Modelling and Forecasting Rig Rates on the Norwegian Continental Shelf

37 Pages Posted: 22 Jan 2016

See all articles by Terje Skjerpen

Terje Skjerpen

Statistics Norway

Halvor Briseid Storrosten

Statistics Norway

Knut Einar Rosendahl

Norwegian University of Life Sciences; Statistics Norway - Research Department

Petter Osmundsen

University of Stavanger; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: January 20, 2016

Abstract

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.

Keywords: Rig rates; Capacity utilization; Oil price; Forecasting; Bootstrapping

JEL Classification: C32; C51; C53; L71; Q47

Suggested Citation

Skjerpen, Terje and Storrosten, Halvor Briseid and Rosendahl, Knut Einar and Osmundsen, Petter, Modelling and Forecasting Rig Rates on the Norwegian Continental Shelf (January 20, 2016). Available at SSRN: https://ssrn.com/abstract=2719350 or http://dx.doi.org/10.2139/ssrn.2719350

Terje Skjerpen

Statistics Norway ( email )

N-0033 Oslo
Norway

Halvor Briseid Storrosten

Statistics Norway ( email )

N-0033 Oslo
Norway

Knut Einar Rosendahl

Norwegian University of Life Sciences ( email )

PO Box 5033
NO-1432 Aas
Norway
+47 64966117 (Phone)

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway
+47 21094954 (Phone)
+47 21094963 (Fax)

Petter Osmundsen (Contact Author)

University of Stavanger ( email )

4036 Stavanger
Norway

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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