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Oil, Gas Operators Committed To Gulf of Mexico, International Deepwater

By Susanne S. Pagano

Oil and gas operators are firmly committed to exploration and production in traditional deepwater regions of the Golden Triangle—the Gulf of Mexico, West Africa and Brazil—as well as newer promising areas, including waters off East Africa, eager to find and develop new reserves as oil prices hold in the $100 barrel range. Worldwide, exploration and production activities are robust, prompting growing demand for technically advanced equipment and services amid heightened safety concerns following the Deepwater Horizon accident three years ago.

The market remains tight for most deepwater rigs, with oil and gas operators moving forward on a long list of attractive prospects spanning the globe. The international drilling fleet includes about 840 rigs, with utilization averaging around 85 percent. Two of the newest rigs in the global fleet are Transocean Ltd.'s (Vernier, Switzerland) Super B-class Bigfoot jackups built at Keppel FELS (Singapore). Both units will work for Chevron Corp. (San Ramon, California) offshore Thailand. About 140 rigs, including semisubmersibles, drillships and jackups, are under construction at shipyards worldwide for drillers including Diamond Offshore Drilling Inc. (Houston, Texas), Noble Corp. (Baar, Switzerland), Maersk Drilling (Copenhagen, Denmark) and Rowan Companies plc (Houston).

Rig Charter Rates Remain High
Daily charter rates for several offshore rig types have inched upward in 2013, IHS Petrodata (Houston) reported. Worldwide average charter rates for deepwater and ultradeepwater semisubmersibles range from $460,000 to $535,000. Day rates for drillships designed for water depths greater than 7,500 feet range from $590,000 to $660,000.

Day rates for jackups widely vary depending on individual markets. An average 250-foot independent leg cantilever jackup in the Gulf of Mexico commands $100,000 to $110,000 a day; a similar rig in the Middle East works at charter rates from $95,000 to $119,000. Jackups in the Indian Ocean generally work at rates from $153,000 to $160,000 a day. Meanwhile, harsh-environment, high- specification jackups in the North Sea mandate $215,000 to $242,500 per day, according to IHS Petrodata.

Oil Operators Log New Discoveries
New oil and gas discoveries have been logged worldwide, including a major deepwater natural gas find by PEMEX (Mexico City, Mexico) in the Gulf of Mexico. The Kunah-1 well in 7,000 feet of water offshore Veracruz, Mexico, is one of several in the deepwater region that PEMEX believes could contain an estimated combined reserves of 2 billion cubic feet of natural gas.

In the U.S. portion of the gulf, Noble Energy Inc. (Houston) and partner W&T Offshore (Houston) discovered 150 feet of net oil pay at the Big Bend exploration prospect in 7,200 feet of water. Separately, Cobalt International Energy Inc. (Houston) and strategic alliance partner Total S.A. (Paris, France) reported a significant deepwater oil strike at its North Platte prospect in Garden Banks off Louisiana. Further appraisal is necessary to confirm the discovery's size and commerciality.

Furthermore, Chevron Corp. reported two recent gas discoveries in Australia's Exmouth Plateau. The Pinhoe-1 and Arnhem-1 wells have estimated net gas pay of 197 feet and 149 feet, respectively. Additionally, Petrobras (Rio de Janeiro, Brazil) logged a new oil discovery with its Florim well offshore Rio de Janeiro. Testing will follow later in the year.

Oil and gas companies continue to build lease portfolios, adding strategic acreage for future exploration. In the Gulf of Mexico, the U.S. Bureau of Ocean Energy Management will conduct one more lease sale this year in the Western Gulf. A March sale in the Central Gulf of Mexico offered 7,299 blocks located in water depths from 9 to more than 11,115 feet. U.S. domestic lease auctions in 2014 will include acreage in the Eastern, Central and Western Gulf of Mexico.

Internationally, Exxon Mobil Corp. (Irving, Texas) recently signed an agreement with Impact Africa Ltd. (London, England) to acquire a 75-percent participating interest and operatorship in the deepwater Tugela South Exploration Right permit off South Africa's eastern coast.

Rig Orders Placed
Numerous drilling contractors are expanding their global deepwater rig fleets to meet an anticipated upswing in demand over the next several years. One order has been placed by Seadrill (Hamilton, Bermuda) to build two high-specification jackups at Dalian Shipbuilding Industry Offshore Co. Ltd. (Dalian, China). Rated to drill in water depths of 400 feet, the premium rigs will be delivered in 2015.

Separately, Seadrill recently disclosed a new five-year contract for the newbuild, harsh-environment semisubmersible rig West Mira for operations off Eastern Canada and Greenland. Estimated revenue potential for the contract, including mobilization and performance bonus, is around $1.18 billion for the five firm years, Seadrill officials reported. The rig, currently under construction at Hyundai Samho Heavy Industries Co. Ltd. (Samho, South Korea) should be ready to spud its first well in 2015. Last year, Seadrill locked in some $4 billion in contracts for three ultradeepwater rigs under construction at Samsung Heavy Industries Co. Ltd. (Geoje, South Korea). At least two of the rigs will mobilize to the Gulf of Mexico in 2013. To continue this article please click here.

Susanne S. Pagano is a Sea Technology contributor based in Houston, Texas.

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