Several new drilling contracts were confirmed this week, including one for a Noble-owned jackup in Argentina and one for a Constellation-owned semisub in Brazil. Meanwhile, certain rigs are changing locations ahead of their upcoming contracts.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
The Iranian Offshore Oil Company (IOOC) has extended the contracts for the 300-ft jackups Sahar 1 and Sahar 2, ensuring their continued operations in the offshore regions of Iran. According to market sources, these extensions span six months, effectively maintaining the operational schedule of the Sahar 1 jackup until approximately April 2024, and the Sahar 2 jackup until roughly March 2024.
Noble has secured a contract with Total Austral, a subsidiary of TotalEnergies, to redeploy the 400-ft harsh-environment jackup Noble Regina Allen for the drilling of three horizontal wells in southern Argentina. Under this new contract, the rig will work on the Fénix project, which is a natural gas development. The contract is expected to begin in the first half of 2024, with a duration of around 220 days. The estimated contract value is approximately $33 million, excluding mobilisation and demobilisation fees. The contract further contains four one-well options. With this new contract, the jackup will be brought back into the market following a mechanical failure with the jacking system of one of its legs in mid-December 2022 after which its contract with EOG Resources in Trinidad & Tobago was terminated early. The rig has been in Rotterdam since April 2023 where it’s undergoing repairs, which are expected to be completed in early 2024. It previously worked in Canada, Trinidad and Tobago, and Guyana.
Constellation has announced a new 3-year contract for 9,000-ft semisubmersible Alpha Star with Petrobras. The contract value is $392 million, which indicates a gross dayrate of $358,000, with a firm duration of 1,095 days. The contract includes a mutually agreed option to extend for the same period. The semisub is currently on a contract with 3R Petroleum and will commence its new contract with Petrobras thereafter. The work scope includes drilling, completion and workover of wells in water depths up to 2,400 meters.
Drilling Activity and Discoveries
Norwegian oil and gas operator DNO has made a gas condensate discovery on the Norma prospect in the Norwegian sector of the North Sea. The well 25/7-11 S, or Norma, is located in license PL984 in which the company holds a 30 percent operated interest. Other partners in the license are Source Energy, Equinor and Vår Energi (20 percent each), and Aker BP (10 percent). Located 20 kilometers northwest of the Balder hub and 30 kilometers south of the Alvheim hub, Norma is situated in an area with extensive infrastructure with tie-back options offering potential routes to commercialisation. DNO secured a drilling permit in April 2023 and started drilling the well in July with the Odfjell Drilling-managed 3,900-ft semisub, the Deepsea Yantai. Preliminary evaluation of the discovery indicates gross recoverable resources in the range of 25-130 million barrels of oil equivalent (MMboe) on a P90-P10 basis, with a mean of 70 MMboe, in a Jurassic reservoir zone with high quality sandstones. Also within the same license, DNO has identified additional exploration prospects that have been considerably de-risked by the Norma results. Drilled to a vertical depth of 4,800 meters, Norma is DNO’s first operated high-pressure high-temperature exploration well. At 4,650 meters, the discovery well encountered a 16-meter hydrocarbon column in a 20-meter gross reservoir section in Jurassic sandstones. Several gas condensate samples were collected in the reservoir. In addition, a water sample was acquired. A bypass core of 33.7 meters was secured and an extensive data and sampling program conducted. DNO says that this discovery is considered a play-opener for the deep turbiditic sands in this area given the exceptionally good reservoir quality it encountered. Plans are underway to further delineate the discovery and the upside potential in the license. Before further appraisal drilling, improved seismic imaging and remapping will be undertaken to identify an optimal location for the next well. Plug and abandonment operations have commenced this week and the Deepsea Yantai will move to drill the next well, appraising the Neptune-operated 2022 Ofelia discovery where DNO has a 10 percent interest.
OMV Norge has made a minor gas discovery at the Velocette exploration well located in the Norwegian Sea but the discovery is not considered to be commercial in isolation. The Velocette well 6607/3-1 S is located in PL1016, which is within tieback distance from the Equinor-operated, producing Aasta Hansteen field. The license partnership consists of OMV Norge (40% operator), INPEX Idemitsu Norge (40%), and Longboat JAPEX Norge (20%). OMV secured safety consent from the Norwegian authorities to drill the well in July and a drilling permit in early August. The well was spud in August with the 10,000-ft Transocean Norge semisub. The exploration well encountered hydrocarbons in the primary target in Cretaceous turbidite sands in the Nise formation. The top of the reservoir was reached close to prognosis at a vertical depth of 3348 metres below sea level with 61 meters of high net-to-gross, moderate to very good quality sandstone. Data acquisition indicates a gas column of approximately nine metres in the well. As the Velocette volumes are at the lower end of pre-drill expectations the discovery is not considered to be commercial in isolation. However, the licence contains numerous other prospects which have been derisked by the presence of gas in good quality reservoir in the Velocette well. The remaining prospectivity has significant size potential in multiple structures and with slightly different trapping geometries. Further assessment of the licence prospectivity together with other opportunities in the area could impact the commercial potential of the licence. High quality data and gas and fluid samples were collected in the exploration well and these will be integrated into the updated prospect evaluations. The well will now be plugged and abandoned as planned.
Norway’s Petroleum Safety Authority (PSA) has given Vår Energi consent for exploration drilling in block 25/7 in the North Sea off Norway. Vår Energi will drill the well 25/7-12, targeting Hubert and Magellan (sidetrack), using the 3,900-ft Odfjell Drilling-managed semisub Deepsea Yantai. The well is located in production licence 917 and the water depth at the site is 127.8 meters. The semisub has recently made a gas condensate discovery drilling on the Norma prospect in the North Sea for DNO. Plug and abandonment operations started this week and, after that, the rig is expected to move on to work for Neptune, also in the North Sea.
Norway’s Petroleum Safety Authority (PSA) has given Aker BP consent for exploration drilling in block 25/2 in the North Sea off Norway. The consent applies to drilling operations in production licences 026, 442, and 272 and for wells 25/2-U-15, 25/2-U-14, and 30/11-U-4, targeting prospects Rind, Langfjellet, and Sentral. The water depth at Rind is 116.8 meters, Langfjellet 121.3 meters, and Sentral 106.5 meters. The wells will be drilled using Saipem’s 10,000-ft Scarabeo 8 semisub. The rig has been working for Aker BP since early 2023 under a long-term contract, which is firm into early 2026.
Equinor is concluding the drilling of exploration well 30/11-15 in the North Sea on behalf of Aker BP as the operator of the licence. The well is dry. Aker BP secured a drilling permit for the well in May and the well was spud in June 2023 with the Deepsea Stavanger rig, about 25 km southwest of the Oseberg field in the North Sea and 150 km west of Bergen. The well, named Krafla Midt Statfjord HPHT, is located in production licence 035. Equinor has drilled the well on behalf of Aker BP, which is the operator of the production licence where the two companies each hold a 50% ownership interest. Munin was discovered in 2011, and the plan for development and operation (PDO) was approved in June 2023. Following the Munin discovery, an additional seven exploration wells have been drilled in this production licence, three of which have resulted in discoveries. The well 30/11-15 encountered the Statfjord Group at about 382 metres, with reservoir rocks totalling 58 metres with poor reservoir quality. Data acquisition was carried out. The well encountered the Brent Group with reservoir properties and hydrocarbon columns as expected. The discovery in well 30/11-8 S was proven in 2011. Data acquisition was also carried out in the Brent Group. The well was drilled to a vertical depth of 4620 metres below sea level and was terminated in the Eiriksson Formation in the Lower Jurassic. The water depth at the site is 106 metres. The well has now been permanently plugged and abandoned.
The Norwegian Petroleum Directorate (NPD) has granted Wintershall Dea Norge a drilling permit for an appraisal well in the Norwegian Sea. The wellbore 6406/3-12 S is located in production licence 836 S, which is operated by Wintershall Dea with Equinor and DNO participating as partners. The well will be drilled with the 10,000-ft Transocean Norge semisub, which is under a long-term contract with Wintershall Dea and OMV via a rig share agreement from last year.
Demand
Equinor has declared commerciality for fields in the BM-C-33, in the Campos Basin, offshore Brazil. The Norwegian energy company has submitted the Declarations of Commerciality and Plans of Development for two fields in the area. BM-C-33 is owned by the consortium partners Equinor (operator), Repsol Sinopec, and Petrobras and is located 200 kilometers from Rio de Janeiro, in water depths of up to 2,900 meters. The two fields will be named Raia Manta and Raia Pintada and contain natural gas and oil/condensate recoverable volumes of above one billion barrels of oil equivalent. Equinor’s Country Manager in Brazil, Veronica Coelho, said: “The fields have the potential to meet 15% of the total Brazilian gas demand when in production. This will contribute to Brazil’s energy security and economic development, enabling significant new job opportunities at local level.”
Mobilisation/Rig Moves
Saipem-managed 12,000-ft drillship Deep Value Driller has left Norway for West Africa, ahead of a drilling contract offshore Cote D’Ivoire with Eni. Deep Value Driller was recently reactivated and handed over to Saipem under a three-year bareboat charter. The rig is currently en route to the Canary Islands, a common stopping point for rigs moving into or out of the West African market.
Diamond Offshore 12,000-ft drillship Ocean BlackHawk has left Las Palmas in the Canary Islands for the US GoM for a new contract after undergoing its five-year special periodic survey (SPS) and other contract preparations. Ocean BlackHawk secured a one-year contract with a one-year option with Occidental subsidiary Anadarko Petroleum in May 2023. The firm contract is expected to commence in November 2023. The unit’s last job was with Woodside offshore Senegal.
Valaris 12,000-ft drillship Valaris DS-8 has begun sea trials in Las Palmas in the Canary Islands as the unit prepares to relocate to Brazil for a contract with Petrobras to begin in late 2023. Valaris DS-8 was cold stacked in mid-2020 and began reactivation in early 2023. The unit secured a three-year contract with Petrobras in a pool tender in the first quarter of 2023. This is valued at $500 million, including a $30 million mobilization fee.
Island Drilling’s 4,000-ft semisub, the Island Innovator, is on its way to Las Palmas in the Canary Islands ahead of a new contract in Equatorial Guinea. This move comes following the completion of a four-well campaign for Dana Petroleum, which started in early June 2023 in the UK North Sea. The rig is now en route to Las Palmas where it’s expected to arrive around the beginning of October ahead of its contract with Trident Energy in Equatorial Guinea in Q4 2023. Earlier this month, Trident exercised the third one-well option for the rig on behalf of another operator, extending the firm backlog into Q3 2024 with two one-well options still available.
Rig Sales
Subsidiaries of China Oilfield Services Limited (COSL) have entered into a contract to purchase four F&G JU-2000E design newbuild jackups from Dalian Shipbuilding Offshore Co. Ltd. (DSIC) for a total of RMB 3,251.6 million ($446 million). Two of the jackups will be delivered to COSL within 90 calendar days after the contract is signed, while the other two will be delivered on or before 31 August 2024. The contract price for the rigs is RMB 812.9 million ($111.5 million) per unit, with the price to be adjusted downwards if the delivery of the assets is delayed. The 400-ft newbuild jackups built at DSIC were originally ordered by Seadrill, which ordered a total of eight jackups from the Chinese yard. Seadrill cancelled these orders in 2018 and 2019. Two of the units bought by COSL are understood to be the jackups known as West Rhea and West Titan. Other newbuild jackups at DSIC include West Dione, West Hyperion, West Mimas, West Tethys, and West Umbriel.
Other News
The UK’s North Sea Transition Authority (NSTA) has awarded 14 companies 21 licences in its first carbon storage licensing round. These licences are located in depleted oil and gas reservoirs and saline aquifers in UK waters. Licences were awarded to Eni, Perenco, Spirit Energy, Pale Blue Dot Energy, Enquest, Synergia Energy CCS, Neptune Energy, Chrysaor, BP, and Shell. Once a licence has been awarded by the NSTA, the licensee also needs to obtain a seabed lease from The Crown Estate or Crown Estate Scotland. The Crown Estate is working to design and deliver the required leasing process for carbon capture and storage developers in England, Wales and Northern Ireland.
Hibiscus Petroleum, through its subsidiary Anasuria Hibiscus UK Limited (AHUK), Ithaca Energy, and Caldera Petroleum have entered into a Unitisation and Unit Operating Agreement (UUOA) to jointly develop the Marigold field in the UK North Sea. AHUK holds 87.5% interest in Licence P198 Block 15/13a, which contains the Marigold West field, with Caldera holding the remaining 12.5%. Ithaca holds 100% in Licence P2158 Block 15/18b, adjacent to the Marigold West field and containing the Marigold East field. Pursuant to the UUOA, the respective unit participations in the unitised Marigold field, i.e. Marigold West and Marigold East, will be: AHUK 61.25%, Caldera 8.75%, and Ithaca 30%. Hibiscus says that the unitisation of Marigold West and Marigold East will allow for an optimal field development solution to be implemented. An integrated project team led by AHUK, comprising AHUK personnel and Ithaca secondees, will develop the Marigold Field Development Plan (FDP), the submission of which is targeted by early calendar year 2024. The Sunflower field, located in Block 15/13b and being part of Licence P198, will be developed by AHUK and Caldera as a subsea tie-in to the Marigold Project infrastructure and the FDP will be submitted separately from Marigold and does not form part of the UUOA. AHUK holds 87.5% and is the operator of the Sunflower field while Caldera holds 12.5%.
Orcadian Energy has entered into a non-binding Heads of Agreement (HoA) with an unnamed North Sea operator, which details a potential farm-out of the Pilot development project located in the UK North Sea. Orcadian has granted the operator a commercial exclusivity period until 30 November 2023 to complete definitive documentation for the overall deal, but there can be no guarantee that any transaction will occur as it is subject to several matters, including completion of due diligence; negotiation of documentation; and various regulatory and shareholder consents as well as board approvals of the operator and Orcadian. If the deal completes as documented in the HoA, this will enable Orcadian and the operator to progress the development. The operator will become operator of the Pilot development and will acquire an 81.25% interest in Licence P2244. Orcadian will retain an 18.75% carried interest in the Pilot development with the operator paying 100% of the pre-first oil scope of work. After first oil, Orcadian will pay its working interest share of expenditure. The operator and Orcadian will work to deliver a Field Development Plan (FDP), which is designed to accelerate first oil and to minimise the initial cost of the development, to the North Sea Transition Authority (NSTA) for a polymer flood development. Orcadian and the operator have requested that NSTA extend the second term of licence P2244 to allow the operator to submit the FDP and Environmental Statement and will also request an out-of-round application for the area of former Licence P2320 (which Orcadian had to relinquish earlier this year), in support of the Pilot development and the area plan. This acreage contains extensions of the Pilot field, the likely location of a wellhead platform to be installed later in field life, and the Feugh oil and gas discovery. On completion of the transaction, extension of the P2244 licence, and a licence award over former P2320, Orcadian would receive a cash consideration of up to $200,000 from the operator, with a further $3,000,000 being received on Pilot FDP approval.
W&T Offshore has completed the acquisition of working interests in eight shallow water oil and gas producing assets in the central and eastern shelf region of the Gulf of Mexico from an undisclosed private seller for $32 million. The producing properties cover 22,079 net acres in water depths of 25 to 265 ft (7 to 80 m) and are currently producing around 2,400 b/d of oil equivalent. Estimated proved reserves as of June 1, 2023, for the eight properties totaled 3.2 million barrels of oil equivalent.
The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) has issued Calls for Nominations (Parcels) in the Eastern Newfoundland and Jeanne d’Arc Regions. Responses to this will be used to inform the C-NLOPB’s decision later this year on whether to proceed with Calls for Bids in either of these regions in 2024 and if so, which parcels would be offered. Nomination submissions or comments regarding the Calls for Nominations are to be submitted on or before 8 November 8 2023. Following the review of responses to the Calls For Nominations, previous input and new feedback from interested parties, and technical analysis, the C-NLOPB will determine whether the Call for Bids will proceed in either region. If it proceeds, the Call For Bids would be announced in Spring 2024 and close in November 2024, with licences awarded to successful bidders in early 2025.
Image credit: Valaris
