Rig equipment failure causes delays for HPHT well in North Sea

UK-based Serica Energy is frustrated after encountering technical issues on its North Eigg exploration well located in the North Sea off the UK, which will result in drilling delays and an increase in well costs.

The High Pressure, High Temperature (HPHT) well was spud in July 2022, using the Transocean Paul B. Loyd Jr. harsh environment semi-submersible drilling rig.

Paul B. Loyd Jr. rig
Paul B. Loyd Jr. rig; Source: Transocean

However, drilling operations on the 3/24c-NE1 exploration well in the North Sea have encountered delays. Serica informed on Wednesday that, following a recent equipment failure and the required mobilisation of a replacement, operations are now expected to take some six weeks longer to complete than the original schedule.

Namely, operations had been progressing successfully despite some drilling delays in the top-hole sections. During recent preparations for drilling the third section of the well, there was a failure of a vital piece of rig equipment during routine pre-job testing. A replacement has been sourced and planning is underway to transport this to the drilling rig.

Serica claims that this will have no impact on the ultimate geological outcome of the North Sea well and it is expected that all well costs will benefit from the Investment Allowances available under the recently introduced Energy Profits Levy.

As a result of the delays, Serica’s net well cost after tax is anticipated to increase by approximately £3 million ($3.5 million) and it is now expected that results from the well will be available in December 2022. These were previously expected in mid-October.

According to Transocean’s latest fleet status report, the Paul B. Loyd Jr.’s contract with Serica is scheduled to end this month after which it is scheduled to work for Harbour Energy, also in the North Sea. The rig’s current day rate is $160,000 and it is expected to increase to $175,000 under Harbour contract.

Mitch Flegg, Chief Executive of Serica Energy, stated that this high-impact exploration well is the latest in a series of capital investment projects with the objective of increasing the company’s production “in an environmentally sensitive manner,” adding that the programme is designed to help increase the UK’s security of supply and reduce its reliance on imports.

“The technical delays encountered on this project are extremely frustrating but do not impact either the chance of success or the significant prospective volumes of this exploration prospect,” Flegg concluded.