This week, Italy's Saipem bought a drillship for $230 million and Transocean secured over $1 billion in firm backlog thanks to new contracts for two of its drillships. While Serica Energy's North Sea well did encounter hydrocarbons, commercial quantities still need to be established. On the other hand, Perenco and Petronas confirmed new discoveries in Congo and Malaysia, respectively. Meanwhile, three energy giants agreed to explore electrification options for their West of Shetland assets, including Cambo, Rosebank, and Clair.
Saipem has exercised its option to purchase the 10,000-ft drillship Santorini from Samsung Heavy Industries. The purchase option is $230 million, to be paid by the end of 2022. Santorini is already bareboat chartered to Saipem and has been working in the US Gulf with Eni. Operations are scheduled to run until Q3 2023. Saipem notes the investment decision is based on an expected return on investment of over 15%, with a payback period of five years, estimated on the basis of the existing contract and the rig’s commercial prospects. The purchase will be financed entirely from available cash.
ARO Drilling has securedtwo three-year contract extensions with Saudi Aramco for Rig BB 84 (Valaris 147) and Rig ED 85 (Valaris 148). The contract extensions will commence in December 2022 for Valaris 147 and in February 2023 for Valaris 148. Both jackups are bareboat chartered to ARO Drilling from Valaris.
Shelf Drilling has secured a three-year contract for the 2008-built LeTourneau Super 116C Class Shelf Drilling Resourceful and a two-year contract for the 1980-built LeTourneau 116-C Key Manhattan with Eni, offshore Italy. The contracts include multiple additional options for work after the firm period and the scheduled start-up date is Q2 2023 for the Shelf Drilling Resourceful and Q4 2024 for the Key Manhatten. Both contracts are for work in the Adriatic Sea, offshore Italy, and the S.D. Resourceful will have to mobilise from Nigeria after its contract with Conoil, while the Key Manhattan is currently contracted offshore Italy with Eni.
Transocean has confirmed that Petrobras has awarded multi-year contracts for work offshore Brazil to drillships Deepwater Corcovado and Deepwater Orion, representing a combined USD1.04 billion in firm backlog for the drilling contractor. The 10,000-ft Deepwater Corcovado was awarded a four-year contract from Lot 1 of the tender. This contract adds around USD 583 million to Transocean’s backlog and is expected to begin in the third quarter of 2023 in direct continuation of the rig’s current contract with Petrobras. The 10,000-ft Deepwater Orion was awarded a three-year contract from Lot 2 of the tender. This contributes USD 456 million in backlog and is to begin in the fourth quarter of 2023. Deepwater Orion has been idle in Namibia since October 2019.
The deadline to respond to the tender from Petrobras for the Buzios project has been extended until 21 December 2022, according to market sources. The operator is seeking up to three high-spec rigs with MPD for work starting between December 2023 and February 2024. The firm term is 991 days with options for 73 days. Meanwhile, negotiations are understood to still be underway for the Petrobras tender for up to two ultra-deepwater rigs with MPD for the BM-S-11 project. Operations are expected to begin in the first half of next year.
Drilling Activity and Discoveries
Serica Energy’s North Eigg exploration well in the UK North Sea has not delivered the result the company was hoping for but it did encounter hydrocarbons, the commercial quantities of which have not yet been established. The HPHT well was spud on 11 July 2022, using Transocean’s 1,969-ft Paul B. Loyd, Jr. semisubmersible rig. Initially, well results were expected in mid-October but Serica encountered delays during drilling operations, adding about six weeks to the operations schedule. The North Eigg exploration well 3/24c-6B has been drilled to a total depth of 16,728 feet in the Jurassic Heather formation and initial analysis indicates that, whilst the well has encountered hydrocarbons, commercial quantities have not yet been established. At the well location, the objective sands were thinner than had been prognosed but a total of 16 feet of hydrocarbon-bearing sands were encountered, and these have confirmed the presence of hydrocarbons at a deeper depth than in the adjacent producing Rhum field. A full suite of wireline logging data has been acquired and the analysis is ongoing. Serica aims to determine if a future sidetrack location can be designed to better evaluate the volumes of hydrocarbon in this new discovery. The well will be suspended pending the results of this further work prior to future potential re-entry and sidetrack.
Turkish national oil company Türkiye Petrolleri A.O. (TPAO) has started drilling the Taşucu-1 well in the East Mediterranean. The well is being drilled using the 12,000-ft Abdulhamid Han drillship, which the company bought last year from South Korea’s Daewoo Shipbuilding & Marine Engineering. Following the delivery and preparation period at Taşucu port, the drillship’s first mission was in August, drilling the well Yörükler-1, which is located 55 kilometres off Gazipaşa.
Chevron is expected to begin drilling the A-3 well at the Aphrodite field on Block 12 offshore Cyprus in the first half of 2023. Chevron and its partners on Block 12 recently received a nine-month extension to the date of the obligation to drill and complete the well, extending this period to August 2023. Chevron has Stena Drilling 10,000-ft drillship Stena Forth lined up to drill the well.
Perenco has confirmed that it has made an oil discovery at the Tchnem1-01 well at the Tchibeli North East pre-salt Vandji exploration prospect on its PNGF Sud licence offshore Congo. The well was drilled with Petrofor-managed 350-ft jackup Dagda. Perenco stated good oil and gas shows were recorded on entry into the reservoir and a 75-meter oil column was interpreted on logs. A test of these zones produced at 2,000 bopd. Perenco stated that the discovery is potentially a “play opener” for Perenco in the pre-salt Congo and it has identified other Vandji leads on its acreage.
Petronas has made a significant oil and gas discovery at the exploration well Nahara-1 in Block SK306, offshore Malaysia. The Nahara-1 well is located in shallow water in the Balingian Province, off the coast of Sarawak, and was drilled to a total depth of 2,468 metres. The well encountered hydrocarbon in the Late Oligocene to Middle Miocene aged sedimentary sequences. Light oil with minimal contaminants was established after production testing was conducted for the well.
CNOOC Limited has started production from the Enping 15-1/10-2/15-2/20-4 oilfields joint development project in the eastern South China Sea. The company plans to commission 48 production wells for the project, in addition to a carbon dioxide (CO2) gas injection well for the reinjection and storage of CO2 produced by the oilfields. This is the first offshore carbon capture and storage demonstration project in China. The project is expected to achieve peak production of around 35,500 b/d of crude oil in 2024.The main production facilities of the project include two drilling production platforms and one unmanned wellhead platform, which has been equipped for remote production.
NewMed Energy and Adarco Energy have signed agreements with Morocco’s National Office of Hydrocarbons and Mines (ONHYM) for the performance of natural gas and/or oil exploration and production activity in the Boujdour Atlantique exploration license offshore Morocco in the Atlantic Ocean. The licence is for eight years with an initial term of 2.5 years NewMed and Adarco each hold a 37.5% interest with ONHYM holding the remaining 25%. The agreements are still contingent on the receipt of regulatory approvals.
Hartshead Resources has completed the initial phase of a partial divestment process for its Phase I development of the Anning and Somerville gas fields in the UK Southern North Sea with plans to conclude it in the first quarter of 2023. Phase I development comprises the Somerville and Anning gas fields, located in License P2607, which is comprised of five blocks in Quads 48 and 49 on the UKCS. Hartshead intends to complete the Front-End Engineering & Design (FEED) stage and define the gas export route during 2022/2023 with a view to taking a Final Investment Decision (FID) on the development in 2023 and achieving the first gas in late 2024.
Lebanon’s Ministry of Energy and Water has extended the deadline for applications to participate in Lebanon’s second offshore licensing round to 30 June 2023. The decision was based on the recommendation of Lebanon’s Petroleum Administration Authority. The round was originally launched in April 2019 with a deadline of 31 January 2020. This has been extended several times since then and was set to 15 December 2022 prior to the latest extension. Lebanon’s first offshore licensing round in 2017 awarded blocks 4 and 9 offshore Lebanon to a consortium of Total, Eni and Novatek, leaving eight blocks on offer for the second round.
The Norwegian government has decided to postpone the 26th oil and gas licensing round following the minority government’s agreement with the Socialist Left Party (SV) over the 2023 budget. Norway has two types of licensing rounds, the numbered licensing rounds include frontier parts of the Norwegian continental shelf (NCS) and the Awards in Predefined Areas (APA) comprise the mature parts of the shelf, with known geology and good infrastructure. It has been decided that the 26th licensing round will not proceed during the life of the current parliament, which ends in 2025.
Three energy companies – BP, Equinor, and Ithaca Energy – have signed a Memorandum of Understanding (MoU) to explore electrification options for their West of Shetland oil and gas interests. It follows the formation of the West of Shetland Electrification (WoSE) group, acting on behalf of the joint venture partners of the Clair, Rosebank, and Cambo fields. Electrification solutions could include power from shore (potentially from onshore wind) or from offshore wind and full electrification would require in the region of 200 megawatts of power. The project is seeking to overcome technical challenges presented by the remote and deepwater locations of the fields, as well as some commercial, regulatory, and consenting hurdles to recommend a technically and commercially viable option that can meet the requirements of the three fields within the respective project timeframes. Equinor’s Rosebank and Ithaca’s Cambo are due for a final investment decision (FID) next year. BP’s Clair Ridge is the second phase of development of the giant Clair field, located 75 kilometres west of the Shetland Islands. Clair Ridge started up in November 2018.
Valeura Energy has agreed to purchase the Thailand upstream oil producing portfolio of Mubadala Energy’s Busrakham Oil and Gas subsidiary. The acquisition comprises interests in three offshore licences in the Gulf of Thailand. The licences include the Nong Yao, Jasmine/Ban Yen, and Manora oil fields. These fields produce a combined total of about 21,200 barrels per day of oil, net to the interest being acquired. The purchase price is $10.4 million plus up to an additional $50 million, contingent upon certain upside price scenarios. The effective date for the transaction, which is subject to customary closing conditions, is 31 August 2022.
Noble Corp. has completed the renaming of semisubmersible Maersk Deliverer to Noble Deliverer, the company’s first rig to be renamed since its business combination with Maersk Drilling in October 2022. The rig is currently contracted to Inpex offshore Australia into mid-2024.