Years ago (just take it at that) I drilled a well in the Gulf of Mexico that involved a number of sidetracks (less than 10). In the process of trying to drill what would have been the world's most expensive well at that time, we lost a source in the hole. The United States Geological Survey - regulatory precursor to the Minerals Management Service - when duly notified, instructed us to secure a plaque to the hull of the rig noting there was a radioactive device underneath the rig. The rig was a jackup. It moved on.

I have always wondered if the plaque was still attached and what comments it might have generated on other, non-radioactive locations. There is a chance I might find out some day. The rig is still out there, part of a worldwide jackup fleet that is aging rapidly.

That aging fleet could be a problem, especially in the Gulf of Mexico as recently pointed out in two presentations. The problem is the insatiable demand for natural gas in the United States. With gas demand projected to increase by around 22% by 2025, and with gas well production going to heck, there is ample incentive to do anything possible to increase North American gas supply. Witness, for example, the 40 proposed liquefied natural gas (LNG) re-gas terminals now in discussion for North America. Gas prices projected at US $5 per Mcf for the foreseeable future magnifies the incentives.

Perhaps the most accessible area for significant gas development in the United States is the deep play [15,000 ft (4,575 m) or deeper total vertical depth (TVD)] on the continental shelf. Initial reserves there were estimated at nearly 6 Tcfe. Most of that is still in place. It is finding the rigs to drill the wells that may be the problem.

Danny McNease, chairman and chief executive officer of Rowan Companies, Inc., pointed out in an address to the RMI Breakfast in Houston recently that some 75% of the world's 387 jackups are 19 to 21 years old. Only 4% are less than 6 years old. And, by 2007 according to McNease, 89% of the world's jackup fleet will be older than 20 years. In fact, newbuild jackup deliveries died with the last downturn (in 1984) and have never really revived. Worse yet, through the period 1990 - 2004, Ensco, presenting at the Lehman Brothers CEO Energy/Power Conference in September, registered an attrition rate of 4 rigs, or 1%, per year. In fact, the company notes that 61 rigs left the market during the 16-year period while only 43 rigs joined the fleet.

As important are the ratings for the worldwide jackup fleet. The Gulf of Mexico deep shelf is not for the faint of heart rig. Hookload capacities of up to 2 million lbs will be required for really deep (21,000 ft or 6,405 m or TVD and above) wells, while high hookload ratings will be required for the bulk of drilling in this play. Portions of the Gulf of Mexico shelf are at the margins of jackup depth and the region will require a disproportionate number of deepwater jackups. With the Gulf of Mexico and Southeast Asia to top all other areas in jackup demand, according to Ensco, the rig shortage may be serious.

Newbuilds and/or refurbs might fill the gaps, but initial deliveries from construction commitments made now would be 2 to 3 years away. And then there is the question of new builds vs. refurbs with refurbs coming in at up to 70% to 80% of the cost of newbuilds.

That leaves us with three questions. Will rig demand materialize as predicted? Will rigs be found/built to meet the demand? And, where is that plaque?