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Analysis

Growth in the Jack-Up Rig Market

Thu, 12/20/2012 - 08:23

In recent times, Pemex’s oshore drilling operations have been impacted by two factors, according to Gustavo Hernández García, Subdirector of Planning and Evaluation at Pemex Exploration and Production. The first is the Pemex Law, introduced in 2009, which brought a new level of authorizations to the process of hiring jack-up rigs. The second factor has been the lack of jack-ups available for hire in recent months. Hernández García explains that going into 2012, Pemex has only been able to hire eight new jack-ups for its fleet, after looking around the world for available rigs. They are also sending letters of intention to drilling rig operators in order to contract their jack-ups once they have finished their current projects elsewhere, according to Hernández García. As in 2011, the lack of availability may impact the NOC’s 2012 drilling plans.

Joe Jenkins, General Manager of Blake Platform Rigs in Mexico, explains that platform rigs provide an interesting alternative for operators in such a situation. “Jack-up rigs require a lot of work that is simply not required for a platform rig, and require companies to halt production while they are connected to the pipeline network. Platform rigs can be brought in without having to lose a lot of production, while the same work is done as with a jack-up at a lower day rate. As a result, platform rigs are becoming more and more common in Mexico. Everyone with a platform rig available in Mexico is currently engaged in a drilling programme. Because of this, I envision a bigger operation in Mexico for Blake than the one we currently have in the US.” Jenkins explains that in the US, many of the contracts that Blake is currently carrying out are short-term, either well-towell or for two or three wells. By contrast, Pemex is engaging platform rigs for long-term contracts of between 18 months and three years. The latest contracts Pemex is signing are for periods of up to five years. Given these long-term contracts and their availability, Jenkins believes that Mexico will become an increasing priority for Blake. For 2011, Jenkins hoped to bring in between four to six platform rigs, with an aim of introducing 10 platforms to the Mexican market in 2012.