No new drilling contracts were announced this week but there was no shortage of new discoveries. Furthermore, while Japan's JX Nippon is taking over the country's only offshore drilling contractor, a new operator will be debuting in the UK North Sea following the acquisition of Hurricane Energy.
In case you missed it, you can access our previous Rig Market Roundup here.
Drilling Activity and Discoveries
Odfjell Drilling’s 10,000-ft semisubmersible rig Deepsea Stavanger has started drilling at the Tott West prospect located in the Norwegian Sea for Equinor. The Tott West well 6406/5-2 S is located in production licence 255 B where Equinor is the operator and its partners are TotalEnergies and Petoro. The water depth at the site is 304 meters. Equinor secured safety consent from Norway’s Petroleum Safety Authority (PSA) to use the Deepsea Stavanger to drill this well in January 2023 and the drilling permit was approved last week. The well was spud on 10 March 2023 and operations are expected to run for 81 days with additional 22 days in case of discovery. Equinor has recently secured a drilling permit to drill the Eggen prospect in the North Sea, which is also expected to be drilled with the Deepsea Stavanger rig.
Equinor has struck oil and gas near the Troll field in the North Sea, its second discovery in the area this year and eighth discovery since 2019. An appraisal well will be considered for drilling in 2024. The well is located in production licence 827 S where Equinor is the operator and DNO is a partner. The volumes are estimated at between 24 and 84 million barrels of oil equivalent, with slightly more oil than gas. Named Heisenberg, the discovery well was drilled by the 10,000-ft Deepsea Stavanger semisubmersible rig. The discovery is considered commercially interesting, partly because it can utilise existing infrastructure connected to the Troll B platform. However, an appraisal well is needed to get a more precise estimate of the size before it can be concluded whether the volumes can be recovered. The parties are considering drilling the appraisal well in 2024. The seven previous discoveries are: Echino South, Swisher, Røver North, Blasto, Toppand, Kveikje and Røver South. Just over a month ago, Equinor made the Røver South discovery in the same area. Through acquisitions two weeks ago, Equinor increased its ownership interests in four of the discoveries made in the area. The Deepsea Stavanger is under firm contract with Equinor almost until the end of 2023 followed by an option throughout 2024. Equinor plans to drill between 20-30 exploration wells each year going forward.
Trillion Energy stated that it has found indications of natural gas at the West Akcakoca 1 well at the SASB field in the Black Sea offshore Turkiye. This is the company’s fourth well in a multi-well program at the field. Trillion’s analysis suggested 55 metres of natural gas pay within six sands. The company intends to complete and flow test the well, then move GSP’s 333-ft jackup GSP Uranus to the Guluc-2 well, which is to be completed and put into production by the end of March 2023.
Italy’s Eni has made a new discovery on the Yatzil exploration prospect in Block 7, located in the mid-deep water of the Cuenca Salina in the Sureste Basin, offshore Mexico. Yatzil-1 EXP is the second commitment well of Block 7 and the eighth successful one drilled by Eni in the Sureste Basin. It is located approximately 65 kilometres off the coast, and 25-30 km away from other discoveries. The well was drilled by the 8,500-ft Valaris DPS-5 semisubmersible rig in a water depth of 284 meters and reached a total depth of 2,441 meters. The rig, which started its three-well charter with Eni in Mexico in January 2023, is next available for charter in August 2023. According to preliminary estimates, the new finding may contain around 200 million barrels of oil (MBoe) in place. Yatzil-1 EXP found in excess of 40 meters of net pay sands with good quality oil in the Upper Miocene sequences with excellent petrophysical properties confirmed by extensive subsurface data collection. The successful result comes after the Saasken and Sayulita discoveries in Block 10, contributing to the potential synergic cluster development of several prospects located nearby. The Block 7 Joint Venture is composed of Eni, which is the operator with a 45% stake, Capricorn (30%), and Citla Energy (25%).
The US Bureau of Ocean Energy Management (BOEM) has announced that it will publish the Proposed Notice of Sale for Gulf of Mexico Lease Sale 261 in the Federal Register in the coming days. The sale will be held no later than 30 September 2023, in line with the Inflation Reduction Act. Approximately 13,620 blocks will be made available. Meanwhile, Lease Sale 259 is scheduled to take place on 29 March 2023.
3D Oil has completed the farm out of VIC/P70 exploration permit to ConocoPhillips following the approval of transfer of title documentation by the National Offshore Petroleum Titles Authority. 3D Oil will transfer 80% interest and operatorship to ConocoPhillips. The VIC/P79 exploration permits is located offshore Otway Basin and is near producing gas fields thylacine and Geographe, as well as the La Bella gas discovery. 3D Oil has previously identifies low-risk, amplitude supported exploration targets and ConocoPhillips will continue the subsurface interpretation of prospects for the drilling of an exploration well before the end of the primary term in February 2025. In accordance with the Farm Out Agreement (‘FOA’), the 3D Oil will be carried for up to US$35 million in gross drilling costs after which it will contribute 20% of drilling costs in line with its interest in the Permit. The 3D Oil will also receive a US$3 million cash payment. ConocoPhillips has commenced preparations for drilling in fulfilment of the terms of the FOA including the preparation of an Environmental Plan (EP) and stakeholder consultation for the drilling of up to six exploration wells within VIC/P79 and T/49P. ConocoPhillips are also actively searching for an appropriate rig to complete the drilling program.
ExxonMobil and Sonangol have signed a memorandum of understanding with Angola’s Agência Nacional de Petróleo, Gás e Biocombustíveis (ANPG) covering revised fiscal terms for Blocks 30, 44 and 45 in the unexplored Namibe Basin. This follows contracts for the blocks entered into in 2020, with ExxonMobil holding a 60% interest and Sonangol with a 40% interest. According to the ANPG, around $200 million will be invested by the partnership into the research and drilling of an exploration well in the basin in 2024, with a further $15 billion invested for evaluation and development in the case of a large-scale commercial discovery.
Equinor is requesting expressions of interest (EOIs) to supply a drilling rig for its Bay du Nord development project off eastern Canada. The operator is expected to make a final investment decision by the end of 2024. The Bay du Nord greenfield development consists of five fields – Bay du Nord, Baccalieu, Harpoon, Cappahayden, and Cambriol. The project is located in the Flemish Pass Basin in water depths ranging from 600-1,200m, necessitating the use of a floating rig. Over 40 subsea wells are in the early planning stages, and drilling is expected to begin no earlier than 2H 2026. The final well count will be decided as the project matures. Responses to the request for EOIs are due by 6 April 2023.
ADES Advanced Drilling Services owned 400-ft jackup Admarine 507 (ex-West Ariel) completed its reactivation and sch. G upgrades at the Lamprell Hamriyah shipyard in Sharjah. Admarine 507 secured its upcoming job in Q2 2022 with Saudi Aramco through Seadrill. In Q4 2022, Seadrill completed the sale of jackups in the Middle East to ADES. The rig is currently in transit from Hamriyah Shipyard in Sharjah to Saudi Arabia, where it will commence its 3 years of operations with Aramco by early Q2 2023.
Japan’s oil and gas company JX Nippon Oil & Gas Exploration Corporation has reached an agreement to take over the country’s only offshore drilling contractor, Japan Drilling Co. (JDC). JX entered into the agreement with the funds related to Aspirant Group to acquire the entire issued shares of JDC and is proceeding with the procedures to obtain the required regulatory approvals with the aim of completing the acquisition around the end of April of this year. Upon completion of the acquisition, JDC will become a consolidated subsidiary of JX. JDC is the only company in Japan engaged in the offshore drilling business. The company operates four offshore drilling rigs, three jackups (Hakuryu-10, Hakuryu-11, and Hakuryu-14) and one semisubmersible (Hakuryu-5). It also operates a drillship designed for scientific drilling operations. JX believes that the acquisition will strengthen its competitiveness in the oil and natural gas development business. In addition, JDC is expected to further reinforce the CCS/CCUS value chain and enhance capabilities to help Japan achieve its carbon neutrality plan.
Looking to execute its strategic growth plans and build a scaled upstream business in the North Sea, midstream and downstream energy group Prax has reached an agreement to acquire UK oil and gas operator Hurricane Energy in a £250 million ($302 million) deal. Under the terms of the acquisition, each Hurricane shareholder will be entitled to receive 4.15 pence for each Hurricane share, comprising the transaction dividend of 3.32 pence per share in cash (£66.1 million) and the cash consideration of 0.83 pence per share in cash (£16.5 million). The acquisition, assuming full value is delivered, will deliver Hurricane shareholders 12.50 pence per Hurricane share and values the entire issued ordinary share capital of Hurricane at approximately £249 million. Prax is committed to building a sizeable upstream business in the North Sea, complementing its midstream and downstream activities to create an integrated business, and it is focused on rapidly developing its oil and gas portfolio via acquisitions. The acquisition of Hurricane is the first strategic step, providing a platform from which its upstream division will grow. Hurricane’s assets are focussed on the Rona Ridge, in the West of Shetland region of the UK Continental Shelf. The company has a 100% operated interest in the Lancaster field. Production of 2P Reserves is projected to continue until August 2025 at an assumed $80/bbl oil price, at which point the Lancaster field will be abandoned.
US President Joe Biden has released the budget proposal for fiscal year 2024. For the Bureau of Ocean Energy Management (BOEM), the request is for $268.2 million, an increase of $48.3 million over the enacted level for 2023. Of this amount, $72.3 million is for conventional energy development, up by $10.3 million from 2023. The budget includes a request of $8.9 million to establish a dedicated offshore carbon sequestration programme. Under the Bipartisan Infrastructure Law, the Department of the Interior (DOI), which oversees the BOEM, has the authority to authorise leases, easements, and rights-of-way on the Outer Continental Shelf in support of carbon sequestration activities. Of the $8.9 million, $6.6 million would support the initiative within BOEM’s Conventional Energy Program, which the DOI says will ensure the effective launch of the programme and allow for reviewing new proposals for carbon capture and storage projects. The other $2.3 million would go to supporting related work within the Environmental Program, which will focus on emerging environmental analysis needed to support offshore carbon sequestration. For the Bureau of Safety and Environmental Enforcement (BSEE), the budget request is for $270.6 million, which is $28.9 million above the 2023 enacted level. Included in the budget is $255.5 million for Offshore Safety and Environmental Enforcement programmes. The amount requested for decommissioning is unchanged at $30.0 million.
Shell has announced the Final Investment Decision (FID) for Dover, a planned subsea tieback to its operated Appomattox production hub in the U.S. Gulf of Mexico. Dover was drilled by Transocean’s 12,000-ft drillship Deepwater Poseidon and originally discovered in 2018. It is located within Mississippi Canyon, approximately 170 miles offshore southeast of New Orleans, Louisiana in about 7,500 feet of water. Shell has 100% working interest in the project. The development concept for Dover is a subsea tieback to the Appomattox production hub, with two production wells produced through a 17.5-mile flowline and riser. The project is expected to start production in late 2024-early 2025 and produce up to 21,000 barrels of oil equivalent per day (boe/d) at peak rates. Last year, Shell took FID on Rydberg, which is another subsea tieback to Appomattox.
Image credit: Trillion Energy