The Red Sea lies between Africa and Asia. It is a seawater inlet that connects to the ocean through the Bab el Mandeb strait and the Gulf of Aden in the south. It also connects to the north through the Sinai Peninsula, the Gulf of Aqaba, and the Gulf of Suez.
The Red Sea
The Red Sea has a maximum water depth of 7,254 ft; however its average depth is about 1,600 ft, and it is known for its shallow shelves.
Nine countries boarder the Red Sea, which is 169,100 sq mi. Egypt, Israel, and Jordan are to the North, Saudia Arabia and Yemen are to the East, Djibouti, Eritrea, and Somalia are to the South, and Egypt, Eritrea and Sudan are to the West.
The Red Sea holds a lot of history. The Red Sea served as the main route to the Indies for Phoenician and Ancient Egyptian traders. When the Suez Canal opened in 1869, it continued as an international trade route and "Passage to India" for European travelers.
As early as the 1860s, the Egyptian government began drilling for oil. In 1911, Shell started up operations at the Hurghada field on the Red Sea. Today, drilling activity is mostly confined to the shallow waters of the region as jackup rigs are actively drilling at multiple locations in the region, but there are no floaters currently deployed in the region. The jackups deployed in the region today are all independent leg cantilever units and most have a maximum water depth capability of 250 feet or more.
Currently, there are nine jackups actively performing drilling and workover operations in the Red Sea, compared to an average of 13 rigs over the last 10 years. With five jackups contracted, Petrobel, Egypt's National Oil Company, employs the most rigs in the Red Sea. Other operators in the Red Sea include Suco, Wepco, Gupco, and Shell with one jackup each.
Historically, Petrobel has been by far the most active jackup operator in the region. As the graph below shows, the national oil company has historically accounted for roughly half the jackups active in the region, and the same holds true today.
Looking at the rig owners, Transocean has three jackups contracted to work in the Red Sea, which is the highest number for any one rig manager, and Diamond Offshore has the second highest market share in the region with two jackups working. Egyptian Drilling, Maersk Drilling, Rowan, and Saipem each have one jackup contracted to work in the Red Sea.
The average age of the jackups working in the Red Sea is about 27 years old, compared to the worldwide working average of 22 years. The oldest Red Sea jackup was built in 1969 and the newest was built in 2008. Jackups working in the Red Sea have an average contract length of about two years and average about $119,000/day, compared to the international average of $133,000/day (excluding the GOM). Over the last decade, the Red Sea jackup dayrate average has tracked at an average discount of 25% to the international jackup dayrate average. The Red Sea operators are utilizing 56% of the available rigs in the region, compared to a 70% utilization rate worldwide.
The oldest jackup working in the Red Sea is the Transocean Mercury. The rig entered service in 1969 and was upgraded in 1998. The jackup is rated to work in up to 250 ft of water, and has a 13 5/8 in. 10,000 psi BOP, which is used to obtain maximum drilling depths up to 20,000 ft. The Sonat Mercury Class Independent Leg Cantilever jackup is currently under contract with Petrobel through January 2010 in the low-$110s.
Transocean has two more jackups working in the Red Sea -- GSF Rig 105 and GSF Adriatic X, which were both obtained from GlobalSantaFe when the companies merged in 2007. GSF Rig 105 is capable of drilling in 250 ft of water and down to 20,000 ft. The LeTourneau Class 52-C self contained Independent Leg Cantilever jackup is under contract with Petrobel through February 2011 in the low-$110s. Petrobel has also contracted the GSF Adriatic X, which is capable of drilling in up to 350 ft of water and down to 20,000 ft. The LeTourneau Class 116-C Independent Leg Cantilever jackup is under contract through October 2010 at in the low-$180s.
GSF Adriatic X
Petrobel has also contracted a Saipem jackup, the Perro Negro 4. The jackup is capable of working in up to 150 ft of water and drilling down to approximately 16,000 ft. The LeTourneau Class 150-44-C Independent Leg Cantilever jackup is under contract through the end of 2009 in the high-$50s.
The Maersk Endurer is also under contract with Petrobel. The jackup is capable of drilling in up to 350 ft of water and down to 25,000 ft. The Baker Marine Services BMC-350 Independent Leg Cantilever jackup is under contract through June 2010 in the mid-$140s.
The only rig Shell currently has contracted is Rowan's JP Bussell. The LeTourneau Tarzan Class 225-C Independent Leg Cantilever jackup is capable of drilling in up to 300 ft of water and down to 35,000 ft. Shell has a two-well contract for the rig June 2011. The contract, which started October 2009, has a dayrate in the low-$180s. The dayrate includes amortization of related mobilization and modification costs. However, the dayrate has not yet been agreed upon for the three-well option, which could require an additional 30 months to drill.
Egyptian Drilling's Kamose is drilling for Gupco in the Gulf of Suez. The Levingston Class 111-C Independent Leg Cantilever jackup is capable of drilling in up to 300 ft of water and down to 20,000 ft. The jackup is working for Gupco through November 2011 in the low-$120s.
Diamond Offshore has two jackups contracted. The Ocean Spur is drilling for Wepco off Egypt in the mid-$80s on a one-year contract plus option. The Ocean Spur is a Friede & Goldman L-780 Independent Leg Cantilever jackup capable of working in up to 300 ft of water and drilling down to 20,000 ft.
Diamond's Ocean Heritage is working for Suco offshore Egypt through January 2010 in the mid-$60s. Suco has a six-month option for the rig at market rates. The Friede & Goldman L-780 Independent Leg Cantilever is capable of working in up to 300 ft of water and drilling down to 20,000 ft of water.
Even if no further contracts are signed for new units to enter the region or to extend the work for units in the region, five jackups will still be working in the Red Sea in 2011 due to several long term contracts for jackups in the region and mobilizations. In fact, the Atwood Aurora jackup, currently deployed close to the Red Sea in the Mediterranean, is expected to move into the Red Sea later this month. The jackup is currently drilling for RWE-DEA on the North Idku Field in the Nile Delta, off Egypt in less than 200 ft of water. The rig is expected to work on the Papyrus field and the Bamboo field in the Red Sea later this year and in early 2010. RWE-DEA has contracted the rig through April 2011 at a dayrate in the low-$130s (plus a 1 year of option at a market dayrate).
Two newbuild jackups are scheduled for delivery in 2010 and 2011 for the Egyptian Drilling Company. The two Baker Marine Services Pacific Class 375 Independent Leg Cantilever jackups are being constructed at a cost of $201 million each. PPL Shipyard in Singapore is expected to deliver the first rig by late-December 2009. The second is due by early-April 2011. They will be equipped to drill high pressure and high temperature wells at 30,000 ft whilst operating in 375 ft of water. Once delivered, the unnamed jackups are likely to mobilize to a location off the middle east.
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