NrgEdge Editor

Sharing content and articles for users
Last Updated: May 18, 2017
1 view
Business Trends
image

uploads1495070882425-logo132.jpgAfter historical highs in 2014, jackup demand plunged by 25% from 409 units in 2014, to 308 units in 2016. With 72 newbuilds scheduled to come into the market in the next few years and only 63 units retired since 2014, the jackup market is in the midst of an oversupply situation, resulting in low utilization levels and depressed rates.


Rystad Energy forecasts a small increase in jackup demand this year, compared to 2016 levels. In line with this view, we have seen increased tendering activity during the first quarter of 2017.

Based on contract fixture data from Rystad Energy’s RigCube, Figure 1 shows the development in contracting activity from Q1 2016 to Q1 2017 for competitive rigs. We see that contracting activity picked up in the first quarter of 2017, with 36 new mutual contract fixtures. This is a 50% increase from the previous quarter and a 33% increase compared to the first quarter of 2016. Tendering activity is still low compared to the peak period between Q1 2012 and Q1 2013, when the number of fixtures for new mutual contracts averaged 77 quarterly.


The blue line in Figure 1 shows the trend of average contract duration per quarter. Durations for contracts signed in Q1 2016 averaged 19 months as compared to Q1 2017 with an average duration of 6 months. This is a 68% decrease in average contract duration for the first quarter of 2017. Eighty-three percent of new mutual contracts signed in Q1 2017 are intra-year contracts. In other words, only six of the units contracted in Q1 2017 will have a contract extending past 2017. This is a large drop compared to Q1 2016, when intra-year contracts accounted for only 42%. While the total backlog for the first quarter of 2016 added up to 25 rig years, Q1 2017 was significantly lower with approximately 18 rig years of backlog. While our forecast calls for a slight uptick in jackup demand, it will still be a very competitive market for the rig owners with units rolling off contract this year.


Taking a deeper look at contracting activity for the competitive fleet during Q1 2017 (sublet, exercised options and new mutual contracts), we see that 33% of the units were already under contract at the time they received additional work. The other 67% of rigs awarded work in Q1 2017 were not under contract at the time of fixture, and on average, had been idle for 11 months. This compares with Q1 2016, where 35% of the jackups receiving new work were already contracted, while the remaining units had, on average, been idle for 7 months. Aside from the “lower for longer” environment and operators “re-tendering”, slow approval processes and revisions to the scope of work required only add to the time it takes to secure a contract.


Over the last decade, the Middle East has been the largest market for jackup rigs. Looking at the first quarter of 2017, 30% of the awarded contracts are for work in the Middle East. Saudi Aramco is out in the market with a multi-rig requirement for incremental units as well as renewal against existing units with a start date during Q1 2018 and a duration between three and five years. Elsewhere in the region, Dubai Petroleum is also out with a requirement for term work against the renewal of two incumbent rigs. During Q1 2017, Southeast Asia and North America were slightly behind the Middle East in awarded contracts, with 25% and 22%, respectively. In Q1 2016, tendering was dominated by the Middle East (38%), with South Asia (15%) a distant second.

Figure 2 shows the development in rig rates per quarter in the last year. In order to understand the global trend in rig rates, North Sea jackup rates have been excluded from the quarterly averages. Declining rates persisted throughout Q3 2016, however during the last quarter of 2016, rates appear to be flattening out and even showed signs of a resurgence in Q1 2017 with contracting activity increasing. Rig rates averaged near $69,000/day during Q1 2017, compared to the peak period for jackup rates, between Q1 2013 and Q3 2014, when rig rates averaged $142,000/day. A situation that can still be seen as depressing for the drillers.


Towards 2020, Rystad Energy believes that jackup demand will increase, with an anticipated yearly average growth of 4%. However, the oversupply of existing units in the market, an expected influx of newbuilds and the short-term nature of contracts, contribute to our opinion that rig rates will remain at low levels going forward.

3
0 0

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

Chicago Cubs Shirts: Wear Style with Ultimate Comfort!

For most people, embracing style can be really overwhelming. The bodycon dress might look fabulous but what about comfort? This type of dress clasp all the body and sometimes it becomes really hard to take a fine breath! In fact, the satin cloths that look super lustrous and voguish, but only the person who is wearing that knows how uneasiness feels like. Moreover, these types of clothing can not be worn on all occasions. You literally have to pick the right piece of outfit according to a specific occasion keeping the ambiance of the situation in mind. This is simply the reason, why ladies always complain that they have nothing to wear. To save people from this fashion crisis, sport wears emerges to be the ultimate lifesaver and in this connection, the mention must be made of Chicago Cubs Shirts.


This exclusive range of sportswear apparel is now currently flooding the market with exceptionally designed shirts that can be worn by people of all ages, gender and fashion taste. They are affordable and comfortable at the same time. Chicago Cubs Shirts adopt the classic sport design with exceptionally hemmed collar shapes that are sober and fashionable at the same time. The trend of sportswear can never be old and apart from sports lovers, people who worship fashion are now greatly turning their heads towards the contemplation of sporty shirts. Although they have a very simple design, they look highly versatile on everyone. 


Whether you are partying, enjoying social gathering, attending boring lectures, going on a date, traveling or just chilling at your couch with a cozy blanket, Chicago Cubs Shirts can be worn at any time and any situation. The material of the cloth is extremely comfortable and they are breathable. The shirts keep you from over sweating and at the same time, it allows you to look super cool in a sober manner. To know more please visit the websitehttps://www.sportsworldchicago.com/Chicago_Cubs_Shirts/


September, 16 2021
The New Wave of Renewable Fuels

In 2021, the makeup of renewables has also changed drastically. Technologies such as solar and wind are no longer novel, as is the idea of blending vegetable oils into road fuels or switching to electric-based vehicles. Such ideas are now entrenched and are not considered enough to shift the world into a carbon neutral future. The new wave of renewables focus on converting by-products from other carbon-intensive industries into usable fuels. Research into such technologies has been pioneered in universities and start-ups over the past two decades, but the impetus of global climate goals is now seeing an incredible amount of money being poured into them as oil & gas giants seek to rebalance their portfolios away from pure hydrocarbons with a goal of balancing their total carbon emissions in aggregate to zero.

Traditionally, the European players have led this drive. Which is unsurprising, since the EU has been the most driven in this acceleration. But even the US giants are following suit. In the past year, Chevron has poured an incredible amount of cash and effort in pioneering renewables. Its motives might be less than altruistic, shareholders across America have been particularly vocal about driving this transformation but the net results will be positive for all.

Chevron’s recent efforts have focused on biomethane, through a partnership with global waste solutions company Brightmark. The joint venture Brightmark RNG Holdings operations focused on convert cow manure to renewable natural gas, which are then converted into fuel for long-haul trucks, the very kind that criss-cross the vast highways of the US delivering goods from coast to coast. Launched in October 2020, the joint venture was extended and expanded in August, now encompassing 38 biomethane plants in seven US states, with first production set to begin later in 2021. The targeting of livestock waste is particularly crucial: methane emissions from farms is the second-largest contributor to climate change emissions globally. The technology to capture methane from manure (as well as landfills and other waste sites) has existed for years, but has only recently been commercialised to convert methane emissions from decomposition to useful products.

This is an arena that another supermajor – BP – has also made a recent significant investment in. BP signed a 15-year agreement with CleanBay Renewables to purchase the latter’s renewable natural gas (RNG) to be mixed and sold into select US state markets. Beginning with California, which has one of the strictest fuel standards in the US and provides incentives under the Low Carbon Fuel Standard to reduce carbon intensity – CleanBay’s RNG is derived not from cows, but from poultry. Chicken manure, feathers and bedding are all converted into RNG using anaerobic digesters, providing a carbon intensity that is said to be 95% less than the lifecycle greenhouse gas emissions of pure fossil fuels and non-conversion of poultry waste matter. BP also has an agreement with Gevo Inc in Iowa to purchase RNG produced from cow manure, also for sale in California.

But road fuels aren’t the only avenue for large-scale embracing of renewables. It could take to the air, literally. After all, the global commercial airline fleet currently stands at over 25,000 aircraft and is expected to grow to over 35,000 by 2030. All those planes will burn a lot of fuel. With the airline industry embracing the idea of AAF (or Alternative Aviation Fuels), developments into renewable jet fuels have been striking, from traditional bio-sources such as palm or soybean oil to advanced organic matter conversion from agricultural waste and manure. Chevron, again, has signed a landmark deal to advance the commercialisation. Together with Delta Airlines and Google, Chevron will be producing a batch of sustainable aviation fuel at its El Segundo refinery in California. Delta will then use the fuel, with Google providing a cloud-based framework to analyse the data. That data will then allow for a transparent analysis into carbon emissions from the use of sustainable aviation fuel, as benchmark for others to follow. The analysis should be able to confirm whether or not the International Air Transport Association (IATA)’s estimates that renewable jet fuel can reduce lifecycle carbon intensity by up to 80%. And to strengthen the measure, Delta has pledged to replace 10% of its jet fuel with sustainable aviation fuel by 2030.

In a parallel, but no less pioneering lane, France’s TotalEnergies has announced that it is developing a 100% renewable fuel for use in motorsports, using bioethanol sourced from residues produced by the French wine industry (among others) at its Feyzin refinery in Lyon. This, it believes, will reduce the racing sports’ carbon emissions by an immediate 65%. The fuel, named Excellium Racing 100, is set to debut at the next season of the FIA World Endurance Championship, which includes the iconic 24 Hours of Le Mans 2022 race.

But Chevron isn’t done yet. It is also falling back on the long-standing use of vegetable oils blended into US transport fuels by signing a wide-ranging agreement with commodity giant Bunge. Called a ‘farmer-to-fuelling station’ solution, Bunge’s soybean processing facilities in Louisiana and Illinois will be the source of meal and oil that will be converted by Chevron into diesel and jet fuel. With an investment of US$600 million, Chevron will assist Bunge in doubling the combined capacity of both plants by 2024, in line with anticipated increases in the US biofuels blending mandates.

Even ExxonMobil, one of the most reticent of the supermajors to embrace renewables wholesale, is getting in on the action. Its Imperial Oil subsidiary in Canada has announced plans to commercialise renewable diesel at a new facility near Edmonton using plant-based feedstock and hydrogen. The venture does only target the Canadian market – where political will to drive renewable adoption is far higher than in the US – but similar moves have already been adopted by other refiners for the US market, including major investments by Phillips 66 and Valero.

Ultimately, these recent moves are driven out of necessity. This is the way the industry is moving and anyone stubborn enough to ignore it will be left behind. Combined with other major investments driven by European supermajors over the past five years, this wider and wider adoption of renewable can only be better for the planet and, eventually, individual bottom lines. The renewables ball is rolling fast and is only gaining momentum.

End of Article

Follow us for weekly updates! 

Market Outlook:

  • Crude price trading range: Brent – US$71-73/b, WTI – US$68-70/b
  • Global crude benchmarks have stayed steady, even as OPEC+ sticks to its plans to ease supply quotas against the uncertainty of rising Covid-19 cases worldwide
  • However, the success of vaccination drives has kindled hope that the effect of lockdowns – if any – will be mild, with pockets of demand resurgence in Europe; in China, where there has been a zero-tolerance drive to stamp out Covid outbreaks, fuel consumption is strengthening again, possibly tightening fuel balances in Q4
  • Meanwhile, much of the US Gulf of Mexico crude production remains hampered by the effects of Hurricane Ida, providing a counter-balance on the supply side

No alt text provided for this image

Learn more about this course

September, 16 2021
How I get so many followers for my instagram page?

I have been looking for a fast way to get followers for my insta page for a long time and recently I have found it. Now I buy instagram followers for my profile every week and my page is very popular

September, 15 2021