Will a basic degree direct the path for a good career ?

Extracted from Straits Times May2013

Will having a basic university degree lead you to the route of a good career?

Our PM Mr Lee Hsien Loong, National Development Minister Khaw Boon Wan, Acting Minister for Social and Family Development Chan Chun Sing and Education Minister Heng Swee Keat - recently spoke on similar themes of how academic qualifications are not a sure ticket to success.

Indeed, Asia "is a bit hung up on that piece of paper", Singapore Management University (SMU) president Arnoud De Meyer tells Insight. A degree helps get a better salary, but it is the experience of learning that is more important in today's age, says Professor De Meyer, who has held top posts at Insead and Cambridge University's Judge Business School.

He also discusses last year's announcement of a 3,000-strong increase in student numbers by 2020, noting that not everybody needs to go to university and there are good jobs that do not require a degree.

· What is your take on the recent debate?Having a good degree helps you to find a better job and a higher salary. It also offers you broader options. If you go for a diploma, usually you're quite specialised.

But there are successful people with no degree, such as (late Apple chief executive officer) Steve Jobs and (Facebook CEO) Mark Zuckerberg.

Even when the PM announced last year that 40 per cent of each cohort will go to university by 2020 (up from 27 per cent now), that still means that 60 per cent will not go to university.

If you look at other advanced countries like the Scandinavian countries or Britain, 40 per cent is in the upper limit.

University degrees offer three things as opposed to a diploma.

First, you get your specialisation, your skills you build up.

Second, it is broad base learning. Students have a lot of flexibility. Most universities now provide the students option to take second major, second degree or electives,etc..

The third,  is "learning to learn". What you learn today may be obsolete five years from now. You need to constantly learn new things. That is also what university education provides - a system of learning.

Some other articles typically note that learning how to learn is a process in which we all engage throughout our lives, although often we do not realise that we are, in fact, learning how to learn. Most of the time we concentrate on what we are learning rather than how we are learning it. The process of learning much more explicit by getting you to apply the various ideas and activities to your own current or recent study as a way of increasing your awareness of your own learning. Most learning has to be an active process - and this is particularly true of learning how to learn. 

The ministers emphasised the value of work experience and entrepreneurship. Can't these be obtained both in and out of university?   Mr Khaw said that it is not about the piece of paper you can hang on your wall but about real experience and the components of your education which is more critical.

It is about being able to immediately start working when you get a job. That is why we believe in internships and nowadays it is compulsory for every student to do an internship as well as international exposure and holistic education - these prepare people better for a job in the real world.

That's what universities need to do more in the future - mix conceptual and theoretical learning with practical exposure.

Asia as a whole is a bit hung up on that piece of paper. It's the experience of learning that is more important. A university is both about skills and things like interactions and discussions with each other, the creativity of working day and night on projects, going out, making new friends.

It is also true that we need to become more entrepreneurial, not necessarily setting up a business but in the way we act within the company. Singapore Institute for Innovation and Entrepreneurship has 55 companies created by our students. They are all small and some of them will fail but you will see that some students have that entrepreneurial attitude.

We have to be realistic. It's not necessary that everybody goes. There are really interesting and good jobs that don't require a university degree and they may be a better fit for people with more practical or artistic aptitudes. We all have different capabilities and should recognise that not everybody will have to go to university.

The second point is, we know from the European experience that if you have too many students going to university, you get graduate unemployment. So underlying the messages from the ministers is, be careful, a degree is no guarantee for a job.

Third, be careful in choosing a line of study. Choose a broad area where there will be demand.

Polytechnic graduates are concerned that in sectors where they compete with university graduates for jobs, starting pay and job progression will differ.

At polytechnics, you get very good people with much more practical skills who can hit the ground running. They start working at 19 for women or 21 for the men, and you could argue that they have four more years of earning money than a university graduate.

University graduates also have to pay their tuition fees. Somehow the market recognises the difference in investments that students have made.

· How has the value of a university degree changed in Singapore? Recruiters ask for more than skills from your studies. They are looking for communication skills and global exposure. They expect us to groom students to be more job- ready.

· How can universities ensure both that their education remains accessible while graduates are employable? By making sure our students are employable.

We have to be realistic. Just because I got a degree in economics today doesn't mean it will be valid 10 years later. That's why our young students nowadays have to think about a broad set of capabilities and skills and to keep improving.

I agree with those who believe it to be essential that for example uni lecturers have expertise in their subjects. But such expertise is not limited to certification: if it were, Tony Blair could hardly have taken up a position lecturing in Politics at Harvard when his BA is limited to Jurisprudence. And who would bother listening to Margaret Thatcher droning on about statecraft when her BSc is in Chemistry? And yet many will sit at their feet, because they have qualification way beyond a framed degree.

Thus lecturers should be an expert, but expertise comes in a number of guises. When lecturing ceases to inspire, the learning ceases to engage. When the learning ceases to engage, little or nothing is learned. What unis' and polys' desperately need are outstanding professionals with a sense of vocation: ten of those liberated to draw out students' faculties and intelligences will eclipse a hundred who have been certified and licensed by the institute to impart a centralised curriculum in accordance with government guidelines for the sake of targets and league tables.

Local behemoths facing keen competition from China and Korea yards

Extracts with courtesy of Straits Times 30April 2013

KepCorp and Sembcorp Marine are the behemoths that build around 70 per cent of the world's oil drilling jack-up rigs. Both which employed approximately 75,000 people and contributed 1.6 per cent to economic output in 2011 per estimate figures.

However they are now facing challenges from several competitions. These include the Chinese players and structural changes to the industry. In what could be a replay of the earlier challenges the two companies faced in the 1990s, the key question is whether Keppel and SembMarine can yet again pull a rabbit out of the hat. Their stories are held up as examples of Singapore's success in ship building industry. In the 1960s shipbuilding and shiprepair were identified as key economic sectors as they could quickly create jobs for many workers. The Government took up stakes in shipyards, including two that were renamed Keppel Shipyard and Sembawang Shipyard.

After decades of growth, consolidation and expansion into the rig construction business, these two are today known as Keppel and SembMarine. However, their main activities are no longer in shipbuilding. Both now build rigs used by energy companies to drill for oil at sea. These include jack-up rigs ( for shallow water depth of 400feet ) - which cost around US$200 million (S$247 million) each - as well as the more expensive semi-submersible rigs that operate in deeper waters ( around upto 10,000 feet ). They can be priced at US$400 million to US$500 million each, with high-specification builds costing more than US$800 million. Those that are working for the north seas cost much more due to the harsher environment and many features that required additional cost to cater for.

Leadership challenged :

The lucrative rigmaking industry has increasingly seen competition from both Chinese and South Korean shipmakers in recent years. Like Keppel and SembMarine, Chinese shipmakers have been shifting from building ships to rigs, as the shipping industry continues to slump amid a massive oversupply of vessels.

With cheaper prices and more favourable financing conditions, these Chinese yards have been snapping up contracts from firms looking for lower-specification, lower-cost builds.

To add to the problem, more and more high-value contracts, like ultra-deepwater "semi-submersible" rigs, have also recently been going to Chinese yards, like Cosco and Raffles CIMC.

For instance, drilling rig services provider Frigstad Offshore early this year ordered two US$650 million untra-deepwater rigs from China's CIMC Raffles. Such orders are right up the alley of Singapore's rigmakers. They're one of the newest most advanced designs, meant to work in harsh deep water environments.

CIMC can build these two rigs for Frigstad is the day that CIMC is on a par with Singapore yards. They won't just be taking low-value rig work from Singapore. It is estimated that as of April 22, Chinese yards this year have won US$2.95 billion in jack-up rig contracts. This means they overtook Keppel and SembMarine, which won only US$2.12 billion.

At the same time, South Korean companies such Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering are also muscling in. They specialise in ship-shaped vessels such as drillships.

Keppel and SembMarine have been investing hundreds of millions of dollars in Brazil, especially after the 2007 discovery of likely rich oil reserves in the deep waters off the country's coast. The aim was to win lucrative rigbuilding deals from Brazil's state oil company Petrobras and its unit Sete Brasil.

Brazil has strict "local content" requirements which state that most of the components for oil platforms sold to these firms need to be produced in the country.

Keppel was an early mover, having been in Brazil since 2000. It bought a yard in the country in 2010 in order to focus on offshore support vessels which are used alongside oil rigs. This added to its existing yard which builds rigs.

And SembMarine is building a Brazil yard and has already secured contracts in the country.

All well and good, except that their biggest client in Brazil, Petrobras, has run into financial difficulties. These include spending and investments that have ballooned far more than initially planned, and government caps on how much it can charge domestic customers for oil. As a result, Petrobras shares have plummeted, losing half their value since 2010. Petrobras has also been squeezing the margins of its suppliers.

Also, Brazil is facing high inflation which could put upward pressure on labour costs.

Adapting to challenges:

TO THE credit of Keppel and SembMarine, they have already identified these issues and taken steps to ensure their businesses remain profitable. Mexico is one frontier. It is growing in importance after state oil firm Pemex made a big crude oil discovery in the deep waters of the Gulf of Mexico last August. Both Keppel and SembMarine have won deals from Mexican customers since then, leading market players to cheer their effort to seek out business opportunities in other high-growth markets.

The two companies are also focusing more on some of their specialities outside rigbuilding.

Keppel is co-designing an Arctic jack-up rig to tap the demand for platforms that can withstand the tough conditions there. The company has also signed a deal with Norway's Golar LNG to convert liquefied natural gas (LNG) vessels into Floating LNG vessels. This will give the firm more exposure to the fast-growing LNG market.

SembMarine has been getting more ship repair work, providing more diverse sources of income. "Ship repair is not something new for SembMarine, it's to drive more work," said DMG.

Both shipyards should continue to differentiate themselves, and spend more on research and development, say analysts.

"The key thing for Singapore yards is to find new products that are not in direct competition with these guys," said Mr Saw, referring to its overseas competitors.

Competition also works both ways. Even as Chinese companies eye the customers of Singapore firms, Keppel recently bagged an order from Falcon Energy Group, a company which previously ordered two jack-up rigs from China.

Back in the 1980s and 1990s the environment for the shipyard business was bad after the global recession of the mid-1980s, with cost pressures and external competition. The two companies were told at that time that they were in a sunset industry.

According to CIMB, Korean yards beat Singapore yards hands-down in terms of yard size. Each Korean yard is almost as big as the combined size of KEP’s and SMM’s yards in Singapore, explaining their competitive advantage in the market for large-scale offshore structures (newbuild FPSOs, FLNGs, TLPs) and drillships (hulls as big as 13,000 TEU container ships).

It also noted that very little apprehension was expressed over Singapore yards’ intention to break into the drillship segment as the Koreans’ market share appears to be protected by more advanced technologies and shorter construction time (of 12-15 months vs. >24 months for Singapore yards.

The Koreans were generally curious about Singapore’s capabilities in conversion and the outlook for jack-up rigs – in the event they decide to venture down the value chain. Though we were awed by the Koreans’ yard space, we believe Singapore still has the upper hand incosts, margins, business flexibility and global yard presence.

Firstly, a reliance on cheaper foreign labour is almost non-existent in Korea. The Koreans’ average low-end pay is US$40,000 p.a., triple that of Singapore.

Secondly, profitability remains the top priority of Singapore yards, with operating margins of 12% vs. the Koreans’ 8%. Thirdly, Singapore yards are able to diversify to from rig-building to building semi-sub accommodation and FPSO conversion while the Koreans remain fixated on high-steel content structures (newbuild FPSOs), ship-shape vessels (drillships, LNG carriers) and mass-produced containers in bulk orders.

Finally, Singapore builders leverage their global yard presence, including Brazil, to beef up their capacity.

Although Chinese rig builders have recently made some breakthroughs in rig building, they still are no threat to Singapore yards, CIMB said in a recent report about the offshore sector.

CIMB points out the rigs which are ordered at Chinese yards including Waigaoqiao and Rongsheng are "either heavily financed or have lower specifications" and heavy financing by Chinese yards is the main attraction for companies to build rigs in China.

"We are not overly concerned by the competition posed by the Chinese for Singapore yards. Traditional drillers with stronger cash flows should still find comfort in Singapore and Korean yards, unwilling to take on risks in quality and delivery," CIMB said.

The aged global rig fleet is in need of replacement as consumption for energy increases in emerging economies. Of the world's 500 jack-up rigs, about 300 are over 30 years old.

A new jack-up rig could set back a drilling operator or national oil company by about US$200 million at current prices. And now, their choices are not confined to the top five yards in Singapore or Korea any longer: China yards like Cosco, CIMC Raffles, and Dalian Shipbuilding have entered the picture. Barclays estimates that, Chinese yards have grown their market share of rigs from 5 per cent to about 30 per cent currently.

And it could increase further. Religare Capital surmised that Chinese yards will be capable of rivalling Singapore yards in terms of rig production capacity by 2015. The Barclays projections corroborate that: China yards may capture 10 percentage points more of market share in the next two years. While the perception is that Chinese yards stick to less complex and commoditised jack-up rigs, and are not competing head-on with the likes of Keppel and Sembmarine, that has proven to be increasingly untrue.

State backing has meant Chinese yards often offer discounts between 10-20 per cent off contract prices and extremely attractive payment terms of a one cent downpayment upfront and 99 per cent of the contract value upon delivery.

In contrast, Singapore yards have a milestone payment system or a 20 per cent-80 per cent payment structure.

But CIMB stands by their belief that the Chinese financier-builder model will not deprive Singapore yards of their fair share of order wins. Traditional drillers with stronger cash flows should still find comfort in Singapore and Korean yards, unwilling to take on risks in quality and delivery.

Yet, the aggression shown by Chinese yards has led to a drop-off in operating margins of rig projects, reported Keppel Corp and Sembmarine recently.

Gone were the boom eras of margins that could go as high as 20 per cent. Instead, going forward, management for both companies are keeping to more modest ranges of between 10 and 13 per cent.

For yards in general - whether in Singapore or China - they will see a weakening in pricing power because they're competing against each other for business.

Singapore yards have articulated clearly that their competitiveness hinges on a mixture of productivity gains and innovation.





"We recognise that there is increased competition in the rigbuilding sphere but we are

confident that Keppel Offshore & Marine is able to distance itself through innovation, technology and experience," COO of Keppel Offshore and Marine, Chow Yew Yuen told BT. Keppel has pursued a strategy of "Near Market, Near Customer", setting up overseas yards in markets like the US, Brazil and China to tap on interest from oil and gas regions around the world and to meet local content demands, said Mr Chow.

And Sembmarine will be shifting from its Jurong premises to a new Tuas Integrated Yard end of 2013. The new space is configured to minimise the movement of manpower and materials.

This year, Yangzijiang chairman Ren Yuanlin told BT that one way for Singapore yards to keep their edge over Chinese yards is to partner with them. Know-how is Singapore's strong suit while China has labour, a resource Singapore has sore demand for.

Yangzijiang itself pursued this strategy in 2010 when it bought over Baker Technology's 15 per cent stake in Sembmarine rigbuilding subsidiary PPL Shipyard, sharing board seats with Sembmarine.

Competition has emerged for the two Singapore companies with news that Daewoo Shipbuilding and Marine Engineering, part of South Korea’s Daewoo conglomerate, plans to re-enter the jack-up rig-building market since its last produced them in 1983.

Earlier this month two Chinese shipyards, Shanghai Waigaoqiao and China Rongsheng Heavy Industries, secured orders for three jack-up rigs, two of them for a Luxembourg-based company called Prospector Offshore.

Analysts say that while the emergence of rivals poses a long-term threat, it will take time for Korean shipyards to catch up as they are not yet configured to build jack-ups. DBS Vickers Securities adds: “However, the potential increase in competition from Korea may limit Singapore yards’ ability to raise prices”.

Potential customers for Chinese yards may be attracted by the financing packages they offer, but would have to overcome concerns over lower specifications and patchy delivery records at such yards, some market watchers said. 

The most important asset - Yourself

From the Business Times February, 2013

Your most important asset is - yourself

Unlike stocks and bonds, you have full control over your human capital

WHAT is probably your most important asset? Stocks? Bonds? Real estate? Collectibles? None of the above. It is human capital. Although most of the focus in wealth planning is on financial assets, human capital is the one thing you can bring to the table that can have the most impact on your future. Yet few advisers stop to measure it fully and discuss its impact on your prosperity.

You have a surprising degree of control over your human capital, unlike the financial markets. You can switch jobs, obtain graduate degrees or simply work more as an independent contractor or partner in a professional firm. In contrast, you have no control over what stocks, bonds, commodities, real estate and other assets return every year.

So consider human capital a measurable return on investment - in yourself.

The stodgy economist's definition of human capital is the net present value of lifetime earnings. This is what you will earn based on the skills, experience and talent you contribute to the labour market. For some, this is a fixed quantity, but in a dynamic world where people are increasingly shifting careers, working longer or pursuing "encore" careers, human capital is a moving target.

Yet estimating human capital is a bit like trying to guess your life expectancy. Life throws us a lot of curves and income gauges look easy to calculate as they emerge from a software programme. Nevertheless, you need to do some projections of lifetime earnings, and potential changes in your income stream, to make a realistic, flexible and holistic financial plan.

Zvi Bodie, a professor of finance at Boston University and co-author of Risk Less and Prosper (Wiley, 2012), says it is essential to know your human capital factor because it ties into how much risk you can take in your financial portfolio. Prof Bodie has been a pioneer in applying economic life-cycle theory to human capital decisions.

Some, with a fairly secure income over their career - such as college professors - may take more risk in their portfolios, while others whose income is linked to cyclical industries may not. You can characterise your human capital like a stable bond or an insecure stock. This is one of the first steps in linking your human capital to how much risk you may take in your portfolio.

"I see myself, for example, as a convertible bond," Prof Bodie said. "I'm protected by tenure at a solid university and have the potential to do extra things for income. I have a lot more capacity to take risk in my portfolio than I choose to use. I'm risk-averse, don't like to gamble and don't get a kick out of winning. I hate to lose."

Noting that "human capital is not a major asset for only a tiny fraction of the population", Prof

Bodie said that lifetime earnings and portfolio management should be reframed as a way of insuring a standard of living and not a focus on obtaining the highest returns.

Figuring human capital into a prudent financial plan requires an attention to detail that most financial advisers may not be able to handle. Because most advisers are focused on managing money or picking investments, they may not be able to do the right calculations that are flexible enough to accommodate changes in income.

Paula Hogan, a fee-only certified financial planner based in Milwaukee, has been employing human capital and the life-cycle theory that underpins it into her business model for years. Like most planners, she carefully examines cash flow, expenses, income and her client's portfolio.

"A key insight of life-cycle theory," Ms Hogan said, "is that the consideration of human capital comes first and then portfolio management comes after that: financial capital is tailored to the human capital, not vice versa." Ms Hogan also steps into the realm of "life" planning that merges human capital with various goals and changes in a person's journey. This raises a set of questions that go beyond numbers. "What do you care about?" Ms Hogan said she asks clients. "Do you have a vision of where you want to be?"

Career counselling

If they want to change, the questions become more focused on transition. "How can we make a bridge? What about health insurance? Will you need a new family budget? Do you have family reserves (savings)? Is your spouse on board?"

Sometimes the transitions are modest, as for an executive at the top of his profession whom she counselled. He wanted to "not go at full tilt" and spend more time doing other things. Other, more radical moves, such as a career change, will require more support. Ms Hogan works with career coaches and counsellors such as Jane Schroeder of Brookfield, Wisconsin to manage the vocational piece.

As a master career counsellor and board-certified coach with a background in educational psychology, Ms Schroeder applies standard assessment tools such as the Myers-Briggs personality test and talks with clients on future direction. She delves into their core strengths, competencies, emotional intelligence and "brainstorms on possibilities".

"What allows you to engage your human capital at the highest level?" she asks clients. "When were you at your best? What was happening? What was energising?"

By re-engaging clients with the force that drives their ability to create, manage or earn money in a fulfilling way, Ms Schroeder eases the transition that some need to make.

It is one thing to know if you need to make a change, but is that possible, given your financial situation? Will you have enough cash reserves to see you through a transition? Will a spouse or partner support your household while you make some changes or re-educate yourself?

Before you even make the decision to redeploy your human capital, you will need to run some numbers to see if it is possible. Online planning programmes such as ES Planner (esplanner.com) can give you some general ideas on what is possible given changing income and cash flow.

While these questions may be difficult at first, they may help you forge a satisfying new path. But you will need to take your time and do some detailed planning that may involve a paradigm change. Your personal capital reserve and future earnings should drive your ability to make a change and not your portfolio return. That is a big leap for most, but a rewarding one if you are able to navigate it.

The 61st B-Class jackup ordered since 2000

April 2013, KeppelFels to build a fourth jack-up rig based on its KFELS B-Class design but with bigfoot (bigger spudcan size).

The rig, Ensco 110, is scheduled for delivery in the first quarter of 2015 and will be constructed under a fixed-price contract. The cost, which includes commissioning, systems integration testing and project management, has been valued at about US$225 million according to website info. The company already has three active rigs based on the KFELS B Class Bigfoot design – Ensco 106, Ensco 107 and Ensco 108. The rig will be capable of working at water depths of up to 400 feet and drilling to 30,000 feet deep. It will have a nominal variable deck load of 7500 kips and a cantilever load of 2500 kips.

Upon completion in 2015, Ensco 110 will be the 16th newbuild project delivered to Ensco by Keppel.

The first B-class jackup was for Chiles Offshore signed in year 2000. It was after much engineering time spent, a small team from here together with OTD supporting ( Offshore shallow water research and designing arm ) met with Chiles Offshore in AMFELS exactly 13 years ago around April Year 2000. Some of us were at AMFELS finalizing some technical issues on the rig design with Chiles Offshore VP of Engineering, Mr Gabe Padilla. He is very well-versed with machinery and piping systems installed on jackup rigs and good in sketching on the whiteboard detail engineering where he could discuss any kind of information right at his finger tips.

The first KFELS MOD V "B" was Chiles Discovery (now renamed ENSCO 104) built and delivered by Keppel FELS in Singapore in year 2002, and currently deployed in the Bayu-Undan field in Timor Sea for Phillips Petroleum Company.

In year 2000, the newbuild jackup market is the only sector of the drilling industry where new contracts have been signed. In the last few months of that yeaor, Chile7s Offshore, Rowan, and Maersk signed contracts to build three new high-specification jackups:

•The Chiles vessel will be a KFELS MOD V "B" design, cantilevered jackup. Th7e rig will be an "ultra-premium" deepwater jackup built with a leg length of 475 ft, with an option to extend it to 545 ft.

•Rowan is building the Gorilla VIII, an enhanced version of the company's Super Gorilla Class rigs, called the Super Gorilla XL. The Gorilla VIII will be outfitted with 708 ft of leg, 134 ft more than the Super Gorillas, and have 30% larger spud cans for working in water depths up to 400 ft, making it the jackup with the deepest water capability.

•Maersk has contracted for what it calls "the world's largest and most advanced harsh environment jack-up." The rig will have 205 meters of leg for operation in water depths up to 150 meters in harsh environment conditions. It will also have double the variable load capacity and drilling envelope of traditional rigs.

ENSCO 105 is the second MOD V "B" new generation deep-well drilling rig that has been completed in AMFELS few months after CHiles Discovery (ENSCO104). The total cost of construction and outfitting for the ENSCO 105 was in excess of US$100 million (S$175m), of which work performed by AMFELS formed a major portion.

At the rig's christening ceremony in AMFELS, Choo Chiau Beng, Chairman and CEO of Keppel Offshore & Marine said, "The design and construction of the two KFELS MOD V "B" class jack-ups is a significant milestone for Keppel as we seek to deliver quality products and services to customers at competitive prices. "We are privileged to have participated in the growth and expansion of the fleet of ENSCO rigs in the last few years. We built ENSCO 101, an enhanced MOD V harsh environment jack-up in year 2000. This year alone, we delivered three jack-ups to the company, namely, ENSCO 102, ENSCO 104 and now ENSCO 105."

chiles discovery1.ppt ..

ENSCO 104.pdf ..

In May 2002 :

ENSCO International Incorporated and Chiles Offshore Inc. announced that they have signed a definitive merger agreement by which ENSCO will acquire Chiles. The Boards of both companies have approved the transaction. Under the terms of the merger agreement, Chiles' stockholders will receive 0.6575 shares of ENSCO common stock, plus cash of $5.25, for each share of Chiles' common stock. Total value of the transaction is approximately $578 million based on ENSCO's closing price as of May 14, 2002. After giving effect to the transaction and including the Chiles' rig currently under construction, the combined company will have a fleet of 56 offshore drilling rigs, in addition to ENSCO's fleet of 28 Gulf of Mexico oilfield support vessels. The combined fleet will include 43 premium jackup rigs, with 29 rigs, or two thirds of the fleet, having been built or rebuilt since 1995. ENSCO's Chairman and CEO, explained the strategic reasons for the transaction. "The acquisition of Chiles will increase ENSCO's exposure to the premium jackup market through the addition of the newest and one of the most capable fleets in the industry. We believe that this is a prudent way for ENSCO to grow, adding to the high-end of our jackup fleet, without impacting industry supply, and without increasing our financial leverage. We expect this transaction to be accretive to our shareholders from day one, both in terms of earnings and cash flow. We anticipate that ENSCO's long-term debt to total capitalization ratio will remain at 24 percent after giving effect to the transaction. "Chiles and ENSCO have similar operating philosophies

What some of the Rig contractors/operators discussed about drilling rigs and outlook back in 2000  (some of the discussions and extracts may not be concurring or accurate anymore with the current trend and what was discussed during that period ) :

The general rule of thumb in the industry is that a drilling unit has a natural life of about 25 years. According to statistics from Bassoe Offshore, almost 40 units of the jackup fleet has reached this age limit and by definition should be retired. But some disagree with this limit.

"The offshore industry is relatively young, and to a certain degree, rules are being made up as we go along," said Bassoe Offshore Consultants Ltd. "Until fairly recently, drilling contractors used the criteria of shipowners when it came to deciding on the useful lives of their rigs. This dictated that it was uneconomic to keep a ship, and hence a rig, past its 20th or 25th year, when particularly onerous and expensive special surveys are due."

"However, as the first modern offshore drilling rigs were not delivered until the early 1970s, it was not until the 1990s that they reached this anniversary and owners were confronted with requirements. While older, redundant designs tended to be scrapped, it became apparent to contractors that, provided the basic design of the rig was acceptable to operators, there was no need to retire a rig at 20 years. This is because the offshore drilling procedures have not changed, so the original hulls, provided they are in good condition and adaptable to the more sophisticated (although essentially the same) machinery that is now in use, remain perfectly acceptable"
These rigs are being extended to 25-30 years, and some cases, beyond that. For standard wells that are not technically challenging, the older rigs work fine. They are not as efficient, but they work fine," concurred Bill Chiles, then President of Chiles Offshore.

Rowan, added, "Jackup rigs that were built prior to 1970 are so obsolete that no one will put any money into trying to upgrade them. Prior to that time, there was no class for jackup rigs. Then the US Lands Act Amendment came in and rigs built prior to then had a number of grandfather provisions. If you look at rigs built from 1978 on, most of them are of sufficient value that people would continue to do upgrades."

Rig design :

While age is an issue, the real factor limiting the usefulness of a jackup is design. "If a rig is properly designed and properly maintained, it has an infinite life," said Bob Rose, President of Global Marine. "Theoretically, if a design is competitive and you've maintained it, it can last forever. The industry used to think that they all had a 20-year life. Now we know that they last a lot longer than 20 years," he added. - Santa Fe's Galaxy III is one of the new fleet of jackups.

So the question now becomes: which designs are capable of being extended for longer and more useful life?

The limiting factors are chiefly variable loading and integrity of the structure. Most contractors said that, of the designs in operation, the independent leg rigs with a rack and pinion jacking system were the most suitable for upgrade. These include the LeTourneau designs, the Friede & Goldman L-780, and the Livingston 111. At the same time, most said that a majority of the mat jackups could not be economically upgraded.

Pride said, "Mat jackups are suitable for soft bottoms and are not suitable for every type of seabed environment. For example, the units do not have the capability of being upgrading to harsh environment jackups, but they can drill wells just as well as any other jackup, once on location."

Maintenance, inspection :

During inspections, contractors can determine the future of a drilling unit. Every year, each rig goes through an annual classification society test. Every five years, each undergoes mandatory testing to maintain class. Additionally, on five year schedules, the rigs undergo periodic surveys to check structural integrity.

When rigs do not meet the requirements of these tests, then retirement becomes a real option. The most stringent of the regulatory areas is the North Sea, where jackups must meet harsh environmental criteria. While this could result in retirement, some companies just move the rigs to another areas of the world. If a rig is in class, then it is by definition capable of operating.

Upgrading units  :

The overall consensus among drilling contractors is to upgrade rather than purchase a new rig. The decision comes down to a return on capital deployed. If a company can make the necessary return on capital based on the cost of the construction program, it will be done. The average upgrade costs for a jackup vary, depending on construction. The lowest average is about $3 million, and $40 million on the high side. This compares to $100 million average for new construction. If the resulting productivity is the same, then the numbers favor the upgrade.

There are limits on what can be done to jackups. The most common upgrades involve adding leg, extending cantilevers, adding jetting systems to assist in pulling legs, adding horsepower, adding additional pumping capacity to help pre-load faster, and adding owner furnished equipment, which in itself is interchangeable.

The most upgradeable of the designs has proven to be the LeTourneau designs, post 1978. This is the only design that offers the advantage of being able to add leg. Rowan said that the majority of the rigs came with 410 ft of leg and that they now know the units can by upgraded to 477 ft. This involves strapping the leg to increase the strength of the leg and adding additional gear units to gain variable load.

Three recent upgrades were executed by Noble Drilling. The company upgraded the Bill Jennings, Leonard Jones, and Eddie Paul rigs, all 300 ft independent leg slot rigs. The company performed the upgrade because they did not have the cantilever reach necessary for development projects. The upgrades included adding leg lengths to 500 ft on each leg and reinforcing the legs so that the units could operate in water depths greater than 350 ft. In addition, the company added 65 ft and 70 ft reach cantilevers on the rigs. The company said that the upgrade made them more desirable, supported by the fact that since the upgrades, the rigs have not been off contract.

"If they can't charge enough money for the rig to justify its ownership then they scrap it, and I think you will see that, if you look at some of the rigs that are cold stacked in the Gulf of Mexico. Some will face multi-million dollar refurbishment plans and the owners will not do it,"  said Rowan.

"The niche market we are looking for is the deeper water locations, those that require extended reach cantilever, or wells that are technically very challenging - deep, high temperature, high angle," Chiles said.

"If someone is drilling an exploratory well and they don't need this higher capability, we run head-to-head with those rigs. For development drilling over a platform, we have an edge. And, if the well is a difficult well where the customer needs to run multiple casing strings, the wellhead design on a floater limits the number of contingent casing strings that can be designed at the wellbore."

Rowan added in support of new Gorillas: "What helps us is that virtually anyone drilling a subsalt or high temperature well will want to have a bottom supported unit, or if they are going to be looking at well problems." All three rigs are being built on spec, without a confirmed operator contract.

Speculative business :

Most newbuild jackups have been fabricated without a firm contract. The reason for this, Rose (Global Marine) explains, is that it is difficult to get a long-term contract on a jackup. "Long-term contracts are the exception rather than the rule on a jackup. Jackups are going to have to get very, very tight before you get term contracts," he said.

Chiles, who has constructed two of these high-spec jackups, concurs. "It's the nature of the beast. There are just no long-term contracts available in the jackup world with exception of a few in foreign areas. Certainly in the Gulf of Mexico, the operators are reluctant to sign long-term contracts."

Rowan said that spec building will always continue in the jackup market. "I don't think you will ever see a long term contract on a jackup, for several reasons. The first is that very few companies have long-term programs for jackup drilling rigs, unlike ultra deepwater, where the large number of tracks ensure use of the unit for three to five years. The shelf in the Gulf of Mexico is about 85% independent operators now, and very few of these independents have more than four or five wells in front of them that they can commit to. So you just don't have the demand there with a single customer for a long period of time. And there are a lot more of us in the jackup business willing to build a jackup on spec."

Rowan does have a competitive advantage, however. The company owns Marathon LeTourneau, which owns the LeTourneau designs and the LeTourneau shipyard, where all of Rowan's rigs are built. This helps ease some of the finances of speculative building. In his defense, Palmer said, "That advantage didn't exist until 1995, and we have been building jackup rigs for 32 years." Global Marine, Noble, Pride, and Santa Fe representatives all said their companies would not build without a contract.

Below shows a listing of Keppel rigs built and to build. It could be seen from past and present that the trend of speculative rigs ordered without contracts is still high and seems like it will continue for some time probably till the shallow water drilling rig market starts to be saturated..... who knows when ?

keppel jackup rigs to-date.pdf ..

One of the workhorses in GOM offshore

In 2011, LeTourneau Technologies announced it has entered into a contract to furnish a kit and license to Lamprell Energy, Ltd. ("Lamprell") for the construction of Lamprell's sixth Super 116E class self-elevating Mobile Offshore Drilling Platform ("jack-up"). This rig will be outfitted with 477 feet of leg designed to operate in water depths of up to 350 feet and will have a 1.5 million pound hook load for a rated drilling depth of 30,000 feet.

The rig will be built at Lamprell's Hamriyah facility located in the United Arab Emirates for Greatship Global Energy Services of Singapore. Rig delivery is expected in the fourth quarter 2012. Lamprell currently has three additional Super 116E class jack-ups under construction under license from LeTourneau. These transactions demonstrate LeTourneau's strong commitment for international growth through the supply of state-of-the-art rig designs, rig kits, and drilling equipment.

LeTourneau's delivery of the kit, which includes the rig's leg components, jacking system, cranes and certain other components, will occur in stages in accordance with the rig construction schedule. The initial delivery is expected to occur in the third quarter of 2011 and the final delivery during the second quarter of 2012.

This marks the 25th order for the LeTourneau Super 116 series of jack-ups, of which 8 others are currently under construction. The Super 116E is one of four current LeTourneau jackup rig designs and an evolution of the industry's original workhorse, the LeTourneau 116-C design. The Super 116E provides over 3,000 kips greater payload than its predecessor along with the enhanced cantilever package offering 70 ft reach and 2,650 kip drill load capacity. The rig is designed to drill in up to 350 feet of water in moderate environmental locations and can be outfitted to handle high temperature/high pressure wells.

LeTourneau built the world's first jack-up drilling rig in 1955 and is an acknowledged leader in the supply of offshore jack-up drilling rigs today. LeTourneau has designed and been involved in the construction of approximately one-third of all jack-up rigs in service.

LeTourneau's vision is to be recognized by our customers as designing, building and supporting the most innovative, capable and reliable equipment for developing the world's natural resources.

Two years on, in DUBAI, January 2013, Lamprell has delivered the newbuild jackup Greatdrill Chaaya to Greatship Global Energy Services.

Work was completed 18 months after initial steel cutting and within budget. The rig left Lamprell’s Hamriyah facility last week for a drilling location offshore India, where it is contracted to ONGC.

Greatdrill Chaaya, weighing 10,394 metric tons (11,457 tons) at delivery, is a LeTourneau Super 116E (Enhanced) design with a self-elevating 477-ft (145-m) leg system.

Lamprell modified the spud can design in order to reduce the soil bearing pressure expected at the offshore location.

The company has now completed construction of 12 newbuild jackups, five of the LeTourneau Super 116 E design and seven of the Friede & Goldman Super M2 design. The company has seven more LeTourneau rigs undergoing various stages of construction.

Rig Designs