011. In 2012, there are 11 rigs scheduled to be delivered in the first half of the year and two rigs expected in the second half of the year.

More than half of the newbuild floaters are contracted. Sixty-three of the newbuild rigs are currently under contract, while 25 of the rigs being built have not yet been signed on for work.

PIE GRAPH OF NUMBER OF RIGS HITTING MARKET BY HALF YEAR
SOURCE: RigLogix

Geographic Hot Spots

Looking at the newbuild market of deepwater and ultra-deepwater floaters, obvious geographical hotspots emerge, namely offshore Brazil and the Gulf of Mexico.

Coinciding with Petrobras contracting the most deepwater and ultra-deepwater newbuild drilling rigs, Brazil is expecting the most newbuilds once construction is complete, with 27 of these rigs scheduled to start offshore the South American country. (An upcoming rig analysis piece will focus specifically on Petrobras' dominance in the deepwater and ultra-deepwater rig market – for both newbuilds and already existing rigs.)

Coming in second, the Gulf of Mexico is expecting 18 newbuild rigs, which includes 15 in the US GOM and three within the Mexican borders of the gulf. Newbuilds are also slated to be delivered to Angola, India, Australia, China, Norway and Russia.

Three contracted newbuilds have not yet been assigned a geographical region for work. Hess has not announced where the Stena Forth drillship will be working upon receipt of the rig. ExxonMobil has not yet announced where the Deepwater Champion will be working, and Shell has not announced where the Bully 2 will be drilling.

GRAPH OF GEOGRAPHIC BREAKDOWN
SOURCE: RigLogix

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Russell Olivier | Apr. 22, 2009
I agree with James Steele.I am 50 yrs. old and the oilfield has provided a good living for my family. Now once again people like myself are being humbled again at the unemployment agency. What about our kids? There's plenty of money to go around for everyone, including good ol DC. Let us drill. We oilfield workers don't want hand outs. We want the rig count to go back up like it was in the early 1980s. It does not take a Harvard Graduate to figure out this solution.

John | Apr. 10, 2009
Some of the drillships being built/on order without contract may be in doubt. Some are "owned" by shipping companies who are suffering grievously in the present downturn. Will they have the finance to proceed??

Noah Ronquillo | Apr. 4, 2009
Excellent graphics to go along with the article. Easy to read, and understand. I can't thank you enough.

Jim | Apr. 4, 2009
I was glad to read your article on the deepwater/ultra deepwater drilling contracts. I've just left the North Sea, 3RD Gen rig as a driller, to the all new Stena Forth in Samsung yard. South Korea. Hess has told us we are doing a new well in Libya and a re-entry Tight hole apparently... then West Africa then G.O.M.

David Eckley | Apr. 3, 2009
Really good work. Shows in a quick glance the state and location of activity...

Gene | Apr. 3, 2009
Herman - The influx of new builds in the US GOM provides an opportunity for talented and willing jack-up drillers to enter the deepwater market.

J.L. | Apr. 3, 2009
There can be no economic recovery without a solid energy supply to fuel it.

Charles Francis | Apr. 3, 2009
Would be nice to see all these projects be commissioned. I'm a qualified electrician with lots of electronic experience and have been looking for a job on Transocean for 5 months. Sure there are many others. Maybe things will start to change for the better.

A.J. | Mar. 31, 2009
HEY YALL. I agree with everyone who posted a comment. Our gov. is worried about our sinking auto Ind. Oh well, you should have done a better job! As far as our drilling Ind. how bout you big fat cats in DC throw some cash at US? We won't fail you. Also, we can bring in alot more oil and natural gas than anybody else. You boys in DC just have to give us the green light.

James Steele | Mar. 31, 2009
I agree/w Herman, too much kissing from union/auto makers, i mean, really,OPRAH WINFREY is worth more than GM. As a laid- off land & offshore floor/derrick/motorman, I also say that they had better pay MORE attention to the BIG BOYS, NOW, US, the real tax-payers

Chip | Mar. 31, 2009
This supports the rate reduction view we were discussing the other night.

Jim Kennedy | Mar. 30, 2009
Well, I hope that these future Deep Water Projects pick up, I am a Night/Day Drilling Supervisor and that is where I want to go and stay long term.

Herman | Mar. 30, 2009
I am glad to see this is looking good for the drillers in the deepwaters, but the shallow water drillers are being pummeled by cuts and lay-offs. The government is worried about car dealers; what about those guy in the shallow water division, they need work now or all is lost. HELP!!!


Related Companies
 Company: Exxon Mobil Corporationmore info


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 Company: Petrobrasmore info


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 Company: ONGCmore info


 - Petrobras Finds Gas at Poco Verde 1 Well in Brazil's Sergie-Alagoas Basin (Sep 25)
 - LTHE Secures $222M EPIC Deal for ONGC's Mumbai High North Phase III Project (Sep 10)
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 Company: Transocean Ltd.more info


 - Transocean Notes Management Changes (Dec 3)
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 - Transocean's Alaska Rig Contract with Shell Starts July 2014 (Nov 19)
 Company: Scorpion Offshoremore info
 - Seadrill's Mandatory Offer to Purchase All Scorpion Shares (Jul 15)
 - Seadrill Increases Ownership in Scorpion Offshore (May 31)
 - UPDATE: Ensco Ends Partial Offer for Scorpion Offshore (May 28)
 Company: Sevan Drillingmore info
 - Sevan Takes Delivery of Sevan Louisiana from Cosco Quidong Shipyard (Oct 24)
 - Seadrill Launches Mandatory Offer for Sevan Drilling Shares (Jul 25)
 - Seadrill Gains Majority Control of Sevan Drilling (Jun 27)
 Company: MPF Corp.more info
 - Analysis: Deepwater, Ultra-Deepwater Newbuilds for 2009 and Beyond (Mar 30)
 - MPF-01 Vessel with FPSO Capability Up for Grabs (Oct 27)
 - MPF Corp Files for Insolvency (Sep 25)
 Company: Odebrechtmore info
 - Petrobras Inks LOI with Odebrecht-Teekay to Charter FPSO for Libra Project (Oct 10)
 - Brazil's Odebrecht, Braskem to Operate US Petrochemical Project (Apr 10)
 - Technip, Odebrecht Pen $1B Contract with Petrobras (Nov 18)
For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit www.riglogix.com.

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