Rigs report: Brazil in recovery, but increased rig scrapping needed for sector health

Covid concerns continue to weigh on the minds of traders. Brent crude oil closed at US$40.70 per barrel on 27 October, down 4.8% week-on-week from US$42.77.

Westwood Global Energy’s RigLogix reported the number of global floaters – semi-submersibles, drill ships and other MODUs, inching up to 106 units – a rise of one unit week-on-week.

While the number of floaters active in the North Sea slipped by one unit from 20 to 19 week-on-week, Wintershall Dea reported it had begun drilling the first of six wells on the Nova field in the Norwegian North Sea.

Located about 120 km northwest of Bergen and about 17 km southwest of the Gjøa platform in the Norwegian North Sea, Nova is being developed by Wintershall Dea as operator with a 45% stake, Spirit Energy Norge (20%), Edison Norge (15%), Sval Energi (10%) and ONE-Dyas Norge (10%).

Wintershall Dea reported that most of the subsea work was complete and a dedicated module installed on the host platform, Gjøa. The start of drilling “marks the start of the last phase for the Nova project,” said Wintershall Dea Nova project director André Hesse.

Scheduled to be on site for around 400 days, Seadrill’s West Mira rig will drill three production wells through one of two subsea templates, and three water injection wells through the second.

The Seadrill-operated West Mira rig has been equipped with an energy-saving hybrid battery power plant, lowering emissions. As a subsea tie-back to existing platform Gjøa, the Nova field also sustainably benefits from in-place infrastructure, with no need for a major new facility.

When it comes on stream in 2022, Nova will be the company’s fourth subsea field in production. First oil is unlikely in 2021, as earlier forecast, due to the impact of Covid-19 on the topside part of the project.

Brazil recovery

Meanwhile, the Brazilian offshore oil market may be staging a recovery, said leading Norwegian energy analyst Rystad Energy. In its October report, Rystad Energy said “Brazil is poised to once again become a key region for benign deepwater drilling. Guyana and Suriname are both showing improvement.

“The Covid-19 outbreak and the oil price crash this year reduced global floater demand by more than 30 rigs since February,” said Rystad, “and total utilisation dropped down to 46% (57% marketed utilisation) with some markets more affected than others. Brazil is one of the few markets experiencing an increase in rig demand.”

While rig demand remains depressed in West Africa and the US Gulf of Mexico, “activity in Brazil has remained stable, helped by the fact that breakeven prices for projects there have fallen and most of the activity for 2020 and 2021 is already locked in through firm rig contracts signed before the pandemic.”