As US President George Bush calls for repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.

In recent years, this global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones.

Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.

Bush called on Congress on Wednesday to end a longstanding federal ban on offshore drilling and open the Arctic National Wildlife Refuge for oil exploration, arguing that the steps were needed to lower gasoline prices and bolster national security. But even as oil trades at more than $135 a barrel-up from $68 a year ago-the world’s existing drill-ships are booked solid for the next five years.

Some oil companies have been forced to postpone exploration while waiting for a drilling rig, executives and analysts said.

Demand is so high that shipbuilders, the biggest of whom are in Asia, have raised prices since last year by as much as $100 million a vessel to about half a billion dollars.

“The crunch on rigs is everywhere,” said Alberto Guimaraes, a senior executive at Petrobras, the Brazilian oil company that has discovered some of the most promising offshore oil but has been unable to get at it.

“Almost 100% of the oil companies are constrained in their investment program because there is no rig available,” he said. As a result, drilling costs for some of the newest deepwater rigs in the Gulf of Mexico-the nation’s top source of domestic oil and natural gas supplieshave reached about $600,000 a day, compared with $150,000 a day in 2002.

These record prices have spurred a new wave of drill-ship construction.This boom could lead to renewed offshore oil exploration that would eventually bring more supplies to the oil market, and push down prices.

Already, 16 new drill-ships are scheduled to be delivered to oil companies this year-more than double the number delivered over the last six years combined. In fact, 75 ultra-deepwater rigs should be delivered from 2008 to 2011, according to ODS-Petrodata, a firm that tracks drilling rigs.

Shipyards from South Korea to Norway are working overtime to meet a huge influx of orders.Robert L Long, the chief executive office of Transocean, the world’s largest drilling company, said he has nine deepwater rigs under construction, eight of which are already under contract for periods of four to seven years once they leave the shipyards.

He expects to receive the ships between the beginning of 2009 and the end of 2010. Transocean believes the deepwater market will continue to be constrained until at least 2012.

Over three-quarters of the drill-ships currently under construction have already been contracted to oil companies eager to benefit from triple-digit oil prices, Long said.

Petrobras, whose full name is Petroleo Brasileiro, is expected to drive much of the growth in the booming market. The company has outlined an aggressive program to increase its drilling capacity, and plans to contract or build 69 deepwater drill-ships by 2017.

Brazil stunned the oil world when it announced the discovery of a vast oil field 200 miles south of Rio de Janeiro last November, turning the country’s deep blue waters into the world’s most exciting oil frontier.

Energy experts said the field could turn out to be just a small part of the largest oil discovery in 30 years.

But seven months later, the problem is still how to retrieve it. Petrobras has only three rigs capable of drilling in waters that exceed 6,500 feet, like the sites of the new fields.

But drilling constraints are not the only problem facing international oil companies,which are seeking to expand at a furious pace after a decade of underinvestment in the 1990s.

They have also had to contend with a doubling of development costs across the industry in the last five years, more acute competition for energy resources, shortages in steel, engineering and manufacturing capacity, and pressures posed by an aging work force.

Also, gaining access to countries that hold oil reserves is becoming tougher as many oil-rich governments see fewer incentives to raise production as they reap the benefits of higher prices.

As a result, explorers are scouring ever-more remote corners of the globe in their hunt for hydrocarbons.

Source : DNA