From David Carten Shinn/Bassoe Offshore
“Nearly 20 jackups left the offshore rig fleet throughout the first quarter of the 12 months. Much more are coming as rig homeowners throw within the towel for his or her previous belongings.
As we’ve talked about earlier than, no one likes scrapping jackups. They’re low cost to stack, dangerous and costly to maneuver, and usually have decrease metal worth than drillships and semisubs.
Until just lately, homeowners have been reluctant to ship them to the scrapyard. Now, as low dayrates persist and previous rigs proceed to rot, the chance that older rigs will ever come again into the market once more has all however disappeared.
Owners’ realization of this, mixed with larger metal costs and extra scrap consumers out there, is driving the pattern in jackup scrapping we’re seeing right now.
Jackup scrapping quantity to triple in 2018
Looking at information from the Bassoe Analytics offshore rig database, 21 jackups left the fleet in 2017 (15 for scrapping and 6 for conversion). Although we’re solely slightly a couple of quarter via the 12 months, jackup attrition in 2018 has already reached 17 rigs.
Borr Drilling and Paragon Offshore (who’re finishing the transition course of after Borr’s acquisition of Paragon), have collectively contributed to 11 of the 17 jackups bought in 2018. They’re anticipated so as to add one other ten rigs from the stacked Paragon fleet over the subsequent few weeks, bringing the entire bought this 12 months to 27 jackups.
But Borr’s not the one proprietor who’s getting in on the motion. We anticipate to see as much as 60 rigs scrapped or bought for conversion this 12 months, round 3 times the quantity bought in 2017.
Nobody is aware of what actual jackup provide is anymore. There are at present 493 jackup rigs out there plus 89 below development. If we take out rigs that are non-competitive as outlined by age (constructed pre-2000), particular survey date (late or quickly due), stacking standing (chilly stacked), and supply chance (within the case of newbuilds), we get to a possible provide vary of 340–515 rigs, with a pool of 160 previous rigs nonetheless in some state of competitiveness.
Real aggressive provide within the jackup fleet is without doubt one of the nice unknowns right now. The pool of 160 previous rigs (125 drilling plus 35 stacked) will decide what the provision quantity finally turns into.
And over time, as operators’ preferences for newer rigs strengthen and homeowners forego investments to maintain previous rigs in service, increasingly rigs within the “previous pool” will find yourself at scrapyards.
The jackup scrapfest has formally begun and it’s going to accentuate.”
(Image: artist’s view of idle jackups in Cromarty by Katerina Rybalka)
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