Esgian Rig Analytics Market Roundup (Week 40)

In case you missed it, you can access our previous Rig Market Roundup here.

Contracts

Shelf Drilling’s subsidiary, Shelf Drilling North Sea, has secured a two-well contract extension for the Shelf Drilling Fortress jackup rig. The firm term of the extension is approximately five months, with a contract value of approximately $18 million. The expected availability of the rig is now June 2024. The contract includes options for an additional two wells, with a total estimated duration of eight months. The 400-ft rig is working for CNOOC at the Golden Eagle platform in the UK sector of the North Sea under a contract that was awarded and started in August 2023. The firm term of the contract was two wells, with a total duration between four and five months. The contract also included options for additional wells, with a total estimated duration of 13 months. If exercised, the remaining options for the additional two wells would keep the rig busy into February 2025.

Shelf Drilling has secured new contracts for the 350-ft jackups Adriatic I and the Shelf Drilling Mentor for operations offshore Nigeria for firm durations of 16 months and 8 months, respectively. The combined estimated contract value for the two rigs is approximately $93 million, excluding revenues for mobilisation and demobilisation. Both rigs completed their previous contracts in Nigeria in September 2023 and are scheduled to begin their new contracts in October 2023, following brief periods between contracts. The Adriatic I is now firm until February 2025, and the Shelf Drilling Mentor is firm until June 2024.

Drilling Activity and Discoveries

Eni has announced a significant gas discovery from the Geng North-1 exploration well. The well was drilled in North Ganal PSC, off the coast of East Kalimantan, Indonesia. Preliminary estimates suggest total discovered volume of five trillion cubic feet (Tcf) of gas in place with a content of condensate estimated up to 400 mbbls. The Geng North-1 was drilled to a depth of 5,025 meters in water depth of just below 2,000 meters. The discovery is adjacent to the Indonesia Deepwater Development (IDD) area that includes several stranded discoveries located within the Rapak and Ganal PSC blocks. Eni recently announced the acquisition of Chevron’s interests in these areas, increasing its participating interest and gained operatorship. The acquisition also provides the opportunity to fast track the development of the Gendalo and Gandang gas project through Eni’s operated Jangkrik facilities. Thanks to its location and significant size, the discovery has the potential to contribute substantially to the creation of a new production hub, in the Northern part of the Kutei Basin, to be connected to the Bontang LNG facilities on the coast of East Kalimantan, further exploiting its available ullage capacity.

Neptune Energy has started drilling operations on the Ofelia appraisal well in the Norwegian sector of the North Sea with the 3,900-ft Deepsea Yantai semisub. The Ofelia discovery (PL 929) was made in August 2022 with the Deepsea Yantai rig. It is located approximately 14 kilometres north of the Neptune-operated Gjøa field, which could serve as a tie-back location. Neptune secured a drilling permit for the appraisal well in August 2023. Preliminary estimates of recoverable volume are in the range of 2.5-6.2 million standard cubic metres (MSm3) or 16-39 million barrels of oil equivalents (mmboe). The new well, 35/6-4 S, aims to appraise and fully evaluate the hydrocarbon discovery in the Ofelia Agat formation. A secondary target is to evaluate an upside of gas charged reservoir in the shallower Kyrre Formation. The main reservoir target is the Lower Cretaceous Agat Formation and is expected to be reached at a depth of approximately 2,530 metres. The appraisal well is also being drilled by the Deepsea Yantai, owned by CIMC and operated by Odfjell Drilling. The rig has recently started its contract with Neptune following the completion of operations on the Norma well for DNO, which was announced as a gas condensate discovery in September 2023.

Brazilian environmental agency Ibama has given Petrobras authorization to drill the Pitú Oeste and Anhangá wells in blocks BM-POT-17 and POT-M-762 in the Potiguar Basin. The newly issued operating license LO 1658/2023 is valid for two years, replacing the previous LO 1123 granted in 2023. Authorization for drilling was granted after Petrobras completed a pre-operational assessment to prove the effectiveness of its emergency plan. This assessment is required for regions of high environmental sensitivity, such as the Potiguar Basin. Drilling is expected to begin by November 2023, after a hull cleaning on the chosen rig is carried out at a support base in Guanabara Bay.

Demand

ONGC has released the recent results of the ongoing rig requirement to contract up to five jackups. The bidders are Jagson Drilling, Dynamic Drilling, Foresight Offshore, Shelf Drilling, and Aban Offshore. Category I is for four 300-ft MLT/BMC jackups, where Jagson Drilling was the lowest bidder with the 1982-built BMC Sea Challenger with a dayrate of $91k. The other bidders were Dynamic Drilling with the 1981-built LeTourneau 116-C Divine Driller at $96k, Foresight Offshore with the 1983-built LeTourneau 116-C FD-IX at $111k, and finally Aban Offshore with the 1982-built LeTourneau 116-C Enterprise 351 at $130k. It is understood that Aban Offshore would bareboat charter the Enterprise jackup if awarded a contract. Shelf Drilling also offered a rig, the 1981-built LeTourneau 116-C Adriatic I, but did not confirm its availability. Since then, the jackup has been contracted with an undisclosed operator for work offshore Nigeria. For Category II, which is for one 300-ft MLT/Slot Type jackup, Jindal Drilling was the only bidder with the 1975-ft LeTourneau Class 84-S Jindal Supreme with a dayrate of $101k.

Mobilisation/Rig Moves

Diamond Offshore’s 3,000-ft semisub Ocean Patriot has started its two-well P&A contract with Repsol Sinopec in the UK North Sea. The rig has been warm stacked in Cromarty Firth since late June 2023, where it arrived following the completion of its contract with Apache, which was shortened through early termination due to the impacts of the UK’s windfall tax. The two-well contract with Repsol was awarded in May this year. The semisub is currently mobilising to the North Sea where it’s expected to stay into early December 2023. This is the first time for Diamond Offshore to work with Repsol in the North Sea. The rig has no further commitments thereafter.

Borr Drilling’s 400-ft jackup Gerd has arrived at Abu Dhabi Ports Khalifa Port. Gerd completed its transit from Africa to the United Arab Emirates (UAE) in September 2023 and is currently undergoing preparations ahead of its upcoming contract with Bunduq. The contract was initially supposed to start in December 2023, but it has now been expedited to mid-November 2023. The contract with Bunduq is a substantial commitment, encompassing a term of 270 days with an unpriced option for 60 days.

Borr Drilling’s 400-ft jackup Hild is undergoing final preparations ahead of its two-year maiden contract with Fieldwood offshore Mexico, which is expected to commence in mid-October 2023. Hild arrived in Mexico from Singapore in August 2023. Borr Drilling 400-ft jackup Ran has been working with Fieldwood in Mexico since July 2023. Ran is expected to finish up with Fieldwood this month and will mobilise to its new contract with TotalEnergies in the second half of October 2023. This contract is expected to keep the unit working into late April 2024.

Saipem 12,000-ft drillship Santorini has arrived in Egyptian waters and is preparing to spud the Orion-1x exploration well for Eni on the North East Hap’y licence during the fourth quarter of 2023. The Orion-1x prospect lies in around 2,395 ft (730 m) of water. Eni is operator of the licence via its subsidiary International Egyptian Oil Company with a 70% interest. Partner Energean is currently farming down its interest in the licence from 30% to 19%. Santorini started a two-year contract extension with Eni in August 2023 and was brought from the US GOM to drill this well.

Following the completion of its work scope with NEO Energy, jackup Valaris Norway is heading to its next contract location in the UK North Sea. The 400-ft N class heavy-duty jackup has completed its short P&A contract with NEO, which entailed the decommissioning of the Victoria subsea well, and is now mobilising to drill North Sea Natural Resources’ Devil’s Hole Horst (DHH) appraisal well in the Central North Sea. The well is located in UK Licence P2321, which consists of seven contiguous blocks covering the Devil’s Hole Horst prospect, approximately 100 miles east of Aberdeen. The jackup is expected on location within a couple of days, and the one-well contract is expected to last about 60 days, keeping it busy into early December 2023. The rig has no further commitments thereafter.

Other News

Brazil’s Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP) has approved geological and economic studies of three exploratory blocks in the pre-salt area of the Santos Basin for possible inclusion in future bidding rounds. The Amazonita, Safira Leste and Safira Oeste blocks have been forwarded to the Ministry of Mines and Energy (MME) to analyze the feasibility of inclusion in future rounds. Under Brazil’s area nomination process, entities in the oil and gas industry can suggest areas for the ANP to study the possibility of them being offered in future bidding rounds. The total area of the three blocks is around 11,300 km² and their oil potential was estimated by the ANP at an in-place volume of 16.8 billion barrels of oil equivalent.

The US Department of the Interior has released the Proposed Final Program and Final Programmatic Environmental Impact Statement (EIS) for the 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program. The proposal includes a maximum of three potential oil and gas lease sales in the US GOM, the minimum number that will enable the department to continue to expand its offshore wind leasing program in compliance with the Inflation Reduction Act (IRA). The US Department of the Interior said that this is the fewest offshore oil and gas lease sales in history. The department stated that the reduction of the leasing program to a maximum of three potential lease sales will bring the Federal offshore oil and gas program in line with the Biden-Harris administration’s goal of net-zero emissions by 2050 and meet the IRA’s requirements for future offshore renewable energy leasing. The IRA does not allow the Bureau of Ocean Energy Management (BOEM) to issue a lease for offshore wind development unless the agency has offered at least 60 million acres for oil and gas leasing on the outer continental shelf in the previous year. The three lease sales are proposed to be held in 2025, 2027 and 2029. These lease sales limit leasing to the areas of the US GOM where there is existing production and infrastructure, including portions of the Western, Central and Eastern GOM not currently under presidential withdrawal. No federal lease oil and gas lease sales would be held in Alaskan, Pacific or Atlantic waters. Publication of the Proposed Final Program and Final Programmatic EIS in the Federal Register will initiate a 60-day waiting period that is required before the Secretary can formally approve the program and finalize the Record of Decision. BOEM will also publish a Call for Information and Nominations regarding the potential future Gulf of Mexico oil and gas lease sales included in the 2024–2029 National OCS Program in the Federal Register. BOEM will also publish a Notice of Intent to prepare a Programmatic EIS in the Federal Register.

Europa Oil & Gas has decided to apply for an extension of the first phase of its FEL 4/19 licence, which contains the Inishkea West prospect in Ireland, to allow the completion of reprocessing work. The company will then continue the farm-out process, which has now been paused. Following the interpretation of recent seismic reprocessing, Europa Oil & Gas’ Pmean prospective resource estimate for Inishkea West prospect in Ireland has increased by 92% to 1.55 Tcf. This has resulted in a marked improvement in the imaging of both the Inishkea West and Inishkea prospects, with the Inishkea West structure now being mapped as a large 4-way closure, with a prospective resource Pmean of 1,554 Bcf. The reprocessed seismic has materially improved the subsurface imaging and provided more confidence in the quality of the seal and trap at Inishkea West, which in turn has increased the chance of success of the prospect. In addition, Inishkea West is prognosed as a shallower structure by some 900 meters which means that the reservoir quality will be better than at Inishkea. For the Inishkea prospect, the reprocessing has confirmed the likelihood of side seal breach and therefore resulted in the downgrading of this prospect, and is now estimated to have a prospective resource of Pmean 146 Bcf. Inishkea West’s proximity to the Corrib infrastructure, which is situated within tie-back range of some 18 kilometres to the southeast, the mapped 4-way closure, the large prospective resource and the reduced seal risk means that the prospect has become the primary target on the FEL 4/19 licence. It is expected that the subsurface imaging can be further improved by reprocessing the data at 30Hz. Therefore, the company has decided to apply for an extension to the first phase of its FEL 4/19 licence to allow time for the reprocessing to be completed and to subsequently find a suitable partner to drill an exploration well. The farm-out process that was announced on 11 January 2023 has been paused until the reprocessing has been completed.

OKEA started production from the Hasselmus gas discovery located in the Norwegian Sea on 1 October 2023. As a subsea tie-back to the Draugen platform, Hasselmus is expected to add 4,400 barrels of oil equivalents per day in production at plateau. The Hasselmus gas discovery is located on the western edge of the Trøndelag platform in the Norwegian Sea, 7 km northwest of the Draugen platform. A single well (6407/9-9 T2) was drilled on the Hasselmus structure by A/S Norske Shell in 1999, which encountered a 16-meter gas column and a 6.8-meter oil column in high-quality sands at a depth of 1,700 metres. OKEA used the COSLPromoter semisub for Hasselmus production drilling during the summer of 2022 as part of a frame agreement with COSL Drilling to be the exclusive provider of semisub rigs for its NCS operations.

Repsol Sinopec has relinquished the Licence P.983 in the UK North Sea containing the Tain discovery and the acreage is therefore unlicenced and available to be re-licenced in the future with two UK operators already looking into it. Tain, discovered in 2005, lies in block 13/23b in the Outer Moray Firth. It was operated by Repsol Sinopec Resources UK, with RockRose Energy participating as a partner. The joint venture was planning to develop the field as a two-well tie-back to nearby infrastructure. The project was initially expected to be sanctioned in Q2 2021, but it was delayed several times, and the licence has now lapsed. As a result, two other UK operators are seeking to explore the remaining potential of the wider area. Namely, i3 Energy and partner Europa Oil & Gas have been working for some time to advance a solution for the Blake / Tain / Serenity area, but this has made little progress whilst the previous Tain licensees were unable to approve additional investment. With the Tain acreage now unlicenced, additional options for the area may now become available and i3 and Europa are starting discussions with the NSTA and other interested parties to explore the remaining potential of the area.

A consortium of Eni, bp, and QatarEnergy has been awarded the East Port Said (EGY-MED-E8) exploration block in the Mediterranean Sea offshore Egypt. Eni will be the operator of the block with a 34% interest while bp and QatarEnergy will each have a 33% interest. The East Port Said Block is offshore the northeastern Mediterranean coast of Egypt and covers an area of around 2,600 square kilometres in up to 800 metres (2,625 ft) of water.

PetroNor E&P has entered into a binding agreement with New Age (African Global Energy) Limited to acquire New Age’s 32% interest in licence OML 113 offshore Nigeria. OML 113 contains the Aje field and is operated by Yinka Folawiyo Petroleum (YFP). PetroNor will pay New Age $6 million in cash plus a deferred future gas production payment up to a maximum of $20 million to acquire its holdings in OML 113. Completion of the transaction is subject to customary conditions, including regulatory approvals in Nigeria. PetroNor is working with YFP to create a jointly owned company, Aje Production AS, which will hold a 39% interest in OML 133. This will give PetroNor and YFP related entities a 71% interest in the licence. PetroNor estimate that the Aje field contains recoverable resources of 480 BCF of gas, 54 mmbbls oil, condensate and LPG and are planning a redevelopment of the field with its partners.

Norwegian authorities have granted ConocoPhillips consent for the start-up of the Tommeliten A field in the North Sea. Tommeliten A is a gas and condensate field southwest of the Ekofisk field in the southern part of the Norwegian sector. The field, which mainly contains gas and condensate, is located in production licence 044. It is a transboundary field, with a marginal share on the UK shelf. The licensees on the Norwegian and UK sides have unitised the activity. Operator Conoco Phillips estimates that around 24 million standard cubic metres (150 million barrels) of oil equivalent can be recovered from Tommeliten A. The discovery was made as early as 1977 and the plan for development and operation (PDO) was approved in 2022. The field is expected to come on stream this month. Tommeliten A will include eleven development wells, seven of which will be completed as of the start-up. ConocoPhillips expects to complete the four remaining wells during the first quarter of 2024. The twelfth well slot will be reserved as a potential future replacement well. The operator is using the Odfjell Drilling-managed harsh environment jackup Linus for production drilling on the field. The 450-ft unit is under a firm contract with the operator into Q4 2028.

Trinidad and Tobago has launched its Shallow Water Competitive Bid Round 2023, offering 13 offshore blocks. The round is set to run for six months, with the deadline for submission of bids on 2 April 2024. Successful bids will be announced four months following the close of bidding. Blocks on offer are Block 1(b), Block 2(ab), Block 2(d), Block 4(c), Block Lower Reverse L, Block Modified U(c), Guayaguayare (Offshore) Block, Block 21, Block 22(a), Block 22(b), Block NCMA 2, Block NCMA 3 and Block NCMA 4(a).

Image credit: Noble Corp.