ADC Energy uses experience to propel rig reactivation

Years of dormant activity, brought on by low oil prices and a pressurized environment, have led to many drilling rigs being stacked for storage. These rigs, put aside for a “rainy day,” have been sidelined in shipyards across the globe—waiting for their entry back into operation.  

However, increased market demand continues to ramp up, brought about by escalating oil prices and the growth of lower-carbon energy sources, including liquified natural gas (LNG) and offshore wind. According to Baker Hughes’ rotary rig count¹, global demand for offshore drilling rigs has soared in the past 12 months, causing day rates to skyrocket and the stocks of drilling contractors to soar. 

In addition to this post-pandemic demand, the Ukraine conflict and resulting commitments by world leaders to find an alternative to Russian imports have all led to an influx of drilling rigs coming out of “retirement” and being reactivated for work. This surge in demand for drilling rigs is forcing the market to look toward drilling rigs that have been idle and require a process of reactivation, whether they are cold-stacked or a newbuilds that have never left construction yards. 

But while operators and investors are keen to utilize former assets or re-engage abandoned vessels, much consideration must be given to reactivation. 

ARE THEY FIT FOR PURPOSE? 

Reactivating a rig relies on the complex equipment that has sat idle being switched back on. This involves rigorous testing to ensure it can still perform, both individually and when integrated into the wider rig system, before commencing operations.  

The process can include equipment overhaul, upgrades and the management of software updates, due to obsolescence during the stacked period. The complex and unpredictable nature of the reactivation process can have impact on time and budget for eager operators. With the many different components and sub-components that need to be checked and tested on a rig, reactivations can take months to complete, Fig. 1. 

Fig. 1. An influx of drilling rigs is coming out of retirement and being reactivated for work. Image: ADC Energy.

A smooth transition to operation may be jeopardized by damage sustained during time spent out of action. Often, equipment is not properly preserved or maintained during the stacked period, which can add significant time and cost implications when it comes to reactivating the asset.  

Many reactivated rigs that have sat idle in shipyards often have suffered equipment damage, due to harsh weather conditions coupled with inadequate preservation, all of which can compromise the operability of the rig.  

Add to this “stranded newbuilds,” which are incomplete or never-before-used and therefore don’t carry any sort of proven track-record with them, and the picture becomes increasingly complex. Supporting this idea are all the additional costs and potential issues that often come along with a newbuild shakedown. 

Post-reactivation, unplanned non-productive time, due to equipment failure, has the potential to create further delay and expense, often into the millions of dollars. 

MEETING MARKET DEMAND 

The pent-up demand, following the slump during the pandemic and fears over energy security in Europe, is driving the industry toward further reactivations and in some cases, newbuilds. This is despite the fact that only a short time ago, the market was scrapping rigs that still had many years left in them. 

With more rigs coming out of shipyards for reactivation, ensuring that they have the right specifications and are fit for purpose can be a challenge. Furthermore, there are fears around loss of knowledge within the industry, due to the past two market downturns and an aging workforce. This isn’t limited to onshore technical expertise, either. 

As business development manager at ADC Energy, I can say that the availability of suitably experienced and skilled crews to man the rigs is a real issue and will only grow, as more stacked and newbuild rigs enter the market. Not only do crews need to be skilled, but, considering the differences between various types of rigs, they must also be familiar and competent enough to operate complex rig systems in a safe and compliant manner.  

Furthermore, with a proven track record of providing assurance oversight during rig reactivations and newbuild projects, ADC Energy is well-placed to support on these complex projects. Our team has almost 40 years of experience with rig and vessel assurance, including over 100 newbuild projects. We are passionate about using this knowledge to continue making the energy industry safer, cleaner and more efficient. This sentiment is felt across both our historic work within oil and gas and now, as we embrace the new energies market. 

NEWBUILDS FOR THE ENERGY TRANSITION 

As larger offshore wind projects are sanctioned across the globe—without enough capable wind turbine installation vessels (WTIVs) to service them—the industry is beginning to see the start of a newbuild WTIV construction boom.  

With millions of capital investment required (newbuild WTIVs range from $300 million to $600 million, each), the experts at ADC Energy are keen to ensure that the same pitfalls that compromised the operations and performance of newbuild drilling rigs are not repeated in the WTIV sector.  

The key skills that have been applied on drilling rigs and vessels in oil and gas are transferable across sectors, whether to rigs used for geothermal or carbon capture utilisation and storage (CCUS), or to WTIVs, to build the wind farms of the future. 

As the offshore wind industry moves into new territory—further offshore and into harsher environments, with larger turbines and even bigger challenges—new and more complex WTIVs will be required to meet this demand. 

ADDED VALUE 

Having worked for decades with partners and clients across the globe, ADC Energy is well- placed to support assurance of the WTIVs during equipment installation, commissioning and acceptance testing, Fig. 2. Redeploying rigs across regions can create a compliance headache, if one is unfamiliar with the variations in legislation or the specifics of a country’s regulatory requirements. While the rig may meet the legislation for one area of operation, this may not necessarily be true for others.  

Fig. 2. ADC Energy is well placed to support complex reactivation and newbuild projects. Image: ADC Energy.

With experience working in the familiar territories of China, Singapore, South Korea and the U.S.—places in which many of these WTIVs of the future will be built—ADC Energy can collaborate with well-known and trusted partners once again. 

The most successful and efficient rig reactivations have been a result of detailed planning involving all parties: us, the client and the drilling contractor, all working collaboratively to ensure the rig is reactivated efficiently and safely. Our approach is aimed to boost reactivation and newbuild project success. These rely not only on our technical excellence and a drive to raise performance, but, more importantly, on the key strength of our people who can build relationships and work together with the vessel owner project team, shipyard personnel and end-user. 

Given that many of the rigs currently stacked were never meant to be deactivated, there is likely to be a steep learning curve regarding the most efficient and cost-effective approach to reactivation. By using key learnings, passed on over years of working on major global oil and gas projects, we are now developing a unified and globally respected approach to support WTIV operations that won’t just improve operational performance and the safety of the crew, but will also add significant value in achieving a sustainable energy future. 

About ADC Energy Ltd.  

ADC Energy Ltd. is a specialist provider of integrated rig inspections, working with some of the largest operators in the world to deliver collaborative assessments, to identify potential digital, mechanical, electrical or hydraulic issues that may occur onboard an installation or offshore asset. The business works closely its customers to provide support in the identification of appropriate solutions, applying 37 years’ of science, engineering and practical knowledge to identify cost-effective and appropriate solutions to engineering problems.  

https://www.adc.energy/  

REFERENCE 

1. https://rigcount.bakerhughes.com/ 

About the Authors

Craig Duncan

ADC Energy

Craig Duncan joined ADC Energy in 2010, initially supporting ADC’s operations and logistics before moving into a commercial role working directly with ADC’s directors. In 2014, he relocated to Kuala Lumpur and took up the role as regional manager for ADC’s Asia Pacific business unit, during which time the company was involved in many operational assurance projects for rig and vessel owners involving newbuild jackups and DP vessels in shipyards located in China, Korea and Singapore. This was in addition to ADC’s extensive work supporting energy companies throughout the Asia Pacific region with their rig intakes by conducting pre-hire condition and acceptance inspections before commencing operations. In 2020, Mr. Duncan returned to the UK, undertaking a new role leading ADC’s evolution into clean energy.