Major rig owners project offshore rig day rates could reach US$500,000 within months, and the US and Norway move forward on bidding procedures for offshore drilling blocks in the Gulf of Mexico and North Sea, respectively
Despite energy analyst Rystad’s recent glum outlook for exploration activities, this week brings better news for offshore oil and gas prospects.
In the United States, the Biden administration has accepted nearly US$190M in bids from an offshore oil and gas lease sale that was held last November but rejected by a federal judge earlier this year for failing to consider environmental concerns.
Reversal of the prior decision on leases was taken in light of the recently passed Inflation Reduction Act which seeks to scale up domestic energy production.
With 33 companies participating in the auction, 308 tracts pulled in US$191.7M in offers on Lease Sale 257 in the US Gulf of Mexico. The Bureau of Ocean Energy Management (BOEM) said it has accepted the 307 highest-valid bids. The proposed lease sale was sent to BOEM’s parent agency, the US Department of Interior to decide the next steps.
The lease sale pertained to blocks in the Gulf’s western, central and eastern planning areas in water depths ranging from 2.7 m to more than 3,387.9 m covering 1.7M acres in Gulf of Mexico waters.
And in the North Sea, exploration has seen renewed interest since Norway’s Ministry of Petroleum and Energy announced the awards in predefined areas (APA) for 2022.
The APA, Norway’s annual licensing round for offshore exploration, has received applications from 26 companies seeking production licences in the Norwegian Continental Shelf.
The Ministry of Petroleum said the APA area is being expanded as geological knowledge in areas on the Norwegian Shelf increases. The predefined area in this year’s licensing round has expanded to include the Barents Sea.
In a reflection of the sector’s positive mood, representatives from major drilling companies Transocean and Seadrill told news agency Reuters this week that they foresee day rates for offshore rigs breaching US$500,000, as producers scramble to find more oil to replace Russian crude.
Reuters quoted Seadrill chief executive Simon Johnson as saying, “It could even happen by the end of this year. I’ve never seen day rates rising so fast,” adding, “The question for the industry is going to be what to do with the cash.”
In contracts news, Petrogas E&P Netherlands will retain the Maersk Resolute jack-up for a new five-well drilling contract which commences Q1 2024. Maersk Drilling said the jack-up will drill three wells at the A15 field and two wells at the B10 field, both of which are located offshore the Netherlands.
The contract is in direct continuation of Maersk Resolute’s previous work scope, with an estimated duration of 188 days and has a contract value of approximately US$24.3M and an agreed fee for using the rig’s SCR system and provisions to include the potential increases in day rates. The drilling contract further contains an additional one-well option.
Maersk Resolute is currently employed to plug and abandon 31 wells in the Dutch sector of the North Sea in support of a rig sharing agreement between TotalEnergies and Petrogas.
CIMC Raffles’ Deepsea Yantai rig has secured more North Sea work, agreeing a one-well firm deal with OMV Norge. Odfjell Drilling, which manages Deepsea Yantai, said the semi-submersible unit will drill the Eirik well in PL 817 in the North Sea with an option for an additional well. The scope of the firm work is estimated to take 60 days and will commence Q1 2023. Deepsea Yantai previously secured a one-well firm deal for DNO Norge, for work commencing Q2 or Q3 2023.
Deepwater drilling contractor Dolphin Drilling has taken a step towards public listing. Chief executive Bjønar Iversen, speaking at an energy conference in Oslo, said Dolphin Drilling was activated on the Euronext N-OTC list 15 September 2022, with a view towards fully listing on the Euronext Growth Oslo by the end of October.
Mr Iversen said, “This is an exciting announcement for the company and returning the company to the public markets further strengthens our commitment to our growth strategy. Our three harsh environment semi submersibles are fit for purpose and ready to be part of the solution to the looming energy crisis.”
Stena Drilling has signed a contract with CNOOC Africa Holding for the Mobile Offshore Drilling Unit Stena IceMAX. The two-well programme, scheduled for Q1 2023, will be offshore Gabon and has an estimated duration of 90 days.
UK-listed i3 Energy will begin drilling the Serenity appraisal well on UK Licence P.2358, Block 13/23c using the Stena Don semi-submersible rig. Stena Don will spud the well later this week and the drilling programme is expected to last approximately 30 days.
Canadian producer Trillion Energy announced the start of its 2022/2023 Black Sea drilling campaign. The multi-well drilling programme on the SASB natural gas field was previously delayed after the Uranus rig underwent maintenance work.
Uranus is situated at the Akçakoca platform where the first wells are being drilled. Three directional wells will be drilled from the Akçakoca platform and a recompletion of an existing well will occur. Trillion Energy estimates the four operations will be completed within six months with first gas production expected early November 2022.
The rig will then move to the three platforms at SASB. The company plans to complete these initial seven wells followed by another estimated 10 wells prior to further exploration occurring.
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