Global offshore jack-up drilling rose during week 43 2020, with Middle East shallow-water activity leading the way
Overall, there were 323 jack-ups contracted globally, a rise of one unit from the previous week, of which 114 were drilling in the Middle East, 28 in southeast Asia and 19 in the North Sea.
Oslo-listed drilling contractor Shelf Drilling has 13 jack-up rigs under contract to Saudi Aramco, ADNOC Drilling, Dubai Petroleum, Gempetco and Petrobel for drilling activity in Saudi Arabia, the UAE and Egypt.
One of those jack-ups Main Pass I, a Friede Goldman L-780 Mod II jack-up, is under charter to Saudi Aramco until February 2030. Shelf Drilling reported it had received a notification on suspension of operations for the jack-up rig Main Pass I for up to 12 months. While the suspension of operations is at a zero day rate effective
October 2020, the term of the contract will automatically extend “for a period equal to the suspension period,” said Dubai-based Shelf Drilling in a statement.
An early termination notice was also rescinded on Trident 16, with the jack-up on call out contract with Petrobel Egypt until February 2021.
Meeting virtually on 19 October, the Organisation of Petroleum Exporting Countries (OPEC) and its allied non-members (together known as OPEC+) reaffirmed their commitments to ‘full conformity’ to rebalancing the global oil markets through agreed upon crude oil production cuts to avoid a market price collapse and to reduce inventory oversupply. Current production levels stand at 7.7M barrels of oil produced per day (bopd).
In reviewing crude oil production data for September 2020, overall conformity level for OPEC+ was 102%.
At the meeting, OPEC+ expressed its concerns for the slowing economic recovery and the resurgence of Covid-19 cases in the major economies, particularly in the US, Europe and Asia. This could affect demand in 2021, when production levels were planned to be raised. Production levels were due to rise 2M bopd to 9.7M bopd.
Reuters reported, however, that based on four OPEC+ sources speaking on the condition of anonymity, no formal recommendations were made at the meeting on changing policy regarding production levels for 2021.
OPEC meets again on 30 November and could take up action.
The price of Brent crude closed lower on 19 October, at US$42.45 per barrel. Week-on-week however, oil rose US$0.79 from a 12 October close of US$41.76 per barrel.
Meanwhile, tracking by Westwood Global Energy’s RigLogix indicated that deepwater drilling activity fell, with the number of floaters falling week-on-week from 107 to 105. South America did see an uptick of one unit week-on-week, with 27 floaters under contract.
Deepwater activity in Guyana looks promising. As previously reported, the ultra-deepwater drillship Noble Tom Madden was secured for an additional 6.5 years under the commercial enabling agreement with ExxonMobil for offshore work in Guyana. The agreement will now extends the rig contract to mid-August 2030. Under the CEA, rig day rates could be adjusted twice per year based on a scale-based discount and performance bonus, and ExxonMobil will have the flexibility to transfer the awarded term between Noble assets, Noble Don Taylor, Noble Bob Douglas, Noble Tom Madden and Noble Sam Croft.