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Lloyds List: Shell on a multi-well mission in Atlantic

Martyn Wingrove, Lloyds List
Published: Sep 20, 2007

ROYAL Dutch Shell has taken Ocean Rig’s semi-submersibleLeiv Eiriksson from offshore Angola to begin a multi-well exploration campaign off northern Europe, writes Martyn Wingrove.

The rig is en route to Las Palmas for modifications and upgrades, which will allow it to operate on the Irish, British and Norwegian continental shelves.

Norwegian contractor Ocean Rig said the unit will be working for Shell under a two year term on dayrates of at least $465,000.

A Shell spokeswoman said the rig will eventually be mobilised to the South Uist area, west of the Shetlands, to begin a programme of deepwater exploration on the Atlantic Margin. The programme includes wells in the UK, Norway and Ireland until mid-2009.

‘Shell, Ocean Rig and the many other service companies involved have been working closely to plan an operation that will be executed to the highest standards of performance in health and safety, drilling and well evaluation,’ the spokeswoman said.

Shell has also submitted an environmental statement to the UK government covering the drilling of an exploration well on South Uist in block 214/21a, which lies north of the Torridon gas field and east of Chevron’s Rosebank oil field.

Shell has estimated the prospect could hold up to 4trn cu ft of gas. If it is successful, the prospect may improve the economics of any proposed regional gas project.

Analysts say Shell is not part of the industry-government task force, set up to evaluate a joint development of the west of Shetland gas discoveries, but this may change if it finds 4trn cu ft of gas at South Uist.

It is thought Shell is also going to use the Leiv Eiriksson to drill exploration wells close to its Dooish gas-condensate discovery, which is in the Rockall basin, off northwest Ireland.

The first prospect to be drilled should be West Dooish, where Shell estimates there could be 300m barrels oil equivalent of gas and condensate reserves. Then the rig may target the even larger prospect Midleton, which may hold 700m boe.

In the Dooish area, Shell already holds a possible 130m boe discovery that was held by Enterprise Oil before it was purchased by the Anglo-Dutch oil major.

Shell is confident the Dooish area needs only incremental discoveries to generate an attractive economic development in a favourable tax regime.

It is unclear where the Leiv Eiriksson will drill in Norway, but market watchers said Shell may drill more wells in the Norwegian Sea near its Onyx area, where it has already found two new fields.

A Shell spokeswoman said the rig will be drilling a monitor well on the Ormen Lange field in the Norwegian Sea next year.

The rig could also drill a well in the Faroes on licence 007, west of the Foinaven and Schiehallion producing oil fields, to target the potential 2.2bn boe William prospect during this campaign.

Shell is offering farm-in deals on the UK and Irish assets and on licences in the Faroes sector prior to the start of the exploration campaign to reduce its capital exposure on these key wildcat wells.

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