Online Exclusive: Japan Drilling embarks upon ambitious expansion program

Gurdip Singh,

Contributing Editor

Japan Drilling Co. (JDC) and its president, Minoru Murata, recently launched a global marketing search for a drilling contract to facilitate the construction of a newbuild drillship.

Murata, also a representative director at JDC, is confident of winning the contract, which would be the basis of the drillship design. JDC, he said, is moving ahead with newbuild orders and would also invest in one semisubmersible rig and a jackup rig.

“We are marketing aggressively for drilling contracts to build new rigs,” Murata said. “We will need a deep-sea semisubmersible rig. We are doing the marketing activity to get a suitable rig contract. It will not necessarily be a harsh environment rig, but if we are going to the North Sea, then yes.”

Murata said the drillship would also be a globally deployable rig, but declined to discuss financial details. He emphasized that the design would not be restricted to a specific market.

An industry source said JDC would invest in newbuilds in 2014-2015, given the shortage of new rigs. Currently, JDC has a jackup under construction at Singapore’s PPL Shipyard that is scheduled for delivery in early 2015. “We will utilize this rig under a leasing arrangement upon its delivery,” said Murata.

Ambitious plans

Murata’s confidence endorses industry projections about JDC’s investment plans. The company has renewed its drive to be among the major rig operators globally.

“The drilling industry is about 50 years old and most of the present rigs are about 30-40 years old. There are obsolete units in the fleet. That is why these rigs are being built,” Murata stressed. “We have old rigs in the Middle East and the time will come to replace them.”

“We don’t upgrade jackups but we maintain these units,” added Murata, pointing out that cost performance of an upgraded jackup was not good when compared to the newly built unit.

Murata brushed aside questions about JDC’s contract for a newly built and commissioned jackup, Hakuryu-11, which was not renewed for optional drilling. Hakuryu-11, christened on May 25, 2013, at the Keppel FELS shipyard in Singapore, is committed to drill one well for Con Son joint operating company of Vietnam. It was due on site in July 2013.

“It is going to drill one well only. It is a result of bidding and option, but the other side decided not to renew the option,” he said, while expressing confidence that the rig would find work elsewhere in the region, “with focus on Indonesia.”

JDC’s subsidiary Japan Drilling Indonesia is already operating Hakuryu-10 in Indonesia. The Singapore-built jackup began drilling off East Kalimantan for Total E&P in July 2013. It has a two-year contract with two additional one-year options.

There are additional opportunities to lease rigs to an Indonesian company, said Murata, while downplaying questions about Indonesia’s new cabotage requirement. The new rule regarding cabotage, or flagging of vessels, applies to ships but not drilling rigs, he pointed out.

Indonesia and Malaysia would be two of the main markets for JDC in the coming years, Murata said. In October 2012, JDC established a wholly-owned subsidiary in Kuala Lumpur, JDC Offshore Malaysia Sdn Bhd (JOM).

Malaysia will continue to provide important offshore drilling opportunities for both the shallow and deepwater frontiers; given these perspectives, JOM would act as the local base to meet current and future customers’ needs for safe and efficient drilling services, Murata said.

Worldwide exploration

In July, JDC launched a series of new drilling programs. Deep-sea drilling vessel Chikyu, owned by Japan Agency for Marine-Earth Science and Technology, started drilling offshore Sabah, East Malaysia. Chikyu is chartered to the Kebabangan Petroleum Operating Co. (KPOC), a joint operating company of Petronas Carigali Sdn Bhd, Shell Energy Asia Ltd., and ConocoPhillips Sabah Gas Ltd. JDC is a technical partner of Petronnic Sdn Bhd (PSB) of Malaysia, which is providing the Chikyu service to KPOC. The Chikyu contract is worth approximately $32 million for one firm well and one optional well.

The company’s Etesco Takatsugu J is drilling in the Franco SW block in water approximately 2,000 m (6,562 ft) deep about 200 km (124 mi) off Rio de Janeiro. The drillship is designed to drill in water depths of 10,000 ft (3,048 m) and down to 30,000 ft (9,144 m) below the seabed. It is chartered to Petrobras for 20 years and has been working in the presalt fields since February 2012.

The ultra-deepwater rig is operated by a partnership of JDC and Nippon Yusen Kabushiki Kaisha, Mitsui & Co. Ltd., and Kawasaki Kisen Kaisha Ltd. The four Japanese companies operate the rig through US-incorporated Etesco Drilling Services, LLC.

Hakuryu-11 is a KFELS Super B Class design with a drilling depth of 35,000 ft (10,668 m). The rig’s leg structure is designed to provide enhanced robustness for operations in 425-ft (130-m) water depths. It has accommodation for 150 people. The jackup is designed to handle a combined drilling load of up to 2,700 kips and a high capacity hook load of 1,000 tons.

Meanwhile, JDC’s joint venture with Qatar Petroleum, Gulf Drilling International (GDI), is also building two jackups at Keppel FELS. Keppel FELS completed two KFELS B Class jackup rigs in 2006 and 2008 for GDI.

JDC is operating the Hakuryu-5 and Naga-1 semisubmersibles in Malaysia, and the Sagadrill-1 and Sagadrill-2 jackups in the Persian Gulf.

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