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The world’s most sophisticated offshore drilling rigs are designed specifically to operate in ultra deepwater areas, but they are increasingly seen outside their natural habitat, invading on the feeding grounds of midwater rigs. As long as rig owners are willing to bid their deepwater rigs at competitive rates in shallower waters, they will continue to win work at the expense of lesser rivals.
The top three countries in terms of demand for floaters (semisubmersibles and drillships) in 2017 were Brazil, the US and Norway. Combined, demand in those three countries totaled some 58 rig-years, constituting a 48% share of the global market. Within these markets, the water depth designation can be split into four categories: ultra deepwater (greater than 7500 feet), deepwater (4001-7500 feet), midwater (451-4000 feet) and shallow water (0-450 feet). Most of the rig demand in the US and Brazil stems from the deepwater segment, whereas Norway operates mostly in the midwater range but also has some demand in shallow waters.
Looking at rig supply in Brazil, the US and Norway last year, ultra deepwater units held a dominant 77% market share measured in rig-years, although shallow water and midwater drilling represented as much as 52% of the wells drilled in those countries (see Figure 1). By comparison, in 2010 only 34% of the contracted floaters in those countries were ultra deepwater units.
Of all the new wells spudded or sidetracked by floaters last year in Brazil, the US and Norway, only Shell’s drilling campaign and one Anadarko exploration probe in the US Gulf of Mexico can be said to be truly ultra deepwater wells. Last year’s deepest spud, at a water depth of 9,582 feet, was drilled by Transocean’s drillship Deepwater Thalassa on Shell’s Stones field in the US Gulf. In Brazil, the deepest field development occurred at roughly 7,500 feet, with Petrobras drilling two injector wells and one production well at the Atapu and Sururu fields in the Santos basin. In Norway, meanwhile, wells drilled at Statoil’s Aasta Hansteen development set Norwegian water depth records at 4,196 feet.
Brazil and the US show a particularly heavy preference for ultra deepwater rigs. Last year, only seven wellbores in those countries were drilled by floaters designed for less than 7500 feet. Figure 2 illustrates the operational water depth for ultra deepwater rigs only. Most of the wells are located in the deepwater segment, but there is a fair share of midwater applications, especially in the US.
In the US, 25 wellbores (32% of the total) were drilled in the midwater segment. However, none were drilled by a midwater rig and only four were drilled by a rig designed for the deepwater segment. All other wellbores were drilled by ultra deepwater rigs.
Although the rig market has been in decline in recent years, the midwater and shallow water segments have increased their market share as a percentage of total demand in these three countries. Yet the share of ultra deepwater rigs on contract has steadily increased. On the upside, ultra deepwater drilling is poised for a comeback in the medium and long term, with exploration campaigns in Brazil and some sizeable field developments, such as Whale, on the cards in the US.