Douglas-Westwood’s (DW) ‘World Land Drilling Rig Market Forecast’ report recently released predicts that following significant declines, the global land drilling rig market is expected to see a recovery from 2017
The report stated that the trend of significant declines in drilling activity over the previous 18 months is expected to continue in 2016, following announcements of further reductions to capital expenditure as operators seek to minimise costs and maximise drilling efficiency in the downturn environment.
Report author Katy Smith commented, “However, even with sustained low oil prices, demand for high-HP, high-specification is expected to rise over the forecast period, with the number of rigs drilling rated above 1,250HP forecast to increase at an 11 per cent CAGR over 2016–2020.”
A rise in horizontal drilling in Russia, as well as planned development of unconventional reserves in Saudi Arabia and China, will contribute towards this growth. Onshore field developments in Iran and Kuwait are also expected to result in high demand for high-HP rigs, the report stated.
Smith also points out that recent technological developments within the market have been driven by the requirement to improve drilling efficiency, with developments for AC rigs having focused on using automatic processes to increase speed and improve safety levels. Sustained low oil prices have also resulted in an increased trend towards the recycling of components such as drill pipes and mud motors from idle rigs in the North American market. In the downturn environment, contractors are also seeking to capitalise on new, alternative markets, such as the Vaca Muerta region in Argentina, for their high-specification rigs, she added.
DW director of research Steve Robertson concluded, “The market is presently challenged and will struggle to recover to previous levels of activity, nevertheless opportunities remain in what is often a nuanced and regionally-focused market.”
