Report: Carbon capture opportunities may drive North Sea jackup demand

Dec. 1, 2023
CCS projects are requiring the drilling of new wells and also P&A work, says Evercore ISI.

Bruce Beaubouef * Managing Editor

NEW YORK CITY – While the jackup market in Northwest Europe continues to remain challenged due to a lack of work and lower day rates, CCS projects and P&A work may help prompt new demand in the region, according to Evercore ISI’s latest Offshore Oracle report.

Two recent contracts provide examples of the CCS trend, the firm says. The first, involving TAQA and the jackup Valaris 123, entails a program for wells on the Porthos CCS project in the Dutch sector, expected to commence in late 2024. The contract for the Valaris 123 involves six wells plus up to ten optional wells, and has a minimum duration of 170 days plus a total optional duration of 300 days.

Additionally, the Hynet CCS project in the East Irish Sea awarded contracts to the jackup Valaris 72 and the jackup Valaris 292, with the Valaris 72 expected to begin a "substantial" P&A campaign this month. 

These developments represent a meaningful shift in the offshore rig market, Evercore says, indicating nearly four rig-years out of 13.8 rig-years awarded to jackups in the UK, Dutch, and Danish sectors supporting CCS projects this year. 

Certain projects will require the drilling of new wells to enable CO2 injection, while others might require extensive P&A work, similar to Eni’s Hynet project (a 55-well P&A contract), Evercore said.

Norway in particular is leading the way on offshore CCS projects, the firm noted. Earlier this year, five companies, including Equinor, Neptune Energy, Storegga, Sval Energi, and Wintershall Dea, submitted applications to the government to store CO2 in the Norwegian waters of the North Sea.