New hydrocarbon discoveries were announced across several offshore regions this week, including Malaysia, the Gulf of Mexico, and the North Sea. Meanwhile, operators are seeking to secure rigs for their operations in Brazil and Nigeria.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
Vantage Drilling has confirmed that the 375-ft jackup Topaz Driller will go to work for Foxtrot offshore Cote d’Ivoire in early 2024. Following a conditional letter of award in May 2023, Topaz Driller has been contracted by Foxtrot for a firm period of 60 days at a dayrate of $125,000 starting around January 2024, with a 30-day option also available. The rig’s next contract is a 90-day term with Eni offshore Morocco. The rig is likely to mobilize to Cote d’Ivoire after the conclusion of this work.
Drilling Activity and Discoveries
Well-Safe Solutions has completed decommissioning operations on Spirit Energy’s Chestnut field in the UK North Sea with the 1,200-ft semisub Well-Safe Defender and the rig has now moved on to the Trees field. Well-Safe Solutions secured this P&A contract with Spirit Energy in July 2022. The contract award was for 14 wells on the Trees and Chestnut fields over approximately 250 days. Following the completion of the final phase of P&A-specific upgrades on the Well-Safe Defender, the rig mobilised from the Cromarty Firth and started its first job as a specialized decommissioning unit in April 2023. Spirit Energy and Well-Safe Solutions removed the last Christmas tree from the field in the Central North Sea earlier this month, ending the 15-year story of Chestnut. Therefore, the Well-Safe Defender has successfully completed the first phase of the Chestnut field’s well decommissioning. The Well-Safe Defender has now moved on to the Trees field for the next phase of decommissioning operations, in blocks 16/12a and 16/7 of the Central North Sea. The production here started in 1995, with three separate oil accumulations – Birch, Larch and Sycamore – making up the field. The rig’s contract with Spirit Energy is scheduled to end in December 2023.
Petronas Carigali has made a total of six discoveries in five blocks offshore Sarawak, Malaysia. The discoveries were made in the Gedonmbak well (block SK306), the Mirdanga well (block SK411), the Sinsing well (block SK313), the Machinchang and Pankin wells (block SK301B), and the Kalung Emas well (block SK315), which stem from both new and existing group of oil fields and exhibit low levels of contaminants. Petronas is confident of more potential in the country as the CEO of upstream, Datuk Adif Zulkifli, stated: “This string of successful discoveries clearly shows the still untapped exploration potential of Malaysia’s basins, waiting to be discovered by companies who are willing to adopt new and innovative ways. We hope these will provide the impetus for more companies to participate and invest in Malaysia’s Upstream sector, especially in the exploration front.”
KazMunayGas has confirmed that an exploration well on the Zhenis block in Kazakh waters of the Caspian Sea did not find any hydrocarbons. Work on the Zhenis block was carried out by Zhenis Operating, a 50:50 joint venture between Lukoil and KazMunayGas, with Lukoil financing the well. Caspian Drilling semisubmersible Dada Gorgud drilled the well, starting in late 2022 and concluding in the second quarter of 2023.
Due to technical challenges, Norway’s Aker BP has temporarily suspended the Rondeslottet exploration well located in licence PL1005 in block 6405/7 in the Norwegian Sea. The licence is operated by Aker BP with Vår Energi and Shell participating as partners. The water depth at the site is 1108 meters. Aker BP received consent for exploration drilling in block 6405/7 in the Norwegian Sea in January and secured a drilling permit for the well in April 2023. The well had a pre-drill unrisked resource potential of 348 million barrels of oil equivalent (mmboe). The Rondeslottet exploration well was spudded on 12 June with Saipem’s 10,000-ft semisub Scarabeo 8. However, according to Vår Energi, the well has been temporarily suspended due to technical challenges. The well has been plugged and abandoned and drilling will commence at a later stage, Vår said. It is a potential high-impact well located in the Norwegian Sea, which could bring significant resources if successful.
Hess Corporation has made a new oil discovery in the U.S. Gulf of Mexico. The Pickerel-1 exploration well (Hess – 100%) is located in Mississippi Canyon Block 727. The oil discovery was made in July 2023. The well encountered approximately 90 feet of net pay in high quality, oil-bearing, Miocene-age reservoir. Planning is underway to tie back the well to the Tubular Bells production facility with the first oil expected in mid-2024. The Pickerel-1 well was drilled with Transocean’s 12,000-ft drillship, Deepwater Asgard. The rig started its current, one-year firm contract with Hess in the second quarter of 2023. The contract also includes three one-year options that could keep it occupied into Q2 2027. The rig also made the Huron discovery for Hess in 2022.
Ithaca Energy has announced “encouraging results” of exploration drilling at the K2 prospect, located in the Central North Sea of the UK Continental Shelf. The K2 prospect is located in License P2382 in Block 22/14c. Ithaca is the operator with a 50% interest and Dana Petroleum is its partner with the remaining 50% interest. The joint venture decided to drill the K2 prospect in January and hired Stena Drilling’s 5,000-ft semisub, Stena Spey, in February 2023. The rig left Scapa Flow to begin drilling operations in the North Sea in early June. Upon entering the reservoir, Ithaca Energy discovered that hydrocarbons were present in the reservoir in the Forties member sandstones, with 45 feet of net thickness. Logs were acquired to establish reservoir quality and further analysis of the well results will be performed to determine future activity and the recoverable resources estimate. Ithaca Energy and Dana have decided to perform an appraisal sidetrack following these results in the main bore. Alan Bruce, Ithaca Chief Executive Officer, commented: “I am delighted to report encouraging well results at K2, located in close proximity to existing infrastructure, further enhancing our portfolio.”
Demand
Petrobras has launched a new tender, this time for up to three high-spec rigs to work off Brazil starting in 2025. Market sources indicate this tender, which was released on 21 July, is divided into two lots. Lot 1 covers up to two high-spec units with MPD. The firm duration is 1,095 days with options for up to 180 days. The campaign start window is from January to April 2025. Lot 2 is seeking one high-spec rig, but MPD is not required for this lot. The firm term is 910 days plus an option for up to 180 days. The commencement window for Lot 2 is May-July 2025. The tender is for the Sepia, Pedunculo, and Atapu fields in the Santos Basin. Bids are understood to be due by 23 August 2024. Notably, the mobilisation window is 415 days from the contract signing date. Given the long lead times necessary to reactivate cold rigs or perform final outfitting for stranded newbuilds, this should allow both cold units and newbuilds to be offered into the tender. There are also a small handful of in-country rigs set to roll off charter in 2025, and these are likely to be offered as well. However, Petrobras has still not finalised awards from the pool tender for up to four floating rigs, the Buzios tender for up to three floating rigs, nor the tender for one floating rig for Colombia. Once these awards have been finalised, this would reduce the number of rigs still available to be offered into this latest tender. Meanwhile, globally, we are seeing an increase in long-term tenders from other operators. These opportunities will also entice newbuilds and cold-stacked rigs to be offered and will likely lead to increased competition for these rigs.
Dubai Petroleum has cancelled its jackup tender. Market sources indicate that Dubai Petroleum has cancelled its tender for one jackup. The scope for this job was for six wells (est. 240 days) plus well-by-well options, and the commencement window was 1 October 2023 to 30 June 2024. No reason was provided for the cancellation.
Shell has issued a pre-tender for a deepwater floating rig to support delivery of well construction, maintenance, and abandonment in the Bonga fields on OML 118 offshore Nigeria. Responses to the pre-tender are due by 14 August 2023. Shell, via its company Shell Nigeria Exploration and Production Company Limited, is looking for a minimum 6th generation semisubmersible or drillship with DP3 capabilities and mandatory minimum water and drilling depth capabilities of 5,000 ft and 25,000 ft, respectively. The unit is also required to have a 15,000 psi BOP, a second BOP, and a variable deck load of at least 3,200 metric ton margin above empty rig. The contract award and commencement dates are planned to be sometime between the third quarter of 2025 and second quarter of 2026 subject to board approval. The pre-tender document did not specify the contract length. Shell currently has Valaris 12,000-ft 7th generation drillship Valaris DS-10 working at the Bonga field; the unit is under contract into March 2024. Shell’s partners on OML 118 include Agip, TotalEnergies, and ExxonMobil under a production sharing contract with the Nigerian National Petroleum Company.
Mobilisation/Rig Moves
Semisub Valaris DPS-5 has finished its charter off Mexico with Eni and is heading to the US Gulf for its next two assignments. First up is a two-well charter with Occidental over about 60 days, followed by a nine-well P&A campaign with APA Corp.’s Apache. These assignments should keep Valaris DPS-5 busy into January 2024. During Eni’s campaign, the operator announced the Yatzil discovery in Block 7 of the Sureste Basin. Results have not yet been released for the other two exploration wells in the campaign – Nabte and Tlazotli.
Noble’s 12,000-ft drillship Noble Voyager (ex-Maersk Voyager) has arrived off Colombia after completing its journey from Mexico. The 7th generation drillship has been working on international assignments with Shell since April 2022. The rig is scheduled to drill an appraisal well in the Gorgon field. Following the Colombia work, Noble Voyager is scheduled to mobilise to Mauritania, where it will continue its work with Shell. The rig is next available for assignment in February 2024, pending the exercise of Shell’s option for up to 24 months.
Stena Drilling’s 10,000-ft drillship Stena Carron has departed Guyana and mobilised to Trinidad and Tobago. The rig’s five-year SPS is due in August 2023. Once finished, it will then return to Guyana and resume operations with ExxonMobil. Stena Carron is currently committed through the first half of 2024 and has continuing options thereafter.
Other News
Italy’s Eni has announced the acquisition of Chevron’s interests, including operatorship, in the Indonesian Blocks named Ganal PSC (Chevron 62%), Rapak PSC (Chevron 62%), and Makassar Straits PSC (Chevron 72%), located in the Kutei Basin, offshore East Kalimantan. Eni already has a 20% interest as a non-operator in the Ganal and Rapak Blocks. The acquisition is an opportunity to fast track the development of the Gendalo and Gandang gas project, a part of the Indonesia Deepwater Development (IDD) in the Ganal PSC, close to the Jangkrik FPU, with estimated natural gas reserves of approximately 2Tcf. This is in addition to the producing Bangka gas field, the Gehem and Ranggas discoveries and the significant exploration potential also included in the northern part of the asset, which represent a further relevant consolidation for Eni operations in the East Kalimantan area. This transaction comes shortly after Eni’s agreement to acquire Neptune Energy, which is holding – among others – a significant presence in Indonesia.
Shell Upstream Overseas Services Limited (SUOS) has agreed to sell its participating interest in the Masela Production Sharing Contract to PT Pertamina Hulu Energi and Petronas Masela Sdn. Shell holds 35% in the Masela PSC, which includes the Abadi gas project. The sales amount is $325 million in cash with an additional contingent amount of $325 million to be paid when the Final Investment Decision (FID) has been taken on the Abadi gas project, and the transaction is targeted to be completed in Q3 2023. Shell’s integrated Gas and Upstream Director, Zoë Yujnovich, said that “the decision to sell our participation in the Masela PSC is in line with our focus on disciplined capital allocation.”
QatarEnergy has completed its acquisition of a 40% interest in Block C-10 offshore Mauritania from Shell. Shell, QatarEnergy and Mauritanian state oil company Société Mauritanienne Des Hydrocarbures (SMH) have signed a joint operating agreement for the block. QatarEnergy and Shell entered into the agreement in April 2023. Shell is the operator of the block with a 50% interest, while QatarEnergy has a 40% interest and SMH has a 10% interest. Block C-10 covers 11,500 sq km off Mauritania with water depths of around 164 to 6,562 ft (50 to 2,000 m). Shell and its partners are preparing to drill an exploration well at the Panacotta prospect on the block before the end of the year. Shell has contracted the 12,000-ft drillship Noble Voyager (Maersk Voyager) to drill this well, following work in Mexico and Colombia. SMH stated that the prospect could contain oil resources of over 1 billion barrels and open up new potential in the area.
Carnarvon Energy has relinquished the TL-SO-T-19-14 production sharing contract (PSC) offshore Timor-Leste and has begun the process to wind up its Timor-Leste subsidiary. The TL-SO-T 19-14 PSC contains the Buffalo field. Carnarvon completed the drilling of the Buffalo-10 well in January 2022 with Valaris 400-ft jackup Valaris 107. The well was drilled to test for the presence of commercial quantities of oil that could have resulted in a re-development of the field. However, the oil column encountered at the well was deemed to be residual and uncommercial.
Deltic Energy has decided to relinquish three and keep two Southern North Sea gas exploration licences following Capricorn Energy’s withdrawal from all five of these licences off the UK. Following Capricorn’s recent decision to exit from its exploration assets outside Egypt, Deltic has been formally notified of Capricorn’s intention to withdraw from the licences. As part of ongoing rationalisation and high grading of its portfolio, Deltic has decided to withdraw from three of the Licences (P2560, P2561, and P2562) and therefore the JV partnership will move to relinquish these three licences as soon as practicable. With respect to licences P2567 (Cadence) and P2428 (Cupertino), Deltic recognises the significant prospectivity highlighted by the technical work programmes completed by Capricorn and intends to continue with these two licences following the withdrawal of Capricorn. Across the P2567 and P2428 acreage position, the committed work programme has been completed and Deltic has been fully carried by Capricorn through nearly $10 million of technical work to date including the pre-funding of nearly 700km2 of new 3D seismic as well as the reprocessing of a number of legacy 3D seismic surveys. The JV identified and matured 17 leads and prospects in the Carboniferous with combined, gross P50 gas-initially-in-place of more than 2.6 Tcf, located on Licences P2567 and P2428. Many of these prospects are analogous with the Pegasus and Andromeda discoveries located on the blocks immediately to the south of these licences. The current terms of P2567 and P2428 licences are due to expire on 30 November 2023 and 31 March 2024 respectively and, once Deltic has been re-appointed as Administrator, it intends to request an extension of the current licence terms from the North Sea Transition Authority (NSTA). If the requests are approved by the NSTA, Deltic would continue to assure and high grade the prospects identified and matured, while seeking to attract another partner or partners to assist with future drilling activity across the two licences.
bp has taken the Final Investment Decision (FID) on the Raven West development project in the Mediterranean Sea off Egypt and launched the project execution. The FID was taken in mid-April 2023, according to bp’s sole partner in the project, Wintershall Dea. The project consists of the drilling of two subsea wells in the West Nile Delta (WND) block and the tie-back for production through existing Raven facilities. bp has previously drilled the Raven West-1 well with 10,000-ft semisub Maersk Discoverer. Valaris 12,000-ft drillship Valaris DS-12 is currently scheduled to start work for BP offshore Egypt around October 2023 under a four-well contract fixed in November 2022. The WND development includes five gas fields across the North Alexandria and West Mediterranean deepwater offshore concession blocks in the Mediterranean Sea. Raven is the third stage of the $9 billion WND development. The first production from Raven, achieved in 2021, followed the Taurus/Libra and Giza/Fayoum projects, which started production in 2017 and 2019, respectively.
Guyana’s Ministry of Natural Resources has once again extended the bid submission deadline for the Guyana 2022 Licensing Round, this time to 12 September 2023. The round had originally been scheduled to close in April 2023, before being extended to July 2023. The ministry cites the comprehensive feedback received from stakeholders in response to the government’s efforts to streamline and improve the petroleum regulatory framework as the driver of the decision to issue the extension. The government says it will soon complement the model production sharing agreements, or PSAs, with a new Petroleum Activities Bill 2023, which will enhance management of the sector and provide improved economic measures for all licensees in the bidding round, as well as future development and production operations in the petroleum sector. The round was launched in December 2022 and continues to receive strong interest.
Karoon Energy has identified a potential final investment decision (FID) target in late 2025 for its Neon field off Brazil. Following the drilling of two control wells earlier this year by the 10,000-ft semisub Noble Developer, and analysis of the results, Karoon has indicated that if its ongoing studies remain encouraging, a decision to enter the Concept Select phase is targeted for the end of Q1 2024, and a decision to enter the Define stage, which would include undertaking FEED activities, could potentially be made in late 2024, with FID in late 2025.
Image credit: Vantage Drilling
