Building Indonesia's Largest Rig-Sharing Consortium

Abstract

In these days of frantic drilling activity, a worldwide shortage of rigs is developing quickly, especially in deepwater areas. This makes it challenging for operators to meet their targets for exploration wells. It was with this background that six PSC contractors undertook to create and manage Indonesia's largest rig sharing consortium to date, namely the Makassar Strait Explorers Consortium (MSEC). Following the signing of the Rig Sharing Agreement, Marathon International Petroleum Indonesia Limited (MIPIL), a subsidiary of Marathon Oil Company, took on the role of Lead Operator for the consortium.The six contractors will have deepwater prospects off Indonesia ready to drill by 2009/2010, each contractor requiring one to three wells in the initial evaluation phase. With the limited number of units capable of drilling these wells, it quickly became obvious that partnering with others would be essential to entice a drilling contractor to bring a rig to the area. As the companies prepared their individual AFE's, they quickly realized that collaboration would also serve to lower each company's expenditures by sharing services and other common costs (mob/de-mob, etc.). Creating a consortium should also allow for sharing of best practices amongst the members, and enhance drilling efficiencies through maintaining rig crew continuity. Additionally, once a rig is in the area, it may prove quite lucrative for it to stay and drill additional exploration wells or delineation programs which may arise in Indonesia.This consortium is still in its infancy, and we are constantly presented with opportunities to improve communication and efficiency. Balancing the various drivers and priorities of the individual consortium members is not without its challenges; yet keeping the common goal in the forefront of all discussions will ensure an advantageous outcome for all.