Another 50 to 70 newbuild deepwater high-specification floaters could be ordered over the next five years. Nearly 190 new floaters will have been delivered between 2008 and year-end 2016. The trend toward high-specification offshore drilling rigs has gotten impetus from regulations and requirements following the blowout on the Macondo well in the Gulf of Mexico (GoM).

Floating rig demand is making another step-change to favoring dual BOP-equipped rigs, which is one of the reasons for acceleration in the current rig retirement cycle. The dual BOP is only one of the new components that operators are including on rigs today. The industry will start to see dual mud tanks capable of better dealing with deepwater wells that require changing mud weights while going through different zones. There also are very basic changes that need to be made, like increasing deck space to better accommodate dual BOPs. This may not necessarily be a high-tech solution but would help eliminate a limitation to a lot of the older rigs.

Pressure controls, dual mud tanks, and backup acoustic systems to actuate the BOP are the most common rig enhancements. The lack of the backup acoustic was one of the shortcomings of the Macondo disaster. This type of system is mandatory in other areas such as the Norwegian sector of the North Sea.

Operators push technology

New technology such as dual-gradient drilling is being emphasized by operators like Chevron. The functionality is slightly different with dual-gradient technology in that operators fill the riser with seawater, which allows better pressure control, and use drilling mud below the mud line.

Operators also are watching the bottom line. Not all of the improvements are related to new technology. When looking outside just the rig itself, operators are placing more preference on a contractor’s track record of reliable uptime. At US $600,000-plus for day rates, anything that causes an operator to have to absorb some type of cost from downtime is becoming more and more cost-prohibitive.

Drilling contractors are looking ahead as well. There are four drillships that Transocean built that are capable of holding 20,000-psi BOPs when that equipment becomes available. To handle those BOPs, the rigs have to have an even greater variable deck load for both the BOPs and the heavy wall piping that is capable of handling the pressure.

Equipment testing is paramount

In terms of certification for the GoM, most rigs located in the region already have been certified. As the primary region for testing, the GoM now faces more of a testing requirement vs. a certification requirement. Rig owners and operators are now shutting rigs down on a weekly basis to test BOPs, which creates more downtime in the BOPs than the industry has seen before.

In the GoM there likely will be a greater percentage of dual BOP-equipped rigs than elsewhere in the world simply because of the testing requirement. Nobody wants another Macondo. While there always is the potential that the regulatory requirements may relax in the future, the geological requirements do not change. The GoM is a very gas-prone basin, which can be quite problematic when it comes to blowout and pressure control issues. Even if the regulatory environment is relaxed, there likely will not be much of a pullback among the contractors and operators from the more frequent testing of pressure control.

Replacing legacy rigs

The majority of the legacy rigs – second-generation, third-generation, and even a lot of the early fourth-generation floaters – already have been upgraded to the maximum water depth capability. Looking out over the next three or four years, there is a fairly healthy inventory of midwater drilling targets to go through. Beyond that timeframe, the industry is shifting increasingly into deeper waters that, from a legacy rig standpoint, lie beyond the capabilities of those third- and fourth-generation rigs. Those rigs simply cannot be upgraded.

Diamond Offshore, which is a company Societe Generale does not cover, upgraded its Victory-class rigs, which is the exception rather than the norm for legacy rigs. Once operators get into deeper water, they will need newer rigs that have greater water depth capability, including the later fourth-, fifth-, and sixth-generation drillships and semisubmersibles.

The retirement cycle has yet to begin in earnest. Effectively, the cycle is one of functional obsolescence of older rigs and has been heavily driven by the Macondo incident and the higher standards post-Macondo. The next-generation rig demand for the leading edge of rig technology – including dual BOP-equipped drillships – is moving the industry farther away from the legacy rig. The industry is starting to see more of an operator preference for dual BOPs. Originally that preference came more from drilling contractors as they were taking on the bulk of the cost for tripping the BOPs. A number of the recent fleet status reports from the drillers have confirmed that the operators are putting higher preference on dual BOPs, which will then put legacy rigs at an even greater disadvantage.

Emphasis on OEM replacement parts

Post-Macondo, the aftermarket for replacement parts has focused almost entirely on original equipment manufacturer (OEM) services. Some retrofitting was done on the Deepwater Horizon’s BOP, and OEM parts were not used, according to press reports. Prior to Macondo, there was at least one second-tier pressure control manufacturer that was implementing a strategy to pursue maintaining other manufacturers’ BOPs. That type of strategy has now gone out the window. It would not be surprising to see about 90% of the aftermarket business being OEM-driven now.

That can be verified by looking at what companies like Cameron, National Oilwell Varco, and others have said about the overall tightness in the supply chain as operators say they only want the OEM to work on their BOPs.

If a BOP fails its test, it has become paramount at this juncture for operators to refuse to contract the rig. To prevent test failures, at least one of the companies that Societe Generale covers has implemented a “no exception” rule. In other words, if there is a scheduled maintenance for BOPs – whenever that frequency may be – even if the seals and other components look good, the parts are changed. It may be overkill, but that shows the emphasis that companies are placing on safety. Operators are likely demanding it as well.