The hunt for land rigs by Anglo-Dutch super major Shell, and Nigerian independent Seplat Petroleum, probably shows exploration and production activities are about to pick-up again after active rig count in Nigeria fell by half last year.
Shell is getting ready for a major drilling programme and has gone to the market for two jack-ups and a pair of land rigs, one of which will have to handle high-pressure, high-temperature wells. Seplat Petroleum is also searching for a land drilling rig for work on Oil Mining Licence (OML) 53.
As of June 2018, Africa’s largest crude producer had 32 oil rigs according to the Organisation of Petroleum Exporting Countries’ Monthly Oil Market Report (MOMR). But this has fallen to 14 rigs as of June 2019, according to the oil cartel’s latest July MOMR. This is more than a 50 percent decrease.
Rig count is a function of the level of exploration, development and production activities occurring in the oil and gas sector. A drop in active rig count means oil exploration and production activities in have decreased year-on-year.
“Both elements correlate. To replace oil reserves, you need to intensify exploration and production activities. This means more active rigs. It also means more investment inflows into Nigeria’s oil and gas sector,” one major contractor told BusinessDay in confidence. “Falling active rig count and reserves mean there have been no fresh investments in the sector.”
Nigeria’s oil reserve decreased to 36.247 billion in 2011 from 37.200 billion recorded in 2010, while in 2012 there was relative improvement to 37.139 billion but went down again to 37.071 billion in 2013. In 2014, it stood at 37.448 billion before sliding down to 37.062 in 2015 while in 2016 it stood at 37.453 billion.
However, at an average of 1.8 million barrels a day (bpd), Nigeria pumps around 648 million barrels per year. When multiplied by seven years this gives 3.888 billion barrels of pumped oil, subtracted from the current figure of 37.453.
However, Shell Petroleum Development Company (SPDC) has started pre-qualification processes for all its rig requirements, under four separate contracts, and responses were due for submission by 12 July.
Three of the four rigs will be chartered under firm two-year contracts, each of which will have one-year extension options.
The charter for the high-pressure, high-temperature unit is for two firm wells with a maximum firm contract of up to 12 months, followed by two one-year extension options. All the contractual work scopes cover drilling, completion and well testing operations and are due to start either in a year’s time or in early 2021.
A shallow-draft drilling and work over jack-up are set to start operations in the first quarter of 2021. The second jack-up that SPDC requires is for conventional drilling and work over duties, with work due to begin in the third quarter of 2020.
For its onshore campaigns, SPDC needs a pair of drilling and workover rigs, one with a 2000-HP draw-works that can handle pressures up to 10,000 pounds per square inch and another larger unit rated at 3000 HP and 15,000 psi, respectively.
The smaller unit must start work in the third quarter of 2020 and the larger unit in the first quarter of 2021.
Seplat Petroleum, as part of a joint venture with state-owned Nigerian National Petroleum Corporation is pre‐qualifying contractors for a two-year contract, with a one-year extension option, that is due to begin this quarter. Responses were due for submission on 10 July. Seplat did not specify exactly where in OML 53 the rig would be working.
Source: Business Day
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