The Offshore Oil Business Is Gushing Again

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The hunt for offshore oil gets some new fuel.

as well ones undergoing repair, and stranded in shipyards.

The CEOs of Transocean and Valaris recently made similar statements. Last July, Valaris announced a $327 million deal with Norwegian oil companyA to deploy its drillship Valaris DS-17 for 540 days in a deep-water field off the coast of Brazil. Of the total, $86 million was paid upfront partly to cover the ship’s reactivation.

“They recognize that rigs are in short supply,” says James West, an analyst at advisory firm Evercore. “They are locking up as much spare capacity as they can today to increase their own productive capacity. As a result of that they’re squeezing the market, so pricing’s going straight up.” Now the region provides just 3% of the world’s oil supply, according to Rystad. The area’s diminished drilling needs are weakening demand for semi-submersible rigs that rely on partially submerged pontoons for their stability and thus are well suited for the North Sea’s rough waters. These rigs have been leaving for places such as North Africa or staying behind for so-called “plug and abandonment” work to seal off old wells, according to Ms. Wilkie.

 

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Meh, their demise is still inevitable.

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