IADC Annual General Meeting: Rig census shows mostly steady results overall

Kurt Abraham, Editor-in-Chief/Chief Forecaster, World Oil November 14, 2023

On its final morning last Friday, the Annual General Meeting of the International Association of Drilling Contractors (IADC) in Austin, Texas, featured a presentation by NOV of the 70th Annual Rig Census. In presenting the new data and results, NOV’s President for Rig Technologies, Joe Rovig, noted that this year’s census shows a fairly stable rig market globally. Obviously, U.S. rig counts have flattened and declined to more sustainable level, while international rig counts have shown fairly steady growth.

Onshore dayrates have behaved accordingly, while offshore dayrates are increasing in a tightening market. However, said Rovig, there is unlikely to be a fresh newbuild cycle. What follows are some key statistics from this year’s census.

U.S. rig fleet. The U.S. available fleet, including onshore and offshore rigs, fell 477 units to 1,163, said Rovig. This was mainly due, he said, to rigs being removed from the count for prolonged inactivity, per census rules. Within the 1,163-unit total are 1,067 land rigs and 96 offshore rigs. The 1,163 total is also a record low in the history of the census.

While it certainly is a startling statistic, Rovig reminded the audience that most of the decline is a “residual effect” from the pandemic. For example, rigs that were laid down in 2019-2020 have remained inactive for more than three years. And per census rules, are now, thus, excluded from the roster. Actually, the decline would have been closer to 600, were it not for 118 new rigs that were added to the U.S. fleet.

Meanwhile, within the available fleet, the number of “active” rigs decreased 24%, to 677. Yet, said Rovig, despite the reduction in active rigs, the utilization rate within the U.S. fleet actually grew, year-over-year, from 54% to 58%. This was due to the aforementioned reduction in the available fleet.

Canadian fleet changes. The combined Canadian fleet utilization of onshore and offshore rigs decreased year-on-year from 51% to 48%. Nevertheless, Rovig said this is still the second-highest utilization of Canadian rigs measured in the census since 2011. However, this good news was offset by the total “available” Canadian rig fleet sliding again, this time 3%, to 347 units. This set yet another historical low in the Canadian count.

Looking at the offshore and onshore components, the Canadian offshore rig fleet fell to five units, which included three platforms, one drillship and one drilling barge. On land, contractors removed nine rigs, per census rules, and none were added. 

International fleet details. In one of the most optimistic statistics, Rovig said that the positive movement for global mobile offshore drilling units (MODUs) that began last year has continued in 2023. For the first time in nine years, the available MODU fleet registered net growth, tallying 622 rigs. The utilization rate also continued to rise, hitting 79% during 2023.

Rovig characterized the global offshore rig fleet as “remaining tight,” with drillships now showing 80% utilization. Middle Eastern NOCs continue to drive an almost insatiable demand for jackup rigs. Similarly, the demand for floaters (drillships and semisubmersibles) is being driven by requirements in the U.S. Gulf of Mexico, South America (mostly Brazil and Guyana) and West Africa.

Meanwhile, onshore, the active rig count has gone up in every region, with Ukraine and Libya hitting three-year highs. The international land rig count, which includes estimates for Russia and China, is said to be approximately 2,398, which works out to 81% utilization. The Middle East led the way, with strong growth occurring again in Saudi Arabia, Iraq and Abu Dhabi. After having grown in recent years, Colombia’s rig utilization has cooled off, due to the central government’s decision to emphasize more usage of renewables.

Growth in rig utilization also was seen in Argentina and Mexico. For the first time in several years, Uganda and Zimbabwe both saw an active rig.

But Rovig also issued some cautionary words to the assembled group. “Dayrates today, while climbing, don’t support reinvestment,” he declared. “We’ve got data that say we should be building [new rigs], and we’re not. But, we’re a bit range-bound for the global rig fleet.”

That having been said, Rovig said he saw some positive aspects for the industry. “Our ecosystem is better than the one that we compete with (renewables, offshore wind), which is completely broken, observed Rovig. “What’s important in the rig market today is in this order: safety, efficiency, and environment.”

Bernard G. Wolford, Jr., President and CEO, Diamond Offshore

2023 IADC Contractor of the Year. After the most interesting presentation on the rig census, IADC handed out its most prestigious annual award, the 2023 IADC Contractor of the Year. This year’s recipient is Bernie G. Wolford, Jr., President and CEO at Diamond Offshore. This annual award was established in 1988 to recognize an individual drilling contractor’s outstanding lifetime achievement in technical innovation, safety, and economic efficiency within the drilling industry.

This award is the only one reserved exclusively for drilling contractors. All recipients of the Contractor of the Year Award are nominated and selected by other drilling contractors, who are IADC members.

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