OFFSHORE TECHNOLOGIES & MARKETS
All four of Northern Offshore’s jackups, including the Energy
Emerger (pictured), are working in the Middle East. Company
President Clay Coan noted an increase in tendering activity
in the region during the second half of last year.
Production is still expected to decline in the long term, of
course. Based on current levels of investment, the expected rate of
decline is between 7% and 10% by the end of the decade. However,
it’s important to note that the rate of decline could jump to 15% if
no new investments are made in the next two years .
A focus on new licensing and exploration can help balance this
decline in the coming years, with OEUK emphasizing the need
for a new licensing round to be announced this year. Its Business
Outlook shows that operators are planning nearly $26.13 billion
(£20 billion) in CAPEX on the UKCS from 2022 to 2026. New proj-
ects under consideration for development could bring up to $4.57
billion (£3.5 billion ) annually in new investments if approved,
unlocking around 300 million BOE per year in new reserves.
Contractors not feeling full benefit yet
Like with Stena Drilling, Mr Coan with Northern Offshore sees
an upward trend for the offshore drilling sector . While it is unclear
34 what kind of long-term impact the Ukraine conflict will have on
the oil price, Mr Coan said he feels the price has settled to a point
that will encourage operator investment in new projects.
“Speculating the future of oil prices will always be difficult, but I
do think it’s reasonable to expect that prices will remain at a level
that will continue to prompt investment by our customers. Whether
that means oil prices settle to the $70-80 range or they remain
north of $100, I don’t know, but I am confident they will be at a level
that encourages operators to go out and drill more wells,” he said.
However, drilling contractors have yet to feel the full benefit of
that upward trend – dayrates are still not at a high enough level
to enable significant reinvestment into upgrading rig fleets, and
existing terms for contracts signed earlier in the oil price recovery
timeline have not been adjusted to reflect higher prices.
“When oil prices crash, some of the oil companies are quick
to ask their service contractors to adjust their rates downward
accordingly. When oil prices increase significantly, the oil com-
panies generally have to go through a budget cycle before funds
are approved to tender for new rigs,” Mr Coan said. “The tendering
process itself can take many months before a contract is awarded.
So, while the market is improving, it hasn’t yet had a material
impact on the number of rigs contracted or market rates. We often
say that we take the slow elevator up and we take the stairs down .”
The downturn also forced drilling contractors to stack or retire
a number of rigs . However, Mr Coan said it is unlikely the recov-
ery will spur a newbuild cycle anytime soon.
“The severity of the most recent downturn is probably going to
limit investors’ appetite for newbuilds. There are just too many
rigs out there that are still available that need to be put to work
first. It is both faster and cheaper to get those rigs up and running
than it would be to invest in a newbuild,” he said.
Northern Offshore’s fleet of four jackups are currently work-
ing under long-term contracts in the Middle East. The Energy
Embracer, Energy Enticer and Energy Edge are working for Qatar
Petroleum through Q4 2023, Q3 2024 and Q4 2024, respectively.
All three contracts began in either late 2020 or early 2021. The
fourth jackup – the Energy Emerger – is working for an unnamed
operator offshore the UAE through Q4 2022. That contract started
in mid-2021.
Three of those four contracts were awarded prior to the oil
price downturn, while the contract for the Energy Emerger was
announced in October 2020. Since then, operators in the offshore
space and particularly in deepwater have been hesitant to award
long-term contracts .
Mr Coan said he’s hopeful that, as oil companies’ confidence
in a sustained high oil price environment grows, more long-term
contract opportunities will become available. But for now, when
making strategic contracting decisions, drilling contractors must
decide whether to bid low enough to secure short-term work or
hold out for longer-term contracts with improved dayrates.
“Each contractor has their own strategic objectives. For us, we
had to have the long-term contracts. We couldn’t justify taking
delivery of a newbuild rig and investing the money required to
deliver the rig to our customers for short-term work. Therefore,
we had to be selective for the right opportunity to take delivery of
our rigs and put them into the market.” DC
M AY/J U N E 202 2 • D R I L L I N G C O N T R AC T O R
OFFSHORE TECHNOLOGIES & MARKETS
Case study: Chevron deploys
below-tension-ring MPD to drill
highly depleted reservoir in GOM
potential benefits include quicker leak-
off detection and reaction to losses, safer
determination of drilling parameter and
mud weight adjustments, greater control
of pressure to prevent borehole instability,
and more efficient cementing of produc-
tion liner.
Strategy helped to reduce risk for fluid loss
and decreased mud weight requirements
Choosing the right
equipment BY JESSICA WHITESIDE, CONTRIBUTOR
Complex deepwater drilling environments
can become even more challenging as res-
ervoirs mature. Pressure concerns tied to
high levels of depletion increase the poten-
tial for fractures, downhole fluid loss and
well control hazards. To reduce these risks
and associated remediation costs, Chevron
has found success deploying drillships
outfitted with customized surface-back-
pressure managed pressure drilling (MPD)
systems in mature reservoirs in the deep-
water Gulf of Mexico.
At the 2022 IADC/SPE International
Drilling Conference in Galveston, Texas,
on 9 March, Ken Vaczi, Deepwater Drilling
Engineer for Chevron, described the com-
pany’s experience with its first two deep-
water BTR MPD systems in the Gulf of
Mexico during a four-well campaign. The
company has since expanded its use of
the technology to other operations in the
region. BTR (below tension ring) refers to a sur-
face-backpressure MPD system in which
the rotating control device (RCD), used to
control pressure during drilling, is placed
near the surface in the riser but below the
telescopic joint.
By maintaining near-constant bottom-
hole (or other target location) pressure,
this MPD approach helps the operator to
navigate narrow drilling margins. Other
Ken Vaczi, Deepwater Drilling Engineer for Chevron, described the company’s
experience with two deepwater BTR MPD systems in the Gulf of Mexico. He was
speaking at the 2022 IADC/SPE International Drilling Conference in March.
Chevron decided to apply BTR MPD to
the four-well campaign after experienc-
ing major downhole fluid losses during an
earlier conventional drilling operation in
highly depleted Gulf of Mexico reservoirs.
Modeling predicted that the new cam-
paign could face similar conditions, which
could trigger downhole losses and make it
difficult to reach planned total depth and
achieve other well objectives.
Through MPD, the team hoped to miti-
gate the potential for thermally induced
fractures and differential depletion, with
some sands in virgin condition and others
with high depletion levels up to 8,000 psi –
the highest level of depletion that Chevron
has drilled in the Gulf of Mexico to date,
Mr Vaczi said.
Smaller flow meters tend to be standard
on MPD packages, which concerned the
project team in light of the erosional veloc-
ity of the mud expected to flow through
the meter, especially in combination with
some of the lost-circulation material they
anticipated using for the project.
“To fix the problem, we elected to do a
two-size implementation,” Mr Vaczi said.
“The larger flow meter could be used for
the larger hole sections and the smaller
flow meter could be used in the smaller
hole sections where the flow rates were
less.” They also included a dual junk catcher
to prevent large debris from plugging the
automatic chokes and disrupting the abil-
ity of the MPD system to automatically
manage surface backpressure. When one
catcher was plugged, they could switch
to the redundant catcher on the fly with
minimal impact to operations.
While Chevron had used other forms
of surface-backpressure MPD around the
world, the four-well campaign marked its
first use of the BTR MPD variant on deep-
water floating rigs in the Gulf of Mexico.
The company worked with MPD equip-
D R I L L I N G C O N T R AC T O R • M AY/J U N E 202 2
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