Seadrill Limited ("Seadrill" or "the Company") has entered into turnkey contracts to build four new ultra-deepwater drillships. Two drillships will be built at the DSME yard and the other two at the Samsung yard, in South Korea. The project value price is estimated to be below US$600 million per unit (including project management, drilling and handling tools, spares, capitalized interest and operations preparations).  Delivery of the 4 units is scheduled for the second half 2015.  Seadrill has in addition received fixed priced options for delivery of two further units for delivery in the first half 2016. 

The drillships will have a hook load capability of 1,250 tons and a water depth capacity of up to 12,000 feet targeting operations in areas such as the Gulf of Mexico, Brazil and West and East Africa. Also, these units will be outfitted with seven ram configuration of the blowout preventer (BOP) stack and with storing and handling capacity for a second BOP. The units include design and equipment features, which makes them particularly attractive for development drilling. For two of the drillships, Seadrill has received options to include equipment which makes the units prepared for 20K BOP systems.

Seadrill's construction program now totals 22 units, including 9 drillships, 2 harsh environment semi-submersibles, and 11 high specification jack-ups. In addition the Company has fixed priced options for two ultra-deepwater units.

The offshore drilling market has absorbed approximately 261 new units since 2005 and the utilization of the ultra deepwater fleet has been 100% since Seadrill was established in 2005. In the same period offshore production has been estimated to be marginally down. This illustrates in very simple terms the increased complexity of the development of new oil and gas reserves. Seadrill has spent significant time and effort analyzing the future demand of the ultra deepwater drilling market.  Ultra deepwater production is estimated to increase from around 1 million barrels per day today to 5 million barrels per day over the next 6 years. In order to reach this target significant new development drilling capacity will have to be added. At the same time, the industry faces a situation where approximately 49% of the current floater fleet is older than 20 years. We have already seen a strong trend where fourth and fifth generation vessels are incapable of meeting oil companies' new requirement for safety margin and deck load capacity and are being replaced with newer units.

The Board of Seadrill is of the opinion that the current order book for 2014 - 2016 of approximately 39 units will be fully absorbed, and utilization will continue at very high levels with solid dayrates for the modern equipment.

Seadrill currently has an order backlog of approximately US$19 billion. Based on current discussions, we are confident that in the coming months we will add to this as our open 2014 capacity is likely to be fixed at attractive day rate levels.

Aker Solutions won a contract from Caspian Drilling Company Ltd (CDC) to provide a complete topside equipment package for a new semi-submersible drilling rig in Baku, Azerbaijan. The parties agreed not to disclose the value of the order.

Aker Solutions has previously delivered drilling equipment to eight drilling rigs operating in the Caspian Sea. Two of the rigs are semi submersible and operated by CDC.

"The contract confirms our strong position in the Caspian market and our long-lasting relationship with CDC," said Roy Dyrseth, head of Aker Solutions' drilling technologies business. "We are pleased to secure more work in Azerbaijan after making significant investments in our infrastructure in the region."

Aker Solutions last year opened a new facility in Baku to improve its offering of services in the region.

The equipment will mainly be constructed and assembled at Aker Solutions' facilities in Kristiansand and Asker in Norway as well as in Erkelenz in Germany.

Installation and commissioning services will be performed by the Caspian Shipyard Company Ltd., where Keppel Fels is the major shareholder. Delivery is scheduled for the fourth quarter of 2016.

Aker Solutions' subsidiary Managed Pressure Operations will deliver managed pressure drilling (MPD) systems and riser gas handling services to Repsol Sinopec Brazil. The parties agreed not to disclose the value of the order.

The three-year contract comes with an option for an additional two years of services. Repsol will use the equipment at an ultra-deepwater operation in the Campos Basin.

"This contract will demonstrate the unique capabilities of our riser gas handling safety system and introduce the first deep-water application of our riser drilling device into an offshore MPD system below the tensioner on a rig," says Charles Orbell, head of Managed Pressured Operations (MPO), which is part of Aker Solutions' drilling technologies business.

The riser gas handling system helps control wellbore fluids during offshore oil and gas drilling. It detects an influx of gas into a drilling riser and diverts the gas to prevent a blowout.

MPD technology improves drilling performance and safety. The riser drilling device seals the area around the drill pipe during drilling operations. Integrating a riser drilling device with a riser gas handling system enables MPD drilling operations.

Aker Solutions in February 2013 acquired Managed Pressure Operations International, which provides knowledge and technologies within the emerging managed pressure drilling segment. MPD is used to improve safety and efficiency during drilling operations, enable access to new fields with challenging drilling conditions and enhance the life of mature fields.

The contract has been booked as order intake in the second quarter of 2013.

The license partners of Gullfaks and Oseberg Area Unit have acquired two new category J jack-up rigs. The rigs will be owned by the licenses and will contribute to increased recovery and extended field life.

Image: Cat J rig illustration.

Samsung Heavy Industries Co. Ltd. and operator KCA Deutag Drilling Norway AS have been awarded the contracts for construction and operation of two category J rigs. Operation start is expected in 2016-2017.

The Bureau of Safety and Environmental Enforcement (BSEE) is continuing to oversee Energy Resource Technology, LLC’s (ERT) source control efforts to stop the flow of gas and kill the well at Ship Shoal Block 225 Platform B, located approximately 74 miles offshore Louisiana, southwest of Port Fourchon, in about 146 feet of water. BSEE and Coast Guard remain on scene at a nearby platform.

Following a site safety assessment, BSEE approved the movement of pumping equipment onto Platform E, adjacent to Platform B and connected by a bridge. BSEE engineers completed final reviews and approved the source control procedures which involve pumping drilling mud into the well to stop the flow of natural gas. The wellhead and associated equipment are located approximately 70 feet above the surface of the water, where all platform work is conducted.

Coast Guard continues to provide safety management oversight as part of its active involvement in ERT operational planning. Coast Guard conducted an overflight yesterday and is ensuring that all precautions are taken to access risk and make certain that safety measures are in place to protect personnel.

As reported by ERT, there is currently a light sheen on the water, which appears to be evaporating. The well is flowing mostly water at very low pressure and ERT believes that approximately 3.6 barrels of light condensate is being discharged every 24 hours based upon the size of the sheen as reported by the BSEE and the U.S. Coast Guard.

According to ERT, the Ship Shoal 225 B-2 well is an older gas condensate well in a field developed in the 1970's that last produced mostly water in 1997 at a rate of 65 thousand cubic feet of gas per day, 9 barrels of condensate per day and 1,150 barrels of water per day at a low flowing pressure of 175 psi.

While conducting a temporary plugging operation, ERT first experienced a loss of well control on July 7, 2013. BSEE was notified of the incident and that the well had been secured. A BSEE Houma District engineer received the report of a second loss of well control event on July 8, at approximately 9:45 a.m. BSEE inspectors were on-board the platform and confirmed that the well was flowing natural gas, water, and condensate. The platform was safely evacuated and two producing wells were shut-in.

BSEE and Coast Guard continue to work closely with federal and local agencies. BSEE will conduct an investigation to determine the cause of the well control event.

Maersk Drilling has been awarded a contract from DONG Energy for the jack-up Maersk Resolve for drilling operations in the Danish North Sea. The contract is expected to commence in August 2013 in direct continuation of its current contract in the UK. The duration of the new contract with DONG Energy is expected to be nine months until June 2014, where the rig after a planned yard stay will commence another five well firm contract with DONG Energy awarded in March 2012 expected to last approximately two years. The estimated value of the new nine month contract is USD 58 million.

"We are very pleased to enter this contract with DONG Energy, one of our key customers in the North Sea area," says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board of the A.P. Moller - Maersk Group.

"Maersk Resolve will now work for DONG Energy through to the end of third quarter of 2016 and we look forward to co-create value with DONG Energy on their many interesting prospects including the high profile Hejre field development which requires the drilling of a number of deep and complicated High-Pressure-High-Temperature wells. With its high tech equipment the Maersk Resolve is ideally suited to meet these demands."

Maersk Resolve is the third in a series of four High Efficiency 350 ft jack-up rigs in Maersk Drilling's fleet. Since its delivery in 2009 the rig has been employed in the Danish and UK North Sea.

Wison Offshore & Marine Ltd. (Wison), a subsidiary of the Wison Group, announced today the award of a contract from China Oilfield Services Limited (COSL) to supply one modular drilling rig for use on a platform in the Mexican sector of the Gulf of Mexico operated by Petróleos Mexicanos (PEMEX). 



Under the contract, Wison will perform the project management, procurement, production engineering, fabrication, load out, offshore installation and commissioning support of one 3000hp modular drilling rig that will be installed on the Tsimin-C drilling and production platform in the Mexican Bay of Campeche. The drilling facility is based on an innovative self-installing design which will consist of some 97 smaller units that will require significant integration work to strict tolerances during module construction. Wison will fabricate the approximately 2500-ton module at its Nantong facility in China with the delivery planned for the second quarter of 2014.



The project marks Wison’s second contract from COSL for the delivery of modular drilling units to PEMEX. In 2007, Wison delivered modules for four platform rigs that are currently operating offshore Mexico. Wison also delivered two modular platform rigs to COSL in 2010 for operation on CNOOC facilities offshore China.



“Wison has established a strong track-record in delivering drilling modules for COSL and we are extremely pleased to expand this relationship and provide more high-quality facilities for PEMEX,” said Wison Offshore & Marine Executive Vice President, Dr. L. Dwayne Breaux. 
 

Recent state tax reform also spurs Prudhoe Bay working interest owners to evaluate additional $3 billion of development projects

BP has announced it is planning to add $1 billion in new investment and two drilling rigs to its Alaska North Slope fields over the next five years due to changes in the state’s oil tax policy signed into law this month by Gov. Sean Parnell.

These plans call for an increase in drilling and well-work activity, the upgrading of existing facilities and the addition of up to 200 new jobs in the state, giving a boost to both the company’s operations and the state’s economy.

Provides States Greater Flexibility in Planning

The Bureau of Safety and Environmental Enforcement (BSEE) has  posted a revised internal policy for evaluating proposals to convert obsolete, offshore oil and natural gas production platforms into artificial reefs.

The Interim Policy Document replaces a policy addendum issued by BSEE’s predecessor agency in 2009, and removes the requirement for a five-mile buffer zone between designated reefing areas and certain restrictions to reefing in place. The revised policy also provides for extensions to regulatory decommissioning deadlines for facilities that companies are actively pursuing acceptance into a state program, and it eliminates storm-toppled platforms from consideration.

“For the past several months, we have been working with our federal partners, state officials and affected stakeholders in the Gulf of Mexico region to learn about their needs and concerns regarding the inclusion of oil and gas infrastructure in the states’ artificial reef programs,” BSEE Director James A. Watson said. “This policy is reflective of the feedback we received. It provides states greater flexibility in their planning and addresses the multiple uses for these areas while ensuring the marine environment is protected.”

Federal regulations and leasing contracts require offshore oil and gas operators to permanently seal wells that are no longer producing and remove any associated infrastructure, including the production platform.

 BSEE can grant a departure from the removal requirement in a process commonly known as “rigs to reefs” provided the platform meets certain structural criteria and other federal and state requirements, and is accepted by a state into its artificial reef program. After all hazardous materials are removed, the platform structure can be dismantled and towed to a designated reefing area, or may be reefed in place under certain conditions. In each case, the state assumes the liability for the structure.

The revised policy reinforces case by case evaluation of each reefing proposal with balanced consideration of future oil and gas development, pipeline rights of way, decommissioning operations and other uses such as charter, commercial and recreational fishing, shrimping and recreational diving.

 James Fisher and Sons plc has announced that its Strainstall subsidiary has been awarded a contract to provide international oil and gas company Total with an Integrated Marine Management System (IMMS) for the Moho Nord tension leg platform which destined for installation off the Congolese coast in West Africa.



Strainstall's integrated monitoring and management systems (IMMS) are designed to provide an integrated monitoring and control system for both fixed and floating offshore structures. Customized to the individual requirements of each installation, the IMMS provides the operator with data and reporting from a number of parameters on the hull. Features include tendon data that incorporates load and bending moments, reports on the height of the deck above the sea surface and wave condition, permanent and temporary ballast tank levels and reporting on a number of meteorological conditions including wind speed direction, air temperature and pressure. This approach allows full visibility and control during installation and simplified topside connection to provide an integrated solution.



Under the contract announced today, Strainstall will provide Total – through a contract placed by Hyundai Heavy Industries – with a comprehensive mooring monitoring solution for the Moho Nord tension leg platform that is critical to production and safety. This multi-million dollar contract, to be completed over the next year, further reinforces Strainstall's market leading position in the tension leg platform mooring monitoring market.


A new fiber-optic monitoring system developed through a Space Act Agreement between NASA and Astro Technology Inc. of Houston is helping to increase safety for workers and reduce the risk of leaks and spills on two oil platforms off the coast of West Africa. The technology also has potential future space exploration applications.

GE Oil & Gas (NYSE: GE) has signed an $84 million agreement with PEMEX Exploration and Production to supply and to install subsea wellheads for PEMEX’s deepwater and ultra-deepwater drilling projects in the Gulf of Mexico. This marks GE’s largest agreement with PEMEX for the supply of subsea high capacity wellheads.

Statoil and its partners have made the investment decision for a joint oil export solution for the Edvard Grieg and Ivar Aasen fields.

The oil will be transported via a 43-kilometer oil pipeline from Edvard Grieg to the Grane oil pipeline, and then on to Sture.

The transport solution is a precondition for developing the Edvard Grieg (operated by Lundin) and Ivar Aasen (operated by Det norske oljeselskap) fields. Edvard Grieg is scheduled to start producing in 2015 and Ivar Aasen in 2016. The new pipeline will be called the Edvard Grieg oil pipeline.

Statoil is a partner in both fields and operator for the joint venture for oil transport.

Tor Martin Anfinnsen, senior vice president for trade with crude oil, wet gas and refined products in Statoil.

The investment decision was made by Statoil and the partners, based on a recommended solution from Gassco. A plan for installation and operation (PIO) has been submitted to the Norwegian Ministry of Petroleum and Energy.

“We are an important player in the Sleipner and Utsira area, and are therefore concerned with robust solutions that provide the possibility of expanded activities in the area in the future,” says Tor Martin Anfinnsen, senior vice president for trade with crude oil, wet gas and refined products in Statoil.

Statoil’s extensive project experience from similar projects and market position within procurements and pipeline installation constitute the framework for implementation of the project. 

Torger Rød, senior vice president for pipelines and onshore projects in Statoil. 

“Good cooperation and close coordination with other projects in Statoil, as well as close follow-up of the primary suppliers are important success criteria, where, among other things, we have achieved synergies as regards the pipeline installation job,” says Torger Rød, senior vice president for pipelines and onshore projects in Statoil.

The Utsira High is located between the two established fields Sleipner and Grane, in an established area with well-developed infrastructure. This forms the basis for new, robust and flexible export solutions on the Utsira High.


Milestones

*  The PIO is expected to be approved this autumn.

*  Pipeline production will be completed in 2013.

*  Pipeline coating will be completed in 2014.

*  Installation of new Y connection point in the Grane oil pipeline will be carried out in connection with the planned shutdown of Grane in the spring of 2014.

*  Pipeline installation in the summer of 2014 and tie-in operations in 2015, so it will be ready for the start of production in the autumn of 2015.


Facts about Edvard Grieg oil pipeline

Length and size: 43-km, 28-inch pipeline from Edvard Grieg (which also processes the wellstream from Ivar Aasen). This will be tied in to the Grane pipeline, which runs to the Sture terminal.

Partners: Lundin Norway (30%), Statoil (operator; 20%), Wintershall Norge AS (18%), Det norske oljeselskap ASA (14%), OMV Norge AS (12%) and Bayerngas Norge AS (6%). 

Lifespan: Designed for 30 years

Investments: NOK 2.1 billion (running)

McDermott International, Inc. (NYSE: MDR) (“McDermott”) has announced  that one of its subsidiaries has been awarded an engineering, procurement and construction (EPC) contract by Exxon Mobil Corporation for its Julia development. The value of the contract is included in McDermott's second quarter 2013 backlog.

The Julia field is located approximately 265 miles southwest of New Orleans in the Gulf of Mexico Walker Ridge area in water depths of approximately 7,000 feet. The Julia Phase I project is a subsea tie-back to a semi-submersible floating production unit and the scope includes six subsea wells, one six-slot manifold, two umbilicals, six jumpers, two flowlines with two steel catenary risers, two subsea pump modules and topsides support equipment. Production will flow through two 10-inch production flowlines with subsea single-phase boost pumps. Exxon Mobil Corporation, the operator, and Statoil each hold a 50 percent interest in the Julia field development.

“McDermott offered a very competitive solution for the Julia project with the right people, assets and technology, based on our experience with a similar deepwater Gulf of Mexico subsea tie-back project that we were awarded in 2011,” said Stephen M. Johnson, Chairman, President and Chief Executive Officer of McDermott. “The Julia subsea infrastructure requires a high level of engineering design and construction work, a key component of which is high-specification welding to help ensure long-term integrity and reliability of the subsea facilities. The installation solution we offer provides a high degree of reliability and precision using key vessels in our fleet for deepwater lowering and flexible lay, and further demonstrates our commitment to the subsea market.”

McDermott will undertake engineering, procurement and construction of the jumpers, four suction piles associated with the manifold, subsea pump, pump transformer and Subsea Distribution Unit /Umbilical Termination Assembly, as well as the transportation and installation of the manifold, suction piles, flying leads, subsea pump system, the power and control umbilicals and SDU/UTAs. McDermott will also carry out testing of the tie-back system and mechanical completion before hand over to the customer.

McDermott expects to successfully execute this high‐profile project employing its in‐house expertise and capabilities for subsea engineering, high‐spec fabrication and subsea installation. Work will commence with immediate effect in our Houston office.

McDermott deepwater installation vessel Derrick Barge 50 is expected to undertake the installation of suction piles and subsea equipment, including the manifold, pump station and transformer. The vessel’s new deepwater lowering system has the capability to lower loads of up to 480 tons to depths of up to 11,500 feet.

On Tuesday, Bureau of Safety and Environmental Enforcement (BSEE) Director James Watson and U.S. Coast Guard Rear Admiral Joseph Servidio signed a Memorandum of Agreement (MOA) for regulating mobile offshore drilling units (MODU) on the Outer Continental Shelf (OCS). Through this agreement, both BSEE and the U.S. Coast Guard will work together to identify and coordinate responsibilities for the inspection and oversight of MODUs.

Mactech Offshore, a leading provider of subsea and offshore machining solutions, has recently received patent-pending status on its Articulating Diamond Wire Saw. The saw is designed for subsea and topside cutting of a variety of materials and projects in the offshore oil industry and utilizes an articulating cutting arm for minimal clearance during cuts.

Photo: Articulating Diamond Wire Saw Decommissioning Gulf Of Mexico Rig