Norshore CEO Expresses Optimism in Riser-Less Drilling Market

Image: CIMC Raffles

Bergen-based drilling contractor Norshore has secured work for its first newbuild mini-drillship Norshore Atlantic as part of a top-hole drilling contract with Shell at the Malikai field in Malaysia. The contract is expected to commence in August 2014.

The Norshore Atlantic was delivered by Otto Marine in Singapore in March at a total cost of $245 million.  In December of last year the company ordered a CIMC Raffles-built rig plus three options.

The company is betting on the market for riser-less (aka top hole) drilling, which by many accounts seems very promising going forward.

When drilling top-hole sections of wells, water-based mud is used and the mud circulating from the well isn’t captured by the rig, thus a riser isn’t needed.  This is standard practice for drilling contractors up to a certain drilling depth.  Losing the mud adds to the cost of the well, however, by using a vessel like this, at day rates far less than rates charged by a full capacity deepwater drilling rig, it makes financial sense for operators such as Shell.

From a commercial standpoint however, there is a bit of risk going forward for top-hole drilling contractors like Norshore as a flood of new rigs are scheduled to be delivered over the next few years, many of which do not yet have contracts, yet are fully capable of drilling top hole sections.  In a phone call with Norsafe CEO Petter Tomren he notes that interest in his company’s vessels has been strong from energy majors and they are quite competitive from a day-rate standpoint, although he couldn’t provide specifics on what those day rates were.

“We have for years seen the potential within the riser-less drilling market and we are very pleased to have secured this first top hole drilling contract for Shell. We believe top hole drilling will contribute to cut the overall drilling costs of field developments. “Norshore Atlantic” has been specifically built to accommodate safe and efficient riser-less drilling operations and we are looking forward to demonstrate the vessel’s capability for Shell at the Malikai field,” commented Tomren in a statement on his company’s website.

The company’s second vessel, Norshore Pacific has a scheduled delivery of Q4 2016 from the Yantai CIMC Raffles yard

As part of its further expansion plans Norshore will do an IPO in Oslo late 2014/early 2015. The long-term plan for Norshore is to have five vessels by 2018.

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