Shell awaits Valaris rig to embark on North Sea drilling ops

UK-headquartered energy giant Shell is anticipating the arrival of a heavy-duty jack-up rig, owned by Valaris, an offshore drilling contractor. This rig is now on its way to the Southern North Sea to undertake drilling activities at a gas prospect on the UK Continental Shelf (UKCS).

Following a positive well investment decision for Selene in July 2022, the North Sea Transition Authority (NSTA) gave its approval and the P2437 license moved into the next phase, enabling Shell to assume operatorship of the license as part of the process of moving into the drilling phase.

Once the geotechnical site investigation works on the preferred surface location of the Selene exploration well were completed, the operator approved the 2024 work program and budget. The firm hired a jack-up rig from Valaris for a two-well drilling campaign.

The rig mobilization announcement came from Shell’s partner, Deltic Energy, after the former, in its role as operator of license P2437, notified the latter about the Valaris 123 jack-up rig’s start of the journey from the Central North Sea on July 21 toward the Selene well location in the Southern North Sea.

The rig, expected to reach its destination soon, depending on weather conditions during transit, will kick off drilling activities shortly afterward, with planned operations lasting approximately 90 days. The Selene prospect is perceived to be one of the largest unapprised structures in the Leman Sandstone fairway of the Southern Gas Basin.

The Selene well is said to be designed to collect key insights into reservoir quality and gas composition, which are required to support, assuming a successful drilling outcome, a field development plan, and a final investment decision (FID) on the potential development of the gas field without the requirement for a further appraisal well.

As a result, Shell and its joint venture (JV) have pinpointed no requirement for a full well test as part of the process and, in line with normal oilfield practice, the well will accordingly be plugged and abandoned on completion.

Furthermore, the oil major’s partner estimates the Selene structure to contain gross P50 prospective resources of 318 bcf – P90 to P10 range of 132 to 581 bcf – with a geological chance of success of 69%. The Leman Sandstone reservoir is portrayed as the key reservoir interval in all adjacent gas fields, including Barque, Clipper, and West Sole.

In the aftermath of farm-outs to Shell in 2019 and Dana Petroleum in February 2024, Deltic is fully carried for its 25% working interest in the Selene well up to a gross success case well cost of $49 million, which is more than the operator’s success case well authorization for expenditure of $47 million.

Graham Swindells, CEO of Deltic, commented: “We are excited to be commencing drilling operations on Selene with our partners Shell and Dana, and for which we are fully carried for the estimated success case cost. This will be the first exploration well spudded on the UKCS in 2024 and is an equally important milestone for Deltic.

“The Selene prospect is a high impact infrastructure-led exploration opportunity which demonstrates the strength and depth of the portfolio that we have built over the last few years, and which we estimate to be worth multiples of the company’s current market value.”

Recently, Deltic opted to withdraw from the Shell-operated Pensacola gas discovery in the Southern North Sea, which is due to be drilled with the Valaris 123 rig, as it did not manage to find a farm-out partner to cover the appraisal costs despite obtaining a deadline extension. 

“Despite ongoing political uncertainty, we look forward to commencing operations and continue to believe exploration on the UKCS has a hugely important role to play in supporting the provision of energy security, vital jobs within the energy sector and offsetting higher carbon intensity imported energy,” highlighted Swindells.