Equinor gearing up for exploration campaign in Canada to boost Bay du Nord resources

Norwegian state-owned oil and gas player Equinor is gearing up to drill two exploration wells in waters offshore Canada by mobilising a rig and support vessels needed for these operations. The success at these wells would boost resources at Equinor’s high-value development, Bay du Nord.

Earlier this year, Equinor told Offshore Energy that the company plans to drill two exploration wells in Flemish Pass off Canada this year. This is where the company’s giant Bay du Nord project, which has recently been approved by the Canadian government, is located.

The exploration wells are planned to be drilled at the Cambriol Central and Sitka prospects. If successful, the two new wells could add to the Bay du Nord development. As part of its exploration campaign in 2020, Equinor drilled the Sitka top hole on EL 1156, using the Transocean Barents rig.

Two oil discoveries were made during this campaign, following the drilling of two wells at the Cappahayden and Cambriol prospects. Now, Equinor is preparing to complete the drilling of Sitka and 1 – 2 additional wells.

In order to drill these wells, Equinor has already secured a semi-submersible drilling rig, West Hercules, from Seadrill. The latest AIS data show that the rig has already mobilised to Canada and is currently expected to reach Newfoundland in two days, on 17 April 2022.

According to Seadrill’s latest fleet status report, the 2008-built West Hercules is starting its contract with Equinor in Canada in May with an end date set for October this year. The previous start date was set for April and end date for September. The total contract value for the firm term is $95 million inclusive of additional services, mobilisation, and demobilisation fees.

It is worth reminding that, in January this year, Equinor used the West Hercules rig for drilling operations near the Fram field in the North Sea offshore Norway, resulting in an oil discovery in the Troll- and Fram area. Preliminary calculations of the expected size indicate between 3.3 and 5.2 million standard cubic metres of recoverable oil equivalent, or around 21–33 million barrels of recoverable oil equivalent.

Now that the rig has been secured and mobilised for Canadian operations, Equinor has also secured support vessels for the rig. Namely, Canada’s Atlantic Towing, a provider of offshore vessels, informed this week that three of its AHTS vessels had been awarded term charters with Equinor.

These charters are for three AHTS vessels, the Atlantic Kestrel, the Atlantic Merlin, and the Atlantic Kingfisher. The first two are of the same VS 4622 CD design built in 2012 and 2013, respectively. The third vessel is of a UT 722L design and older than the first two, being built in 2002.

The vessels from Atlantic towing will form the entire support vessel fleet for Equinor’s exploration drilling campaign, which will use the West Hercules rig. The vessel provider said the project is seeking a minimum of two wells offshore of Newfoundland & Labrador, in the Flemish Pass. The contract is expected to begin this month.

“The Atlantic Kestrel and the Atlantic Kingfisher have previously supported Equinor Canada in offshore Newfoundland & Labrador drilling campaigns,” said Sheldon Lace, General Manager of Atlantic Towing.

Offshore Energy has reached out to Equinor, seeking further details about its upcoming exploration campaign in Canada. A spokesperson for the company told us the campaign is expected to start in May, adding that the rig is expected to “arrive offshore Newfoundland in the coming weeks.”

The spokesperson also confirmed the plan is to drill the Cambriol Central prospect and complete the Sitka prospect – where a tophole was drilled as part of the 2020 exploration drilling programme.

As previously reported, the Canadian government had found itself caught between a rock and a hard place when it comes to Equinor’s Bay du Nord project with pressures over climate change and the urgent need to transition to clean energy sources on one side and growing concerns over energy security due to the war in Ukraine on the other.

However, despite several delays and significant pressure from the environmentalists, calling for the rejection of the project and a shift to wind and energy storage opportunities, the Canadian government earlier in April approved the development of the project with an estimated value of about $12 billion.

The project will be developed with a floating offshore oil and gas production facility in the Flemish Pass, approximately 500 kilometres east of St. John’s, Newfoundland and Labrador, in the Atlantic Ocean. It is expected that, once developed, the project would be in operation for approximately 30 years, with the potential for additional wells and tie-backs to the production facility.

As part of ongoing work to improve the robustness of the development, the conceptual studies for the FPSO topsides are being carried out by Norway’s Aker Solutions and the U.S.-based KBR.

Previous estimates for the Bay du Nord project pointed to recoverable reserves of about 300 million barrels, but this does not account for the two new oil discoveries made during the 2020 campaign, which provide an upside to previous estimates.

Now that the project has been approved, Equinor continues its work to mature it. A final investment decision is expected in the next couple of years while the first oil could be achieved as early as late-2028, Equinor recently told Offshore Energy. It is worth reminding that the FID was previously expected in 2021 and the first oil in 2025.