Increased shallow water activity in southeast Asia and the Middle East boosted the active global jack-up drilling rig fleet to 333, a rise of three units week-on-week as Brent crude topped US$72 per barrel during week 23 2021
NYSE-listed driller Valaris reported a contract extension of 240 days with Mubadala Petroleum Thailand offshore Thailand for Valaris JU-115 that will keep the jack-up busy through September 2022.
One of the 26 jack-ups active in the North Sea is Valaris JU-291. Valaris reported it had been awarded a two-well contract extension by Equinor, keeping the jack-up under contract in the Norwegian sector until February 2022.
Contracted semi-submersibles, drill ships and other floaters for week 23 2021 fell one week-on-week to 112, according to Westwood Global Energy’s RigLogix.
While Covid lockdown concerns still weigh on the market, pricing for Brent crude oil continued to climb, boosted by continuing positive signs in recovery in demand in the US and the UK. Brent crude oil hit US$72.28 per barrel for August contracts at 2:33 EDT on 8 June, climbing 1.11%, reported Bloomberg.
Pricing for Brent crude in May averaged US$68 per barrel – an increase of 25% over January’s average, according to the US Energy Information Administration (EIA).
Based on the EIA’s Short-Term Energy Outlook for June, Brent crude oil prices should remain stable, averaging about US$68 per barrel in Q3 before decreasing to an average of US$60 in 2022.
“In the coming months, we expect global oil production to catch up with the increases we’ve seen in demand in 2021,” said EIA Acting Administrator Stephen Nalley. “US and global oil producers are increasing their production, which should help moderate oil prices that have increased significantly as global economic concerns about the Covid-19 pandemic have begun to ease.”
The EIA projects global petroleum and liquid fuels consumption will grow by 6% in 2021, totaling 97.7M barrels per day (b/d), and increase a further 4% in 2022, reaching 101.3M b/d. In response to this increase in global demand, EIA forecasts US crude oil production will average 11.8M b/d in 2022, up 4% from 2020. EIA expects OPEC production to reach 28.7M b/d in 2022, an increase of 12% over 2020.
Transocean delays delivery of newbuild drill ships
In the US Gulf of Mexico, the number of active rigs drilling fell one to 13 for the week commencing 4 June, unchanged from a year ago, according to Baker Hughes.
Valaris was awarded a three-year contract by Chevron for Valaris DS-18 (Relentless), extending the drill ship’s work in the deepwater US Gulf of Mexico to 2025. In May, Valaris was awarded a contract of about 45 days with W&T Offshore in the US Gulf of Mexico for jack-up rig Valaris JU-117, with a start date of July 2021.
Perhaps the biggest news out of the US Gulf of Mexico was a deal between NYSE-listed Transocean and Singapore’s Jurong Shipyard to delay the delivery of two ultra-deepwater drill ships due to work in the US Gulf of Mexico in 2022 and 2023.
Calling the agreements “monumental”, Transocean president and chief executive Jeremy Thigpen said the shipyard financing would materially improve the driller’s year-end 2022 liquidity by over US$450M, “extending our runway and providing us with additional investment flexibility as the industry recovers.”
Under the deal with Jurong Shipyard, Transocean will delay delivery of Deepwater Atlas and Deepwater Titan, extending payments for the world’s first eighth-generation ultra-deepwater drill ships over a five-year period after their delivery.
Capable of drilling to over 3,600 m, the drill ships will feature a 3,000,000-pound hook-load and will be the first rigs with 20,000 psi well control systems. Additionally, these rigs are designed and equipped to optimise fuel consumption, reduce emissions, and lower associated CO2 emissions from offshore operations.
Delivery of Deepwater Atlas will be in December 2021. Upon delivery, Transocean will pay US$50M to Jurong Shipyard, with the outstanding balance of US$370M payable to the shipyard over a five-year period after delivery.
Separately, Transocean agreed with BOE Exploration & Production (Beacon) that drilling operations on the Shenandoah project in the US Gulf of Mexico will start in Q3 2022. Beacon and its partners plan FID for the Shenandoah project on or before 31 July 2021, and Transocean expects to use Deepwater Atlas for the drilling campaign.
Delivery of Deepwater Titan will be delayed until May 2022. Upon delivery, Transocean will pay Jurong Shipyard 80% of amounts owed, about US$350M. The remaining 20%, some US$90M, will be deferred and payable over a five-year period after delivery.
Transocean has agreed with Chevron USA that commercial operations of Deepwater Titan will begin in Q1 2023. Transocean’s contract with Chevron maintains its duration and estimated backlog of US$830M, excluding mobilisation and reimbursables.
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