Discussion Papers no. 832

Modelling and forecasting rig rates on the Norwegian Continental Shelf

Knowledge about rig markets is crucial for understanding the global oil market. In this paper we first develop a simple bargaining model for rig markets.

Knowledge about rig markets is crucial for understanding the global oil market. In this paper we first develop a simple bargaining model for rig markets. Then we examine empirically the most important drivers for rig rate formation of floaters operating at the Norwegian Continental Shelf in the period 1991q4 to 2013q4. We use reduced form time series models with two equations and report conditional point and bootstrapped interval forecasts for rig rates and capacity utilization. We then consider two alternative simulations to examine how the oil price and remaining petroleum reserves influence rig rate formation of floaters. In the first alternative simulation we assume a relatively high crude oil price equal to 100 USD (2010) per barrel for the entire forecast period, whereas the reference case features the actual oil price with extrapolated values for the last quarters in the forecast period. According to our results, the rig rates will be about 34 percent higher in 2016q4 with the higher oil price. In the second alternative simulation we explore the effects of opening the Barents Sea and areas around Jan Mayen for petroleum activity. This contributes to dampening the fall in the rig rates and capacity utilization over the last part of the forecast period. 

About the publication

Title

Modelling and forecasting rig rates on the Norwegian Continental Shelf

Authors

Terje Skjerpen, Halvor Briseid Storrøsten, Knut Einar Rosendahl

Series and number

Discussion Papers no. 832

Publisher

Statistics Norway

Topic

Discussion Papers

ISSN

1892-753X

Number of pages

39

Language

English

About Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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