With rising Covid-19 infections in the US raising the spectre of tumbling energy demand, global offshore drilling activity continued to fall, with the number of contracted jack-up rigs and floaters each slipping by two in week 28 of 2020
Brent crude oil closed at US$43.16 per barrel on 6 July, up US$1.89 week-on-week (w-o-w), about a 4.5% rise.
Leading energy analyst Westwood Global Energy Group reported that the number of contracted jack-up drilling rigs fell from 325 to 323 and floaters from 108 to 106 w-o-w. It was the fourth consecutive week the number of jack-ups and floaters fell, according to Westwood Global Energy’s RigLogix data.
If there was a bright spot it was the North Sea, which held steady at 19 active jack-up drilling rigs and climbed to 24 floaters, up one w-o-w.
Oslo-listed Odfjell Drilling announced it had signed a letter of intent with Equinor and its partners for the semi-submersible Deepsea Atlantic to drill 12 wells during phase 2 of the Johan Sverdrup field development in the Norwegian sector of the North Sea. Deepsea Atlantic, a sixth-generation, high-spec, harsh environment floater, just completed its work on phase 1 at the Johan Sverdrup field.
Licence partners for the project are Equinor, acting as operator, Lundin, Petoro, Aker BP and Total.
Equinor reported the estimated value of the fixed part of the deal to be US$150M, plus additional costs for integrated services, maintenance and options for drilling five extra wells. The total contract value will depend on the efficiency of the well deliveries.
“Johan Sverdrup phase 2 is the next stage in the development of the giant Johan Sverdrup field and a project that strongly impacts activities and spinoffs in Norway,” said Equinor senior vice president for project development Geir Tungesvik.
The drilling period is scheduled to start in Q1 2022.
Odfjell Drilling said a performance incentive rate will apply when wells are delivered ahead of target. The rate for the optional wells is at a premium to the firm wells.
“This contract award has come at an important time for Odfjell Drilling with the current challenges faced by the industry,” said Odfjell Drilling chief executive Simen Lieungh. “We acknowledge Equinor for proceeding with long-term developments such as Johan Sverdrup in this climate and we shall deliver on the trust they and the partners have placed in Odfjell Drilling,” he added.
“Deepsea Atlantic drilled the Johan Sverdrup phase 1 wells with excellent results, so we are pleased to secure the rig for phase 2 as well,” said Equinor senior vice president for drilling and well operations Erik G Kirkemo. “The rig is already on a continuing contract with Equinor, and our ambition is to keep it busy until Johan Sverdrup phase 2 comes on stream at the end of 2022, added Mr Kirkemo.
Located about 140 km off Stavanger, Johan Sverdrup field is the third-largest oilfield on the Norwegian Continental Shelf. Johan Sverdrup phase 2 includes the construction of a subsea production system, reconstruction of the existing riser platform and a new processing platform, which will also accommodate a converter unit receiving electrical power from shore – generated by hydropower. This unit will distribute power to other fields on the Utsira High: Edvard Grieg, Ivar Aasen, Gina Krog and Sleipner. The four existing platforms on the Johan Sverdrup field are already receiving power from shore and CO2 emissions per barrel are 0.7 kg.
By contrast, the average CO2 emissions generated per barrel of oil worldwide is about 18 kg.
The phase 2 development will increase the field production capacity from 470,000 to 690,000 barrels per day on plateau. The breakeven price will be below US$20 per barrel, making Johan Sverdrup a highly profitable field with a very low CO2 footprint.
Meanwhile Odfjell Drilling’s Deepsea Nordkapp and Deepsea Yantai are also contracted for Norway, while Deepsea Bergen and Deepsea Aberdeen are working in the UK. Odfjell recently mobilised Deepsea Stavanger to South Africa under an agreement with Total.