An exodus of oil rigs means the North Sea market is expected to “tighten considerably” over the next two years, according to new analysis.
S&P says further departures could have a “serious impact on operators’ plans in the North Sea” in 2024 and 2025.
“A number of campaigns are outstanding from the second half of 2024, and the balance between marketed jackups and demand is becoming increasingly tight, as shown below in the forecast chart for Northwest Europe jackup activity to the end of 2025,” the analyst firm said.
“Further departures could have a serious impact on operators’ plans in the North Sea over the next two years.”
Rig operators have been leaving the region for better prospects elsewhere; with the most recent example this week with Shelf Drilling planning to move its Perseverance rig out of the UK to Vietnam.
Day rates are rising too, said S&P. Having been in the $100,000 to $120,000 bracket for most of the year, recent deals are ranging $130,000 to $150,000.
The Valaris 247 is meanwhile expected to head to Australia, on a $180,000 day rate, after finishing up with Perenco in the UK at the end of this year.
S&P said demand elsewhere has increased, while northwest Europe has been “one of the few regions” with a surplus of units has been available – and these have been marketed globally.
“The Middle East remains strong, and opportunities also exist in the Mediterranean, West Africa and other parts of Southeast Asia,” said S&P and the contractors “have not been shy to tell North Sea based operators that if long-term work at suitable rates does not materialize, they will move units out”.
S&P also said that carbon capture and storage (CCS) work has become a “new revenue stream” for drilling contractors, with “significant charters” being concluded for such programmes in north-west Europe.
Challenges linked to the Energy Profits Levy (EPL) in the UK have caused issue, but contractor Valaris has also pointed to challenges in Norway with jack-up opportunities being “very limited”.
Read more: The great drilling rig migration: jacking up and shipping out
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