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Norsk Hydro Awards Awilco Offshore Contracts

04/02/2007

Norsk Hydro ASA has, on behalf of the partners in the Troll production license, entered into two contracts with Awilco Offshore ASA for rental of the two newly-built semi-submersible drilling rigs WilInnovator and WilPromotor. “These two rig contracts provide a good technical and commercial solution for the long-term drilling requirements on Troll. Hydro is developing a long-term plan to increase the oil reserves in the Troll field through an extensive drilling program,” said Senior Vice President Øystein Michelsen, head of Operations at Hydro.

The two rigs will start operations for Hydro on the Troll field in 2009 and second quarter 2010 respectively. Each contract has a fixed five-year duration from its start-up date.
Currently, Hydro is using three drilling rigs for production drilling on the Troll field. The two new rigs will replace two of the three rigs presently in operation on Troll.

As operator for Troll Oil, Hydro has been responsible for long-term development of the oil reserves located in the thin oil zones in the field. The commercial oil reserves in the field have increased from zero in 1986, to around 1.4 billion barrels. Hydro is developing a new long-term plan for increased oil recovery from Troll, where the aim is to increase the reserves by 30 percent, to over two billion barrels of oil.
So far, 113 wells have been drilled on Troll Oil, of which a large proportion are multilateral wells with between two and six branches. Altogether, there are around 300 producing well branches in the oil reservoir.
Both rigs will be built at Yantai Raffles Shipyard in China. The drilling package for the rigs will be built at National Oilwell Varco in Norway.
The estimated value of each contract is between $650 million and $980 million, depending on the ultimate fixed duration of the contracts. The value is exclusive of mobilization and possible modification costs.