West Eminence Heads for Offshore Brazil Next Week

West Eminence
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MACAE, Brazil (Dow Jones Newswires), Jun. 18, 2009

Norway drilling company Seadrill hopes its West Eminence rig will head out for drilling in Brazil's Santos Basin next week, the company's drilling performance manager told Dow Jones Newswires.

The West Eminence arrived in Brazil on May 30 and has been undergoing inspections and acceptance testing, Seadrill's Mauricio Aguiar said Wednesday.

"We expect everything will be ready and the rig will head out to sea next week," Aguiar said. The executive spoke on the sidelines of the Brazil Offshore 2009 conference in Macae.

West Eminence will first head for the much-ballyhooed BM-S-11 block, home to the Tupi and Iara finds. The subsalt oil prospects are estimated to hold recoverable reserves of between 8 billion and 12 billion barrels of oil equivalent.

According to Aguiar, the West Eminence will complete work on the second of two wells being drilled at the Iracema prospect. Seadrill's West Taurus started two wells at Iracema, and is currently on site at the first well to complete drilling, Aguiar said.

The two semisubmersibles, which are under contract to Brazilian state-run energy giant Petrobras (PBR) for six years, join drillship West Polaris offshore Brazil. West Polaris is under contract to ExxonMobil (XOM), operating in the BM-S-22 block -- home of the Azulao and Guarani prospects.

A fourth drilling rig, the West Orion, is currently under construction and should enter operation in late April or early May 2010, Aguiar said. The West Orion is also under contract to Petrobras for six years.

Aguiar said that Brazil is a key market for the company, with the rigs under contract to Petrobras headed for operations in the key subsalt region in the Santos Basin. Industry experts and government officials have said the region could hold reserves of between 70 billion and 100 billion BOE.

With international oil prices recovering from lows after the global financial crisis and subsequent economic slowdown, the rig market is showing signs of life, Aguiar said.

"There is still demand. It's not that easy to find rigs in operating condition, especially for deepwater drilling," Aguiar said.

Daily rig prices reflect the demand, the drilling manager added. While prices have not rocketed to the heady highs of when oil threatened $150 a barrel, they're still better than the late 1990s.

"After the crisis, prices were lower. But overall, daily rig rates historically are at a very elevated level," Aguiar said.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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