North Sea trends could cause drift of semisubmersible rigs to other regions

The remaining pool of harsh-environment semisubmersible drilling rigs in the North Sea is down to 23, according to Westwood Global Energy Group’s RigLogix service.

That represents a reduction of eight rigs over the past two years.

Currently, according to senior rig market analyst Kathleen Gammack, 18 semisubs are operational, with two COSL rigs being prepared for contracts starting between fourth-quarter 2024 and first-quarter 2025.

Another in a state of suspension is the Ocean Patriot, ahead of a long-term contract due to start early next year. And the semisub Borgland Dolphin is undergoing reactivation in Las Palmas, the Canary Islands, for an assignment in UK waters that begins next spring.

Three North Sea semisubs, the Bideford Dolphin, Dolphin Leader and Stena Spey, have been sold this year for recycling and the sale of the Ocean Valiant is imminent. Their average age is 40.75 years.

Noble’s acquisition of Diamond Offshore may lead to further rationalization, Diamond’s UK fleet including the 1983-built Ocean Patriot, along with Ocean Endeavor and Ocean GreatWhite.

Ocean Endeavor is set to end a current contract in November and faces investments in hull repairs and BOP recertifications to continue working. If no new assignments come through soon, this rig too may be facing retirement, Gammack said.

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So far in 2024, the awarded days for the North Sea semisub fleet has totaled 1,468 days, with Norway accounting for 1,195 days, and the UK 273. That represents a major slump from last year’s 7,158 days in Norway and 3,524 days in the UK.

Although there are no outstanding semisub requirements for work in the North Sea this year, RigLogix has identified three rig tenders in UK waters and one offshore Norway for work likely to start in 2025 and 2026, totaling 910 days. There is tentative demand totaling 13,803 days offshore the UK, Norway and Ireland.

Outside Norway, semisub day rates are some of the lowest globally with the decline starting in 2022. North Sea jackup day rates have been moving in the opposite direction since 2018, currently averaging just over $132,000/d.

The outlook for drilling in the UK North Sea is not great due to the new Labour government’s disinclination to sanction new E&P activity. And judicial reviews brought by environmental groups into the Jackdaw and Rosebank field developments could jeopardize both projects, causing further rig contracts to disappear.

At the same time, Westwood has noted that several drilling contractors with rigs currently based in Norway and the UK have been bidding them for work in Southeast Asia, the Mediterranean Sea, Africa and the Falkland Islands.

While there are big P&A opportunities in the UK North Sea (more than 2,200 wells set to be plugged and abandoned between 2024 and 2033, 39% of them subsea), operators have been deferring programs, Gammack said, citing high rig day rates.