Brent crude oil continued its rally, closing at US$48.66 per barrel on 7 December, up 28.5% since 30 October
Oil’s strengthening comes as the UK became the first country to begin coronavirus vaccine inoculations, and Denmark said it would not issue any future permits for oil and gas exploration and production (E&P), putting a sunset on drilling in the Danish North Sea.
Global offshore drilling remained relatively stable, with the number of contracted floaters and jack-up drilling rigs each slipping by one unit during week 50 2020. Overall, there were 103 floaters active and 322 jack-up rigs contracted, according to Westwood Global Energy’s RigLogix.
Grabbing the headlines during the week was the Danish Government’s cancellation of all future licensing rounds for new oil and gas E&P permits in the Danish sector of the North Sea and plans to end existing production by 2050. Greenpeace Denmark head of climate and environmental policy Helene Hagel called it “a watershed moment.”
There are 55 platforms in 20 oil and gas fields in the Danish sector of the North Sea, producing about 103,000 barrels of oil per day.
The move aligns with the country’s plan to be a green frontrunner in global climate action, with plans to cut greenhouse gas emissions by 70% by 2030 and become climate neutral by 2050, underpinning the Paris Agreement.
Low-emissions rig contracted
In the clean energy transition, hybrid and smart technology are proving lucrative for Danish drilling contractor Maersk Drilling, which scored another success with a low-emissions jack-up in the Norwegian North Sea. In a direct continuation of its previous work scope, Maersk Drilling has been awarded a one-well contract from OMV (Norge) for Maersk Integrator. An ultra-harsh environment CJ70 XLE jack-up rig, Maersk Integrator will drill one exploration well starting in mid-2021 in the Ommadawn prospect in PL 970 offshore Norway.
With an estimated duration of 52 days and value of US$14.3M, the contract includes mobilisation, but excludes integrated services provided and potential performance bonuses. A contract option would add approximately 28 days of well testing.
Upgrades underway on Maersk Integrator will add hybrid power to cut NOx emissions and data intelligence to further reduce energy consumption and CO2 emissions. The performance bonus schemes included in the contract with OMV are based on rewarding reduced fuel consumption and reduced NOx emissions during the drilling operations.
The upgrades are similar to those for Maersk Intrepid, which were undertaken with the support of a grant from the Norwegian NOx Fund and a separate compensation scheme agreed with Aker BP.
Maersk Drilling chief operating officer Morten Kelstrup said the award offered “a new type of collaborative contractual set-up with OMV where we will focus on aligning incentives in the planning and execution of the drilling operation which again is expected to significantly reduce the uncertainty about overall well construction costs for our customer. We believe this kind of commercial model has the potential to increase exploration drilling activity in Norway and across the North Sea. The contract further shows the commercial value of our low-emissions upgrades. By reducing fuel consumption, CO2 emissions and NOx emissions we are not only making contributions towards reaching emissions targets, but also creating value for our customer under the incentive schemes established in Norway.”
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