Statoil Plans New Rig to Improve North Sea Crude Recovery (STO)

Norway’s national oil company, Statoil ASA (NYSE: STO) is planning to build two new drilling rigs that the company claims will increase oil recovery at lower cost in the mature fields of the Norwegian continental shelf. The new rigs are called ‘category J’ or ‘cat J’ rigs and are based on the standard jack-up design.

According to Statoil, the category J rigs will operate in water up to about 500 feet deep and are capable of drilling nearly 33,000 (more than six miles) below the ocean floor. According to MarketWatch, the cat J rigs will cost $450-$500 million each. The rigs will be specially designed for the shallow water and harsh environment on the Norwegian continental shelf.

Statoil is trying to overcome the depletion of its North Sea fields by improving the recovery rate from its existing fields. The company’s production is falling by about 5% a year, and the new rigs would eventually replace existing ones, some of which are more than 20 years old.