Among the contract suspensions, Saudi Aramco has issued a notice to drilling contractor Valaris, through its joint venture ARO Drilling, halting work for the Valaris 143 jack-up rig; LLOG is to begin drilling Gulf of Mexico appraisal and exploration wells
Over recent days, suspension notices for as many as 18 jack-up rigs have indicated the world’s largest oil-exporting nation is acting on plans to reign in expansion of its oil production capacity.
Suspensions have reportedly covered jack-up rig contracts with at least six well-known drilling contractors. Aramco’s latest, with contractor Valaris, comes as Aramco moves to fine-tune its offshore drilling operations in the wake of Saudi Arabia’s decision to lower its expansion targets.
China Oilfield Services Ltd (COSL), Saudi Arabia-based Arabian Drilling and ADES Holding were all also hit with suspension notices. Though ADES and COSL did not name the Middle Eastern client who sent the suspension notices, the service providers have five rigs and four rigs contracted with Aramco respectively.
Now, US-listed players Valaris and Borr Drilling have joined the list, and both had contracts with Aramco.
Valaris leases Valaris 143 to ARO under a bareboat charter agreement. The leased ARO rig’s contract was previously scheduled to end in December 2024 but the suspension notice is for a period of up to 12 months. ARO said it is in discussions with Aramco to determine the effective date of the suspension.
Borr, which operates the Arabia I rig, received a temporary suspension notice and confirmed Saudi Aramco as the client. Borr said it would look to move the rig elsewhere for the duration of the suspension.
Shelf Drilling also received a notice of suspension of operations of four jack-up rigs from a customer in the Middle East, which has also been linked to Aramco in reports.
In a review of activity in 2023, analyst Westwood Global Energy noted rig reactivations and newbuild deliveries had decreased compared with the year prior, driven by Middle Eastern national oil companies shoring up near-term jack-up contracts as they aimed to ramp up production.
But in January 2024, Aramco surprised markets by scaling back its expansion programme by 1M barrels per day (b/d) from 13M b/d, capping the maximum sustainable capacity at 12M b/d.
In the US Gulf of Mexico, US-based LLOG Exploration Co has approved the drilling of appraisal and exploration wells in the Who Dat East and Who Dat South offshore blocks. Who Dat East aptly lies about 27 km east of the Who Dat floating production system (FPS).
LLOG, with a 40% interest, serves as operator of the Who Dat East joint venture, where partners Karoon Energy (40%) and Westlawn (20%) also own significant stakes. The Who Dat East well, MC 509-1, is expected to spud in the first half of April 2024, using the Noble Valiant drillship. The aim is to delineate a discovery made in 2001, and test additional targets in the Middle Miocene section.
Who Dat East is estimated to contain 17 MMboe of gross unrisked 2C contingent resources and 35 MMboe of gross unrisked 2U prospective resources, with an aggregate geological probability of success estimated to be 62%. Who Dat South prospect is located about 11 km southwest of the FPS and exploration well MC 545-1 is expected to spud towards the end of Q2 2024, using Seadrill’s West Neptune drillship.
The objective of the well is to test two targets in the Miocene section, with the shallower target being similar to the reservoir in the G-1 well in Who Dat. Who Dat South prospect is estimated to contain 31 MMboe of gross unrisked 2U prospective resources, with the geological probability of success estimated to be 52%.
Contracts
Borr Drilling has secured work for three premium jack-up rigs, Prospector 1, Gunnlod, and a third rig to be determined. The commitments total 820 days and US$158.6M in contract revenue. Borr did not name the company awarding the contract, but one rig is expected to work in the North Sea with a backlog totalling about 250 days and commenced work in March 2024. A second rig will work in southeast Asia; the one-well commitment, with an anticipated duration of 90 days, will commence in May 2024. And an undisclosed customer has issued a firm and binding letter of award for a campaign expected to commence between Q4 2024 and Q1 2025, with an estimated duration of 480 days.
Vantage Drilling’s Platinum Explorer drillship has begun its mobilisation from Indian waters to Singapore, then onto Labuan, Malaysia, where the rig will undergo its five-year special periodic survey, maintenance and be upgraded with a blow-out preventer. The 3,658-m rated drillship completed its six-year contract with Malaysian state-owned ONGC in February 2024.
Noble’s rig Noble Regina Allen has left the North Sea region and is en route to Argentina ahead of a new contract with TotalEnergies. The jack-up has been completing repairs and contract preparations in the Netherlands since April 2023. The rig secured the three-well contract with TotalEnergies for work on the Fénix project offshore Tierra Del Fuego, Argentina back in September 2023. Noble Regina Allen will be temporarily located next to the Fénix platform; its work scope is expected to last 220 days with four one-well options available.
Valaris’s 3,658-m rated drillship DS-17 is en route to Rio de Janeiro as it commences its journey to Argentina for a contract with Equinor. The vessel left Equinor’s Bacalhau field in the Santos basin on 4 April. Equinor plans to drill the Argerich-1 prospect in the North Argentina Basin.
Following this 60-day contract, the unit will return to Brazil and continue working on the Bacalhau development.
Finally, Stena Drilling has secured work for its 2009-built drillship Stena Forth. The contract with London Stock Exchange-listed Energean is for up to two wells offshore Morocco. The amount of the contract was not disclosed. The drilling campaign is expected to begin Q3 2024, after the sixth-generation drillship finishes work for Shell in the Egyptian sector of the Mediterranean Sea.
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