Page 10: of Offshore Engineer Magazine (Jul/Aug 2021)

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LEADING OFF OFFSHORE RIGS own development or exploration cam- ply is decreasing. sions but also to help them meet their paigns off Brazil, too. However, the industry continues to own sustainability targets as the energy

Meanwhile, we are also seeing in- suffer from oversupply and fragmen- transition gains pace. creasing numbers of foaters moving tation, with almost 750 rigs currently As can be seen in Figure 4, there are into Guyana and Suriname. Outside of spread over 100 owners. Further amal- six rig owners/managers that have been

South America, independent operators gamations would reduce the number most active so far in this area, with com- will lead most of demand in areas such of owners while increasing attrition as mon system upgrades including the as the North Sea as well as the US Gulf companies often look to “right-size” likes of hybrid-power, DP closed bus of Mexico, West Africa, the Far East, their feets post-acquisition. operations, energy emissions effciency and Southeast Asia. Also, after years of turmoil, most off- software, selective catalytic reductions

Like the shallow-water side, Es- shore drillers have reduced their overall systems. Seadrill also announced that its gian believes there is further attrition operating costs. This, combined with West Saturn drillship will be installed planned and needed in the foating rig the likely cost synergies realized after a with a hydrogen and methanol injec- segment, which of course may be am- merger or acquisition (Noble Corpora- tion system (along with other upgrades) plifed by consolidation within the rig tion expects to achieve annual pre-tax prior to commencing a long-term cam- owner segment and potentially by the cost synergies of at least $30 million paign offshore Brazil.

green transition. from the acquisition of Pacifc Drilling), Most of these systems have only been

Similarly, we expect that near term, a may allow companies to better position used on rigs for a short time and are in lot of attrition will come from the cold- themselves during negotiations, espe- their infancy; therefore, results are still stacked feet rather than those rigs that cially for longer-term work at dayrates coming in, but in terms of hybrid power are currently competitive, however, this more in tune with the capital invested. and closed bus solutions, targeted re- will still help the market recovery lon- As oil prices have increased to pre- ductions are commonly around the 10- ger term. There are only a handful of covid levels and demand has picked up, 25% mark in terms of fuel and CO2 newbuilds planned for delivery over the asset values also seem to have bottomed emissions. As can be seen in Figure 4, next 18 months, despite there currently out and are increasing slightly, too. the North Sea is leading the way, espe- being 18 drillships and six semisubs un- According to Esgian Rig Service, the cially in Norway and the Netherlands, der construction. entire offshore drilling rig feet is cur- where there are either incentives or strict rently valued at $43.9 billion, which, al- regulations that are driving demand for

Consolidation Kick-Started though it is an almost 3% drop against low-emission rigs. However, the US

Several drilling contractors have now July 2020’s fgure of $45.2 billion, is Gulf of Mexico is an area of growth due exited Chapter 11 proceedings with an increase of nearly 4% on December to Transocean’s roll-out of its patented fresh balance sheets, and the consolida- 2020’s value of $42.4 billion. This leads hybrid power systems on several of its tion season appears to have kicked off Esgian to believe that the time for con- drillships working in the region. with two of these companies – Pacifc solidation is now. Though there are currently four un-

Drilling and Noble – merging. der-construction foaters recorded by

Te “Green Rig” Revolution

Large offshore drillers have previously Esgian Rig Service with such emission- proven keen on consolidating during According to Esgian Rig Service, over reducing measures, due to high costs times of optimism (as depicted in the the past year, the total feet of jackups, associated with building new rigs and historical M&A tree shown in Figure 3). semisubmersibles, and drillships gener- with the current oversupply problem,

As the long-awaited recovery appears to ated approximately 10.7 million tonnes it is likely that more delivered units have begun and with the frst transac- of CO2. So, we know that a lot of CO2 will be retroftted in the future rather tion out of the way, more deals are ex- is being emitted from offshore rigs, but than newbuild orders being placed for pected imminently. what’s being done about it? “green” rigs.

Since 2018, Esgian’s records show Over the past few years, there has

Energy Transition: that 154 rigs have been recycled or sold been a growing trend of owners retro- for conversion outside of the drilling ftting their rigs with emission-reducing

Treat or Opportunity? market, while only 62 newbuilds have or fuel-saving systems in a bid to help With utilization, supply, consolida- been delivered and therefore, total sup- not just their clients lower their emis- tion, and dayrates seemingly headed in 10 OFFSHORE ENGINEER OEDIGITAL.COM