U.S. Offshore Drilling Market Size, Share & COVID-19 Impact Analysis, By Rig Type (Drill Ships, Semisubmersibles, and Jackups), By Water Depth (Shallow, Deep-water, and Ultra-Deepwater), and Country Forecast, 2023-2030

The U.S. offshore drilling market size was worth USD 2.08 billion in 2022 and is projected to grow at a CAGR of 6.25% during the forecast period. 

Offshore drilling involves extracting petroleum and gas reserves from beneath the Earth's oceans rather than on land. Recently, offshore oil platforms have been developed for this purpose, increasing the acceptance of this process due to the significant global demand for oil and petroleum products. It stands as a critical activity in the global energy industry, facilitating the exploitation of valuable hydrocarbon reserves situated offshore. This process demands intricate engineering and technology to access and extract these resources from below the ocean floor. The U.S. primarily derives its energy, particularly oil and natural gas, from wells drilled on the ocean floor, contributing to the growth of the market.

Due to the COVID-19 pandemic, industry participants faced challenges due to lockdowns. According to those active in the market, several years of unstable and mostly weak commodity prices, exacerbated by the impact of the pandemic and production discrepancies between major oil-producing countries, led to the suspension of offshore investment decisions and the delay of exploration and development programs.

LATEST TRENDS

Expanding Oil & Gas Industries to Stimulate the Demand for Offshore Drilling

Oil and gas exploration is among the most capital-intensive industries, requiring expensive equipment and drilling services. The drilling process begins once a company identifies the location of oil or gas reserves. Many oil and gas companies contract specialist drilling contractors and pay for the labor and daily rates of drilling rigs. Offshore drilling involves using a single platform, which can be fixed (supported by the bottom) or mobile (floating, secured with anchors). The U.S. ranks as the world's third-largest oil producer, boasting over 500,000 production wells and approximately 4,000 oil and natural gas platforms in its waters.

In recent years, the U.S. has regained its position as the world's largest producer of oil and gas. Industries operating in this sector develop oil and gas field properties and hold significant market share. These activities encompass exploration for crude oil and natural gas, drilling, completion, and equipping of wells, as well as operating separators, emulsion breakers, and desludging plants. The increasing oil production is fueling the demand for this drilling.

DRIVING FACTORS

Technological Advancements and Innovative Exploration Techniques to Accelerate Market Growth

Automating drilling rigs, such as oil rigs, has a significant impact on hydrocarbon exploration and development. Numerous oil companies are now outfitting their drilling rigs with autonomous drilling control systems to enhance performance times, meeting the increased demand for oil and gas. Offshore operations have evolved into a crucial value-added concept for most operators.

Innovations in drilling rigs, subsea technologies, and reservoir management enable better identification and recovery of hydrocarbon reservoirs. These technological advances, coupled with increasing offshore projects, are stimulating the U.S. offshore drilling market growth. For instance, in March 2023, the U.S. signed a contract for a contentious oil and gas drilling project in the northwestern state of Alaska.

RESTRAINING FACTORS

Increased Reliance on Fossil Fuel on the Environment May Restrain Market Growth

Offshore drilling activities have serious environmental impacts, including oil spills and marine pollution. Ensuring staff safety and minimizing environmental risks are top priorities in these operations. Drilling rigs adhere to strict safety and environmental regulations and incorporate specific features to mitigate these risks. In the supply chain, starting with this type of drilling, the oil produced is a major source of several air pollutants such as carbon dioxide, hydrogen sulfide, particulate matter, and sulfur dioxide. Some chemicals released during the refining process are known to be carcinogenic. This drilling releases toxic pollutants into the air and water. Exploration and drilling on the platform, transport by tanker, and oil refining on land may release explosive organic compounds, greenhouse gases, and other air pollutants.

SEGMENTATION

By Rig Type Analysis

Based on rig type, the market is segmented into drill ships, semisubmersibles, and jackups. Drill ships are essentially vessels designed to offer optimal profitability on the water, making it easy for conglomerates to engage their services for better quality results.

• Drill ships dominate the market and are vital rig types in offshore drilling where semisubmersible rigs are inefficient. These vessels are typically suitable for transporting large loads of drilling equipment and supplies. Drill ships are capable of drilling in deep and extremely deep ocean waters. Drill ships, being self-propelled and capable of transporting larger loads of drilling equipment and supplies, dominate the market share. This reliability is particularly advantageous in remote sea areas.

By Water Depth Analysis

Based on water depth, the market is segmented into shallow water, deep-water, and ultra-deepwater. The deep-water segment held the highest U.S. offshore drilling market share in 2022. This was observed as deep-water reservoirs can yield wells with larger reservoirs and higher flow rates than other water depths.

• The segment dominates the market as improved drilling techniques such as extended-reach drilling and controlled pressure drilling enable wells to be drilled in extreme water depths with greater precision and safety. In addition, deep water wells have a higher probability of reaching the production rate of hydrocarbons. Therefore, various oil & gas companies are investing in producing unexploited hydrocarbons compared to shallow water wells.

KEY INDUSTRY PLAYERS

Companies Focus on Advanced Technologies and Modified Version of Drilling Equipment to Maintain Competitiveness 

In terms of the competitive landscape, the market shows the presence of established and emerging oil & gas companies with recent technological advancements in drilling equipment. These companies play a significant role in exploration, development, and production activities, leveraging advanced drilling technologies and extensive experience in drilling services. Other companies with a considerable presence in the U.S. market include Diamond Offshore Drilling, Inc., KCA Deutag, Maersk Drilling, Pacific Drilling, Transocean, Saipem S.p.A, and others. New technologies have enabled these companies to increase offshore oil and gas extraction, involving drilling at great depths underwater, enhancing their brand and reputation for quality and reliability, which has helped them secure many customers in the U.S.

LIST OF KEY COMPANIES PROFILED:

• Saipem S.p.A (Italy)


• Maersk Drilling (Denmark)


• KCA Deutag (U.K.)


• Transocean (Switzerland)


• Valaris plc (U.K.)


• Odfjell Drilling (U.K.)


• Pacific Drilling (U.S.)


• Diamond Offshore Drilling. Inc (U.S.)


• Noble Drilling (U.K.)


• Archer Well Company (Bermuda)

KEY INDUSTRY DEVELOPMENTS: 

• July 2023: Transocean received an order for upgraded ultra-deep-water drill ships in the Gulf of Mexico offshore. The agreement would contribute approximately USD 518 million to a backlog, excluding mobilization and demobilization revenue, and is expected to take effect between Q4 2025 and Q2 2026.


• December 2022: Saipem implemented its purchase option for the seventh-generation Santorini drill ship, already operating within the Saipem fleet under a long-term project and agreement signed with Samsung Heavy Industries.


• August 2022: Diamond Offshore Drilling announced that it agreed with BOE Exploration & Production LLC for a Diamond-managed drillship for work in the U.S. Gulf of Mexico. The agreement included options for up to five to seven additional wells. Work under the new contract will begin in the first quarter of 2023.

REPORT COVERAGE

The report provides a comprehensive market analysis, focusing on key aspects such as leading companies, rig types, and primary product applications. It offers insights into market trends, highlights key industry developments, and includes various factors contributing to recent market growth. It covers technological advancements, exploration and production (E&P) activities, and the reimbursement scenario within the U.S. oil & gas industry. The report also delves into significant industry developments like mergers, partnerships, and acquisitions, as well as the impact of COVID-19 on the market. Additionally, it presents insights into market trends and emphasizes key industry dynamics.

Report Scope & Segmentation