This week, Stena Drilling, Island Drilling, and Borr Drilling secured more work for their rigs. Furthermore, two discoveries were announced, one made by Chevron in the Eastern Mediterranean Sea and the other one by Equinor in the Norwegian Sea. In the UK, the latest licensing round attracted a total of 115 bids from 76 companies.
Stena Drilling has signed a new contract with Shell for the use of the 10,000-ft drillship Stena Forth in Egypt. The operations for Stena Forth in Egypt are due to begin in 2023 upon completion of its existing contractual commitments. The Shell exploration project will entail three wells drilled in the Mediterranean. The project will require Managed Pressure Drilling (MPD) utilising the system owned and installed by Stena Drilling on the Stena Forth.
Petrofac has exercised an option to use Island Drilling’s 4,000-ft semisub Island Innovator for a further well as part of the Tullow plug and abandonment (P&A) campaign at the PSC-A Banda and PSC-B Tiof wells offshore Mauritania. Island Innovator will now be used for five well re-entries on the project. The newly-exercised P&A work at the Banda-1 subsea exploration well is expected to take 20 days. The Island Innovator began work for Petrofac offshore Mauritania in late 2022. Beyond its contracted work with Petrofac, Island Innovator also has jobs lined up with Dana Petroleum offshore the UK and Trident Energy offshore Equatorial Guinea.
Borr Drilling’s 400-ft premium jackuprigRan has received a Letter of Award (LOA) from an undisclosed customer for work in Latin America. This award will cover a two-well campaign with an estimated duration of 200 days on a dry-hole case and up to 460 days on a success case. The work will begin in October 2023 and has an estimated contract value, including mobilization and demobilization fees, of $30.4 million on a dry-hole case. The Ran is currently on a contract with Wintershall in Mexico which is expected to keep the rig committed until Q2 2023. The company remains in constructive discussion with other customers in the region for further work to cover the available time between these two programs.
Drilling Activity and Discoveries
Chevron and its partner Eni have made a significant new gas discovery at the Nargis-1 exploration well located in Nargis Offshore Area Concession, in the Eastern Mediterranean Sea, offshore Egypt. The Nargis-1 well has encountered approximately 200 net feet (61 m) of Miocene and Oligocene gas bearing sandstones and was drilled in 1,014 feet (309 m) of water by the Stena Forth drillship. The rig is now scheduled to work for Chevron in Israel. The discovery can be developed leveraging the proximity to Eni’s existing facilities. Eni says that the Nargis-1 confirms the validity of its focus on acreage offshore, which the company will further develop thanks to the recent award of exploration blocks North Rafah, North El Fayrouz, North East El Arish, Tiba and Bellatrix-Seti East. Egypt’s Nargis Offshore Area concession is ~445,000 acres (1,800 square kilometres). Chevron is the operator with a 45% interest, while Eni’s wholly owned Affiliate IEOC Production BV holds a 45% and Tharwa Petroleum Company SAE holds a 10% interest.
The Norwegian Petroleum Directorate (NPD) has granted OMV (Norge) a drilling permit for a wildcat and an appraisal well in the North Sea off Norway. The wells 15/2-2 S (Eirik HPHT well) and 15/2-2 A are located in production licence 817, which is operated by OMV with Neptune Energy and Source Energy as partners. The wells will be drilled using the Odfjell Drilling-managed Deepsea Yantai semisub. The first well is expected to be spud this month and the second one is slated for March, according to the NPD. This year, the 3,900-ft rig also has work lined up with Wellesley Petroleum, DNO, and Neptune Energy.
The 8,500-ft semisubValaris DPS-5 has commenced its three-well charter with Eni off Mexico. The rig recently completed an assignment with Murphy drilling the Tulum exploration well in Block 5 of the Salina Basin. Eni’s first well in its campaign is Yatzil. The rig is next available for charter in August 2023.
Equinor has made a commercial gas discovery in the Norwegian Sea estimated at between 2 and 11 billion standard cubic metres of recoverable gas, or about 12.6-69.2 million barrels of oil equivalent. Both wells are located in production licence 1128 operated by Equinor. The wildcat well 6605/1-2 S was spud on 27 November 2022 and the appraisal well 6605/1-2 A on 31 December 2022. The wells were drilled to respective vertical depths of 3,330 metres and 3,327 metres below sea level by Odfjell Drilling’s 10,000-ft Deepsea Stavanger rig. The Obelix Upflank discovery was made some 23 kilometres south of the Irpa gas discovery, and 350 kilometres west of Sandnessjøen. The water depth at the site is 1190 metres. Equinor says this is the first discovery made on the Norwegian continental shelf (NCS) in 2023 and the first wells in its operated production licence awarded in the APA award in 2020. Equinor and its partners, Wintershall Dea and Petoro, will consider tie-back of this discovery to Irpa, for which it has recently submitted a plan for development and operation. Irpa is a subsea development that will be tied back to the Aasta Hansteen platform and extend its life by seven years.
One of the Valaris-owned jackup rigs is gearing up for drilling operations on the Shell-operated Shearwater field in the UK North Sea. Following the completion of drilling operations at the Orlov field on the 22/08a-E Orlov well, the 400-ft Valaris 122 is scheduled for work on the Shearwater field. Starting in February, the jackup will drill a single well on the field, the 30/22b-SW-IWA. The total duration of drilling and suspension activities is expected to last approximately 170 days. The rig has been working for Shell since 2020. In September 2022, it was awarded a four-well extension with a duration of 500 days for work in the UK North Sea. This will keep it busy with Shell into August 2024.
The UK’s North Sea Transition Authority (NSTA) has announced that more than one hundred applications have been received for the UK’s 33rd offshore oil and gas licensing round. The round was launched in October 2022 and closed last week. The round attracted a total of 115 bids across 258 blocks and part-blocks, from a total of 76 companies. It included four priority areas, which have known hydrocarbons, in which there was very keen interest and could see production in as little as 18 months, the NSTA said. The round has attracted similar interest to the 32nd Licensing Round in 2019 which received 104 applications from 245 blocks and part-blocks. In 2019, a total of 768 blocks and part-blocks were offered, compared with 931 this year. The bids will now be studied, with a view to awarding licences quickly and supporting licensees to go into production as soon as appropriate. Priority blocks could be awarded during spring. There are several necessary consents after licensing and before production to ensure these developments are also in line with net zero. More here…
Crogga Ltd has appointed THREE60 Energy to drill the Crogga appraisal well off the Isle of Man in 2023. Crogga is currently raising funds for the project. The Crogga field is located in the East Irish Sea. The shallow-water field was discovered by bp in 1982 but was not developed at the time. If appropriate funding is secured, drilling is expected to begin in October. Crogga indicated if the well is successful, 3D seismic and additional drilling will quickly follow with a goal to commencing natural gas production as early as 2026.
Following changes in the UK tax regime announced last year, UK’s independent oil and gas operator Harbour Energy reduced its spending, decided not to participate in the country’s latest licensing round, and started a review of its organisation to be in line with lower future activity and investment in the country. Harbour Energy’s 2022 total capital expenditure of $1 billion was materially lower than the $1.3 billion forecast at the outset of the year. This was due to the decisions not to proceed with several North Sea exploration and appraisal wells as well as the delayed arrival of rigs at some locations. UK capital expenditure focused on high return, lower risk, infrastructure-led investment opportunities including Tolmount East and Talbot development drilling, Callanish F6 infill well, Leverett appraisal and the Jocelyn South exploration well. More here…
The Northern Ocean-owned 10,000-ft semisubmersible Deepsea Mira is expected to mobilize from Norway to West Africa by late February 2023, ahead of a multi-country drilling program with TotalEnergies fixed in late 2022. Deepsea Mira, now managed by Odfjell Drilling, secured the 300-day contract plus option with TotalEnergies in December 2022. This is the rig’s first contract since Odfjell Drilling took over management of the unit. The rig is currently in Norway undergoing contract preparations. Deepsea Mira is expected to leave Norway by late February 2023 at the latest, with an expected transit time of 35 to 40 days. The contract with TotalEnergies covers multiple countries, initially commencing offshore Namibia.
TotalEnergies has reached a final investment decision (FID) on the Lapa South-West project in the Santos Basin off Brazil. The project will be developed through three wells tied to the existing Lapa FPSO, which is currently producing the northeast portion of the Lapa field. First production from Lapa South-West is expected in 2025. Production will be increased by about 25,000 b/d of oil, bringing the overall Lapa production to 60,000 b/d of oil. The development represents an investment of approximately $1 billion. TotalEnergies operates Lapa South-West with 45% interest. The partners are Shell with 30% interest and Repsol Sinopec with 25% interest.
United Oil & Gas has entered into a binding Asset Purchase Agreement (APA) with Quattro Energy to sell UK Central North Sea Licence P2519 containing the Maria discovery in Block 15/18e. The divestment is part of United’s strategy to focus its new ventures programme on opportunities in the Greater Mediterranean and North Africa. The agreement is for a consideration which comprises an initial cash payment of £2.45 million to United (c. $3 million) at completion. It also comprises an additional £1 million to be paid to United upon approval of an FDP (expected in late 2023) for Block 15/18e and a contingent bonus payments of up to £2.25 million upon reaching gross production thresholds from the field of three, four and five million barrels. The completion of the APA is subject to a number of pre-conditions including the North Sea Transition Authority (NSTA) approval to the Licence acquisition and Quattro having available an amount equal to the completion payment of £2.45 million in cash. It is anticipated that completion of the APA will be within 90 days from this announcement. More here…