Securing rig capacity to improve recovery on the NCS

Illustration: Category D rig.

The rigs will contribute further to Statoil’s efforts to improve recovery on the NCS.

Songa Offshore has been awarded contracts for building the two rigs. The estimated contract value is USD 1.33 billion per rig for a fixed charter period of 8 years, with options for extensions of another 4x3 years per rig. The contracts cover two category D rigs for medium water depth. This innovative rig concept has been developed by the industry for Statoil.

“Statoil is committed to maximising the value of the NCS,” says executive vice president of Development and Production Norway in Statoil, Øystein Michelsen.

“We have a world-class project portfolio on the NCS with a robust production outlook. In addition to the safe and efficient development of new fields, we continue to step up our efforts to improve recovery from existing fields. We are convinced that new efforts are needed to secure a rig fleet that can handle the demanding tasks ahead.”

By increasing the capacity of category D rigs, the drilling and completion of production wells will be carried out at lower costs, more efficiently and in a safe manner. Reducing rig costs is important in order to realise the values in existing discoveries. New discoveries are often made close to existing fields. Fast development of such discoveries is necessary to utilise the existing infrastructure.

“In order to further revitalise the NCS, Statoil sees the need for adding new rig capacity. We are targeting the allocation of rigs and rig concepts to ensure more capacity in the market, and we are already seeing results of these efforts,” says chief procurement officer in Statoil, Jon Arnt Jacobsen.

One of the new category D rigs will be used on the Norne, Heidrun and Åsgård licences, the other will be part of Statoil’s strategic rig fleet and set up for year-round operations in the Barents Sea.

“We have carried out a procurement process which has generated significant interest among rig entrepreneurs, contractors and investors. Statoil committed to Songa Offshore last year to realise the first two category D rigs, these new contract awards strengthen our cooperation. The contract awards will raise exciting possibilities for Songa Offshore, but will also lead to positive spinoffs for sub-suppliers involved in producing and preparing the rigs for operation,” says Jacobsen.

In connection with the contracts Statoil will provide to Songa Offshore a bridge financing covering the pre-delivery payment by Songa to the shipyard (DSME). The financing is equivalent to 20% of the total construction contracts value, offered at normal market conditions, including security.

• Partners on the Norne field are: Petoro AS 54%, Statoil 39.1% and Eni Norge AS 6.9%.
• Partners on the Heidrun field are: Petoro 58.16%, ConocoPhillips Skandinavia 24.31%, Statoil 12.40% and Eni Norge 5.11%
• Partners on the Åsgard field are: Petoro 35.69%, Statoil 34.57%, Eni Norge 14.82%, Total E&P Norge 7.68% and ExxonMobil 7.24%

Facts: In the summer of 2011 Statoil awarded the contract for construction of two new drilling rigs for use on the NCS to Songa Offshore. The purpose-built category D rigs are able to operate in water depths between 100 and 500 metres, and drill wells to a depth of 8,500 metres. These workhorses on mature fields will primarily be used for drilling of production wells and well completion. This way Statoil and its partners will recover more oil from the fields. The first two rigs are planned to be in operation from 2014 and the two following from 2015.