Statoil cancels Norwegian Sea rig contract

STAVANGER, Norway, May 23 (UPI) -- Norwegian energy company Statoil said it canceled relocation plans for a drilling rig from Canada to the Norwegian Sea following field delay decisions.

Statoil canceled its lease contract with rig company Seadrill for the West Hercules platform, deployed for the past 18 months for an exploration campaign off the coast of Newfoundland and set for relocation to the Aasta Hansteen field offshore Norway. The contract originally was planned to expire on Jan. 31, 2017.

According to Statoil, a drilling campaign was set to start July 1 under the terms of the original plans for the Aasta Hansteen license area.

"In the autumn of 2015, it was decided to postpone the Aasta Hansteen field startup one year until the last half of 2018, and consequently the field drilling program will also be postponed," the company explained. "One of the reasons is that it is not preferable to complete the wells too early before production startup."

The rig cancellation comes at a time when energy companies are reconsidering field development plans because less capital is available in a weakened market. Seadrill receives a lump sum payment for $61 million plus day-rate and reimbursements costs for demobilizing the West Hercules.

Last year, Statoil characterized the Aasta Hansteen reserve area as "one of the main projects" in its portfolio after making a series of natural gas discoveries there.

A process to lay the 300-mile long Polarled pipeline from the Aasta Hansteen field in the Norwegian Sea across the Arctic Circle to a gas processing plant in Norway began last year. Statoil said the project marked a regional milestone as the first large-diameter pipeline of its kind to be placed in waters of up to 4,150 feet deep and the first pipeline to take gas across the Arctic Circle.

Seadrill leased the rig to Statoil for a day rate of $445,000, 10 percent less than the contract for its previous Chinese customer.