E&P Notes (August 2022)
Authors: JPT staff _ 
Published: September 2022

Valaris Adds Fresh Rig Contracts to Backlog

Valaris has scooped a number of new contracts and contract extensions, adding an associated $466 million to its contract backlog. The company received a 540-day contract with Equinor offshore Brazil for use of drillship Valaris DS-17. The rig will be reactivated for this contract, which is expected to begin in mid-2023.

The total contract value is around $327 million, including an upfront payment totaling $86 million for mobilization costs, a contribution toward reactivation costs, and capital upgrades. The remaining contract value relates to the operating day rate and additional services.

Also in Brazil, Valaris received a contract extension with TotalEnergies EP Brasil offshore Brazil for the use of drillship Valaris DS-15. The option is in direct continuation of the current firm program.

“We are particularly pleased to have been awarded another contract for one of our preservation stacked drillships, Valaris DS-17, and look forward to partnering with Equinor on their flagship Bacalhau project in Brazil,” said Valaris Chief Executive Anton Dibowitz. “We expect Brazil to be a significant growth market for high-specification floaters over the next several years, and we are well positioned to benefit by now adding a third rig to this strategic basin.”

The contractor also was awarded a two-well contract extension with Woodside offshore Australia for semisubmersible Valaris DPS-1. The two-well extension has an estimated duration of 38 days and will be in direct continuation of the existing firm program for Woodside’s Enfield plug-and-abandonment (P&A) campaign. The P&A work covers 18 wells in total.

Woodside also awarded Valaris a separate one-well extension for the rig. The work has an estimated duration of 60 days with Woodside’s Scarborough development campaign.

Elsewhere, Shell awarded a 4-year contract for heavy-duty modern jackup Valaris 115 offshore Brunei. The $159-million contract is expected to begin in April 2023.

The contract was also awarded various short-term deals for jackups with Shell in the UK, an undisclosed operator in the Gulf of Mexico (GOM), Cantium in the GOM, and GB Energy offshore Australia.

Shell Joins Equinor in GOM Sparta Development

Shell has agreed to purchase 51% of Equinor’s interest in the North Platte deepwater development project in the US Gulf of Mexico (GOM). Equinor will retain 49% interest in the project, and Shell will become the new operator of the field. The new partners also have agreed to rename North Platte to Sparta.

Sparta straddles four blocks of the Garden Banks area, 275 km off the coast of Louisiana in approximately 1300 m of water depth. Front-end engineering and design has been matured for the project. Equinor and Shell will review the work that has been completed and update the development plan.

Shell said that Sparta aligns with its strategy to pursue upstream investments that can remain competitive over time, both from a financial and environmental-intensity perspective.

North Platte was discovered by Cobalt Energy and Total in 2012. The partners said the Wilcox-aged discovery would require 20K-psi technology to develop. Cobalt went bankrupt in 2017 and its stake in the asset was sold to Equinor and Total. In early 2022, TotalEnergies walked away from the project and its operatorship to focus on other projects, leaving Equinor with 100% interest.

BP Awarded King Mariout Block in Egypt’s West Med

BP has been awarded the King Mariout exploration block offshore Egypt following its participation last year in the limited bid round organized by the Egyptian Natural Gas Holding Company. The King Mariout Offshore area is located 20 km west of the Raven field in the Mediterranean Sea and covers 2600 km2 with water depths ranging between 500 and 2100 m.

The block is within the West Nile Delta area, for which material gas discoveries could be developed using existing infrastructure. BP holds a 100% stake in the block.

BP is a major player in Egypt investing more than $35 billion in the area over the past 60 years.

LLOG Begins Production From Spruance in GOM

LLOG has kicked off production from its operated Spruance Field located in Ewing Bank Blocks 877 and 921 in the US GOM. The two-well subsea development is producing, in combination, approximately 16,000 B/D of oil and 13 MMcf/D via a 14-mile subsea tieback to the EnVen-operated Lobster platform in nearby Block 873.

The Spruance Field was initially discovered by LLOG and its partners in mid-2019 via a subsalt exploratory well, the Ewing Bank 877 #1, which was drilled in 1,570 ft to a total depth of 17,000 ft and logged around 150 net ft of oil

pay in multiple high-quality Miocene sands. A second well, the Ewing Bank 921 #1, was drilled from the same surface location as the discovery well to a total depth of 16,600 ft in early October 2020. The well delineated the main field pays

and logged additional oil pay in the exploratory portion of the well, finding a total of more than 200 net ft of oil.

LLOG is the operator of the Spruance Field and owns a 22.64% working interest with partners Ridgewood Energy (23.89%), EnVen (13.5%), Beacon Asset Holdings (11.61%), Houston Energy (11.2%), Red Willow (11.15%), and CL&F (6%).

Egypt Signs Agreement With Chevron To Drill First Exploration Well in East Med

Chevron is planning to drill the first exploration well in its concession area in the Eastern Mediterranean this September. The well plans come as Egyptian Natural Gas Holding signed a memorandum of understanding with the US-based producer to cooperate in transporting, importing, and exporting natural gas from the area. Chevron expanded its presence in the area following its $5-billion acquisition of Noble Energy in 2020.

The two companies will evaluate options for natural gas transmission from the East Mediterranean to Egypt to optimize its value through liquefaction before re-exporting and selling it, according to the memorandum. In addition, the two firms will perform research on low-carbon natural gas.

APA Suriname Campaign Offers Mixed Results

APA Corporation successfully flow tested its Krabdagu exploration well (KBD-1) on Block 58 offshore Suriname, while its Rasper exploration well on Block 53 offered disappointing results. Flow-test data collected in the two lower intervals, the Upper Campanian (32 m of net oil pay) and Lower Campanian (32 m of net oil pay), indicate oil-in-place resources of approximately 100 million bbl and 80 million bbl, respectively, connected to the KBD-1 well.

Appraisal drilling will be necessary to confirm additional resource and development-well locations, according to APA. The exploration well encountered another high-quality interval in the Upper Campanian that was not in a location suitable for flow testing. This shallower Campanian zone will need to be flow tested in the appraisal stage from a better location.

The APA-TotalEnergies joint venture is currently drilling the Dikkop exploration well in the central portion of Block 58 with drilling rig Maersk Valiant. Following completion of operations at Dikkop, the rig is expected to continue exploration and appraisal activities in the central portion of Block 58.

APA Suriname and operator TotalEnergies each hold a 50% working interest in the block.

Meanwhile, APA’s Rasper well in Block 53 off Suriname encountered water-bearing reservoirs in the Campanian and Santonian intervals. The Noble Gerry de Souza drillship has been mobilized to the next exploration prospect, Baja, in the southwestern corner of Block 53. Baja lies 11 km northeast of the recently announced Block 58 discovery at Krabdagu and will test Maastrichtian and Campanian targets.

APA Suriname, the operator, holds a 45% working interest in the block, Petronas holds a 30% working interest, and CEPSA a 25% working interest.

Novatek JV Wins North Yarudeyskoye License

Novatek’s Yargeo joint venture has won the license to survey, explore, and develop production at the North Yarudeyskoye oil and gas condensate field over the next 27 years. The license area is in the Yamal-Nenets autonomous region in the Arctic, Russia’s principal gas-producing area. North Yarudeyskoye holds an estimated hydrocarbon resource potential of 93.5 million BOE.

The greater Yarudeyskoye field began producing in 2015 and by 2017 was responsible for nearly a third of Novatek’s liquids production.

The company, Russia’s largest private natural gas producer, noted that it had participated in the recent auction to explore and develop North Yarudeyskoye through Gazprom Bank’s Electronic Trading Platform and that the win was Novatek’s first on that platform.

PDC Energy Gets Green Light for Kenosha, Broe Developments

The Colorado Oil and Gas Conservation Commission has approved PDC Energy’s Kenosha and Broe developments’ permit applications. The Kenosha development, which encompasses 69 wells on three pads in rural Weld County, Colorado, further increases PDC’s permitted inventory by another rig year and solidifies drilling and completion activity well into 2024.

The Broe permit encompasses 30 wells in rural Weld County. The Broe plan was initiated by Great Western Petroleum, which was acquired by PDC in May 2022 and represents PDC’s first development plan approval on Great Western acreage. Combined with the Kenosha plan approval, PDC added 99 new wells to its inventory in June and will soon have more than 675 permits and drilled and uncompleted wells.

Both fields are in the greater Wattenberg area. The new permits add to an already-established multiyear inventory of projects in the DJ Basin. Kenosha is the second oil and gas development plan to be approved, and the company anticipates further approvals with its Guanella area plan and others.

PDC’s operations in the Wattenberg field are focused in the horizontal Niobrara and Codell plays. The Wattenberg represents PDC Energy’s largest asset with more than 85% of its 2021 production and 90% of its year-end 2021 proved reserves.