There are “too many rigs and too many players” in the drilling industry, Maersk Drilling CEO Jørn Madsen has said.
Restructuring and a wave of bankruptcy reorganisation “will make the industry capable of making the rational choices and create a much healthier business environment”, Madsen said.
Speaking at the IADC World Drilling conference, the CEO said profitability would be key to tackling two issues facing the industry.
The first, playing a role in the industry’s response to the climate challenge. Saying the newfound interest was “indeed a good thing”, Madsen said there had been some “radical scenarios” on reaching net zero by 2050.
“There will be a very significant need for hydrocarbons for decades to come, and therefore also for drilling services,” he continued.
Maersk has made its own progress. It has launched two low-emission rigs in Norway, using batteries to provide power to avoid peak load on main engines. The company believes this might reduce energy consumption by 20-25%.
It has also installed energy-optimising software on “most” of its floater rigs this year. This should reduce emissions, Madsen said, although he did not provide a target.
The second is increasing efficiency. Cutting the amount of time drilling wells cuts costs – while also reducing emissions.
In order to do this, the industry must move away from the “simple day-rate structure”, Madsen said. This is necessary in order to improve collaboration with customers and other partners.
Maersk recently carried out a 30-well plug and abandonment campaign for Aker BP offshore Norway. The company managed to reduce time spent per well by 30%, saving Aker BP around $600 million.
Updated at 9:42 pm to correct a quote in paragraph four.