Offshore Drilling

Offshore drilling turns profitable

Offshore drilling turns profitable

Declining costs to boost growth

Even though offshore oil and gas drilling is expensive and complex, the profitability rates of offshore drilling is improving

The global offshore drilling market is expected to post a CAGR almost 9 per cent during the period 2019-2023, according to the latest market research report by Technavio.

Oil and gas companies are shifting from shallow reserves toward the extraction of oil and gas from deepwater and ultra-deepwater resources due to the presence of large untapped reserves in GOM and Brazil and rising crude oil prices. Also, many E&P companies are investing heavily in the production of offshore deepwater oil. Moreover, the cost of offshore projects is declining which will further boost the E&P activities in deepwater and ultra-deepwater locations. Thus, the rise in investments in deepwater and ultra-deepwater E&P activities will boost the growth of the offshore drilling market during the forecast period.

As per Technavio, the declining costs of offshore projects, will have a positive impact on the market and contribute to its growth significantly over the forecast period. This research report also analyzes other important trends and market drivers that will affect market growth over 2019-2023.

Even though offshore oil and gas drilling is expensive and complex, the profitability rates of offshore drilling is improving. As a result, capital investments in the GOM and the Norwegian offshore has come down and are now claimed to be robust at USD 25/bbl to USD 40/bbl. In addition, standardization and simplification of designs is further helping to reduce the cost of offshore projects. These factors will boost offshore drilling activities leading to market growth during the forecast period.

"Apart from the declining costs of offshore projects, the emergence of next-generation automated drilling rigs will boost market growth during the forecast period," says a senior analyst at Technavio.

The APAC region led the market in 2018, followed by EMEA, Europe, North America, and South America respectively. During the forecast period, the APAC region is expected to maintain its dominance over the global market due to the growing adoption of offshore oil and gas production to support the growing energy needs.

Meanwhile, ModuSpec, an internationally recognised name for rig inspection services, re-emerges as an independent operating company following a strategic restructure of leading engineering and technical professional services organisation, Lloyd’s Register (LR).

In March, LR announced its withdrawal of its Drilling Integrity Services (LRDIS) in the Middle East and Asia Pacific regions. ModuSpec, originally acquired by LR in 2008, formed the basis of LR’s LRDIS service portfolio.

Today’s announcement sees the ModuSpec name re-emerge as a privately owned, third-party independent company. It offers a full range of services covering all aspects of drilling rig inspection, auditing and training to local and international clients in the Middle East and Asia, as well as in Egypt, Uganda and Kenya. LR will continue its Drilling Integrity Services capability in the Americas, Europe and other African Countries under the LRDIS brand.

Andrew Calderwood, Managing Partner and CEO, ModuSpec, says: "At the beginning of 2019, LR unveiled its first phase of a new global strategy. This presented us with an excellent opportunity to continue to serve both existing and new clients in the Middle East and the Asia Pacific regions, providing a more focused service and operating independently of LR in these regions."

The ModuSpec board of directors includes former LRDIS and ModuSpec senior personnel, Andrew Calderwood, Andrew Goldstein and Andy Frankland. The trio, who have worked in the Middle East and Asia for many years, bring a wealth of experience and knowledge in the field of drilling integrity, and are supported by other team members who had previously worked for LRDIS and ModuSpec in the region.

The company is backed by a Middle East energy investment group.

"We will ensure the ModuSpec legacy goes from strength to strength," says Calderwood.

More Stories