Jack-Up Rigs Market

Market Overview

The global jack-up rigs market size was valued at USD 4.0 billion in 2022 and is projected to reach a value of USD 6.8 billion by 2031, registering a CAGR of 6.1% during the forecast period (2023-2031). Rising energy demand and growing investment in offshore drilling activities are the primary market drivers driving the market growth of Jack-up rigs.

Jack-up rigs are specialist mobile offshore drilling units (MODUs) for shallow to moderate-depth offshore drilling operations. These rigs are typically used for exploration and production activities in the oil and gas industry. Their distinguishing feature is the capacity of jack-up rigs to "jack up" above the water surface, supported by legs lowered to the seafloor. This feature enables them to work in various water depths while providing stability during drilling operations. The increase in offshore wind energy generation is the key market driver for the worldwide jack-up rigs industry.

Furthermore, increased demand for oil and gas has significantly expanded the jack-up rigs market. Investment in the oil and gas sector has decreased dramatically due to low and volatile crude oil prices. This is a significant market limitation for the jack-up rigs market share.

Highlights

• Independent Leg Type commands the largest share of the market by type.
• Mobile Offshore Drilling Units are the most common application in the market by application.
• Shallow Water influenced the market growth by operating depth.
• North America dominates the global market.

Market Dynamics

Global Jack-Up Rigs Market Drivers:

Offshore Exploration and Production Activities

The need for jack-up rigs is intimately related to offshore exploration and production. Jack-up rigs are becoming increasingly crucial for drilling operations in shallow to moderate-depth waters as oil and gas corporations explore and develop offshore reserves. For example, the North Sea is a well-known site for offshore E&P activities. Companies in the North Sea frequently use jack-up rigs for drilling operations because of their geographical characteristics, including shallow and transitional waters. According to Westwood Global Energy Group research, the North Sea was a substantial market for jack-up rigs as of 2021, accounting for a significant share of global jack-up rig utilization. Variances in utilization rates influenced the global jack-up rig market, with variances dependent on regional demand, oil prices, and industry investment cycles.

Furthermore, the Baker Hughes Rig Count, which provides information on active drilling rigs worldwide, can be used to gauge industry activity. Increased operating rigs are frequently associated with increased exploration and production efforts. The discovery of new offshore reserves, technical breakthroughs, and global energy demand trends are anticipated to influence the jack-up rigs market trend. Jack-up rigs may find use in projects related to offshore wind farms and other renewable energy initiatives as the sector navigates the energy transition with a rising emphasis on renewable energy.

Global Jack-Up Rigs Market Restraints:

Oil Price Volatility

The global market for jack-up rigs is susceptible to changes in oil prices. Sharp price drops can cause oil and gas corporations to curtail capital spending, hurting exploration and drilling activity. Companies may postpone or cancel offshore projects during low oil prices, lowering demand for jack-up rigs. This volatility can lead to lower usage rates and detrimentally influence the whole market. According to Statista, the average annual price of Brent crude oil in 2023 will be USD 82.4 per barrel. This is an almost USD 20 fall from the previous year when the Russia-Ukraine war drove up energy commodity costs. Many oil and gas businesses, particularly those involved in offshore exploration and production, encountered financial difficulties during these falling oil prices. Budgets for capital expenditures were changed, and projects were delayed or canceled. Demand for offshore drilling services, especially jack-up rigs, has decreased due to lower capital expenditure. Rig operators saw lower utilization rates, and rig contract day prices fell as businesses explored cost-cutting measures.

However, oil prices have recently been rising, according to J.P. Morgan. Brent crude, the global oil market benchmark, reached a 10-month high of USD 97/bbl in September 2023. This rally was caused by Saudi Arabia and Russia cutting production and increasing demand for gasoline and jet fuel from China's reopening. Similarly, The US Energy Information Administration (EIA) predicts that the Brent price will rise from USD 78/b in December 2023 to an average of USD 83/b in 2024. The market's surplus of jack-up rigs and decreased demand created an imbalance in the supply-demand relationship. This condition heightened the competitive atmosphere, impacting rig operators' profitability.

Global Jack-Up Rigs Market Opportunity:

Renewable Energy Projects

The shift to renewable energy, namely offshore wind farms, presents a significant opportunity for jack-up rigs. These rigs can install wind turbine foundations in shallow to moderate-depth waterways. Jack-up rigs are adaptable to varied projects, and their positioning and stabilizing capabilities make them well-suited for the precise labor necessary in offshore wind farm development. According to a Global Wind Energy Council (GWEC) estimate, global offshore wind capacity will reach 34.6 gigatonnes (GW) by the end of 2020, with significant expansion projected in the following years. Offshore wind turbine construction necessitates using specialist vessels, such as jack-up rigs, capable of navigating the harsh sea environment during foundation installation. According to a study conducted by RenewableUK, an organization that promotes wind, wave, and tidal energy, the UK, a leader in offshore wind, has witnessed significant investments in vessels, particularly jack-up rigs, to assist the building and maintenance of offshore wind farms. 

Furthermore, data from the European Wind Energy Association (now WindEurope) show that European offshore wind investments have increased, with numerous countries planning to increase their offshore wind capacity. Installing foundations and turbines necessitates using specialist boats, which opens up chances for jack-up rigs. With 19.1 GW of new wind installations in 2022, Europe had a record year for wind installations. Despite supply chain challenges and a challenging economic environment, this was a 4% rise over the prior year. The International Energy Agency (IEA) predicts that global offshore wind capacity will more than double in the following decades, having the potential to become a significant source of sustainable energy. As countries establish aggressive renewable energy objectives, demand for jack-up rigs in offshore wind projects is projected to rise, allowing rig operators to diversify their portfolios.

Regional Analysis

The global jack-up rigs market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America Dominates the Global Market

North America is the most significant global jack-up rigs market shareholder and is estimated to grow at a CAGR of 6.2% over the forecast period. The North American Jackup rigs market will dominate due to the increasing demand for energy resources and the expansion of drilling and exploration operations. North America will likely be a significant jack-up rig business player. Offshore oil exploration and extraction activities in the United States are rising. The United States also contains some old oil wells that must be refurbished, modernized, and upgraded. In the United States, midstream and downstream operations have increased. Several additional offshore oil and gas locations have been proposed in the United States. Offshore wind installations are also rapidly expanding in the United States. The United States government is incentivizing renewable energy, which has increased offshore wind farms. These factors are expected to strengthen the jack-up rig industry in North America. 

The Middle East and Africa is anticipated to exhibit a CAGR of 6.4% over the forecast period. According to jack-up rigs market insights, the Middle East and Africa are projected to benefit the jack-up rigs industry. The Middle East is the world's greatest exporter of oil and gas. Existing oil and gas production installations in the Middle East are several years old and require routine maintenance to avoid downtime. Some sites require renovation, upgrade, and modernization to run efficiently. The African region's oil and gas deposits remain untapped and undiscovered. The exploration and exploitation of oil and gas in the ocean water surrounding the African continent is gaining traction. Africa has significant offshore wind market potential, and offshore wind energy production in Africa has continuously expanded.

The Asia-Pacific jackup rigs market is expected to develop at the quickest CAGR during the forecast period. This is due to increased drilling and exploration activity in offshore locations and rising crude oil demand. Furthermore, China's Jackup Rigs Market had the greatest market share, while India's Jackup Rigs Market was the Asia-Pacific region's fastest expanding market. Offshore oil and gas activities in India, China, Southeast Asia, and elsewhere are expected to grow in the future years. Offshore wind farms are gaining popularity in China, Japan, Taiwan, and South Korea, among other places.

Europe's jackup rigs market accounts for a moderate market share owing to an increase in oil and gas demand and the expansion of the automobile industry. These initiatives have resulted in a dramatic drop in oil prices. Furthermore, the German jackup rigs market had the most significant market share, while the UK jackup rigs market was the European region's fastest expanding market.

For example, oil and gas sites in the United Kingdom, Norway, and Russia require regular maintenance; some require modernization, upgrade, and refurbishment. The Arctic Ocean represents a fresh opportunity for North American and European governments to explore hydrocarbon riches. Offshore wind installations in Germany, the United Kingdom, Belgium, Denmark, and other countries have increased wind energy production because of the EU's renewable directive.

Segmental Analysis

The global jack-up rigs market is segmented based on type, application, operating depth, and region.

The market is further segmented into Independent Leg Type and Mat-type Jackup.

Independent Leg Type commands the largest share of the market.

Independent Leg Type

Independent leg jack-up rigs have legs that are not linked to one another. Each leg operates separately, allowing for more adaptability to varying seabed conditions. These rigs are frequently employed in a variety of offshore settings. The category of independent-leg units retained a sizable market share. The independent-leg units must drive the legs into the ocean bottom before the hull can be raised entirely. During this technique, the jack-up MODU is prone to weather and leg "punch through"; one leg breaks through a hard crust, causing the other legs to bend drastically. These machines can typically jack out of the water in 5 ft swells and an 8-foot combined sea. If the hull rolls, pitches, and heaves to the point where the legs touch the ocean bottom, mainly if the bottom is hard, the legs can be severely damaged.

Mat-Type Jack-Up

A giant mat or hull distinguishes mat-type jack-up rigs on the seafloor. The legs are joined to this mat, providing a sturdy rig base. The rig is raised above the water by jacking up the entire mat, including all associated legs. The mat design ensures a larger area of contact with the bottom. The large mat uniformly distributes the rig's weight, lowering the chance of sinking into soft-bottom materials.

The market can be bifurcated by application into Mobile Offshore Drilling Units and Offshore Wind Turbine Installations.

Mobile Offshore Drilling Units are the most common application in the market.

Mobile Offshore Drilling Units

Mobile Offshore Drilling Units (MODUs) are jack-up rigs primarily used for offshore oil and gas exploration and drilling activities. These rigs are outfitted with drilling amenities such as a derrick, drill floor, and other oil and gas exploration equipment. The mobile offshore drilling units category had the most market share in 2022. MODUs (mobile offshore drilling units) are the most common type of jack-up rig. They can be stationary or mobile and balance on the bottom while drilling in waves up to 30 feet high. MODUs have a massive drill floor that rises below the water's surface and pierces the surface. Once reserves have been found, jack-up rigs are frequently used for production drilling to extract hydrocarbons.

Offshore Wind Turbine Installations

Offshore wind turbines are installed on jack-up rigs. Installations are designed to build and install offshore wind farm foundations and turbines. These rigs may build various foundations, such as monopiles or jackets, to support offshore wind turbines. The capacity of the rig to elevate makes precise installation of wind turbine components in the offshore environment possible. Jack-up rigs are essential for laying the foundations for offshore wind turbines. This entails driving piles or laying jackets on the seafloor. Once the foundations are in place, the rig installs wind turbine components such as the tower, nacelle, and blades.

Based on operating depth, the market is sub-segmented into Shallow Water, Deep Water, and Ultra Deep Water.

Shallow Water influenced the market growth.

Shallow Water

Shallow water jack-up rigs are intended for use in relatively shallow offshore locations with water depths ranging from a few feet to a few hundred feet. With a substantial CAGR during the projection period, the shallow category is the market's most significant contributor. The water depth in the shallows is less than 200 meters. Due to its lower cost and less demanding technical requirements for operators, the sector has the largest market share, accounting for around 90% of the market. There are some critical distinctions between shallow and deepwater drilling. Shallow water rig blowout preventers (BOPs) are accessible above the water's surface for inspection, maintenance, and repair and can be controlled manually or remotely in an emergency.

Deep Water

Deepwater jack-up rigs can operate in deeper offshore areas where water depths exceed those considered shallow but fall within the range suitable for jack-up rig deployment. Deep water rigs have longer legs than shallow ones, allowing them to reach deeper below the water's surface. The rigs are placed in water depths that necessitate a moderate amount of leg extension. These rigs are used for deeper-water offshore oil and gas exploration projects.

Recent Developments

• November 2023- Equinor chose Kenera from KCA Deutag for a large electrification project on the Askepott rig.
• August 2023- Transocean Ltd. announced a USD 222 million contract for an ultra-deepwater drillship. The 21-month program will begin in the first quarter of 2024 and will contribute an estimated USD 222 million in backlog, excluding a USD 5 million mobilization charge.