Offshore Drilling Industry: Challenges and Positioning Strategy of Pacific Drilling

Running head: INTERNATIONAL BUSINESS
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1INTERNATIONAL BUSINESS
Introduction
The Offshore drilling industry is facing a number of issues in the current time but still it
can be referred as an attractive industry. This is due to the reason that oil and gas sector will have
business potentiality in the long term also as the demand for energy will get increased in future1.
All the issues faced by the current drilling companies will be discussed in this essay along with
discussion of the potential solutions. It should also be noted that huge investments are required to
operate in this industry along with maintaining extensive infrastructure. This may be difficult for
the new entrants and will restrict their entry in the industry. On the other hand, restriction on the
entry of the new entrants will further increase the market attractiveness for the existing players2.
This is due to the fact that the less will be the probability of new entrances; the more will be the
monopolistic power of the existing players. Oil and gas sector is one of the most profitable and
potential industries in the world with revenues being generated in billions.
However, currently all the offshore drilling firms are producing only non-renewable
sources mainly petroleum products. Thus, the future potentiality will get reduced in the coming
years with the reduction in the flow and source of non-renewable sources, business potentiality
of the offshore drilling companies will get reduced3. This is coupling with the existing players in
this industry creating offshore drilling industry, a highly competitive industry. However, in the
recent time it can be said that attractiveness of the offshore drilling industry is increasing due to
the fact that average price of crude petroleum is rapidly increasing in the world market and this
will increase the profitability of the offshore drilling firms. Hence, it can be concluded that The
1 Kaiser, Mark J., and Brian F. Snyder. The offshore drilling industry and rig construction in the Gulf of Mexico.
Springer-Verlag London, 2013.
2 Abimbola, Majeed, Faisal Khan, and Nima Khakzad. "Dynamic safety risk analysis of offshore drilling." Journal
of Loss Prevention in the Process Industries 30 (2014): 74-85.
3 Chernyi, S. G. "Analysis of the energy reliability component for offshore drilling platforms within the Black
Sea." Oil Industry Journal 2016.02 (2016): 106-110.

2INTERNATIONAL BUSINESS
Offshore drilling industry will be attractive only it can be sustainable in the long term. In
addition, the business is more attractive for the existing players than the new entrants.
Positioning strategy of Pacific Drilling
In the case, it is identified that Pacific Drilling initiated differentiation strategy in
positioning themselves in the industry. This is due to the fact that they focused more on
technological advancements rather just following the industry trends. In the case study, it is
stated that majority of the existing players in this industry are just focusing on driving through
their existing technologies. It was the approach of the existing business organizations in this
industry that only they are capable enough to dig rigs and no one can do it better. This approach
leads to the stagnation in the development of new technology in the offshore drilling industry4.
Pacific Drilling targeted this gap in the industry in positioning themselves. According to their
strategic intent, technology is given the major concentration and they entered in the market by
offering the latest technologies, which are more efficient and cost effective over the existing
ones. In addition, Pacific Drilling also focused on maintaining single type of drill ships in their
inventory in order to reduce the complexities and difficulties. This helped them to offer more
specialized services to the customers in a particular asset class.
Extent of success of the strategy
The positioning strategy initiated by Pacific Drilling can be termed as successful but only
in the long term. This is due to the reason that in the case study, it is stated that unique
positioning of Pacific Drilling in this industry caused limitations in attracting new clients5.
4 Kaiser, Mark J., and Brian Snyder. "Capital Investment and Operational Decision Making in the Offshore Drilling
Industry." The Engineering Economist 58.1 (2013): 35-58.
5 Rui, Zhenhua, et al. "Development of Industry performance metrics for offshore oil and gas project." Journal of
Natural Gas Science and Engineering 39 (2017): 44-53.