While the world’s economic recovery from Covid-19 has been uneven, contracting activity in the global offshore jack-up market remained ’steady as she goes,’ as the number of active units remained unchanged at the yearly high of 338, week-on-week
Floater activity inched up week-on-week, with the number of contracted semi-submersibles, drill ships and other deepwater units hitting 114, supported by positive gains in the North Sea and West Africa, according to Westwood Global Energy’s RigLogix. With 452 rigs contracted for shallow-water and deepwater campaigns, offshore drilling hit its highest level this year during week 21. Traders pushed Brent crude oil (ICE) for July contracts to US$68.55 per barrel, up US$0.09 as of EDT 4:30 PM, according to Bloomberg.
“If demand evolves as the market expects and more oil is consumed during the summer season, prices can grow and remain high, offering producers a healthy environment to consider boosting their production,” said Rystad Energy oil markets analyst Louise Dickson.
Ms Dickson expects oil demand growth will not “take off” until Q3 2021, after which it will climb from the current 92.1M barrels per day (b/d) to reach 98.2M b/d by December 2021.
In commenting on his company’s Q1 2021 performance, Maersk Drilling chief executive Jørn Madsen noted the improving outlook for the drilling market. “The market is still recovering from the 2020 downturn, but we are seeing signs of improvement, particularly in the floater segment where fleet rationalisation has led to a healthier business environment for offshore drillers,” said Mr Madsen.
GMS Dubai senior trader Faidon Panagiotopoulos noted earlier this month that there are more than 20 offshore rigs in the recycling market… which is "a historical high for the offshore recycling industry and a sign of things to come.”
OSJ readers might recall from last week’s Rigs Report that Maersk Drilling sold off two of its harsh-environment jack-up rigs to New Fortress Energy for use in non-drilling purposes as part of their planned Fast LNG project.
As a result of the improved market conditions, Mr Madsen said the Danish offshore driller added US$730M to its backlog “which is an industry-leading commercial performance and our largest quarterly backlog addition since 2017.” As a result of its Q1 performance, Maersk Drilling’s total backlog at the end of the quarter exceeded US$1.8Bn.
Thanks to a trio of contracts, Maersk Drilling’s drill ship Maersk Viking will be one of the busier floaters in Asia in 2021. The DP3 Samsung 96K design drill ship will drill one exploration well for Korea National Oil Corporation offshore the Republic of Korea starting in June 2021, in direct continuation of the rig’s previous work scope, followed by a one-well contract from PC Gabon Upstream, a subsidiary of Petronas, and drill four development wells offshore Malaysia for Shell Malaysia starting in December 2021. The contract includes five additional one-well options for work offshore Malaysia, the Philippines and Brunei Darussalam.
Extending the life of Darwin LNG
Australia’s biggest domestic gas supplier Santos said it has begun the Phase 3C infill drilling programme at the Bayu-Undan field in Timor-Leste offshore waters.
Operator of the Bayu-Undan Joint Venture, Santos took FID in January on the project, comprising three production wells, and will develop additional natural gas and liquids reserves, extending field life as well as production from the offshore facilities and the Darwin LNG plant.
The Darwin LNG Project involves the development and production of gas mainly from the Bayu-Undan Gas Field located 250 km off the southern coast of East Timor and 500 km off the coast of Darwin, Australia, as well as the pipeline transport and liquefaction of that gas. Darwin LNG has a liquefaction capacity of 3.7 mta.
Santos managing director and chief executive Kevin Gallagher said the wells will be drilled using Noble Tom Prosser jack-up rig, with first production expected in Q3 2021.
“Only by way of a close and constructive working relationship with the Timor-Leste Government, through the Autoridade Nacional do Petróleo e Minerais (ANPM), and our joint venture partners have we been able to move so quickly towards our shared goal of safely maximising value from the Bayu-Undan field,” Mr Gallagher said.
“The infill drilling programme will add over 20M barrels of oil equivalent gross reserves and production at a low cost of supply and importantly extends the life of Bayu-Undan and the jobs and investment that rely on it.
Calling it a “milestone” for Timor-Leste, ANPM president Florentino Soares Ferreira said the Phase 3C drilling campaign marks the first drilling campaign in the Bayu-Undan field in Timor-Leste offshore waters, following ratification of the Maritime Boundary Treaty between Timor-Leste and Australia.
Mr Ferreira said the campaign was another opportunity to maximise hydrocarbon production recovery and extension of production life, which will ultimately ensure economic benefit for all stakeholders and the State.”
Santos has a 43.4% operated interest in Bayu-Undan, with the remaining interests held by SK E&S (25%), INPEX (11.4%), Eni (11%), JERA (6.1%), and Tokyo Gas (3.1%).
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