June 2001 Vol. 222 No. 6  Drilling

Robert E. Snyder,  Editor

Contractor survey results; offshore rig utilization; new tools

Hadco International recently reported on results of its 2001 Oilfield Appraiser Oilfield Survey. In response to the question of what are the greatest concerns of contractors and service companies, in order of importance, the top five are:

   1. Shortage of trained people. With only two exceptions, this was the top concern for every drilling and well-service contractor, including international contractors. For over a year, it was thought that drilling / service contractors were at maximum rig utilization, based on trained-people availability, or trainable people. The fact is that contractors are still finding people and putting more rigs back to work. Where are these rig hands coming from?

Most contractors have implemented "on the job" training programs, and the pay increases have attracted people back from the massive layoffs of late-1998/early-1999. For small contractors, keeping good people is their greatest concern. Employees with 10 – 15 years’ experience are leaving for better pay and benefits of larger companies.

   2. Stabilized oil / gas prices. This ranked second in the survey, up from fifth last year. Survey responses indicated there is a lack of confidence that higher oil / gas prices will hold. One good year out of 15 is not enough to overcome past problems and build confidence for smaller, privately owned contractors, service and supply companies.

Most respondents said they built their 2001 budgets on an average oil price of $25 – 27/bbl and a gas price of $3 – 4/Mcf. Oil price is of less concern. Several indicated they feel OPEC will control output and prices. Gas price is a different story – respondents indicated a concern that gas may be over-priced. However, most drilling / service companies indicated they expect 100% utilization of their rigs on gas wells in 2001. The pressure is on for increases in gas production, creating an active drilling / service market for this year.

   3. Availability / cost of rigs and equipment. There is a growing concern for availability as noted by several respondents. As supplies of good used rigs / equipment continue to decrease, prices will increase. There has been limited new rig / equipment production for so long that we are reaching a point where it may become economically possible to justify new rigs. It has become increasingly obvious that fewer rigs will be broken up or dismantled this year. In fact, it appears that the marketable rig fleet could increase by as many as 100 rigs this year.

   4. Rig rates / dayrates. This issue dropped to fourth this year, but is still a real concern. Operators are paying higher rates to get rigs, and offering incentives or long-range contracts to any reputable contractor. Higher dayrates have finally caught up to where they should have been all along. With increased work for rigs and people shortages, most contractors are working every rig they can, and operators are sometimes in a bidding war to get rigs.

   5. Cost of drill pipe and collars. Prices paid for new and used drill pipe and drill collars was still in the top five concerns this year. Contractors are less concerned about the cost of new drill pipe or new collars. Their real concern is the price / availability of good used premium pipe and collars. More survey respondents indicated they plan to buy new pipe and collars in 2001, not expecting premium used to be available. As more rigs go back to work, many contractors will have to replace pipe and collars they sold two years ago to keep their doors open, but at higher prices now.

World offshore rig utilization. According to the Offshore International Newsletter, worldwide mobile offshore drilling rig utilization was at 90.1% in early May, the first time it has topped 90% since August 1998. Of the world’s 649 offshore drilling units, 585 were under contract. U.S. Gulf of Mexico offshore rig utilization was 90.5%, its highest level since July 1998 – 211 units were deployed; 191 had contracts. European offshore utilization was 93.1%; only seven of the 101 rigs in the region were without contracts. West Africa was at 90.9%; of the 44 rigs in the area, 40 were under contract. And utilization offshore Asia / Australia was 84.6%, with 65 rigs deployed and 55 under contract.

Deepwater records. Two contractors have noted record-water-depth drilling recently. Transocean Sedco Forex said it set a new world record when its Discoverer Spirit drillship spudded an exploration well for Unocal in 9,687-ft water in the U.S. Gulf. Drilling was underway in early May. This exceeds the 2,791-m (9,155-ft) water depth Saipem claimed only a few weeks earlier with its new Saipem 10000 drillship, operating offshore Gabon for operator Total Astrid Marin Gabon. Unocal has 25% of the Gabon operation also, so it is getting its share of really deepwater action.

Couple of new tools. Two rig-floor innovations noted in the exhibits at OTC are interesting. Maris introduced its Continuous Circulation Coupler (CCC) with a unit built by Varco, sponsored by ITF and supported by five oil companies: Shell, Statoil, BP, BG and Veba. The advantage of the rig floor tool is that it enables continuous mud circulation to the drillstring while making drill pipe connections, using three sets of interacting pipe and blind rams.

The Pipe Push / Pull Machine (PPM) by Tesco simplifies rig floor snubbing for all live well applications. The PPM can be installed on all drilling and workover rigs, and adapted to fit most rotary table bushing sizes, or it can be supported from the BOP stack. All systems are equipped with an independent hydraulic power unit spotted at ground level, away from the rig floor. The system is operated from a small control console located on the floor.

The dual-slip traveling assembly allows the PPM to control pipe movement into and out of the well, in pipe-heavy and pipe-light conditions. The system is also used to improve ROP during the slide intervals of shallow, extended reach horizontal wells, while increasing hole depth over conventional methods. Casing running time can be reduced in similar application by using the tool to push casing to bottom.