Equinor hires rig to drill in Flemish Pass Basin

Equinor Canada announced this week it has finalized a contract for the Transocean Barents, a harsh environment, ultra-deepwater rig, to carryout an exploration drilling program in the Flemish Pass Basin next year.

The semi-submersible will drill two new exploration prospects, and carry out what's called plug and abandonment activities on a previous exploration well.

The contract also includes an option for other wells, according to a report in the industry publication Upstream.

It's the latest indicator of an upswing in exploration activity in the offshore, with three drill rigs currently under contract to various oil companies, and is in keeping with the provincial government's strategy to significantly grow the industry over the next decade.

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A spokesperson for Equinor, previously known as Statoil, said the drilling is a continuation of a follow-up campaign to previous exploration activities in the area.

"The program is an opportunity to advance our understanding of the region, where we have a well-established exploration portfolio," the company said in a statement to CBCFriday.

However, the company said the exploration is not directly related to much-hyped $6.8B Bay du Nord development, which was announced with great fanfare a year ago.

Bay du Nord, with oil reserves of roughly 300 million barrels, is expected to be sanctioned next year, and could eventually become the province's fifth producing oil field, and the first deepwater project.

"This program provides Equinor an important opportunity to advance our position in a region where we have a well-established exploration portfolio while we continue to evaluate and mature our existing exploration assets in the Flemish Pass Basin."

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The contract is likely a sign of things to come, with eight oil majors having submitted applications to drill 100 wells in the coming years in the Jeanne d'ArcBasin, home to four producing oil fields, and other prospects such as the Flemish Pass and the Orphan Basin.

For this latest contract, the Barents will be drilling in roughly 1,200 metres of water. According to Upstream, the Equinor contract is valued at $54 million, with a variable start of between January and March of next year.

Reports put the day rate at around $450,000, which is a further sign that the exploration sector is recovering after faltering badly following the crash in oil prices in late 2014.

The Barents is currently under contract to Suncor, which operates the Terra Nova oil field.

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