Onland drilling contractors hurting as orders dry up

Vol 12, PW 15 (18 Dec 08) Exploration & Production
     

Plans by drilling contractors to bring new onland rigs to India this year to reap business from an expected drilling boom have been shelved as crude oil prices plummet and finance dries up.

PETROWATCH learns that several contractors have delayed plans to bring onland rigs to India or sent them to other countries. Punj Lloyd Upstream, part of the diversified Punj Lloyd Group, told us in January this year it would have four rigs in India by July.

Despite attempting to get contracts with ONGC or Oil India by hiring â€کagents’ or â€کmiddlemen’ the upstream unit struck a dry hole and in September announced it hired two of its onland rigs to a company in Libya. A company source says that the other two rigs would only come to India when “we have a contract in hand, maybe in March next year.

â€‌ Four years ago, rig hire charges ranged between $10,000 to $15,000/day and more recently fetched rates as high as $30,000/day as crude oil prices hovered near a record $150/barrel. But with fewer E&P companies requesting the rigs with crude oil now below $50, the boom seems to have ended.

One oil industry service contractor said they had luckily shelved plans to buy a Chinese rig earlier this year and diversify into the onland drilling business. “We are very happy that we changed our mind at the right time,â€‌ says the contractor.

“The rig would have arrived in India by now and there are hardly any new contracts.â€‌ Another contractor, Tuff Drilling, said it had plans to bring four onland rigs to India this year but is behind schedule.

“We already have a rig in India and our second rig is expected to arrive shortly,â€‌ says a company source. “Two more rigs are expected to arrive in India next year.

â€‌ Why the delay “The delay was mainly because of the recession in the US where the rigs are being built,â€‌ our source added. Like Punj Lloyd, Tuff Drilling claimed it could provide better rigs to E&P operators than ones sourced from China.

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