New life for Henry Goodrich as Husky inks 2-year contract for rig

The Henry Goodrich drill rig will be returning to Newfoundland's offshore, with owner Transocean announcing it has signed a two-year contract with Husky at a dayrate of $275,000.

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Transocean said the rig will begin operatingin the second quarter of 2016 in the White Rose field, which is on the eastern edge of the Jeanne d'Arc Basin, 350 kilometres southeast of St. John's.

It's one of two important developments announced Monday relating to the province's offshore oil land gas industry.

In a separate release, Husky announced that appraisal work in the highly touted Bay du Nordoil discovery will continue in 2016.

The discovery islocated in the deepwaterFlemish Pass Basin, about 500 kilometres northeast of St. John's, and has been described as a high impact discovery containing as much as600 million barrels of recoverableoil.

The West Hercules rig has been drilling in the basin since late 2014, and the program has been "progressing well," said Husky CEO Asim Ghosh.

"We expect the results of this appraisal to further increase our understanding of the scope of this significant opportunity," he stated.

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There are currently three producing oil fields in the offshore, with Hebron expected to come online in 2017.

Bay du Nord is seenas the next oil play in the province.

Renewed life

Meanwhile, the Husky contract means a renewed life for the Goodrich, which has been an icon in Newfoundland's offshore for manyyears, having drilled 80 wells since 1999.

It's also an economic boost for an industry that has struggled against a prolonged slump in oil prices.

The Goodrich has a crew capacity of 140, and two crews are required to operate the rig. Substantial spinoffs in everything from the catering and offshore supply sector are also anticipated.

The rig was built 30 years ago and wascold stacked in Scotland. The crew was recently mobilized and the Goodrich is now at a shipyard in Norway, where it is undergoing upgrades.

The Goodrich last drilled in the offshore last winterand with an oversupply of rigs on the market, most observers were predicting an uncertain future for the platform.

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That changed in September after Huskyannounced it was cancellinga nearly $2-billion contract with Seadrill for theWest Mira, a sixth generation harsh environment semi-submersible.

The contract came with a dayrate of nearly $600,000, andoil companies are aggressively cutting costs in a bid to cope with low prices.

A source said the $275,000 dayrate for the Goodrich is well below what companies were paying a year ago.

As for the GSF GrandBanks, another well-known rig, it remains moored in Mortier Bay, Marystown, and its future is uncertain.

Both are owned by Transocean.

Sources say essential equipment on the Grand Banks is being stripped off, and will be installed on the Goodrich.

As for why the Goodrich was selected over the Grand banks, a Transocean spokesperson said the two rigs have different capabilities,with the Goodrich classified as a harsh-environment semi-submersible, while the Grand Banks is known as a mid-water floater.