workover rig cost per day factory

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The commodity price downturn is prompting price reductions among well service contractors in the greater Rockies outside the Williston Basin. In mid-January 2015, service providers report rates down about 10% quarter-to-quarter, similar to reports elsewhere in the oil patch as operators push the service sector for cost reduction. Meanwhile, larger service providers worry about further rate cutting from local, privately-held contractors. Rate reductions have not yet translated to reduction in wages for hands, although expectations are that pricing is going to drop further on the basis of lower commodity prices.

Among Survey Participants:Rig Demand Down QTQ [See Question 1 on Statistical Review]. Seven of the eight respondents said that demand had dropped in 1Q15 vs 4Q14 and all but one blamed lower oil prices for the slowing. One respondent that had seen a slowdown in demand said it was because they had finished all of their completion work. The respondent who had not seen an effect on demand said that their work was steady, but they were hearing of others slowing down.Mid-Tier Well Service Manager: “We are seeing demand slow for rigs and prices are being reduced. Operators are asking for 20% reductions, some are asking for 30% and they may get it. The greater reductions will be from people who are local because they don"t have the overhead expense. The service won’t be as good. On average, operators may get 15% of that 30% they are seeking in reductions.”

Number of Rigs Sufficient [See Question 2 on Statistical Review]. Six of the eight respondents said that the workover rig inventory is excessive for the current demand, while two said that it is sufficient but tipping toward excessive.Mid-Tier Operator: “Operators here are basically focusing on the higher production wells and going to ignore the lower ones. We have heard companies are laying down workover rigs. One company is going from 17 to 13.”

Well Service Work Weighted Toward Standard Workovers and Routine Maintenance [See Question 3 on Statistical Review]. Among all respondents, standard workover work accounts for 34% on average, routine maintenance accounts for 34%, plug and abandonment (P&A) accounts for 16% and completion work accounts for 16%.Mid-Tier Well Service Manager: “Our work slowed because we finished our completion work so the client gave us some production work to keep us steady till we finish this fracking job.”

Hourly Rates Consistent Among HP Series [See Question 5 on Statistical Review]. Most workover rig horsepower falls within the range of the 500 series. The 500 HP hourly rates average $310 to $400/hour depending on what ancillary equipment is contracted. See Table II for Average Hourly Rates.

Hart Energy researchers completed interviews with nine industry participants in the workover/well service segment in areas of the Rocky Mountains outside of the Bakken Shale play. Participants included one oil and gas operator and seven managers with well service companies. Interviews were conducted during January 2015.

3. Looking at your slate of well service work - on a percentage basis - how much of it is workover vs. routine maintenance vs. plug & abandonment (P&A) vs. completion work?

About products and suppliers:Alibaba.com offers 222 workover rig manufacturing products. About 50% % of these are oilfield drilling rig, 28%% are mine drilling rig.

A wide variety of workover rig manufacturing options are available to you, You can also choose from diesel, electric and gasoline workover rig manufacturing,As well as from energy & mining, construction works , and manufacturing plant. and whether workover rig manufacturing is unavailable, 2 years, or 6 months.

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Day rate refers to all in daily costs of renting a drilling rig. The operator of a drilling project pays a day rate to the drilling contractor who provides the rig, the drilling personnel and other incidentals. The oil companies and the drilling contractors usually agree on a flat fee per contract, so the day rate is determined by dividing the total value of the contract by the number of days in the contract.

Day rate (oil drilling) is a metric that investors in the oil and gas industry watch to evaluate the overall health of the industry. The day rate makes up roughly half the cost of an oil well. Of course, the price of oil is the most important metric by far in the oil and gas industry.

That said, investors can gain insights into the oil supply and demand picture by watching metrics like day rate and rig utilization in addition to global inventories. Day rate fluctuations, which can be wide, are used by investors as an indicator of the health of the drilling market. For example, if day rates fall, investors may take it as a sign to exit oil and gas positions.

Day rates can be used to assess the current demand for oil, ultimately gleaming insight into where oil prices are headed. An increase in the price of oil increases the number of projects that can recover their extraction costs, making difficult formations and unconventional oil reserves feasible to extract. The more projects greenlit on an economic basis, the more competition there is for the finite number of oil rigs available for rent – so the day rate rises. When oil prices waver and fall, the day rate that rigs can command drops.

As an example of actual day rates – Transocean signed a contract in December 2018 with Chevron to provide drilling services. The contract is for one rig, will span five years and is worth $830 million. The effective day rate for the rig is $455,000:

Like the day rate, the rig utilization rate is a key metric for determining the overall health of the oil and gas sector. The day rate lays out a large part of the costs of drilling a well, while the utilization rate is how many wells are being used.

Investors use both of these metrics and a fall in each could signal a slowdown in oil demand. High utilization rates mean a company is using a large part of its fleet, suggesting oil demand, and ultimately, oil prices are on the rise. There is a positive correlation between oil prices and both day rates and rig utilization.

The strength of the correlation between oil prices and day rates is not consistent. The correlation is strong when oil prices and rig utilization are both high. In this situation, day rates increase almost in lockstep with prices. In an environment of rising oil prices and high utilization, the day rates in a long-term contract will shoot up even faster than short term contracts as rig operators demand a premium for being locked in on a project.

In a low price environment with falling utilization, however, the day rate may plunge much faster than the oil prices as rigs enter low bids on long contracts just to keep busy in a potential slowdown. Due to the volatility and the varying strength of the correlation, investors and traders can flip between seeing day rates as a leading or a lagging indicator for oil prices and the health of the oil and gas industry as a whole.

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Every workover rig available is going right now in the Bakken, North Dakota’s top oil and gas regulator Lynn Helms said on Friday, during his monthly oil production report, as companies try to get wells online as quickly as possible after back-to-back blizzards idled a substantial number of four and five-well pads in Williams, Divide, and McKenzie counties.

March was a good month for production, Helms said, with a 2.8 percent increase in crude oil production from 1.089 million barrels per day to 1.12 million barrels per day. That figure is 2 percent above revenue forecast. Gas production, meanwhile, rose 4.5 percent to 3.01 billion cubic feet per day from 2.87 billion cubic feet per day in February.

Gas capture percentages were 95 percent, and this time Fort Berthold was a bright spot, with 97 percent capture. Helms said he expects continued improvement in the Fort Berthold area, with new solutions for gas capture in the works for the Twin Buttes area, which has been a problem spot.

“We saw production in the first blizzard dropped from about 1.1 million barrels a day to 750,000 a day,” Helms said. “We recovered not quite back to a million barrels a day. And then the second blizzard came in. It was heavily impactful on electrical power and infrastructure in the Bakken oil fields.”

“It took a week, or I guess within a little bit less than a week, we recovered to 700,000 and it’s taken another week, we think we’re back at about a million barrels a day.”

“Just this past week, our largest gas plant came on and that’s really enabled a lot of production to come back on,” Helms said. “So we’re back to a million barrels a day, maybe a little more. You know all of the large operators reported enormous production losses. And of course that has led to the deployment of every workover rig available being out there trying to get wells back on production.”

In his discussions with drilling contractors, Helms has learned that most drilling rigs went south to Texas and New Mexico, both of which escape winter sooner than the Bakken. Those areas hired the available workforce, too, which has added to the Bakken’s difficulty in attracting workforce.

“It’s taking around two months to train and deploy a drilling rig and crew, and very similar timeframes for frack crews,” Helms said. “So it’s just very, very slowly coming back.”

“I was reading an article today, and some of the large operators were saying, ‘Well you know we could bid up the price to hire frack crews, but all we would be doing is hiring them away from smaller companies that can’t afford to pay as much.’ So there wouldn’t be a gain in the number operating, in the number of wells completed, or really a more rapid rise in production. So it’s very much workforce limited.”

North Dakota rig counts are at 40 right now and Montana rigs are at 2, according to figures from North Dakota Pipeline Authority Justin Kringstad. Helms said the Bakken hasn’t seen those numbers since March of 2020. There are about 15 frack crews running now, a number last seen in April 2020.

“Today’s price is almost $102 a barrel for North Dakota light sweet and $106 West Texas,” Helms said. “So we’re estimating about $104 a barrel for North Dakota crude prices. That’s more than double revenue forecast. Revenue forecast was based on $50 oil, so that’s 108 percent above that.”

North Dakota is a few days away from a May 18 deadline for protests in the projected June sale, which has 15 parcels listed. If there’s a protest against one or more of the tracts, they could be pulled from the sale for further consideration.

OSLO, May 27 (Reuters) - Rental rates for offshore oil and gas rigs have rocketed higher, boosted by a race to lift production because of the war in Ukraine and a recovery in demand after the COVID-19 pandemic.

Drilling companies are in a stronger position to demand higher dayrates for their equipment after several lean years that led to a wave of mergers and pushed them to scrap older rigs, leaving fewer available now that demand is rebounding.

Daily costs to hire a rig, known as the dayrate, have risen fastest for deepwater equipment in the "Golden Triangle" from the U.S. Gulf of Mexico to offshore West Africa and Brazil.

"Rates are picking up quite rapidly, especially in West Africa," said Cinnamon Edralin, head of rig market analysis at Oslo-based Esgian. "Last year, we were at $200,000, this year we are firmly in the $300,000s and quickly heading to $400,000."

Conflict in Ukraine has helped push up demand for rigs as the United States, Europe and other allies look for alternatives to Russian oil and gas supplies. The European Union aims to end the use of Russian hydrocarbons by 2027. read more

For Britain and Norway, the main North Sea producers, the contracted rig count stood at 40 in April, up from 37 at the end of 2020 but below 51 before the pandemic, Esgian data showed.

Valaris (VAL.N), the world"s largest offshore driller by fleet size, said in April it had won a contract with an international oil major with dayrates "not seen in the past seven years for drill ship work offshore West Africa".

Transocean , which operates ultra-deepwater and harsh environment rigs, said in its annual report for 2021 that contractual dayrates for its fleet averaged $401,000 for 2023 and $467,000 for 2024, compared with $345,000 this year.

"Offshore drilling activity is increasing in almost every deepwater geography, with the "Golden Triangle" being the key driver of demand and dayrate growth," Seadrill said.

It said demand for jack-up rigs used in shallow waters had climbed, particularly in the Middle East, while demand for rigs on the Norwegian continental shelf was expected to rise until the end of 2023 with the increased focus on energy security.

This follows lean years of investment in exploration and production (E&P) after the 2014-2016 oil price dive followed by the 2020 COVID-19 related crash that pushed drillers to restructure, merge and scrap old rigs.

Seadrill"s prospectus said the worldwide total of floating rigs stood at 193 in March, down from 257 in March 2018, and the number of jack-up rigs was 487, down from 532. It said more than 300 rigs had been scrapped since the start of 2015.

OSLO, Sept 14 (Reuters) - Rental rates for offshore oil and gas rigs could rise to $500,000 in the coming months, company executives said on Wednesday.

Daily costs to hire a rig, known as the dayrate, have already more than doubled from two years ago to some $300,000, with some top-end rates reaching close to $400,000, according to Oslo-based brokerage Pareto Securities.

Drilling companies are in a stronger position to demand higher rates to rent their equipment after several lean years led to a wave of mergers and pushed them to scrap older rigs, leaving fewer available now that demand is rebounding. read more

It is no secret that oil rig workers stand to make an impressive paycheck, even in entry-level positions. However, are these salaries worth the dangers that they face on a daily basis?

Salaries for an entry-level oil rig position, such as a maintenance roustabout, average around $47,000 per year, with management positions making well over $100,000 per year. This high-level pay combined with a schedule that includes 3/5 of the year off per average employee sounds like a sweet deal for offshore workers.

Part of the reason that offshore oil rig worker pay is high is to offset the difficult working conditions and risks associated with the job. Workers often face 14/21 shifts, meaning that they work for 14 days straight, followed by 21 days off. Each day on the rig comes with hard manual labor for many workers, sometimes including night shifts on the 24-hour operation. Two straight weeks at sea can be a harrowing experience for many, although some rigs are equipped with impressive living quarters for the crew.

Also, oil rig crews face some of the highest rates of injuries and fatalities in the country. In 2008 alone, 120 workers in the oil and gas industry were killed on the job. The amount of workers killed in this field from 2003 to 2010 is seven times higher than that of all other industries in the U.S., according to the Occupational Safety & Health Administration (OSHA). According to a recent report from the Center for Public Integrity, 1,566 workers died in the oil and gas industry between 2008 and 2017—more deaths than many industries combined during the same period. This means that it’s crucial that workers are aware of the dangers present on an oil rig.

While this hazard seems obvious, it’s important to mention since it’s one of the leading causes of death on an oil rig. Petroleum is highly combustible and when it is mixed with other hazardous chemicals like hydrogen sulfide, it becomes even more dangerous. The U.S. Centers for Disease Control estimates that 7 percent of all oil rig fatalities are caused by blazes. Oil rig fires are devastating because they usually start with an explosion and end with a chemically fed fire that is difficult to put out. In many cases, crews must wait for oil rig fires to burn themselves out.

Ask any roughneck about their job, and they’ll immediately tell you how difficult it is. Oil mining is rigorous and requires physical labor and long hours. An average oil rig worker can work shifts exceeding 8 hours for 7 to 14 days in a row. As they deal with the heavy machinery and equipment used on a rig, crews can experience the dangers of fatigue.

Many are surprised to know that fatigue isn’t just dangerous on the oil rig for workers, it kills many of them when they aren’t on one. One study found that oil industry workers are 8.5 times more likely to die in a motor vehicle accident than those in other industries. Since it isn’t uncommon for oil rig workers to work shifts of 12 hours or more, their drive home can be deadly. Small roads connecting oil sites to residential areas can be dangerous because of fatigued workers driving home.

Oil mining requires the use of heavy machinery, including drills, cranes, forklifts, pipes, and more. Having proper machinery and using it right means employees can do their job safely and that materials will be handled correctly. If equipment is not properly maintained, it can malfunction. Even a small amount of maintenance neglect by a company can cause a catastrophic failure of machinery that claims lives. As mentioned above, employees need to be completely cognizant when operating such machines. Given the long hours and tiring nature of the job, too many workers fall victim to negligent machine operation.

The Centers for Disease Control estimates about 7 percent of oil field workers die from falls. With hazardous materials on the floor and falling tools, workers can easily encounter danger from an unexpected object. It is the responsibility of the employers to maintain safe environments and uphold strict protocol.

Being at sea also means that the rig is cut off from certain types of medical care. While each rig staffs a doctor or medic, there is always a chance that a situation will occur in which the rig is not equipped with the needed equipment. In that case, the delay in treatment can exacerbate an offshore injury or even lead to wrongful death. If you have been injured while working on an oil rig, you should consult with an experienced lawyer to learn about your legal rights. Our oil rig injury attorneys represent rig workers throughout the nation.

The oil rig accident lawyers from Arnold & Itkin understand the dangers that oil workers face. Too frequently, our team has seen employees injured because of inadequate equipment, training, or other safety issues on their oil rig. We know that employers should be held accountable for neglecting to provide a safe work environment for workers. We"re always ready to help injured workers receive the help they deserve.

The oil market ebbs and flows and is probably far more complicated than the average consumer can understand (without putting in the time and effort, that is). There are many steps to take petroleum out of the earth and put gasoline in your car, and a lot of decisions have to be made along the way. Sometimes these decisions include the oil rigs themselves, particularly in instances of an oversaturated market.

Oil rigs and drillships are expensive, high-tech pieces of equipment that are expensive to operate, whether they’re actively drilling or not. So when one or several rigs are not currently engaged in the oil production, the owners of said rigs have options: they can either cold-stack or warm-stack them.

A crew must be present on warm-stacked rigs to ensure the rig’s preservation and preventative maintenance schedules are followed for drilling and general ship equipment. Typically, these rigs are warm-stacked when the owners anticipate a work contract soon, so they are always ready to be mobilized within a few days. They are actively marketed and are considered part of the marketable supply.

Because routine rig maintenance continues, the daily costs may be reduced, but are actually similar to those in drilling mode. Warm-stacked can still cost, for example, an estimated $40,000 a day, without the profitable drilling of oil.

Cold-stacking a rig is also sometimes called “mothballing” because the rig is shuttered and put away; This is more of a cost-reducing step when an adequate return on investment doesn’t seem likely, or isn’t great enough to make the unit work-ready.

Mothballed rigs are shut down and stored in a shipyard, harbor, or designated offshore area. Crews are either reduced to zero, or else a skeleton crew might remain, greatly reducing the cost of maintenance.

Before storing the rig, crews take necessary steps to protect the rig’s facilities, including the application of protective coatings to fight corrosion, filling engines with protective fluids, and installing dehumidifiers. Unlike warm-stacked rigs, these may be out of service for extended periods of time and are not actively marketed. Including maintenance and a small crew, a cold-stacked rig might cost around $15,000 a day.

Going by numbers alone, cold-stacking seems like a better way to save money, right? Especially given that"s what companies want to do--not lose money on unproductive pieces of equipment that cost millions of dollars themselves (if not more).

But cold-stacking isn"t the magical answer, even if saving $30,000 a day seems like a win-win. The truth is, it"s a lot of work to make mothballed rigs ready for production--and a lot of money. To return a rig to service can easily means tens of millions of dollars for refitting costs.

As Bloomberg recently pointed out, mothballing drillships during an oil slump is a "massive gamble." But it doesn"t stop companies from taking that risk, especially if they"re losing millions of dollars on these behemoths. According to their reports, "Nearly half of the world’s available floating rigs are out of work today, and most observers expect that number will climb further." And not everyone is using the same method--not all companies are willing to turn engines off, for fear of not being able to turn them back on. It"s like Vegas that way--everything"s a gamble (but what happens in the ocean doesn"t necessarily stay in the ocean...or the ground, for that matter).

The land drilling market worldwide is structured primarily as a rental market, not a sales market, where land drilling companies lease their rigs to E&P companies for an agreed period of time – weeks, months, or years – at a day-rate. The rigs are then used to drill wells and execute the E&P’s drilling programs.

Drilling opportunities are analysed and explored in order, leaving a series of dry holes, until a discovery is made. It is rare for an E&P company to actually own the rigs which they operate, but there are some exceptions such as Chesapeake, who will purchase their own fleet of rigs.

Under these rental contracts, a turnkey cost is paid by an E&P business to a middleman. This includes an insurance premium, which is returned if nothing goes wrong, but may be lost if there are difficulties. Higher specification equipment commands a larger premium.

Investors require a minimum level of return for their investment dollars in drilling operations, and typically equate cost with risk. These turnkey drilling contracts may limit risk by guaranteeing a minimum number of wells that can be drilled with the rig. The contract will also outline how the rig can be used – including the pieces of equipment, when to change pieces, temperature and pressure tolerances and the weight of mud.

Nabors operates the world’s largest land drilling rig fleet, with around 500 rigs operating in over 25 countries – in almost every significant O&G basin on the planet. It also has the largest number of high-specification rigs (including new AC rigs and refurbished SCR rigs) and custom rigs, built to withstand challenging conditions such as extreme cold, desert and many complex shale plays.

Headquartered in Tulsa, Oklahoma, H&P is a global business with land operations across the US, as well as offshore operations in the Gulf of Mexico. It is engaged primarily in the drilling of O&G wells for E&P companies, and recognised for its innovative FlexRig technology.

Patterson-UTI operates land based drilling rigs, primarily in O&G producing regions of the continental US, and western Canada. The company also provides pressure pumping services to US E&P companies and specialist technology, notably pipe handling components, to drilling contractors globally.

Precision is an oilfield services company and Canada’s largest drilling rig contractor, with over 240 rigs in operation worldwide. The Company has two segments. The Contract Drilling Services segment operates its rigs in Canada, the United States and internationally. The Completion and Production Services segment provides completion and workover services and ancillary services to O&G E&P companies in Canada and the US.

Pioneer operates a modern fleet of more than 24 top performing drilling rigs throughout onshore O&G producing regions of the US and Colombia. The company also offers production services include well servicing, wireline, and coiled tubing services – supported by 100 well-servicing rigs, and more than 100 cased-hole, open-hole and offshore wireline units.

In Texas, generally considered to be the centre of US land drilling, RigData reports that there are currently 678 active rigs – split between Helmerich & Payne (160), Patterson-UTI (85), Nabors (64), Precision Drilling (39) and 77 other drillers (330).

Most new onshore rigs, both drilling and work over rigs, are built by OEMs in China. In the US, the larger vertically integrated land drillers have in-house manufacturing operations, so they will outsource some equipment construction, but assemble the new rigs at their own facilities. The leading provider of US newbuild rigs is National Oilwell Varco.

The secondary market, where existing rigs are sold, is largely auction dominated with mostly older rigs changing hands. As a rule, the big land drillers do not sell their newbuild rigs, as each has their own flagship designs.

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At a time when spiking oil prices should be driving a boom in U.S. production, and helping to relieve those painful numbers at the pump and on monthly utility bills, two of the company’s five service rigs have been idle. Vice President Greg Burbach, whose coveralls are spattered with mud, sits down in his office to explain why.

In January, as the price of oil climbed steadily higher, he started getting daily calls from customers interested in hiring the rigs, which are used for maintaining and repairing oil wells. So over the next two months, he spent $12,000 on ads in 10 markets across the country trying to hire workers. He only got one.

“I can’t just hire people off the street,” says Mr. Burbach, walking around one of the rigs, which stands 104 feet tall, with a ladder for crews to climb and long guy wires to anchor it to the ground. With the winds that whip across the prairie here, it requires experienced hands to operate the machines safely.

Greg Burbach (left), a vice president with the oil-services firm J&J Rental, stands with his colleague John Thiers near one of their rigs used to repair and maintain oil wells. The North Dakota company is having a hard time finding experienced workers, despite offering hefty bonuses and housing allowances.

They can’t get workers. They can’t get capital from Wall Street. They can’t secure new leases on federal lands. And the cost of doing business has gone up dramatically – everything from labor to steel to the diesel needed to drill for oil.

“We’re trying to chart a course that takes us down the middle of that road – not drill at all costs and produce at all costs, or shut things down because we have a climate crisis,” says Lynn Helms, director of the state’s Department of Mineral Resources. “We think we can do both.”

“I’ve got a rap sheet as long as your arm,” admitted Mr. Goodman, explaining he was imprisoned on drug-related charges, but nothing violent. “I’m here to make a life, to try to do the right thing.”

From 2019 to 2021, North Dakota’s oil production dropped 25% – far worse than the 9% decline nationally. One of the main reasons it’s not possible to simply turn on the oil spigot now that prices have surged again is that many of the itinerant workers have vanished. Some have headed to the Permian, the large oil field that stretches across Texas and New Mexico. The oil is cheaper to extract, and there are no cryogenic windchills that leave icicles on your eyelashes and “make you wish you’d never been born,” as one worker here puts it.

“I had guys asking me to lay them off so they could collect unemployment insurance,” says Shane Johnson, who owns J&J Rental, which includes the oil-services operation in Watford City where Mr. Burbach has been trying to woo workers.

But Mr. Goodman is still driven to work. After recently returning from Kentucky to Watford City, he swings by J&J Rental to fill out paperwork, pick up a harness to keep him safe on the derrick, and grab a hat with the company’s black-and-red logo. Then he heads to Outlaws’ Bar and Grill on North Main Street, to fill up on bison meatloaf and mashed potatoes.

The next morning, with a full moon still hanging in the sky, workers in Carhartts and muddy work boots trudge into The Corner Post gas station to fuel up for another day in the oil patch. They clutch sodas, sticks of beef jerky, and wedges of frosted cake, as well as foam containers loaded with eggs, biscuits, and bacon from the breakfast buffet. The four cashiers punching registers have been working since 5 a.m.

Outside, supersize pickups and flatbed trucks brimming with equipment fill up with gas before rumbling out of the parking lot. There are pipelines to fix, wells to drill, and, yes, there’s oil to pump.

But despite the high prices, Mr. Helms at the Department of Mineral Resources projects that North Dakota will only see an increase in production of at most 9% this year, to 1.2 million barrels per day – still 300,000 barrels short of the 2019 peak. Currently 40 rigs are operating across the state, down from 55 pre-pandemic.

Iron Oil CEO J.R. Reger says he’s sticking to his plan to use only one drilling rig in the Williston Basin for now because his costs have risen as much as 15% over the past year. He worries oil prices will plummet before he can recoup his costs.

Industry officials say investors are hesitant, too, for several reasons. They poured money into oil for years and didn’t get great returns. Secondly, as socially responsible investing picks up, windmills are in vogue, not oil rigs. Then came the Biden administration’s pivot – and with it, increased regulation.

The federal government has canceled the $9 billion Keystone XL pipeline; suspended lease sales; bogged down the permitting process, according to industry executives; and nominated people who see banking policy as a key tool in accelerating the transition away from fossil fuels.

GOP Rep. Kelly Armstrong, North Dakota’s sole House member, has a few suggestions: Approve permit applications that have languished since last year, signal support for building natural gas pipelines, and reform the environmental review process.

Delvin Rabbithead Sr.worked as a roughneck in the oil patch for a year during the last boom. Then one winter, as the temperatures started dipping to minus 30, he decided to switch to the comfort of a heated truck cab. As a driver, he hauled away the salty water that is a byproduct of oil production.

Yet he quickly witnessed something on the new job that disturbed him: drivers who wouldn’t bother to go to the designated disposal sites but would dump their effluents elsewhere under the cover of darkness. These and other experiences served as a wake-up call about the industry he’d grown up around. “I started realizing what it was doing to our land,” he says.

The Fort Berthold Reservation where he grew up is particularly notorious for gas flaring. So he joined a group called Fort Berthold Protectors of Water and Earth Rights, and says they were close to reaching a deal with tribal leadership to lower emissions before the pandemic hit.

Across the Missouri River that Lewis and Clark once plied, farmer Donny Nelson is fighting another battle. He personally has lost about 100 acres to saltwater spills, despite the state’s remediation efforts.

As co-founder of the Salted Lands Council, he’s fundraising to map saltwater spills statewide and determine the cost of properly restoring the land. His guess: $1 billion or more.

The idea is to capture emissions at 31 ethanol plants in the Upper Midwest and send it by pipeline to Beulah, North Dakota, where it would be injected deep underground and stored permanently. The state would get to claim huge carbon offsets, and the ethanol producers would be able to sell their low-carbon ethanol at a premium in states like California, the largest ethanol market in the nation.

It’s one of numerous initiatives launched since Governor Burgum announced his carbon-neutral goal last year, and by far the biggest. Other projects include advancing a $1 billion plan to capture and store coal emissions, building one of the nation’s largest low-cost hydrogen hubs, and turning soybeans into diesel fuel.

The $4.5 billion carbon storage project is not yet approved, and there are plenty of skeptics. In order to get the necessary permits, Summit Carbon Solutions is drilling three wells and bringing up core samples from thousands of feet underground, then shipping them to Denver for analysis. Its goal: prove that the sandstone layers can hold carbon, and that the cap rock just above them is impermeable enough to keep it from escaping.

Mr. Dokken, the project manager, pulls up to the entrance gate at the site on a recent sun-dappled morning. A drilling rig is boring 4,000 feet underground. Inside one of the heated trailers on-site, a geologist monitors the rock layers they are expecting to find, and at what depth. The crew is pleased with the progress so far.

Summit is offering to pay landowners to lay a pipeline across their property and for carbon storage rights. But not all are thrilled with the project.

One disgruntled local landowner has been leaving leaflets in people’s mailboxes warning about the dangers of transporting carbon gas. In Richland County, to the east, residents recently approved a resolution to deny Summit the right to invoke eminent domain for the pipeline.

running across his property concerns him. He says his insurance wouldn’t cover an accidental leak or its effects, including on livestock grazing nearby.

– Larry Dokken, an oil industry veteran who, along with engineer Jean Datahan (right), is overseeing work on a huge carbon sequestration project in North Dakota

In general, to cold stack a rig is similar to "shuttering" an industrial plant; workers are let go, the hatches are battened down and the rig is completely shut down. Cold stacking a rig involves reducing the crew to either zero or just a few key individuals and "storing" the rig in a harbor, shipyard or designated area offshore. Although the duration of cold stacking can vary depending on many factors, rigs that are cold stacked are typically out of service for a significant period of time and are generally not considered to be part of marketable supply.

Typically, steps are taken to protect the cold stacked rig including the installation of monitoring systems that communicate rig status and critical systems information to locations onshore. Monitor Systems Engineering provides a comprehensive marking and monitoring system that includes GPS Position Monitoring, Intruder Monitoring, Fire and Bilge Alarm Monitoring, Anchor Winch Tension Monitoring, Solar Power Supply and an Automatic Identification System.

Cold Stacked: Also referred to as mothballing, cold stacking is a cost reduction step taken when a rig’s contracting prospects look bleak or available contract terms do not justify an adequate return on the investment needed to make the unit work ready (e.g., repairs or refurbishment). For example, a conventional GOM jackup might see its costs reduced from $30,000 per day when operational to as little as $2,000 per day when cold stacked. Cost savings primarily come from crew reductions to skeletal levels. Steps taken to protect the rig’s facilities include applying protective coatings, filling engines with protective fluids etc. With the costs of crewing up, inspection, deferred maintenance, and potentially refurbishment acting as deterrents to reactivation, cold-stacked rigs may be out of service for extended periods of time and may not be actively marketed. A return to service can be a costly proposition, often requiring tens of millions of dollars for refitting costs.

Warm stacked status means that a rig is idle but operational and is also referenced in the industry as warm stacked. A ready stacked rig typically retains most of its crew and can deploy quickly if an operator requires its services. In a ready stacked state, normal maintenance operations similar to those performed when the rig is active are continued by the crew so that the rig remains work ready.

Warm Stacked (also called Hot Stacked or Ready Stacked): a rig is deployable (warm) but idle (stacked). Warm stacked rigs are typically mostly crewed, actively marketed, and standing by ready for work if a contract can be obtained. Routine rig maintenance is continued, and daily costs may be modestly reduced but are typically similar to levels incurred in drilling mode. Therefore, rigs are generally held in a ready stacked state if a contract is expected to be obtained relatively quickly.

1: "Keeping a rig cold-stacked can cost anywhere from $1-$5mm per year, and warming up a cold-stacked rig requires a $10-$50 million investment in surveys, upgrades, and refurbishment."

2:"Will any 1977-1985 built jackup put into cold stack ever return to active service?. Re-activation costs will be high and it normally requires a buoyant market with term contracts and good dayrates to justify the expense. Also this will be exacerbated by the number of new builds that are entering the market over the next two years. Cold stacking in today"s market is essentially postponing the evil day when you have to scrap."

3: "Older rigs have been able to stay busy and earn good profits until now because there weren"t enough newbuilds to fulfill operator demand. But as demand for offshore rigs declines, crude oil prices fall, and more new rigs deliver, the days are now numbered for many old rigs in the fleet."

4:"The number of drilling programs where old, low-specification rigs are optimal is declining and new rigs are increasingly competing for this work as the offshore market slows down. Older rigs are simply not competitive with new rigs when it comes to modern drilling programs. They have been serving as a buffer pending the deliveries of new rigs (old rigs have essentially been filling the gap between supply and demand while new rigs were built). The pace of attrition has been regulated by the pace of addition."

5:"Ultimately, this scrapping will be very healthy for the offshore drilling business as it will balance supply with demand and allow drilling contractors to begin raising dayrates again. It will also free up some staff to work on the new rigs, where hiring requirements number in the tens of thousands of staff over the next few years."