Report makes case for urgent scrapping of rigs

Report makes case for urgent scrapping of rigs

A new report from Icarus Consultants suggests another 100 rigs need to be scrapped to give the offshore market any chance of equilibrium.

Despite a rash of retirements in the first half of the year there has been nothing scrapped in the last three months.

“The floater sector has, at least, made a start, with 44 units, mostly from Transocean and Diamond, being sent to the knackers yard this year but consensus of opinion from analysts is that another 100 units need to go the same route,” Icarus noted.

The consultants warned there are still 42 floaters currently under construction which will enter the market over the next two years and this is not counting those for Sete Brasil which may or may not amount to another 15 UDW units.

Only five out of an estimated 526 jackups worldwide were sent to scrap this year.

Currently there are around 60 idle jackups that are over the age of 30 years and another 90 of the same age that come off contract in 2016. The current chartered overall fleet amounts only to 61% utilisation with around 118 idle jackups and 63 cold stacked. Moreover, Icarus warned: “The number of idle rigs will swell alarmingly when the 125 jackups currently under construction hit the market in 2016 and 2017.”

The report concluded: “Something has to give, scrapping has to begin in earnest and even relatively new premium rigs will go into cold stack. By not retiring rigs the downturn will be extended as the market would remain severely overcrowded.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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1 Comment

  1. Deva
    December 22, 2015 at 8:31 am

    Oil rig scrapping is a complicated job. It needs to be done at certified Green recycle certified yards. The Tugs of right Bollard Pull should be employed. The anchors should be picked up by the anchor handler tugs. The towing wires should be of right strength & length. The smith brackets should be designed for the load and tested. Warranty surveyors should inspect and certify the whole arrangement. This is during start of the Tow.

    At beaching yard the drafts required at 7-10 meter maximum. Most of the Rigs drafts are 20-40 meters. This makes it challenging for the Tug and assist tugs to push the Rig into shore ( as far as possible) against the currents. Most of the time the Rig gets stuck around 1 km away from the yard and workers need to travel in boat for cutting the rig.

    Whole thing need to be done cost effectively and environmental friendly way.