Saudi Aramco Acquires More Rigs
- Pipeline
- Saudi Aramco News
- Industry News
Author: Aramco ExPats
Released 23 June 2006
Saudi Aramco is continuing to pursue as many drilling rigs as it can in an exploding market.
There are currently close to 100 rigs operating in the kingdom. A year ago, there were only around 70 rigs operating in Saudi Arabia. Late last year, the state oil giant announced its intention to boost the kingdom's rig count to 110 by the end of 2006.
Over the past six months, Aramco has sourced at least four rigs each from US-based drillers Rowan, Ensco and GlobalSantaFe. Aramco has also signed contracts for two Nabors-owned rigs and another two rigs from Italy's Saipem. Arabian Drilling Company also has secured a one-rig contract with Aramco over the past six months.
Local sources say that Aramco intends to increase the number of rigs running in the Kingdom to 140 by 2007, which is around the time that the giant Khursaniyah oil field development is expected to be brought on line. The scheme will bring on stream 500,000 barrels per day of Arab Light crude by December 2007.
In its procurement efforts, Aramco is no longer tendering for rigs. The company is instead relying on direct negotiations with rig companies and signing as many long term deals as possible.
Two new Chinese companies,Sinopec Drilling and CP Arabia, have entered the Saudi drilling market, joining existing operators Great Wall Drilling Co., a subsidiary of state China National Petroleum Corp., and HongHua Co.
Rig rates are expected to keep rising with the market remaining tight until at least 2009 when several oil and gas projects are expected to be completed.
There are four international consortia exploring for gas in the Rub al-Khali desert region where drilling has already begun, as well as several massive oil projects under way which combined will boost the kingdom's production capacity to 12.5 million b/d by 2009, from 11.3 million b/d today.
The increased drilling day rates for onshore and offshore rigs in Saudi Arabia have lured several rigs away from other regions of the world, including the US Gulf of Mexico. The US Gulf has been hardest hit as rigs migrate to other, higher paying, parts of the world. There are currently about 100 jack-up rigs working in the Gulf, but by year-end the number of jack-ups in the region could fall below 90, according to some estimates.
Even so, the high price of oil, hovering around $70 a barrel, has brought a nearly dormant Mississippi petroleum industry roaring to life. Wells abandoned long ago by the major oil companies are being reopened by independent operators. Requests for new drilling permits have spiked, trainees for oil-field work can make nearly $14 an hour, and companies wait 12 months to rent the kind of field equipment that was once sold for scrap.