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Mobile offshore drilling rig newbuild and replacement cost functions

Author

Listed:
  • Mark J Kaiser

    (Center for Energy Studies, Louisiana State University, Energy Coast & Environment Building, Nicholson Drive Extension, Baton Rouge, LA 70803, USA)

  • Brian Snyder

    (Center for Energy Studies, Louisiana State University, Energy Coast & Environment Building, Nicholson Drive Extension, Baton Rouge, LA 70803, USA)

Abstract

Mobile offshore drilling rigs are used to drill, complete and workover wellbores in marine environments. The fleet that exists today consists of a wide variety of vessels built to various specifications over the past three decades, and because they operate in harsh, corrosive environments, they wear out structurally and require periodic maintenance. Rig designs have evolved with changes in operating requirements and new technology and rigs are frequently modified and upgraded, depending upon market conditions, operator preferences and other factors. The construction and replacement costs of offshore rigs are often used for management planning, financial valuation and insurance analysis, and because of the wide variety of designs, specifications and upgrades, cost estimates vary widely. In this article, generalized newbuild and replacement cost functions are derived based on rig class, age and upgrade status, water depth, and other factors using market data for 111 rigs under construction and 466 rigs in operation. Factors that influence newbuild and replacement cost are described along with a summary of the model results and limitations of the analysis.

Suggested Citation

  • Mark J Kaiser & Brian Snyder, 2010. "Mobile offshore drilling rig newbuild and replacement cost functions," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 12(4), pages 392-429, December.
    • Handle: RePEc:pal:marecl:v:12:y:2010:i:4:p:392-429
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    Cited by:

    1. Hong Yao & Zhen You & Bo Liu, 2016. "Economic Estimation of the Losses Caused by Surface Water Pollution Accidents in China From the Perspective of Water Bodies’ Functions," IJERPH, MDPI, vol. 13(2), pages 1-13, January.
    2. Michael J. Ford & Ahmed Abdulla & M. Granger Morgan, 2017. "Evaluating the Cost, Safety, and Proliferation Risks of Small Floating Nuclear Reactors," Risk Analysis, John Wiley & Sons, vol. 37(11), pages 2191-2211, November.

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