While not unusual in the North Sea, the Middle East and other parts of the world, it is the first time in Australia that a shared drilling program for a number of different operators has been established.
A major UK oil and gas well construction and services company has slipped quietly into Western Australia with a solution to the dearth and high cost of drilling rigs.
The Peak Group has started a one-year, multi-well, multi-operator management project off WA’s north coast worth over $100 million.
The landmark deal is the blueprint for similar future operations in the Asia Pacific region.
While not unusual in the North Sea, the Middle East and other parts of the world, it is the first time in Australia that such a company has established a shared drilling program for a number of different operators.
The offshore drilling rig shortage has been felt in Australia for more than two years, caused mainly by the distance from the world’s main petroleum exploration areas and made worse by recent hurricanes Katrina and Rita in the Gulf of Mexico. The hurricanes destroyed many rigs and left others in need of extensive, lengthy repairs.
One oil and gas producer with operations off WA’s north-west coast told WA Business News the cost of hiring a semi-submersible drilling rig had risen from about $93,000 to $230,000 a day in two years.
Peak’s eight-well campaign is currently at Australian junior AED Oil Ltd’s Puffin development in the Timor Sea, about 80km south west of the Jabiru and Challis oil fields.
It will involve the drilling and completion of two development wells; Puffin-7 and Puffin-8, and the drilling of the Puffin-9 exploration well. Peak will provide a complete well construction, project management and procurement service for most elements of the three Puffin wells.
Peak will also drill one well for Santos, one of Australia’s largest hydrocarbon producers and two for US international ConocoPhillips. Two have already been drilled for the Italian ENI energy group. All are in the Timor Sea.
The key to the program is that Peak holds all the contracts – for the semi-submersible drilling unit, the Stena Clyde, the supply vessels, third party service contracts, logistics and supply base services.
Perth-based Peak Group’s Asia Pacific operations manager Nick Muecke told WA Business News the rig share approach gave Peak’s clients the financial benefits and synergies of a multi-well program normally only available to operating companies with substantial exploration and development programs.
Major benefits included the sharing of substantial mobilisation and demobilisation costs and the provision of an integrated operations team via Peak’s onshore and offshore management team, rig and service contractor personnel.
AED managing director Ken Tregonning said Peak’s securing of the rig and associated contracts, then farming them out to other operators, substantially reduced the cost and time associated with getting the Puffin project up and running.
“Having Peak as AED’s drilling department with established management systems in place, enabled us to demonstrate existing competence in well construction project management, which greatly simplified the work required to gain regulator approval for the Puffin development,” Dr Tregonning said.
First production from the Puffin field, via a floating production and storage facility, is scheduled for the end of this year at an initial flow rate of about 15,000 barrels of oil a day.
Full field production is expected in late 2007, with total field production estimated at 15 million barrels.
Work already completed for the two ENI wells included the provision of rig and supply vessels and an offshore management team, which included drilling supervisors and well-site geologists.
For Santos and ConocoPhillips, Peak will provide the rig, supply vessels, third party service contracts, logistics and on and offshore rig management teams.
The Peak Group, which has had an office in Perth for about six years, was incorporated in Aberdeen in 1997 and will operate more than 30 wells world wide this year.
