Newbuild Jackups Set to Sail

Newbuild Jackups Set to Sail

Advanced shallow water drilling activity is forecast to rise, which demands more sophisticated jackups. Several rig contractors had the foresight to upgrade their fleets as early as 4Q 2010. Expect to see the first of 60 newbuild jackups to hit the market as soon as June 2012, but the majority will be delivered in 2013 with a few lingering deliveries in 2014.

New jackups will be capable of drilling deep high temperature, high pressure (HTHP) wells in water depths greater than 350 feet down to as much as 30,000 feet, which will require more horsepower, storage and deck load capacity than previous jackup designs. HTHP wells will most likely require drilling fluid circulation at 1,400 gal/min and circulating pressures as high as 4,500 psi, in which three to four high-pressure mud pumps will be needed. Drilling deeper requires more drilling fluid and several different drilling fluid types to be onboard, which requires more deck space and variable load requirements.

Also look for offline tubular handling on newbuild jackups. An offline arm lifts and moves tubulars from horizontal to vertical and positions the tubulars directly into a preparation hole for assembling and disassembling tubular stands while simultaneously drilling, this feature will save time and money for the operator. Other upgraded features include capacity for 1.5 million + drilling hookloads, as well as single-room accommodations for up to 150 people to operate and maintain the increased technology onboard.

These specifications come with an average construction cost of $217 million and an average construction time of 2.3 years. Twenty one of the 60 jackups (approximately 35 percent) are rated for harsh environment work.

There currently are 12 jackups with firm contracts (about 19 percent), with an average dayrate in the $220s. Three will drill off Norway. Another three will drill off Thailand. Two will drill off India and one off the UK. The remaining contracted jackups are scheduled to work for state-controlled oil companies (NOCs) in Saudi Arabia and Vietnam. Operators with newbuild jackups contracted include Chevron, ONGC, Nexen, Total, Dragon Oil, Det norske oljeselska, ConocoPhillips, Petro Vietnam and Saudi Aramco.

Newbuild Jackups Set to Sail
Caption: The newbuild Tam Sao 03 jackup
is scheduled to leave the PV Shipyard in
Viet Nam at the end of April 2012.

The remaining newbuild jackups are not expected to remain idle when they leave the shipyards. High-spec jackups with enhanced technical capabilities designed to drill in more remote and challenging environments are in demand. Not only are operators looking to drill new wells, but they also are trying to squeeze out the last drops from declining wells using enhanced technology on these newbuilds. Revisiting abandoned wells and marginal fields is also driving demand.

"Currently, the demand for high-spec and +350 foot jackups is much stronger than the industry average for all jackups," Sr. Market Research Analyst for Rigzone Trey Cowan said. "Specifically, both high-spec and +350 foot rigs are posting utilization rates around 90 percent while the average utilization for all jackups is closer to 70 percent. Thus, it only makes sense that future newbuilds will actually find work upon leaving the shipyards, displacing older, less capable rigs in the process."

Newbuild jackups are not the only offshore rigs expected to enter the market in the next few years. Semisubmersible and drillships with more sophisticated equipment onboard are also set to leave shipyards soon. These deepwater floaters will meet the demand for rigs capable of drilling in deeper, harsher environments. Read more about deepwater floaters here.

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vijaya mohan rao palika | May. 31, 2012
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