Onshore Drilling Rigs
Onshore drilling rigs are also known as land rigs; and are used in petroleum industry to drill deep holes under the earthâ€™s surface for oil and gas extraction.
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Neptune Energy begins drilling at Adorf gas field developmentJuly 05, 2022
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The average annual savings achieved in Onshore Drilling Rigs category is 16.40%
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Onshore Drilling Rigs market report transcript
Onshore Drilling (North America) –Market Analysis
- COVID-19 outbreak is having an adverse effects on the oil & gas industry. The outbreak that started in China has escalated into a global pandemic. As a result, companies around the world are being squeezed through labor market and supply chain disruptions. Travel restrictions and nation-wide lockdowns are restricting workforces in the normal recommencement of work. The oil prices have collapsed to its lowest since 2002, due to oversupply and low demand
- The global oil demand is expected to decrease by more than 600,000 barrels of oil per day in 2020. The decrease in demand is an outcome massive cancellations of airlines flight operations, travel bans, and isolation measures. The transportation sector, which has more than 20 percent of share in the global oil consumption is being affected by the quarantine measures adopted by individuals and governments
- According to Beroe analysis, the COVID-19 pandemic will create a skilled labor shortage, due to travel restrictions and self-quarantine measures on the onshore drilling activity.
- Moreover, the onshore rig activity has reduced drastically particularly in North America, due to low oil demand, low crude oil prices and conservative capital investments resulting in operating onshore rigs economically less viable
Onshore Drilling (APAC) –Market Analysis
- The rig utilization rate has been steadily increasing from early 2017 and is about 70 percent since January 2018.
- In 2018, utilization of land rig in APAC has recovered and is been maintained at an average of 70 percent
- By 2021, rig demand is expected to be at the rate of 8 – 13 percent, as oil prices are recovering and rising demand
- India, China and Indonesia are the major oil producing countries in the region, which have high level of utilization of rigs in the region
- Oil companies are preferring electrical rigs over mechanical rigs, as it gives them the advantage over cost and time factors, though its day rates are expensive
- Rebounding oil prices have encouraged E&P operators to invest in exploration activities
On Shore Drilling Rig Market Overview –North America
- Demand for land drilling rigs has increased by more than 40 percent as oil prices are recovering
- The Permian Basin in the US and Alberta in Canada have been the key region for oil exploration in North America
- Based on drilling activity, North America has 1,029 active land rigs as of 7th December 2018
- Top states in the US, on the basis of active land rig count, are as follows:
– Texas (513)
– Oklahoma (134)
– New Mexico (95)
– North Dakota (52)
- More than two-third of land rigs are active in four states primarily, due to ‘Big Three' shale basins namely Bakken, Permian Basin, and Eagle Ford, which has the highest number of shale wells
- The Permian basin in the US, specifically Bone Spring and Wolfcamp, plays an vital role in the US oil production
Key Cost Drivers
- In the current market condition, buyer has a high control in choosing the supplier, due to the low demand and rig utilization rates
- The buyer must keep a track on the supplier's financials to have a better contract leverage
On Shore Drilling Rig Market Overview –APAC
- Stable oil prices between $55/bbl and $60/bbl have resulted in a cautious approach by onshore drilling rigs companies w.r.t. investments in exploration activities in the APAC region.
- Based on the onshore drilling activity, APAC has 227 active rigs, of which, 132 are land rigs (excluding activities in China) as of Q2 2019.
- The Indian announced 55 onshore oil & gas blocks for exploration to public and private players, thereby resulting in an increase in demand for on shore drilling rigs in the near future.
- With crude oil prices hovering between $55/bbl and $60/bbl, cautious investments are expected to be witnessed in the region in the near future with stable oil prices.
Onshore Drilling Rig Cost Breakup
- Material cost covers 63 percent of the entire rig and with the demand for rigs with deep drilling capacity, the cost is expected to increase
- Suppliers’ day rate for rigs covers components such as: cost of capital, operating cost and profits.
- Onshore drilling rig day rates may be further classified as per the operational phase of the rig as follows; Drilling rate, Standby rate (as a percent of the day rate), Maintenance cost, Mobilization/demobilization.
Why You Should Buy This Report
The report gives the market overview, supply trends and market analysis of the North American and APAC on shore drilling rig market. It lists out the global demand drivers for the drilling rig industry. It provides the cost breakup and key cost drivers of the onshore drilling industry. The report details the supplier landscape and SWOT analysis of the North American Oil and APAC rig market and shares the profile of major players like Helmerich & Payne, Precision Drilling Corporation, John Energy, India, SVOGL Oil Gas & Energy Ltd., India, etc.