25 Percent of Floater Fleet Could be Scrapped

25 Percent of Floater Fleet Could be Scrapped
One quarter of the global floater segment could be scrapped, according to Rystad Energy.

One quarter of the global floater segment could be scrapped.

That’s according to Rystad Energy, which outlined that restructuring in the “already stretched” offshore drilling market will accelerate.

An evaluation of active rigs in the global floater fleet revealed that up to 59 of the 213 units are potential candidates for retirement, Rystad Energy noted. This equates to one quarter of the segment, or 22 drillships and 37 semisubs, the company highlighted.

Rystad Energy revealed that global demand for floaters had just started to recover before the pandemic but added that the sector is now expected to remain under pressure until 2022. Demand is expected to fall from 129 rig years in 2019 to 110 rig years in 2020 and 103 rig years in 2021, before slowly inching back up to 117 rig years in 2022 and 122 rig years in 2023.

Floater utilization levels are expected to stand at 50 percent this year, according to Rystad Energy, which outlined that these levels began “plummeting” in 2016 and have hovered between 45 percent and 55 percent since. Back in 2013, utilization levels for the segment stood at 85 percent, a Rystad Energy chart shows.

“Capacity attrition can set the stage for a comeback in utilization and play a key role as the offshore drilling industry seeks to shore up its finances,” Jo Friedmann, a senior energy service analyst at Rystad Energy, said in a company statement that was sent to Rigzone.

“After drillers come out of restructuring we could see more mergers and acquisitions, which again could result in more attrition,” Friedmann added in the statement.

Rystad Energy pointed out that 154 floaters have been scrapped since the last downturn. The company also predicted that units that were cold stacked relatively early on during the prior downturn will be some of the first rigs to be retired in this downturn.

To contact the author, email andreas.exarheas@rigzone.com


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