Deepwater Drilling Market
Global Industry Analysis (2017 – 2020) – Growth Trends and Market Forecast (2021 – 2025)
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Greater Viability of Drilling Projects in Deepwater, and Ultra-deepwater Provides Impetus to Market Growth
With the ascending number of offshore oil and gas exploration activities, the deepwater drilling market is taking on an increasingly important role. The market has undergone ground-breaking technological changes over the last 60 years, which introduced drill ships, semi-submersibles, and tender rigs that allow operators to explore, and produce oil from ever-deeper hydrocarbon reserves. New offshore discoveries in deepwater, and ultra-deepwater tend to be significantly larger than new onshore discoveries, making this sector of the energy industry particularly interesting to oil and gas companies. The global deepwater drilling market is likely to flourish at a promising pace over the foreseeable future. While the prevalent supply-demand gap remains among the key factors driving the market growth, the industry’s instability, and crude oil pricing volatility will continue to challenge rapid expansion of deepwater drilling space in long run.
Energy Security Concerns, Followed by Rising Investments in Untapped Deepwater Oil and Gas Assets, Favour Market Expansion
The global energy demand remains one of the main drivers for deepwater drilling projects, which is especially observed to be driven by developing economies. A majority of offshore reserves to be brought online along with estimated reserves are located in deepwater, and ultra-deepwater. The current build cycle indicates that rig operators are investing heavily to expand their deepwater, and ultra-deepwater fleets. Thus, in the next few years, the offshore production will move further into deepwater, and ultra-deepwater, where a large amount of the remaining hydrocarbon reserves exist. Technological advances such as high-pressure high-temperature drilling, and subsea production, and processing systems have made it possible to conduct the exploration and production (E&P) in harsh environments like ultra-deepwater. The industry has had a good experience with floating production, storage, and offloading (FPSO) vessels, and these are being joined by floating liquefied natural gas (FLNG) vessels to monetise deepwater, and stranded gas reserves.
Despite improvements, technological challenges for deepwater E&P still exist, and the main concern is the impact of harsh environments involving waves, wind, and currents on the equipment. The stresses placed on equipment are emphasised especially when considering issues of fatigue on sections of risers connected either to the surface vessel, or the seabed flowlines. Although there are cheaper options than installing a new fixed, or floating platform, deepwater E&P is always CAPEX-intensive, with contracts averaging hundreds of millions of dollars. The oil price fall is putting caution into capital markets, with stagnant European economies, and slowing growth in China all impacting the potential growth of the wider oil, and gas market. These challenges can limit some deepwater projects, and therefore are a limitation to the deepwater drilling market.
Semi-submersible to Remain a Dominant Segment in Deepwater Drilling Market
Deepwater drilling can be categorised by types such as drill ships, semi-submersible, and tender rigs. Each of these submarkets has its own dynamics that determine demand for units, influencing day rates, and overall spending within that particular submarket. Typically used in shallow waters, deepwater and ultra-deepwater, semi-subs are typically cheaper than drill ships and offer a highly stable platform for drilling operations, including better resistance to wind, waves, and currents coming from different directions. Semi-subs have a wide global presence but are most notably used in harsh environments such as the North Sea, and Eurasia. Older semi-subs often witness adoption at reduced charter rates in some benign regions such as Asia Pacific. As semi-submersibles typically have to be towed to the destination and have limited storage space, they are more often used for development drilling. Tender rigs are used exclusively for development drilling while moored, and are suitable for multi-platform dry tree developments, shallow-water areas where jack-ups cannot get good purchase on the seafloor, or slightly deeper areas that are beyond the reach of these vessels. Particularly used for ultra-deepwater drilling, drill ships offer high transit speed, and large amounts of storage. The greater mobility that they offer than that by semi-subs, and storage space for spud materials mean that drill ships are typically the vessel of choice for deepwater exploration drilling.
North America to Lead in Deepwater Drilling Investments
North America will remain the largest regional deepwater drilling submarket for the next ten years, driven by the US Lower Tertiary play, and the opening up of the Gulf of Mexico. There will be extensive drilling in support of the abundant FPSO units deployed in the Brazilian pre-salt, with other opportunities in South American frontier regions as well. Completing the golden triangle, West Africa will also see strong spending in support of its complex FPSO mega-projects, with some opportunities appearing in East, and North Africa.
Asia Pacific is among the major markets for deepwater semi-submersibles, and tender rigs, with operators taking advantage of the benign climate, and shallower waters to charter older vessels at cheaper day rates. Western Europe is not a major deepwater region, although the harsh environment of the North Sea means that it will be the third-largest semi-sub market across the forecast period. Western sanctions on Russia are set to constrain Eurasian deepwater drilling spending over the next ten years, however, some activity will take place in Russia, and the Caspian Sea. The Black Sea is an exciting frontier region, reveals research. In Africa, South Africa is drilling the world’s deepest offshore well in Angola, in waters more than two miles deep, as the African country works to reverse years of declining output.
Global Deepwater Drilling Market: Competitive Landscape
Some of the key players in the deepwater drilling market include Royal Dutch Shell, Total SA, Seadrill Limited, Noble Corporation, Saipem S.p.A., Diamond Offshore Drilling, Inc., Schlumberger Limited, Transocean Ltd., Maersk Group, Ensco plc, and China Oilfield Services Limited. Royal Dutch Shell has developed floating platform for Appomattox, a deepwater oil and gas project, in the Gulf of Mexico.