Hai Yang Shi You 981 (HYSY981) is a 6th generation deep water Semi-submersible rig and the first DP3 drilling rig in China. To ensure safety operation of the rig, dynamic positioning capability analysis was performed on HYSY981. Firstly, the model of marine environment including wind, wave and current was established to simulate real marine environment loads. Then different failure modes were designed, such as loss of one or more thrusters and loss of one or more switchboards. The designed failure modes were applied to the established model of dynamic positioning system of HYSY981. Then under marine conditions and designed different failure modes as above, some dynamic positioning capability simulation analyses for HYSY981 were done. This simulation analysis results showed that the DP station keeping performance is excellent. Eventually, some practical failure modes such as drive off due to two DGPS drift or conditions such as soliton disturbance in the South China Sea in the operation of HYSY 981 were given, the reliable DP capability of HYSY981 was verified, at the same time the DP capability simulation analyses were proved right.