AN industry expert is warning offshore oil and gas contractors to think carefully about how they preserve rigs and ships which have been built speculatively as the sector emerges from the unprecedented slump.
Since 2013 expenditure on exploration has fallen by almost a third year-on-year and the decline is expected to continue next year.
Despite this, Allan Durham, director of offshore services company Presserv, said an abundance of rigs and vessels has been built for delivery in 2017/18 with no contracts in place.
Presserv, a specialist in preservation and corrosion protection in the oil, gas and shipping industry, has its headquarters in Stavanger, Norway, and has subsidiaries in Vitoria, Brazil and Aberdeen.
Durham said:“The longer an asset lies unused, the more work and greater the cost involved in reactivating it when the market regains buoyancy.”
However, he said the costs involved could be minimised by building in preservation protocols from the beginning of a project.
There are two basic ways of storing an idle rig – warm stacking, when it is crewed, actively marketed and deployable (warm) and standing by ready to work; and cold stacked, when it is shut down and stored in a harbour when its prospects for work look bleak, or if its contracted terms do not meet the investment needed to make it work ready.
More than 90 per cent of jack-up rigs, or mobile platforms, are currently idle and, therefore, vulnerable to the elements.
Durham said: “Warm stacking a drillship costs around $40,000 (£32,600) per day, with the advantage that key personnel remain employed in the operational maintenance of the vessel and that reactivation is quicker than that of a cold stack.
“In turn, cold stacking the same unit costs $15,000 (£12,200) per day and the vessel will remain corrosion-free during the preservation period.
In total, the cost faced by the drilling contractor for cold stacking a drillship is approximately $4.5 million (£3.6m), so over a 24-month lay-up period this represents a saving of $13.75m (£11.2).
“Although the initial outlay is greater, in a time when operators and contractors are unsure of how long their assets will remain inactive there is a clear long-term economic benefit.
“Current technologies allow mobile drilling units – even those cold stacked with no crew – to remain corrosion-free for 24-36 months with no retreatment required.”
The preventative techniques can strengthen operational and safety performance, allowing operators and contractors to minimise downtime and maximise productivity, and the initial outlay can be preferable to the potential repair and maintenance costs of corrosion.
Durham added: “We know how important equipment integrity is to a project, and we understand how costly and time-consuming it can be if preservation is not managed effectively.
“Contractors and operators who factor in preservation to their plans prior to commencement will benefit hugely from their foresight. By adopting a robust preservation programme from fabrication through to commissioning, it is possible to reduce downtime and, in turn, loss of income.
“Only then can contractors and operators be confident they have fully protected their assets and the interests of their investors.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here