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Onshore Versus Offshore

The amount of recoverable oil and natural gas around the world has been rapidly expanding, thanks to two advanced drilling techniques: onshore and offshore drilling. With significant improvements in fracking continuing to influence the industry, these oil drilling methods have turned otherwise uneconomic drilling locations all over the world to suddenly become profitable. But what’s the difference between the two?

In short, onshore drilling refers to drilling deep holes under the earth’s surface whereas offshore drilling relates to drilling underneath the seabed. These drilling methods are used in order to extract natural resources – usually oil and gas – from the earth. While extracting oil from below the surface of the ocean used to be much more difficult than the traditional onshore drilling method of making wells on land and drilling holes, offshore drilling has become easier through the innovative methods that have surfaced such as making either floating or fixed platforms on the bed of the ocean to support drilling.

Similarities and Differences in Onshore and Offshore Drilling

In general, the equipment used in both offshore and onshore drilling are not much different. Both methods require tools like exploratory equipment, waste-water/oil separators, pumps, pipelines and storage tanks.

However, there are some key differences between offshore and onshore drilling equipment as well, specifically in the structure of the drilling rig itself.  Onshore drilling rigs are the more classic drilling equipment and come in different sizes and strengths. They are generally classified by their maximum drilling depth and their mobility. Conventional land rigs cannot be moved as a whole unit and are typically used in the petroleum industry while mobile rigs are drilling systems that are mounted on wheeled trucks and come in two different types, jackknife and portable mast.

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Diagram of a petroleum onshore drilling rig

Offshore drilling rigs are classified differently, mainly based on their movability and how deep the sea bed is. There are two types of offshore drilling rigs.

  1. Bottom-supported units are rigs that have contact with the seafloor. There are submersible bottom-supported units and also jack up units that are supported by structured columns.
  2. Floating units do not come in direct contact with the ocean floor and instead float on the water. Some are partially submerged and anchored to the sea bed while others are drilling ships which can drill at different water depths.

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Diagram of different types of offshore drilling rigs.

So there are some key similarities and differences between the two drilling methods. But which is more profitable?


The Business of Offshore and Onshore Drilling

If you’re interested in offshore or onshore drilling, you’re likely interested in it for one reason: making a profit. Drilling on land versus drilling offshore can provide different return on value based on investment costs and timeline. Since it only takes a matter of weeks to drill an inland well, you have more flexibility as to when you start and stop new drilling projects. The chart below shows the correlation between the price of oil and the number of onshore drilling rigs in the United States. As soon as the price goes down, the number of inland rigs also decreases.

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As for offshore drilling, there can be similar “boom and bust” phenomenon. However the offshore market is much less volatile, especially with very deep water drilling rigs. Since offshore rigs take much longer to drill, these contracts are typically much more long-term, providing the involved companies a bit more security. It is also worth noting, however, that as drilling companies meander into deeper waters, the drilling becomes more complex and costly. In addition, offshore drilling can bear greater risks and hazards such as marine weather and pollution that can be very expensive over time.

Offshore vs. Onshore: What’s the best option?

Whether offshore or onshore drilling is best for your business goals depends on a range of things.

Timeline
Offshore drilling projects require a much longer timeline than onshore drilling rigs – many offshore drilling contracts last several years. Onshore drilling requires less of a time investment as many inland rigs can drill oil in a matter of months.

Cost
Given the elongated timeline of offshore drilling compared to onshore in addition to the added risks, onshore drilling will require more investment, at least initially. However, offshore drilling profitability rates have been improving and demand remains high. As for onshore drilling rigs, the cost can be lower since the timeline of the contract is often shorter. New innovations have also helped boost the onshore drilling industry and profits expect to increase as more companies develop new technologies.

No matter if you’re leaning toward offshore or onshore drilling, Entrance can help. Our team has extensive experience in the oil and gas industry and can help develop custom applications to support your exploration needs to better position your business for success.


Nate Richards
Nate has over 18 years of software engineering and consulting experience. He founded Entrance in 2003. Nate is the past President of the Board of LifeHouse Houston, a Christ-centered maternity home ministry, and is past Executive committee member and Treasurer of Houston Achievement Place, a foster care and social skills training non-profit organization.
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