As 2021 has progressed, offshore drilling has gained in strength, as the global economy begins to emerge from the global pandemic
This was evident during week 26, as global offshore jack-up activity remained steady, with the contracted fleet holding at 339 – its highest level of the year for the second week in a row.
Brent crude oil, which has reached pricing levels not seen in over two years, receded from US$75 per barrel as traders grew cautious over concerns of outbreaks of a new strain of the coronavirus. “The forecast for oil demand recovery over the summer may be a bit overestimated and traders are facing a reality check this week as the Delta variant reached Europe, infections surge in southeast Asia and Australia is bringing back lockdowns,” said Rystad Energy oil markets analyst Louise Dickson.
OPEC+ is expected to raise oil production levels as much as 500,000 barrels per day in August to meet increased summer travel demand.
As of 29 June, 7:15 AM EDT, Bloomberg reported Brent crude (ICE) contracts for August 2021 were trading at US$74.30.
Meanwhile, deepwater drilling showed a slight increase, as the number of floaters ticked up one unit week-on-week to 114, according to weekly offshore rig tracking data from Westwood Global Energy’s RigLogix.
In the Mediterranean, Stena Drilling’s drill ship Stena Icemax will conduct a drilling campaign for Energean subsidiary Energean Israel Limited offshore Israel during 2022 and 2023. The drilling programme is expected to target the “derisking of unrisked prospective recoverable resources of over 1Bn barrels of oil equivalent (boe),” said Energean in a press statement.
Under the contract with Energean, Stena Icemax will drill three firm wells and two optional wells, with the first firm well expected to spud in Q1 2022. The firm wells are all expected to be drilled during 2022 in the Karish North development, Karish Main-04 appraisal well and Athena exploration well.
SHI leases drill ship to Saipem
South Korea’s Samsung Heavy Industries (SHI) reported it had struck a two-year charter a new generation drill ship to Italy’s Saipem. The charter period runs from November 2021 to August 2023.
The drill ship is one of two ordered by OceanRig is 2013 and 2014. SHI has four other drill ships in its inventory as a result of cancelled orders during the oil downturn.
In the West Africa jack-up market, Dubai-based Shelf Drilling has secured a five-well contract for the jack-up rig Baltic with Total E&P Nigeria Limited for operations offshore Nigeria. Starting in June, the campaign will last about 380 days. A Marathon LeTourneau Super 300 design, Baltic can drill in 114 m of water to maximum drilling depths of 7,600 m.
In the Middle East, the number of contracted offshore jack-up rigs remained at 121 for the week – its highest level of the year. In the most recent contracting activity, NYSE-listed driller Valaris was awarded a 200-day extension to its bareboat charter agreement with ARO Drilling for the jack-up Valaris JU-250 (ex Bob Palmer). As a result of the extension, Valaris JU-250 will be under contract through the end of 2021. Saudi driller ARO Drilling’s contract with Aramco has been extended for the same period.
The jack-up rig Noble Mick O’Brien has been extended until September 2022 to continue its campaign in Qatar for Qatar Gas.
Improvement in OSV utilisation
While there is still a tonnage oversupply weighing on the market, utilisation has improved in the offshore support vessel (OSV) sector, according to collaborative research from leading shipbroker Braemar ACM Shipbroking and Westwood Global Energy.
Total utilisation for the global OSV market fell from 55% in Q1 2020 to a low of 49% in Q3 2020, following a sharp decline in rig activity, FID cancellations and deferments, and significant logistical challenges posed by the global pandemic. To reduce operating costs, OSV owners quickly stacked idle fleets, with global lay-ups accounting for almost 33% of total capacity. Braemar ACM and Westwood Global Energy jointly estimate effective utilisation (excluding stacked vessels) at 73% in Q1 2021. “Owners and operators who wish to remain competitive must consider future tactics for fleet rationalisation, factoring in ageing fleets alongside the financial and environmental costs associated with scrapping,” said the companies in their analysis.
Positive news in US Gulf of Mexico
There was positive news out of the US Gulf of Mexico, which saw the offshore rig count move up one week-on-week to 14, up three year-on-year, according to Baker Hughes.
In its latest fleet status report, Noble Drilling reported securing a one-well contract for the drill ship Pacific Khamsin from EnVen. The contract, which contains three one-well options, will run from early January 2022 to late February 2022. Prior to its EnVen work, Pacific Khamsin will be under contract to Petronas between August and mid-October 2021 for a campaign in Mexico. The disclosed rate is US$192,000 per day. The drill ship could return to work for Petronas following its campaign for EnVen under two priced option wells and two additional option wells at market rates.
Built in 2013 by Samsung Heavy Industries, the DP-3-capable Pacific Khamsin can drill in 3,700 m of water to drilling depths of 12,000 m.
Louisiana-based privately held E&P company LLOG Exploration announced on 23 June its first production from the Praline field, a discovery in Mississippi Canyon Block 74. The Praline well was drilled in 800 m of water to a total depth of 4,100 m. The well was completed in August 2020 and has been tied back to the Talos Energy-operated Pompano platform.
As operator, LLOG holds a 27.25% working interest in the field. Its partners in the field are entities managed by Ridgewood Energy Corp, including ILX Holdings, Red Willow Offshore, Houston Energy and CL&F Offshore.
LLOG president and chief executive Philip LeJeune said the Praline field was the company’s first of four pipe-in-pipe tieback projects it expected to have online in the next year.
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