Astronomical Drilling Rig Prices Anticipated Because Of Worldwide Demand

According to industry officials, prices for drilling rig equipment are about to skyrocket because of strong worldwide rig demand.

The resulting rise in the cost of finding oil and getting it into production may slow future drilling activity unless oil prices rise, officials also warned.

They attributed the demand for rigs to be due to ambitious exploration and production programs that are under way simultaneously in many oil producing nations.

Kuwait, in addition, is expected to need an unspecified number of rigs to restore its crude oil output after hundreds of its wells were damaged or destroyed by Iraq's occupying forces.

The growing U.S. demand for rigs is also putting upward pressure on prices worldwide, but the largest price increase is expected to be outside the U.S.

Depending on what kind of rig is being used and where drilling is taking place, drilling rigs can cost from $2 million to $12 million each.

Astronomical rig prices within a matter of months is anticipated by an international exploration manager at a large oil company. In anticipation of the higher costs, he said his company is stepping up efforts to locate rigs for future use.

Oil exploration managers agree that long-term result of the rise in rig costs and oil-field development expenses will be higher crude oil prices.

Other stories from April 1991 issue


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