Class act

Demand for new offshore rigs and skilled labour to work offshore is something that is putting a strain on the industry. It is DNV’s aim to provide the knowledge, creativity and experience to help companies meet high demand concerns, without neglecting their assets, workforce and the environment.

As the boom in the Middle East region pushes oil and gas firms to expand operations, DNV has witnessed significant growth in offshore rig build business. “There is huge demand for drilling rigs at the moment, and in the Middle East there is a deficit in exploration. Therefore there is a very strong demand locally for jackup rigs, and anybody who believes they have the ability to build them is doing it now,” says Michael Reed, deputy manager, offshore division DNV, Dubai.

Further to the structural surveys traditionally undertaken by the societies, the industry-wide boom has created a new growth area for DNV. “Increasingly we are being asked to help owners identify suitable yards for the building of new ships and rigs, and for advice on suitable rigs to purchase and upgrade. This is because the market is growing fast, and a lot of the traditional yards that have been favoured in the past by customers, are actually full – working to capacity and booked for up to two years ahead,” explains Reed.

“There are a lot of new yards being pre-selected to build some of these vessels and installations, and because it’s the first time they’ve undertaken such a project owners are obviously wary and come to us to assess these yards in terms of capability and suitability,” says Reed.

“As slots for new builds dry up there is an increasing tendency to upgrade old rigs, one’s that are stacked (in storage), bring them out of semi-retirement, bring the technology up to modern standards and often make them bigger too. Owners will come to us in a consultative capacity for our judgement on the suitability of a yard to carry out that work too,” he adds.

The demand for new rigs has been demonstrated in Iran, where recently they advertised in newspapers specifying the need for new jackups in the country. According to DNV’s UAE manager, Lazaros Sarris, the country requires 25 jackups at present – not an easy task considering the sanctions placed on the country and its frosty political relations with the West.

“There are a lot of companies in the Middle East looking to buy jackups second hand or damaged, from the Katrina hurricane. Currently we have one jackup which is being repaired in Sohar Port in Oman, which is a newly established yard looking into building new rigs as well. There are also FPSO conversions here in Dry Docks World Dubai, where we have two vessels and they are expecting more,” says Sarris.

It is this sort of demand that forces companies into buying what are essentially insurance write-offs, which creates a requirement for DNV to provide the skills and know-how to ensure they are repaired, rebuilt and reclassified to correct and safe specifications. But it is not just the need for new rigs which forces the hand of such companies; there is also the lack of skilled labour which creates potentially dangerous situations if there is not the level of expertise and experience in the industry.

“In addition to this, there is a rapid increase in demand for deep-water drilling units offshore India, a market segment in which we are world leaders” says Bijali.

“What we need are skilled competent people to handle these projects, because everybody nowadays requires these workers and there are not too many left in the area. We personally have a very aggressive recruitment programme which will increase our staff by 70% in 2008, which is quite ambitious, but we are expecting more work to come which is why we are looking in this direction. We are continuously recruiting all nationalities, and we recently recruited a lady from Turkey to start a building programme in the drydocks,” says Sarris.

DNV is also pioneering some intensive training schemes in order to recruit university graduates and train them to a suitable standard in a short period of time. “We have developed over the last couple of years an accelerated surveyor training programme to take people in and make surveyors of them in a very short time. We put them on a six month training course around the world at some of the busiest locations that we have, that’s how we approach the stress of trying to find people to meet this demand,” says Reed.

“There is an awful lot of new build drilling and other types of offshore units going to be delivered over the next three years, and someone has got to run them – the big problem for the industry at the moment is where are people with those skill sets coming from? Yes, people are poached, but everyone is fishing in the same pool and you still need to bring in new people and train them, and you need to make sure they are competent and do no harm to themselves or anyone else when they are out there,” explains Reed.

The other main focus for DNV is increasingly to do with climate change, something that cannot be ignored any longer by companies in the industry. DNV has put much focus on climate change and has developed a new business area devoted to the subject, directed by one of the company’s successful regional mangers.

“Climate change is something that’s starting to creep into things. The severity and frequency of storms, for example will need to be analysed more,” he says. A practical example would be the storms in the Gulf of Mexico. These storms have been happening forever, but not with the same force or as often. “This means class societies are having to adapt the technical requirements for ships and rigs operating in these areas. Strength and structural considerations for vessels are developed on the assessment that a storm of a certain severity will take place, for example, once every 100 years. If these events occur more often then this has to be taken into consideration at the design phase to accommodate for the structural stresses involved,” adds Reed.

Whilst managing climate related risk is a challenge for DNV, it is also a business opportunity. “Dealing with the impact of environmental changes is one side of the equation, but there are things we are well placed to do by trying to prevent the situation getting any worse. There are emission controls on the offshore units, for example in terms of power generation, drivers and prime movers,” says Reed.

“Energy management becomes an issue not only due to the environment but also as the price of fuel goes through the roof – clients are increasingly interested in efficiency when maybe in the past they were not. There are lots of ways it will affect our business both internally and externally driven – it is quite exciting,” explains Reed.

For the foreseeable future, DNV will certainly be kept on their toes by the issues such as the worrying signs of climate change, and business will remain strong as long as demand is strong. “The main challenge for DNV is trying to predict when the demand will start to decline, because eventually, it will,” a reflective Sarris concludes.