Jackup Rigs Market

• Continuously rising world oil demand will increase the demand for jackup rigs to fuel the jackup rigs market.

Crude has gained more than 60% in 2021 as the roll-out of Covid-19 vaccines lifted movement curbs and, subsequently, oil demand. An energy crisis is gripping major economies with no sign of easing even as major oil producers remain firm on restrained supplies. Prices have risen as more vaccinated populations are brought out of coronavirus lockdowns, supporting a revival in economic activity. At the same time, from Asia to Europe, the global commodity prices, including those used as fuel for power generation such as coal and gas, have also surged.

China's government, meanwhile, has ordered miners to ramp up coal production as power prices surge. Global oil demand is now forecast to rise by 5.5 mb/d in 2021 and 3.3 mb/d in 2022 when it reaches 99.6 mb/d, slightly above pre-Covid levels.

The energy demand will rise with social and economic development in the world. This makes oil an attractive commodity for generating power and keeps the economic activity steady, and thus the higher demand is pushing crude markets higher.

Oil and gas production will continue to be an important part of meeting global energy demand, with total production forecast to grow by 17 million barrels of oil equivalent per day by 2025 Despite significant growth in an unconventional onshore production, offshore production represents 28% of overall oil and gas production today – and expectations are that offshore production will provide approximately 5 million barrels of oil equivalent growth by 2025.

Thus, in order to bridge the gap between energy supply and demand, oil and gas companies will accelerate the offshore exploration activities, which in turn will drive the demand for jackup rigs all over the globe.

Maturing of onshore oil and gas wells to propel the jackup rigs market.

The major difficulty with the mature fields is that either their oil production is uneconomical or the operator faces technological limitations to recover oil reserves. Mature fields are often equipped with old equipment and infrastructure. They produce more water than oil, which raises potential environmental issues. Thus, with the rising oil demand offshore exploration activities will continue its upward trajectory in the years ahead. In addition, new major offshore project approvals in 2018 were more than 2.5 times 2016 cyclical lows, with expectations of further increases in sanctioning activity in the coming years.

This is also expected to increase the demand for jackup rigs, used for offshore oil and gas exploration in the coming years.

Increasing deepwater and ultra-deepwater discoveries is surging the jackup rigs market.

Currently, deepwater areas have become the hotspot of global oil and gas exploration, and they are also one of the most important fields of oil and gas increase in reserves and production all over the world. In 40 years, global deepwater oil and gas discoveries are mainly distributed along five deepwater basin groups. In deepwater basins of the Atlantic Ocean, giant discoveries of oil are mainly concentrated in Brazil, West Africa and the Gulf of Mexico, and significant discoveries of natural gas are mainly on the west coast of Norway in the northern part of the Atlantic Ocean.

In deepwater basins of the East African continental margin, a group of giant gas fields has been found in the Rovuma Basin and Tanzania Basin.

With the exploration degree relatively high in these deepwater basins and the potential for modern jackup rigs for deepwater is also expected to increase.

The Global Jackup Rigs Market Industry is experiencing a surge in demand driven by the increasing global energy requirements. As economies expand, the need for oil and gas escalates, particularly in emerging markets. This trend is underscored by projections indicating that the market will reach 124.1 USD Billion in 2024, reflecting a robust appetite for offshore drilling capabilities. The demand for jackup rigs is likely to be influenced by the necessity to explore untapped reserves, especially in regions where traditional drilling methods are becoming less viable. Consequently, the industry is poised for growth as operators seek to enhance their exploration and production activities.

Technological innovations play a pivotal role in shaping the Global Jackup Rigs Market Industry. Enhanced drilling technologies, including automated systems and advanced materials, are improving operational efficiency and safety. These advancements facilitate deeper and more complex drilling operations, thereby expanding the geographical reach of jackup rigs. As a result, operators are increasingly investing in modern rigs equipped with cutting-edge technology. This trend is expected to contribute to the market's growth, with forecasts suggesting a compound annual growth rate of 5.7% from 2025 to 2035. The integration of technology not only optimizes performance but also reduces operational costs, making it a key driver in the industry.

The Global Jackup Rigs Market Industry is witnessing diversification as companies expand their operations into new geographical regions. This globalization trend is driven by the search for new oil and gas reserves, particularly in regions such as Southeast Asia and West Africa. As companies venture into these markets, the demand for jackup rigs is expected to rise, reflecting the industry's adaptability to changing market dynamics. Moreover, the diversification of operations allows companies to mitigate risks associated with regional fluctuations in oil prices. This strategic approach not only enhances market resilience but also positions the industry for sustained growth in the coming years.

Investment in offshore exploration is a significant driver of the Global Jackup Rigs Market Industry. As oil prices stabilize, companies are reallocating resources towards offshore drilling projects, recognizing the potential of untapped reserves. This trend is evident in the projected market growth, with estimates indicating a rise to 228.4 USD Billion by 2035. The influx of capital into offshore exploration not only boosts demand for jackup rigs but also stimulates technological advancements and operational efficiencies. Furthermore, partnerships between oil companies and governments are likely to enhance exploration activities, creating a favorable environment for the jackup rig market to flourish.

The Global Jackup Rigs Market Industry is influenced by regulatory frameworks that promote sustainable practices in offshore drilling. Governments worldwide are implementing stricter environmental regulations, which necessitate the adoption of cleaner technologies and practices. This regulatory support encourages investment in jackup rigs that comply with environmental standards, thereby fostering market growth. Additionally, the industry's commitment to reducing its carbon footprint aligns with global sustainability goals, making it a focal point for operators. As the market evolves, compliance with these regulations is likely to drive innovation and investment in more environmentally friendly rig designs, further enhancing the industry's prospects.

By Region, the study segments the Jackup Rigs market into North America, Europe, Asia-Pacific, Middle East & Africa, and Latin America. The sizable jackup rigs industry in North America is likely to make the region the largest expanding global market for jackup rigs. Most of the drilling activity in the US in support of the offshore oil and gas industry occurs in the Gulf Coast region and is concentrated in Alabama, Mississippi, Louisiana, and Texas. The jackup construction industry in the US has historically supplied most of the shallow water drilling capacity in the GOM.

However, shallow water drilling in the US GOM is declining and capital instead has been flowing to onshore natural gas plays which are cheaper to drill and the more prospective deepwater GOM which is oil prone. As deepwater production is expected to hold a bright future, but jackups capable of drilling in these water depths are finding increased applications in the US. Moreover, in 2020, offshore oil and natural gas production in the Federal Gulf of Mexico accounted for about 15% of total U.S. crude oil production and about 2% of total U.S. dry natural gas production.

However, a number of states, including California and Florida, have banned leasing of state waters for oil and gas drilling, which in turn will have a negative impact on the growth of the U.S. jackup rigs market.

Major market players are spending a lot of money on R&D to increase their product lines, which will help the Jackup Rigs Market grow even more. Market participants are also taking a range of strategic initiatives to grow their worldwide footprint, including new product launches, contractual agreements, mergers and acquisitions, increased investments, and collaboration with other organizations. Competitors in the Jackup Rigs Market industry must offer cost-effective products to expand and survive in an increasingly competitive and rising market environment.

One of the primary business strategies adopted by manufacturers in the global Jackup Rigs industry to benefit clients and expand the Jackup Rigs market sector is partnerships and acquisitions. The market for Jackup Rigs is recognized as being extremely competitive and fragmented. The market for Jackup Rigs offers considerable potential opportunities for domestic and unorganized companies. Some of the key players operating in the market are Eurasia Drilling (UK), COSL (UK), Nabor Ltd. (India), Valaris (China), Seadrills (Bermuda), BORR Drilling (Bermuda), GSP Offshore (Constanţa), Noble Corporation (Cayman Islands), and Maersk Drilling (Denmark).

To increase their global reach and client base, key firms are concentrating on acquisitions and product innovation.

Maersk Drilling.: Maersk Drilling is a drilling-rig operator based in Lyngby, Denmark. With more than 45 years of experience operating in the most challenging offshore environments, Maersk Drilling provides responsible drilling services to energy companies worldwide. Maersk Drilling owns and operates a fleet of 19 offshore drilling rigs and specialises in harsh environment and deepwater operations. Headquartered in Denmark, Maersk Drilling employs around 2,400 people. Recently, in November 20221, Noble Corporation has entered into a definitive business combination agreement with Maersk Drilling  to combine in a primarily all-stock transaction and the combined company will be named Noble Corporation.

Eurasia Drilling: Eurasia Drilling Company Limited is a leading onshore and offshore drilling and well services contractor. The company isknown as one of the world’s largest land rig owners with hundreds of land rigs in its fleet, owns four offshore jack-up rigs: Astra, Saturn, Neptune, and Mercury. Presently, three of the four rigs are currently on drilling contracts, with one – Astra -being cold stacked in Russia.The primary activities of the Group is operating within the Russian Federation, Iraq and the Caspian Sea region.

In 2017, Schlumberger announced an agreement to acquire a majority (51%) equity interest in Eurasia Drilling Company Limited.

February 2024

Shell, an oil company with headquarters in the United Kingdom, has contracted with Valaris, an offshore drilling contractor, to provide a heavy-duty jack-up rig for a drilling campaign that would include two wells in 2024. Additionally, the corporation took steps to determine when this exploration program in the North Sea would begin.

The rig contract with Valaris for the drilling of Shell's Selene and Pensacola wells was ratified by Deltic Energy, which is the partner of the oil giant.

The Valaris 123 jack-up rig will be used in order to carry out the spudding of both the Selene exploration well and the Pensacola appraisal well. The pair will be drilled in a two-well sequence together, and the contract and mobilization are scheduled to start somewhere between June and July of 2024. Considering that the two wells will be drilled in a sequential manner, Deltic is of the opinion that this will generate the possibility of operating efficiencies that are connected with being a part of an extended program of wells.

As a further point of interest, the business considers the ratification of the rig contract to be "a significant step forward" and "a key milestone" in the preparatory work that is necessary to support the exploratory well on the Selene gas possibility and the appraisal well on Pensacola, which was discovered the previous year. It is anticipated that the geophysical site survey of Pensacola will run for roughly one month. This is due to the fact that the permitting permission for the survey has already been acquired, and the mobilization to the site has already taken place.

With a potential drilling depth of 40,000 feet and the capacity to accommodate 145 people, the ultra-enhanced super 'A' class jack-up rig Valaris 123 Keppel FELS, which was constructed in 2019, comes with extreme enhancements.