The Offshore Drilling Industry and Rig Construction Market in the Gulf of Mexico

Mark Kaiser, David Dismukes, and Allan Pulsipher.  Funded by the U.S. Department of the Interior, Minerals Management Service.  Project Funding: $268,282.

Drilling contractors and speculators have on order 140 mobile offshore drilling units (MODUs) worldwide valued at over $36 billion to be delivered through 2011. New yards are being built and old yards expanded or reopened around the world to handle the latest construction boom, the sixth cycle the industry has seen since its inception. Most of the rigs are being built in Asia, but the U.S. Gulf Coast has 10 jackups and 3 inland barges in construction estimated at $2 billion.

The purpose of this proposal is to examine the offshore drilling industry and rig construction markets, and to investigate targeted issues relevant to the Gulf of Mexico (GOM). We will develop empirical models over specific segments of the industry, prepare aggregate statistics for rig construction by class and geographic region, quantify labor and materials requirements for rig construction in the GOM, and investigate trends that are currently playing out and that are expected to impact the industry in the future. The economics of rig supply and demand in the GOM, and the factors that influence the competitiveness of the domestic rig construction industry, is of particular interest.