Drillers line up for ONGC's new rig-hire procedure

Vol 11, PW 10 (20 Sep 07) Exploration & Production

ONGC has radically modified its selection process to beat the global shortage of drilling rigs, a move heartily applauded by contractors.

Evidence of this comes from ONGC’s latest invitation to submit Expressions of Interest from drillers for five categories of rigs, which closed on September 7. In the past, ONGC followed the time-honoured procedure of calling a tender, evaluating the technical and commercial offers, followed by selection of the bidder that quoted the lowest day rate.

But no longer! Instead of price, ONGC has finally realised that rig availability and delivery schedules in a tight market should be the principal drivers in its selection process; that international drillers, in particular, no longer accept its low rates, when they can get the asking price elsewhere. As expected, the results of this policy shift have been startling, with drillers who would have otherwise looked the other way, submitting EoIs for up to 24 rigs by the September 7 deadline.

“Everybody has submitted an EoI,â€‌ confirms a driller. “They show ONGC what is available on the market and when.

After the evaluation is complete ONGC will call bidders in order of rig availability to negotiate contracts. They will save a lot of time doing it this way.

â€‌ ONGC has divided up this latest request for rigs into five categories: the first three are for jack-up rigs, the last two for deepwater rigs. In Category I, ONGC wants a rig that can drill in marshy conditions of less than 12-ft water depths; for Category II it wants rigs that can drill â€کhigh pressure/high temperature’ wells in water depths up to 150-ft; in Category III it also wants rigs that can drill in â€کhigh pressure/high temperature’ wells, but in water depths of up to 350-ft.

In Category IV it wants a deepwater rig that can drill up to 12,000-ft and for Category V it wants one that can drill in depths of up to 7000-ft.