Supply & Demand Dynamics
Demand for deployment tools is growing worldwide, as a direct result of steady growth in well intervention activities, due to continuous efforts on maintaining and maximizing production within existing oilfields. In parallel to that, the number of ageing wells is increasing; hence more intervention must be conducted.
Due to continuous investment by NOCs in the Middle East and increased technological challenges, Middle East growth shall witness a steady increase in demand for Well Intervention services. The Middle East is considered to be the market with one of the highest penetration rates for Well Intervention, both onshore and offshore.
Performance characteristics of work-over rigs allow it to be a more economical solution than a full drilling rig. The demand for work-over rigs is directly influenced by well intervention activities and fields' maturity. Older fields would require more heavy intervention. However, with the tremendous progress made in the artificial lift area, the down-hole equipment deployed to lift oil became more reliable. This, in turn, requires less well intervention work, hence reducing the demand for work-over rigs.
In contrast, due to technical complexity in ageing wells and development in horizontal drilling, the demand for onshore work-over rigs is set to increase in the medium and long-term. This well intervention method is in direct completion with Snubbing services (Haudraulic Work-over Units).
Offshore, the preference is with conventional drilling rigs, due to a number of reasons. In general, it is commercially unattractive to build an offshore work-over rig, due to less value created. It is very much applied to Jack-up drilling rigs. This is why lift barges came to the market, as a lower-cost solution, to service this niche.
Outside of Russia and CIS, North America has been historically the largest market for land rigs of any type, followed by the Middle East. Regionally in GCC, around 25% of the units are work-over rigs, with the rest onshore drilling rigs.
Due to relatively low entry barriers and low technology the market is very competitive with a large number of players, of various sizes, fragmented around the world and across the value chain. While some companies will be fully integrated to provide the whole spectrum of well intervention services, others would specialize in small segments of it on a regional basis. Providers of work-over rigs are divided into rig manufacturers and providers of services, including the crew. The latter tend to be provided by regional/local companies with almost no global and diversified service providers.
The GCC market is comprised of mainly national/domestic rig companies and international players, with domestic prevailing, controlling circa 90 % of the fleet, with most of the domestic players concentrated in Oman.