Onshore rig surplus diminishes as demand rises
- Nabors Industries Inc. (United States)
US and international onshore surplus rig supply is diminishing rapidly as rig demand in many regions continues to increase. Consequently, capital costs associated with reactivating, constructing, and refurbishing new and existing rigs are on the rise. In addition, rising operating costs are putting upward pressure on operating costs. In order to justify replacement of existing rigs, US rig day rates will need to more than double. Current rig-market indicators show that rig demand should continue to rise at current levels, or even accelerate. Day rates will have to rise to a level that justifies investments in new capacity, and with continuing rig attrition, even more rigs will have to be built to offset deletions. It is not a matter of whether this will occur, but only when. This will not necessarily threaten the operators` returns over the long-term because technological advances will continue, resulting in lower exploration and production costs. The paper discusses the drivers of increasing demand, faster recovery rates, increasing rig demand, diminishing rig supply, and escalating component costs.
- OSTI ID:
- 533008
- Journal Information:
- Oil and Gas Journal, Vol. 95, Issue 38; Other Information: PBD: 22 Sep 1997
- Country of Publication:
- United States
- Language:
- English
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