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Statoil to Invite Tenders for New Type of Drilling Rig

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OSLO - Norwegian oil and gas giant Statoil ASA Friday said it is introducing a new drilling rig concept for mature fields on the Norwegian continental shelf, in a move to increase the recovery rate from its wells and reduce costs.

The new rigs will cut production costs by around 20%, cut yard delivery costs by 10%, and increase oil recovery, the company said, essential at a time when production from its existing fields is falling by about 5% a year.

The partly state-owned company said it is preparing an invitation to tender for the new jack-up rigs, known as category J, able to operate at water depths from 70-150 meters and drill wells down to 10,000 meters. Statoil will ask for offers for a minimum of two rigs, at an estimated cost of $450 million-$500 million each.

The company said the new rig type could be used on fields such as Gullfaks on the Norwegian continental shelf and Mariner on the U.K. shelf, and that the future Johan Sverdrup field could also be a candidate.

"Statoil has huge ambitions on the Norwegian shelf. We want to maintain current production until 2020," said Statoil's Chief Procurement Officer Jon Arnt Jacobsen, adding that the new rigs will help rejuvenate the current rig fleet.

"Today, more than 50 of the rigs on the Norwegian continental shelf are more than 20 years old, which means more maintenance and higher costs," Jacobsen said.

The most important measure to extract more oil on the shelf is to drill more wells, the company said. The Cat J concept "will have real impact on improving oil recovery," said Statoil's senior vice president for drilling and well, Oystein Arvid Haaland.

Statoil said the rigs should be owned by the licenses for each field, since the rigs are part of the long term development of the field. The company has discussed this with partners such as the state-owned petroleum company Petoro, said Jacobsen, adding that Petoro "supports this approach fully."

Statoil is currently developing several large fields, including Gudrun, Dagny, Valemon, Luva, Skrugard and Avaldsnes/Aldous. It also plans increased oil recovery projects on several fields including Snorre, Statfjord, Troll, Oseberg, Gullfaks and Asgard, and fast-track developments on fields like Stjerne, Visund Sor and Hyme, among others.

Statoil is the world's largest offshore operator and has 44 developed fields on the Norwegian continental shelf that produced about 1.4 million barrels a day in 2010.

The invitation to tender will be issued in July and the contracts will be awarded in the second half of 2012. The rigs will be delivered in the second half 2015.

Copyright (c) 2012 Dow Jones & Company, Inc.

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