Global Land Drilling: 25 months into the recovery… where is the industry headed?
The land rig cycle is 25 months into a recovery phase. Consolidation, new technology and a drive for efficiency have characterised the cycle thus far. Westwood expects the growth in North American drilling and key international markets to drive a sustained recovery in the rig market over the next five years, with the number of rigs drilling forecast to rise at a 5% CAGR through to 2022.
The forecasts and analysis for the new edition of ‘World Land Drilling Rig Market Forecast’ have been updated with Westwood’s latest data and reflect the outcome of the June 22nd-23rd 2018 OPEC meetings – of particular significance is Russia’s announced plans to produce an additional 200 kbbl/d in 2H 2018.
Global Rig Fleet and Drilling Utilisation, 2018-2022
- Westwood estimates that the rebound in North American drilling activity in 2017 contributed to a 7% rise in the global number of operational rigs, with the number of rigs drilling having risen by 9%.
- As the upcycle has emerged, the impetus has been on the ability to return high-specification units to the market as quickly and cost-effectively as possible, leading large, well-established contractors to focus on upgrades to their existing fleet. OEMs focused on tailoring their offering to cater for demand for cost-effective drilling.
- Westwood expects the recovery in the market to continue over the forecast period, with global rig utilisation expected to rise by nine percentage points from 41% in 2018 to 50% by 2022.
- High-specification units within the 1,500-1,999 HP range are expected to see the strongest growth, in terms of the number of active rigs, driven predominantly by activity in the US shale plays. Outside of North America, demand for high-specification rigs will also be driven by increased horizontal drilling in China and Russia, as well as the development of the Vaca Muerta shale play in Argentina.
- Over the forecast, a key focus for contractors will be on technology that enables the operator to ‘de-man’ the rig and automate the drilling process, with rig design expected to focus on enhancing the scope of performance for the drilling of longer laterals, as well as more complex well completions. This will include units requiring a higher drill pipe racking capacity and top drive torque capacity.
- Contractors are also continuing to focus on consolidating their presence in markets where there are strong prospects for growth, with KCA Deutag having completed its acquisition of Dalma Energy’s Omani and Saudi Arabian businesses in May 2018.
The World Land Drilling Rig Market Forecast 2018-2022 report is presented using the rig fleet data from Westwood’s online Global Land Drilling Rig Tool, as well as the onshore drilling and production data from Westwood’s SECTORS. The report contains detailed country and regional analysis of the market, including onshore wells drilled, operational rigs, rigs drilling by HP category (0-499 HP, 500-999 HP, 1,000-1,499 HP, 1,500-1,999 HP, 2,000-2,999 HP, and 3000+ HP), and rig utilisation. Analysis is based on a ten-year view of the market, with historic data covering the period 2013-2017, and forecast data for 2018-2022.
The report also provides detailed insight on:
- Macro-economic drivers and trends – including analysis of trends in drilling complexity and unconventional exploration and development, the North American land rig fleet evolution, and economic and political considerations impacting the market.
- Manufacturing – including a comprehensive overview of the supply chain, analysis of the leading original equipment manufacturers operating in the regional markets for key rig components, and rig equipment trends for top drives, as well as pad drilling and walking rig technology.
- Regional and national competitive landscape of identified rigs – matrix of drilling contractors operating in each region, indicating the overall size, composition, and countries of operation of each contractor’s fleet, as well as a competitive landscape by contractor type (indigenous, international, and NOC) for each country included in the report.
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