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World demand for ‘ultra-deepwater’ rigs expected to increase, say drilling executives Transocean and GlobalSantaFe execs see usage driven by move to deeper drilling as companies chase dwindling reserves Ray Tyson Petroleum News Houston Correspondent
Big contract drilling companies Transocean and GlobalSantaFe, which between them own two-thirds of the world’s offshore rig fleet, are predicting a healthy improvement in global drilling markets, in particular the “ultra-deep” waters over 7,000 feet in the Gulf of Mexico and West Africa.
Industry forecasters are projecting that by 2015 worldwide demand for energy will require 71 percent more oil and 90 percent more natural gas than what is being produced today.
“That’s going to take a tremendous amount of drilling,” said John Marshall, GlobalSantaFe’s chief executive officer.
Marshall told analysts Sept. 8 at the Lehman Brothers CEO Energy Conference in New York City that worldwide utilization of shallow water jack-up rigs alone has reached 85 percent, the level at which daily rig rates for that segment historically begin to escalate.
“We have seen some studies that reflect even higher levels of demand in the ultra-deep waters,” he added. “We see by the end of this year there’s going to be an under supply of ultra-deepwater rigs.” Backlog 25 percent ahead of 2003 Jean Cahuzac, Transocean’s chief operating officer, told analysts at the same conference that Transocean’s backlog of deepwater projects in general is running 25 percent ahead of year-end 2003.
Moreover, he said all but one of the company’s 32 high-specification deepwater and harsh environment rigs were under contract at the end of August, with 29 of them currently at work across the globe.
“When we look at future projects in the Gulf of Mexico, we are talking about water depths going deeper and deeper,” Cahuzac said. “But we’re also seeing a number of operators going to drill deeper and deeper wells.”
The Shell-operated Great White discovery and the Unocal-operated Trident discovery, both in more than 9,000 feet of water in remote Alaminos Canyon, are among a list of development and exploration projects in the Gulf of Mexico that present opportunities for deepwater drillers, he said.
“One of the interesting things regarding this project is that these fields are located near the Mexican border and could indicate some long-term prospect there,” Cahuzac said.
Another opportunity for drillers in the Gulf of Mexico is ChevronTexaco’s Tahiti development in shallower deep waters of Green Canyon, Cahuzac said, noting that a tender has been issued for two rigs. “We expect a decision to be taken before the end of the year for 2005,” he said. Companies forced into deeper waters Because of the diminishing size of onshore and near shore discoveries around the world, companies are being forced into deeper waters to capture the remaining elephants, including those still lurking in the Gulf of Mexico.
The U.S. Minerals Management Service believes that 56 billion barrels of an estimated 71 billion barrels of total oil equivalent reserves remain to be found in deepwater Gulf of Mexico. Exploration drilling in 2002 and 2003 alone turned up more than 2 billion barrels of oil equivalent with a dozen fields coming on stream in 2003 and another 13 planned in 2004.
Gulf oil production also rose more than 840 percent and deepwater gas production increased about 1,600 percent from 1992 to 2002. And of the 7,800 active oil and gas leases in the Gulf, 54 percent are in deeper waters off the Gulf’s outer continental shelf, one of the heaviest exploited regions of the world. Deepwater begins at depths of around 1,000 feet.
So, with worldwide demand for oil expected to increase 3.1 percent a year and with reserves declining at roughly 5 percent a year, “we’ve got to find reserves that can produce 56 million barrels of oil per day between now and 2015 at these current growth rates,” GlobalSantaFe’s Marshall said.
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