North Platte Rig Contract Maintains '20k' Momentum

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TotalEnergies has awarded a multiyear contract to a Valaris drillship to carry out development drilling for the French operator’s North Platte field in the US Gulf of Mexico, a strong indication that the long-stalled Lower Tertiary project is headed for sanction. Valaris disclosed this week that the DS-11 drillship is due to go to work for Total for 3½ years starting July 2024 under an eight-well drilling contract in the US Gulf. The contract is a huge win for Valaris, which emerged from Chapter 11 bankruptcy in May (OD Mar.5'21). It is also a positive step for the North Platte project, which now looks on course to be potentially the third major project sanctioned in the US this year, although observers say a final investment decision (FID) could still slip into early next year due to ongoing pandemic-related delays. Lower Tertiary Moves Forward North Platte could also be the third sanctioned project to tap the ultra-high-pressure Lower Tertiary trend in the US Gulf, where reservoir pressures can exceed 20,000 psi (20k). Chevron sanctioned Anchor in late 2019 in what would be the industry’s first 20k project to produce oil. Production there is due to start up in 2023 (OD Dec.13'19). And just this week, a partner in the Beacon Offshore-led Shenandoah development indicated FID at that project could come within a matter of weeks (OD Aug.2'21). North Platte was discovered in 2012 with now-defunct Cobalt International Energy as operator (OD Dec.6'12). Total, who was already a partner, took over after Cobalt dissolved 2018, with Equinor joining the project at the same time. The field is estimated to hold 500 million-600 million barrels of oil equivalent. The project has been undergoing front-end engineering and design studies for over a year. Total has tendered bids from contractors to build a semisubmersible production hub with peak capacity of 75,000 barrels per day and 28 million cubic feet per day of associated gas -- a near replica of what Chevron is planning at Anchor. The development is expected to require around $4.8 billion in capital, according to Wood Mackenzie. Specialized Rig One of the biggest hurdles in developing a 20k field is finding a rig capable of drilling and completing the producer wells, with specifications that include 3 million pounds of hookload capacity and 20k-capable blowout preventers. There are currently only two such rigs in the world -- Transocean’s Deepwater Titan and Deepwater Atlas -- both of which are already committed, to Chevron and Beacon, respectively. Ahead of the Total contract, the DS-11 will undergo “significant upgrades,” including the installation of 20k well-control equipment, Valaris said. The upgrades will cost more than $200 million, a “substantial portion” of which Total has agreed to cover up-front, “while the remaining part will be recovered over the duration of the operations,” Valaris said. It is unclear whether that amount includes the costs required to reactivate the cold-stacked rig, which alone can cost tens of millions of dollars depending on how long the rig has been out of service. The 2013-built DS-11, formerly known as the Atwood Advantage, has not worked since 2017, when it was drilling at the Leviathan project in the Mediterranean Sea off Israel. The rig was warm-stacked until 2020 and has been “preservation-stacked” in Spain since April last year. Competitive Contract Valaris did not disclose a dayrate for the DS-11. Chevron’s contract for the Deepwater Titan, which marked the industry’s first 20k rig award, carries a rate of $455,000 a day. The Deepwater Atlas’ dayrate has not been disclosed. Formal contracts for both that rig and DS-11 are contingent on FIDs for their respective projects. Transocean downplayed the Valaris contract award, saying the rates “that were being discussed at that time” were not in line with its expectations for such a high-spec rig. There were also timing overlaps with the other two 20k projects that would have made a rig-sharing agreement with Chevron or Beacon difficult, according to one industry watcher (OD Mar.15'19). Total did not respond to a request for comment by press time Friday. Luke Johnson, Houston

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