Offshore update

July 2002 Vol. 223 No. 7  Offshore Update

Robert E. Snyder,  Executive Engineering Editor

UK strategy report. A new report on the UK’s offshore engineering industry has been launched by the Minister for Energy, Brian Wilson. The long-term downturn in capital expenditure offshore Europe is having a major impact on the industry, and the report – commissioned by the UK’s Department of Trade & Industry’s Oil & Gas Industry Development unit in Aberdeen – makes over 30 recommendations.

Report author, energy analyst Douglas-Westwood Associates (DWA), values world Engineering Design & Project Management (EDPM) at about $4.4 billion, with a UK share of around $800 million, about 18%. Process Equipment is valued at $22 billion, with a UK share of about $1.8 billion.

The report identifies three major challenges facing the UK industry: 1) Changing markets; 2) Personnel shortages; and 3) Communication. With decreasing capital spending in the UK offshore sector, major market changes are underway. The largest offshore field development prospects are now in other regions of the world; and Houston is the predominant location from which oil companies manage projects worldwide. Ideally, suppliers will need to work closely with operators in Houston, be capable of working globally and, at the same time, meet national requirements for increasing levels of local content. Also, concerns over long-term positions are causing suppliers to investigate diversification opportunities. This should be encouraged, but a consequence may be a reduction in offshore engineering capacity.

An increasing number of senior staff are approaching retirement age, and there is a lack of new, younger entrants to replace them. Unless the UK Engineering Services industry can access more trained engineering staff, there is a danger that this economically important activity will decline. In many sectors, the "personnel time bomb" is ticking, and in engineering disciplines, dependence on high levels of skills makes this even more critical.

And there is evidence that, despite PILOT, LOGIC and the PPWG initiatives, there is still considerable scope for greater levels of collaboration up and down the UK supply chain, and between oil/gas companies and contractors. DWA found evidence that relationships between agencies of government, and between government and industry, are less well developed than would be ideal. "While we are now beginning to see improvements in communications, it is essential that this process continue," DWA notes. A PDF file of the summary report can be downloaded via: page one of the DWA website, www.dw-1.com; or the DTI website, www.og.dti.gov.uk/sponsorship ‘Engineering Study.’

Energy research partnership. The Texas Engineering Experiment Station (TEES) of the Texas A&M University System and the Gas Technology Institute (GTI) announced, at the recent Offshore Technology Conference, signing of a Memorandum of Understanding that creates a research partnership focused on ultra-deepwater petroleum development and unconventional resources. Under MOU terms, a new, not-for-profit, Texas company called Research Partnership to Secure Energy for America (RPSEA) is being established – formalization is expected by the end of this summer. TEES brings to the partnership world-renowned scientists and industry-leading deepwater research capabilities. GTI, which brings with it a 25-year history of R&D management, will support an initial $7 million of research address goals.

Dr. Roland Haden, Vice Chancellor for Engineering and Director of TEES, believes cutting-edge research is needed to meet the nation’s future energy needs, and that RPSEA will play a leading role. "RPSEA research efforts will leverage the strengths of the Texas A&M system and GTI, together with industry partners and other universities, to address America’s need for increased natural gas and petroleum supplies," Haden said.

John Riordan, President and CEO of GTI added that the funding from GTI will enable significant R&D efforts to begin immediately. "GTI is looking forward to building on its past successes in gas supply research – one example being the key role we played in transforming coalbed methane from a substance with no commercial value into 7.5% of today’s domestic natural gas production," Riordan said.

TEES is a research agency of the State of Texas and is part of the Texas A&M system. GTI is a not-for-profit research institution with substantial expertise in managing and developing new gas technology programs. The TEES contact is Roland Haden; email: r-haden@tamu.edu.

Another offshore drilling merger. As described in a recent Gulf of Mexico Newsletter, Ensco International entered into a deal to acquire Chiles Offshore, in a cash and stock transaction valued at about $578 million, based on Ensco’s closing stock price prior to the announcement. Chiles currently operates four jackups, the oldest only three years old. It also has a jackup under construction for delivery this year.

The addition of Chiles’ five rigs will increase Ensco’s fleet to 56 units, including 43 "premium" jackups, 29 of which have either been "built or rebuilt" since 1995. Ensco says it believes acquisitions are the prudent way to grow the company without impacting industry rig supply.

Chiles Offshore President/CEO William E. Chiles has agreed to join Ensco as an executive officer upon completion of the acquisition. In the preparation of World Oil’s annual Directory of Marine Drilling Rigs, it has been interesting to follow the aggressive involvement of Mr. Chiles as a small player in a big, worldwide market – looks like he did it right.

Deepwater mooring record. Heerema Marine Contractors used its recently converted deepwater construction vessel Balder to set a world water depth record, in April, for installation of an offshore spar mooring system. That system is on BP’s Horn Mountain spar project in 5,500-ft water in the Gulf of Mexico. The system comprises nine piles, each 18 ft in diameter by 89-ft long. Each mooring line is over 7,500 ft long with two wire sections and 246 ft of chain.

Verolme Botlek, the Rotterdam yard, reports that the Balder conversion kept it busy for a long time in 2001. The complex renovation of the semisubmersible crane vessel to a deepwater construction vessel capable of laying pipelines took almost a year and required 1.2 million man-hours labor. During peak periods, 1,100 people worked every day on the huge vessel – the largest the yard has worked on in recent years. Before sea trials began, the vessel was equipped with seven thrusters in a deep part of the Caland Canal.