Before any of you go and state the obvious, yes we’re aware the main difference is that one is on land and one is out on the waters. Beyond that, however, there are many differences between onshore and offshore drilling. From the kinds of equipment used to the main resources welled, they share as many differences as they do similarities. The team here at TriStone Holdings Ltd, an exciting new oil and gas venture capital firm based in the UK, wanted to look at some of the differences (and similarities) of the two industry areas, so that the next time someone brings it up, you’re not left completely in the dark!
Which Is The More Prevalent?
Onshore drilling still comprises the majority of global crude oil production. This is perhaps unsurprising given just how much more effort and cost (as we will find later) must go into setting up an offshore site. This is why it’s so exciting for investors when they see new onshore developments, such as the Viola Prospect that TriStone Holdings Ltd is tackling, being explored for production. That being said, offshore production has consistently made up around 30% of annual global production for some years now, which is by no means a small percentage. This percentage ratio will almost certainly level out in the coming years as known oil stocks diminish, and companies are forced to look to less accessible environs (offshore sites) for production.
The Equipment Used
One of the main differences between onshore and offshore drilling is in the rig equipment used, itself. More specifically, the equipment used to support the drilling rig. In onshore settings, the setup is relatively simple and the rig can be set up to support itself. In other words, it requires no anchoring to keep it at its location. Offshore drilling, on the other hand, brings with it a whole host of factors in this area. Once they’ve found the spot they want to well, drillers don’t want to move from that spot.
How, then, do you ensure that you don’t simply float away? And how do you support the drilling equipment in the first place? Offshore drilling requires either anchoring supports linking the manmade drilling platform with the ocean bed, or a means of maintaining positioning in deeper waters where anchors aren’t feasible. There are many different offshore rig types to satisfy these criteria, ranging from fully anchored fixed platforms in shallower operations, to purpose-built drillships that maintain their location through dynamic positioning.
It’s A Long Ol’ Stint At A Time, Out There…
Another difference, though one which is seemingly often forgotten about, is the living situation. With an onshore setup, it’s nice and easy. Although not universally the case, in most instances the drilling team will arrive in the morning to carry out their work and leave at the end of the day (or the week, at least), able to see their families. By comparison, offshore drilling setups are their own little microcosms. Save for relief teams coming in with both workers and supplies, these stations are self-contained for weeks on end. This means there must be a much greater emphasis on amenities for the workers than there is for onshore drilling.
When it comes to the costs involved, there are many variables at stake. Not least of which is the size of the drilling project, itself. A huge onshore drilling operation, for instance, will invariably cost more than a tiny offshore operation. Generally speaking, however, land rigs tend to be cheaper than their offshore counterparts. Whilst onshore rigs usually cost somewhere in the tens of millions of dollars (and that’s for the bigger onshore rigs), offshore rigs can cost hundreds of millions of dollars. That’s by no means an insignificant price differential. The flip side of this is that offshore tends to present longer-term opportunities; the market is less volatile, at least relative to onshore drilling.
As you can see, then, whilst they may occupy the same industry, these two disciplines are far from identical. Our focus, as a company, is centred around onshore prospects in the Cherokee Basin, USA. This area holds upstream potential for both oil and natural gas exploration. So, if you’d like to find out more about that, or about TriStone Holdings Ltd as an oil and gas venture capital firm, more generally, then get in touch! Contact us today on 0800 055 7079. We’d love to hear from you! TriStone Holdings has also featured in several prominent publications, click here to find out more. Take a look at our Facebook page here.