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Warning over rigs and vessels built outside of contract

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.”

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