DEPARTMENTS • ENVIRONMENT, SOCIAL AND GOVERNANCE
ADNOC to apply blockchain
to certify carbon intensity
Abu Dhabi National Oil Company
(ADNOC) and Siemens Energy will pilot
blockchain technology to certify the car-
bon intensity of a range of products. By
using smart sensor data gathered from
across ADNOC’s operational chain, the
pilot will show how much CO 2 was used
to make products such as Murban crude,
ammonia and aviation fuels. This infor-
mation will be automatically recorded
onto a decentralized blockchain ledger.

Such transparency will allow inde-
pendent regulators to certify the carbon
intensity of products.

Equinor is leading the use of rigs fitted with emission reduction technologies,
with 33,618 contracted days between 2020-2032, while the combined number
of contracted days for all other operators is 43,600.

Westwood: More incentives needed to accelerate
adoption of emission reduction upgrades on rigs
New research from Westwood Global
Energy Group reveals that the availabil-
ity of emission-lowering upgrades for
offshore rigs has been on the rise but that
adoption of these new technologies is
slow outside of Norway and the US Gulf
of Mexico due to limited regulatory and
financial incentives.

The report indicates that the biggest
users of rigs fitted with emission reduc-
tion technology are those with ambi-
tious emission goals of their own, driven
largely by Equinor’s Norway and Brazil
operations. Between 2020 and 2032,
Equinor’s contracted days of low-emis-
sion upgraded rigs is 33,618 (92 rig years)
compared with the combined number
of days for all other operators, which is
43,600 rig days (119 rig years).

“Drilling contractors, and the industry
as a whole, are starting to realize that
oil and gas will be imperative to energy
security over the coming years. But that
doesn’t need to come at the detriment
of the energy transition,” said Teresa
Wilkie, RigLogix Director, Westwood.

“Rig operators have ambitious Scope 1
reduction targets, and eco-friendly rig
technology is keeping pace. The next
step is for regulators to work with the
industry to ensure that the framework is
there to facilitate adoption of these new
8 technologies in a financially sustainable
way.” She continued: “Norway is dominating
as the biggest user of low-emission rigs,
driven by the country’s carbon taxation
regulations, as well as incentivization.

Pair this with Equinor’s ambitious emis-
sion reduction targets and you have a
ripe environment for low-emission rig
adoption.” Since the downturn in 2014, newbuild
rig orders have almost come to a halt due
to lack of demand, a mass oversupply
of rigs and a resulting stack of new-
builds abandoned in shipyards with no
work. There is still a lack of appetite to
invest in costly newbuilds and, therefore,
a deluge of “green” newbuild rig orders is
unlikely. Instead, it is expected that more
of the current fleet will be retrofitted for
lower-emission operations.

“Some drilling contractors are at the
beginning of their emissions reduction
journeys, while others have been work-
ing on emission-reducing technologies,
projects and studies for several years,”
Ms Wilkie said. “By amalgamating
the industry’s different and increasing
efforts regarding this complex topic, we
can better understand the trajectory of
the industry, highlight new technologies
and identify the areas of opportunity.”
Oil and gas expertise to help
with well control for CCS
Norway’s state-owned Gassnova has
awarded eDrilling NOK 10 million under
its CLIMIT research program to develop
well control software for carbon capture
and storage (CCS). The project recognizes
that today’s market does not have the well
control technology needed to address the
risks for underground leakage with full-
scale CO 2 storage. By leveraging its experi-
ence with well control of petroleum wells,
eDrilling expects it can reduce the time
and resources needed to launch reliable
software for well control in CO 2 wells. The
development will also aim for easy inte-
gration with existing systems.

APA cuts upstream routine
flaring in Egypt by 40%
APA Corp has achieved a compensa-
tion-linked ESG goal to reduce upstream
routine flaring across Egypt operations
by 40%. The goal was reached ahead of
schedule and is the result of numerous
emissions reduction projects executed in
Egypt throughout 2022.

To achieve the 40% flare reduction goal,
technical teams in Egypt identified a
series of emissions reduction initiatives.

The projects included the installation of
new compressors to move gas from flar-
ing to sales and implementing flare-to-
power generation processes that move
previously flared gas to power genera-
tion, which eliminated the need for diesel-
based power generation.

JAN UARY/FEB RUARY 2023 • D R I LLI N G CO N T R ACTO R




OIL & GAS MARKETS • DEPARTMENTS
>2200 2000-2200
1800-2000 1600-1800
1400-1600 1200-1400
1000-1200 800-1000
600-800 400-600
20 18
16 Million BOED
14 12
10 US
growth phase
8 6
Angola growth
phase NSTA report: Focus on sidetrack drilling,
interventions can boost UK production
Namibia’s Graff and
Venus expected
online in 2027-2028
Guyana’s Stabroek
reaches 1 million bbl/day
Búzios surpasses
500,000 bbl/day in 2020
on its way to >1.8 million bbl/day
Macondo Brazil begins
long-run expansion
4 2032
2030 2028
2026 2024
2022 2020
2018 2016
2014 2012
2010 2008
2006 2004
2002 2000
1998 1996
1994 1992
0 1990
2 Source: Wood Mackenzie Lens Upstream
Production growth in the deepwater sector to 2032 will be primar-
ily driven by Brazil, Guyana and Mozambique as there have been
few commercial discoveries in the more mature basins.

Deepwater production forecast to climb
60% by 2030 despite cost challenges
Global deepwater production will increase 60%, reaching 17 mil-
lion BOED, by 2030, according to a report from Wood Mackenzie.

This means the deepwater sector will expand from 6% of the
upstream oil and gas supply today to 8% by the end of the decade.

“Brazil, Guyana and Mozambique are the main growth drivers.

Developments are also getting deeper; production from water
depths of over 1,500 m will surpass that from 400 to 1,500 m by
2024,” said Marcelo de Assis, Director of Upstream Research for
Wood Mackenzie.

On the other hand, traditional growth regions, such as the US
Gulf of Mexico and Angola, have lacked major new commercial
discoveries. “The forecast for mature deepwater basins remains
uncertain. We could see production performance begin to peak
and then plateau after 2030 without an exploration and invest-
ment renaissance,” Mr de Assis said.

Cost inflation will continue to be a challenge, with constraints
in the global deepwater supply chain leading to increases in lead
times and unit costs. The hard-fought efficiency gains made dur-
ing previous downturns will start to reverse.

The report also points out that deepwater will still remain
niche relative to conventional oil and gas. “The future of the deep-
water sector remains in their hands of the majors and Brazil’s
Petrobras for the foreseeable future,” Mr de Assis said.

Drilling activity in the North Sea remained low in 2021 as the
industry continued its recovery from the COVID-19 pandemic,
but a focus on sidetrack drilling and maintaining existing
wells could help boost production, according to the UK’s North
Sea Transition Authority (NSTA). The agency is also working
to spur more exploration drilling with the launch of the first
oil and gas licensing round since 2019 (read more on Page 44).

A new NSTA report noted that the UK offshore industry is
focusing on faster development, with approximately half of the
66 wells that were spud in 2021 targeting near-infrastructure
opportunities. Additionally, 30% of the wells were geological
sidetracks, which can be drilled more quickly and at lower
cost than new wells.

In the report, the NSTA also urged the industry to undertake
more well interventions to reactivate production, noting that
intervention work was carried out on just 15% of wells in 2021,
down from 17% in 2020. This has led to a decline in the perfor-
mance of the existing wellstock, with 34% of total active wells
on the UK Continental Shelf now shut-in or plugged.

Continued low demand may lead to
more semis departing North Sea in 2023
Utilization of North Sea semisubmersibles, as well as award
activity during 2022, have shown improvement, but a lacklus-
ter demand outlook for 2023, especially in the more mature UK
sector, could result in more units leaving the region.

According to Westwood Global Energy Group’s RigLogix, the
North Sea semi supply shrank by 17 units, or 36%, between
January 2015 and November 2022, following a prolonged lack
of demand for these units. The Island Innovator and Deepsea
Bollsta both left last year for new campaigns in Africa, for
example. While this shrinking supply will help to buoy utiliza-
tion in the near term, it could pose availability issues further
down the line if demand picks up, which Westwood predicts
may be the case from early 2024. During 2024, Westwood
expects to see several new Norwegian developments move
ahead because of the tax incentives that were implemented
by the government during 2020. Meanwhile, longer-term UK
campaigns are likely to start up, consisting of both plugging
and abandonment work and development projects.

Number of oil and gas contracts down, but contract value rises to $47.7 billion in Q3 2022
The overall number of contracts in the
oil and gas industry declined by 7% in Q3
2022, decreasing from 1,662 in Q2 2022
to 1,542 in Q3 2022, according to a recent
report from GlobalData. However, there
was an increase in the contract value
reported, which rose from $38.8 billion in
Q2 to $47.7 billion in Q3.

Keppel Shipyard helped to keep the
momentum during Q3 with its two engi-
neering, procurement and construction
contracts, said Pritam Kad, Analyst at
GlobalData. Combined, those contracts for
the P-80, P-82 and P-83 FPSOs are worth
$8.76 billion. All three units are destined
for Petrobras’ Búzios field (see Page 32).

Operation and maintenance represented
53% of the total contracts in Q3, followed
by procurement scope with 24%. Contracts
with multiple scopes, such as construc-
tion, design and engineering, installation
and procurement, accounted for 12%.

ADNOC Drilling’s two 15-year contracts
for eight jackups, worth a combined $3.4
billion, was also notable during Q3, as
were ADNOC’s agreements for directional
drilling and LWD with SLB, Halliburton,
Weatherford, Al Ghaith Oilfield Supplies
and Services, and Al Mansoori Directional
Drilling. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2023
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