Diamond Offshore Drilling Inc. has two signed and five pending term contracts that could provide total combined revenue of up to $1.2 billion over the lives of the contracts.
That is very much a sign of the times, as operators are learning to deal with what would have been unthinkable only 12 months ago - a shortage of offshore rigs. But times have changed, and rig demand is surpassing supply in certain rig categories.
The Diamond Offshore contracts are for work in the Gulf of Mexico, Brazil, and the UK North Sea. In the deepwater GoM, the company has a letter of intent for a two-year contract for itsOcean Confidence semisubmersible. In Brazil, contracts are being renewed on four deepwater rigs for four years each (five years for the Ocean Clipper) at dayrates that could generate total revenues of over $880 million, excluding potential bonuses.
“These developments demonstrate the continuing growth in demand for mid-water and deepwater equipment seen in markets across the globe,” Larry Dickerson, president and COO, says.
It is significant that a good portion of the Diamond Offshore contracts is for work in the GoM. As this month’s issue reflects, the GoM is experiencing new life. And independents are playing a major role in the region’s E&P resurgence.
Take operator W&T Offshore, for example. Chances are you’ve never heard of the company. For years, W&T Offshore flew under the radar, moving gradually from marsh to shallow water, then to deepwater. W&T recently made headlines with its move from a private entity to a publicly held company.
With this shift, W&T Offshore is poised to grow from a billion-dollar private firm to a multi-billion-dollar public company. For a full report on its progress, strategies, and future plans, see the article onpage 30 by Jaime Kammerzell, Gulf of Mexico Editor.
Meanwhile, all the elements are in place for a “liftoff” in GoM drilling, according to James K. Dodson Co. Equipment (drilling rigs) is on the launch pad, fuel (undrilled leases) is in place, pressurization (higher oil and gas prices) is complete, and the countdown (lease expirations) is underway, Dodson says. All that remains is ignition - the spark that will propel the industry forward in the exploration and development of new GoM fields.
The company forecasts that the GoM will experience a 7% drilling increase in 2005 compared to 2004. Operators will drill 840 wells in 2005 compared to 783 wells drilled last year. Dodson’s full forecast and analysis begins onpage 34.
In a related GoM article,John Cromb and Blake LaGrone of Kerr-McGee Oil & Gas Corp. discuss how experience gained through the Nansen and Boomvang projects in the GoM helped Kerr-McGee reduce rig time and cut costs at Gunnison and Red Hawk.
The operator’s completion philosophy played a critical role in the success of the project.
From June 2001 to July 2003, Kerr-McGee completed 21 subsea and spar wells. Some of the technologies used for the completion implementation were unique, and the operator carried over applied technologies from similar experiences at its Neptune spar and other projects. Their thought-provoking report begins onpage 48.
A major part of the GoM resurgence has come in deepwater, and the trend toward deepwater and ultra-deepwater targets has spread throughout the world, enabled by new technology. The DeepStar program, a joint industry project that launched in 1992, is one means of moving today’s technology into the future. One of DeepStar’s primary objectives is to identify and develop economically viable, safe, low-risk methods to produce hydrocarbons from deepwater.
According toSean Hanrahan, DeepStar director, Chevron, DeepStar is the oil and gas industry’s best mechanism for adapting to the new deepwater market. “DeepStar delivers value by leveraging dollars and technical competency,” he says. Through DeepStar, oil companies, vendors, regulators, academia, and research institutes cooperate to develop the technologies necessary to tackle deepwater. International Editor Judy Maksoud traces the technological advances brought about by the DeepStar program in a special section beginning on page 68.
Let’s see....drilling rigs at a premium, a resurgence in GoM drilling, more deepwater exploration....I think the trends are clear. Let’s hope we can keep this one under control.
Eldon Ball,
Houston
