Mark Watson explores energy security fears and the hidden complexities of drilling rigs
With the global push for energy security, oil and gas drilling rigs are being spotlighted as a means of balancing short-term needs with global environmental commitments. Consequently, the oil and gas market is having to look towards assets that have been idle and require a process of reactivation, so as to bridge the gap. There is an evolving demand for drilling rigs and restarting drilling operations in today’s climate presents unique challenges that need to be considered.
There is a building backlog of rig contracts due to pent-up demand and now with the fear over energy security in Europe, it wouldn’t be unthinkable that rig utilisation will continue to build – despite the market only a short time ago scrapping rigs that still had many years left in them.
Scrapping has resulted in the availability of older offshore units falling, which causes a problem for some operators as they are at a crossroads between continuing to plug and abandon (P&A) wells or drill new wells – or do both. Each option will require a rig. Generally, older units are best for P&A – it is possible that operators will end up with a much higher specification rig than they need or will contract multiple rigs.
Either way, there will no doubt be a need for more rigs to come out of the shipyards and to get back to work as operators look at their well stock and reassess their direction.
For a successful rig reactivation process, assessment of the state of the equipment and what is needed to become operational again needs to be conducted in a careful, considered manner – to also ensure compliance with regional operation standards. Reactivation can be a lengthy process because rigs can lay idle for months and years. Some equipment is put into what is known as ‘preservation’, therefore not all of the equipment within the asset will be in perfect working order from the last time it was used.
Typically, when a rig is reactivated, the complex equipment that has been idle needs to be ‘switched on’ and tested rigorously to ensure it can still perform individually and as a system before being mobilised. The process of reactivation includes equipment overhaul and sometimes, a complete repair and recertification. It is not a quick process considering the many different components and sub-components that need to be checked and tested on a rig. The rigs that drill the deepest wells in the deepest oceans can be challenging to reactivate, given the level of automation and electronics installed compared to a conventional style land or shallow water jack-up rig, however these are, more so than not, the ones in greatest demand.
Though each rig reactivation has its unique challenges one of the more sizeable issues in the industry at the moment is availability of vendors to service equipment, spare parts and technical resources. The supply chain supporting reactivations due to the market downturn has been cut back. If a rig has been cold stacked for a lengthy period of time, the reactivation can be especially challenging.
Post-reactivation, unplanned non-productive time due to equipment failure has the potential to create further expense and delay, sometimes into the millions. Thus, getting reactivation right does pay dividends. Bearing in mind time and budget pressures, an external, unbiased view of the rig’s condition can go a long way to mitigating these ‘unscripted’ and costly complications. Being able to ascertain a complete view of the asset in question facilitates improved decision-making around risks of reactivation against the project timeline.
It is becoming increasingly common for rigs to be taken to multiple new operating locations, an example being ModuSpec’s work during the reactivation of a rig in Norway to operate in the UK before moving to South Africa and subsequently Mauritania. The firm is also supporting a UK-based client to consider if an operational semi-submersible based in Asia is compliant to enter the UK Continental Shelf – as there is a shortage of operational harsh environment semi-submersibles in the region. This is despite some units being cold stacked; they are deemed too expensive to reactivate, hence the look to Asia.
Redeploying rigs across regions can create a compliance headache if unfamiliar with the variations in legislation or the specifics of a country’s regulatory requirements; BEIS, BSEE, NOPSEMA and PSA to name the most widely used. Although the rig may meet the necessary legislation for one area of operation, it may not necessarily be true for others. There is also the question of whether the crew will be willing to go with the rig to multiple locations or seek alternative work closer to home.
These complexities can, fortunately, be anticipated and, therefore, ironed out. Having an independent party such as ModuSpec to provide sound technical advice can be invaluable.
In the drive towards cleaner energy, many groups are seeing oil and gas in a negative stance. The reality is that the sector has been the lifeblood of the world’s energy for such a long time that turning to alternative sources will not be an instant, nor smooth, process. The volatility of energy supply, especially with the current conflict in Ukraine, creates an additional layer of complexity. By understanding the reactivation challenges at play, and how to safely bring rigs back into operation, it is possible to ensures supply is not further compromised in today’s ever-changing landscape.
Mark Watson is operations manager of ModuSpec – a Vysus Group company