Research
Interview Synopsis

Offshore drilling – Fleet overview & 2022 outlook

  • Credit
  • Energy
  • North America

The energy sector is set to remain in “chaos” over the next 12-18 months, a former Global Category Manager at Chevron Corp told Third Bridge Forum - days before the price of crude oil experienced the biggest one-day drop since April 2020 (falling below USD 70 on 26 November).

Click on the hyperlink below to access the full Forum transcript.

Declining offshore drilling contributes to energy sector “chaos”

In the Interview, the specialist discussed the 2022 outlook for offshore drilling, where upticks in production might occur, potential investments by major oil companies into AI technology, and how supply chain issues affect offshore and onshore drilling.

The specialist began by stating that they don’t expect to see a significant uptick in offshore drilling “between now, 2022 or even 2023.” While the world still needs oil and gas, offshore drilling is “a different kettle of fish”, requiring significant investment that oil companies are unprepared to sanction given the current transition towards renewable energy. 

High-specification rigs are, however, one area that might be an exception, the specialist said. These rigs are better equipped to handle regulations regarding reduced greenhouse gas emissions and are therefore more likely to see some investment, although the specialist warned this would take time given many of these rigs have been dormant for years. 

Similarly, specialist drilling contractors are likely to be more competitive, and the specialist highlighted two contractors – Noble and Transocean – as companies which “have an edge” in terms of rig quality. Noble’s recent merger with Maersk was also discussed by the specialist, who thinks the arrangement can deliver “top-notch results”.

New technology that makes rigs safer is another area where the sector may see some investment, particularly if companies can “optimise man-machine interactions”, the specialist said. But getting companies to sanction such spending would be a “challenge”, as “none of these companies are [financially] healthy” and are all “in distress in one way or another”.

Many companies are expected to follow stringent spending policies after years of speculating on multiple rigs. “Synergy” has become a buzzword, the specialist said, with operators seeking to contract a few rigs in certain areas and then work collaboratively with other operators that can complement them – something the specialist described as a sensible move. “I think exercising that capital discipline is what has changed the whole offshore rig market dynamics, and I think it has changed it for good.”

To access all the human insights in Third Bridge Forum’s Offshore Drilling – Fleet Overview & 2022 Outlook, click here to view the full transcript.

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