Sept. 05–Offshore oil production is showing early signs of a turnaround as crude prices hover near $70 a barrel, high enough to turn profits on deepwater projects considered too costly to complete during the oil bust.
A recent analysis by research firm IHS Markit projects that global demand for mobile offshore drilling rigs will increase by 13 percent through 2020 as operators resume exploration and production. The firm expects demand will average 521 rigs in 2020, up from 453 this year.
The projected upswing follows years of relative stagnation offshore as many oil and gas companies concentrated their operations in U.S. shale basins, where production requires less time and money.
But the cost of operating offshore has fallen in recent years, said Justin Smith, an offshore rig analyst at IHS Markit and author of the forecast. That, coupled with rising oil prices, has reignited interest in offshore production in the Middle East, the Gulf of Mexico and elsewhere.
“While fewer rig contracts have been signed during the last several years, we know that operators are making more plans for the future,” Smith said.
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