- The BP blow-out is unlikely to damage deep water drilling for long
- The Gulf of Mexico floating rig drilling moratorium may tighten the 2011 market if postponed 2010 wells are added to ongoing drilling plans for 2011 and 2012
- A 6 month freeze transfers some 15 rig years of work into 2011 and beyond at a time when some long term rig contracts are ending and as new rigs arrive
- This delayed demand may strengthen rig rates
- The USA is heavily dependent on deep water oil so the need to drill remains strong
- The downside risk is higher costs and longer lead times on drilling permits that may deter some operators from committing to higher budgets
- But by 2011 upward oil price pressure will be growing, promising higher revenues
- Operators may persuade government to shorten or relax the deep drilling ban once the blow-out is under control in exchange for tougher regulations
- Total floater market still headed for decline in 2011, but delayed new buildings and stronger committed demand has slowed day rate falls and maintained 100% utilisation for the highest spec deep water rigs
by Yue Pan // 16 June, 2010
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