Beach Energy awaits Valaris rig to spud well off New Zealand

Australian oil and gas company Beach Energy is now targeting the start of drilling operations at its development well off Taranaki towards the end of the first quarter of 2024. These activities will be carried out with one of Valaris’ heavy-duty modern jack-up rigs.

Beach Energy hired the Valaris 107 jack-up rig for the drilling of the Kupe South 9 development well. This 70-day contract for work offshore New Zealand was previously expected to start in the third quarter of 2023 and last from August until December 2023. The rig worked for Eni in Australia until May 2023 when it moved to its assignment with GB Energy. Afterwards, the rig is scheduled to work for an undisclosed operator in Australia until August 2023.

The activities for the further development of the Kupe offshore natural gas reserves within the existing Petroleum Mining Licence (PML 38146) through Phase 2 were expected to start in late 2022 to early 2023. The development drilling for Phase 2 entails up to two new wells at the existing Kupe wellhead platform, some 30 km off Manaia in South Taranaki.

After Beach Energy lodged consent applications with the Environmental Protection Authority (EPA) related to offshore drilling in Taranaki, Climate Justice Taranaki members set the wheels into motion for these consents to be declined.  

At the start of January 2023, the company outlined that the spudding of the Kupe South 9 development well was slated for 2Q 2024, subject to the joint venture and regulatory approvals and rig access. This well has the potential to return the Kupe Gas Plant to capacity gas processing rates of around 77 TJ/day.

According to Beach Energy, the Valaris 107 rig will soon mobilise to the site while the spudding of the well is now anticipated in late 1Q 2024. If the drilling goes well, the well is expected to materially increase well deliverability for the Kupe Gas Plant while the first gas is scheduled for 3Q 2024. The 2006-built Valaris 107 jack-up rig is of KFELS MOD V – Class B design. It can accommodate 112 people. The rig’s maximum drilling depth is 30,000 ft.

Located along the west coast of the North Island in New Zealand, the Taranaki Basin covers about 115,000 square kilometres with most of the area being offshore. Beach Energy acts as the operator of the Kupe natural gas processing plant which produces gas from the Kupe field, situated approximately 30 kilometres off the New Zealand North Island.

At peak, the gas produced from the Kupe field was predicted to meet about 15 per cent of New Zealand’s annual natural gas demand and 50 per cent of New Zealand’s LPG demand. Beach’s Kupe project consists of three production wells up to 3.8 kilometres in depth and the Kupe unmanned offshore platform.

Beach Energy claims that active drilling campaigns continue across all basins with a 90 per cent drilling success rate from 29 wells. Four of the six Otway development wells that were drilled as part of the major drilling campaign in 2022 offshore Australia are now connected to the Otway Gas Plant and have materially increased well deliverability.

At the start of 2022, Beach Energy confirmed that the first two wells of its offshore Otway Basin campaign – Geographe 4 and 5 – were connected to the Otway Gas Plant and started delivering gas into the East Coast market. Come May 2023, the company connected two more, Thylacine North 1 and 2, development wells to the plant.

As a hydro pressure test failure occurred during the testing of one of the flowlines, this impacted connection timing for the final two development wells, Thylacine West 1 and 2, thus, an independent root cause analysis of the hydro pressure test failure is underway.

Currently, Beach is targeting the connection of Thylacine West 1 and 2 in 1H 2025, subject to securing a vessel. Deferred production from these wells will be partially mitigated through the connection of the Enterprise discovery in mid-2024.

Furthermore, Beach participated in a consortium which secured Transocean’s Transocean Equinox semi-submersible rig, which is expected to undertake drilling activities in 2025 and potentially beyond. To this end, early planning is underway to develop a work schedule in conjunction with consortium members.

The 2015-built Transocean Equinox semi-submersible rig is of GVA 4000 NCS design. Constructed by DSME, the rig can accommodate 130 people. With a maximum drilling depth of 8,500 metres, it can operate in water depths of up to 500 metres.

The company’s drilling agenda is expected to include the development of the Artisan and La Bella discoveries, exploration drilling and abandonment activity. However, the confirmation of schedule, prospects and number of wells to be drilled is subject to the completion of seabed assessments, joint venture and regulatory approvals and a final investment decision.

Regarding the connection activities for the Enterprise discovery, Beach made progress which included Christmas tree installation at the well site, completion of pipeline laying and hydro testing, and commencement of Otway Gas Plant pipeline connections and fibre optic pipeline cable installation.

Morné Engelbrecht, Beach Energy’s Chief Executive Officer, commented: “We now have several exciting growth catalysts coming to fruition. Perth Basin exploration, connection of the Enterprise gas discovery, first LNG sales from Waitsia, connection of the Thylacine West wells and drilling of the offshore Kupe South 9 well will deliver a strong foundation for Beach in FY24 and beyond.

“The resulting production uplift will come at a time when markets need our products more than ever, where underinvestment in new supply, continuing supply constraints and robust demand are common themes. Against this backdrop, Beach’s value proposition has never been stronger.”