Hydro Secures Drilling Capacity for Troll

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 new-build 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," says Senior Vice President Oystein Michelsen, who is head of Operations in Hydro.

The two rigs will start operations for Hydro on the Troll field mid 2009 and second quarter 2010 respectively. Each contract has a fixed five-year duration from its start-up date. Hydro has the option to extend the duration of one or both contracts to eight years, within 60 days of contract award.

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. The contract period for these rigs ends in 2009.

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 in the range of US $650 million and US $980 million, depending on the ultimate fixed duration of the contracts. The value is exclusive of mobilization and possible modification costs.

If the fixed operating period remains 5 years, the contracts have 5 x 1 year options. If the operating period for one or both contracts is extended to 8 years, the contracts have 8 x 1 year options.

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