Energy Commodities: Offshore Oil Terminology - dummies

Energy Commodities: Offshore Oil Terminology

By Amine Bouchentouf

The offshore drilling business is a technology-heavy industry, and if you want to invest in companies that function in this commodity space, you want to be familiar with some of the associated terminology.

Because offshore drilling activity may take place in unforgiving locations, companies have to deploy specific vessels for specific drilling projects. These vessels are among the most technologically advanced structures created by man. Some vessels are designed to withstand harsh winds and high waves. Others are more suited for shallow-water exploratory projects and need to move from location to location quickly.

Here are the names of some of these vessels you can expect to come across as you start investing in offshore drilling companies:

  • Drilling barge: The drilling barge is one of the most nimble vessels in the market. It’s a floating device usually towed by tugboat to target drilling locations. The drilling barge is primarily used inland, in still, shallow waters such as rivers, lakes, and swamps.

  • Jack-up rig: The jack-up rig is a hybrid vessel that’s part floating barge, part drilling platform. The jack-up rig is towed to the desired location, usually in open, shallow waters where its three “legs” are lowered and “jacked” down to the seafloor. When the legs are secured, the drilling platform is elevated to the desired levels to enable safe drilling.

  • Submersible rig: The submersible rig is similar to the jack-up rig, in that it’s primarily used for shallow-water drilling activity and is secured to the seabed.

  • Semi-submersible rig: Sometimes referred to as a semi, this structure is a feat of modern technological development. It’s similar to a submersible, except that it has the capacity to drill in deep waters under harsh and unforgiving weather conditions.

    The drilling platform is elevated and sits atop a floating structure that’s semi-submerged in the water (hence the name) and secured by large anchors that can weigh up to 10 tons each.

  • Drill ship: The drill ship is essentially a ship with a drilling platform. It’s perhaps the most versatile drilling vessel because it can be easily dispatched to remote offshore locations, including drilling in very deep waters.

  • Offshore oil platform: When one of the previous vessels discovers a commercially viable offshore oil field, a company may decide to build a permanent platform to exploit this discovery. Enter the offshore oil platform. These structures are a sight to behold and are truly man-made floating cities. They house personnel, include living quarters, and are often even equipped with heliports. They’re ideally suited to harsh, deepwater conditions.

You can get information on an offshore drilling company’s fleet in its annual report. Companies usually lease these vessels to customers, which may include independent oil and gas companies, national oil companies, and the major integrated oil companies, for a premium.

A company also includes this type of financial information regarding its fleet in the annual report.