Offshore focus: Jack-up rig maintenance

Jack-up rigs provide oil producers with a flexible solution to offshore drilling for hydrocarbons. While renting them is not exactly cheap, the fact that they can be towed to almost any location, “jacked” to the sea bed and operational within a short period of time makes them the most economically viable solution to offshore producers.

When demand for oil started to decline in mid-2008, oilfield and marine services companies operating both on and offshore started to notice a dip in general activity across the Middle East. Dockyard across the region also noticed an upsurge in “warm stacking” – sending a jack-up rig back into port, but keeping the crew onboard and ready for work.

However, after enjoying day rates of between US$150,000-$175,000 against operating costs of around $45,000 for the three to four years prior to the downturn many operators decided that the time was right to send some of their rigs back to shore for essential maintenance and upgrade work.

“During 2009 we witnessed a surge of maintenance, upgrade and repair works, as confidence grew in the market and owners went for upgrades and enhancements as well as the usual preventive maintenance,” Ian Anderson, marketing manager for the UAE-based offshore marine services providers Lamprell says.

Stephen Smith, corporate business development director at the Sharjah-based MIS Group states that his company’s clients have been more circumspect in regards to major upgrades: “In the current period, the majority of owners will only take care of the essential or ‘basic’ refurbishment needs required. e.g. work resulting from periodical audits etc, but are unlikely to take on major upgrade work,” he says.

With around 25% of the world’s jack-up rig fleet currently operating in the Middle East, competition has tightened for contracts and as a result many operators are now ensuring that their rigs offer both the latest technology as well as a high standard of living accommodation for the crew to ensure they steal a march on rivals with more outdated rigs.

“The type of work we are doing remains basically the same,” Ian Anderson says. Replacing the steelwork, servicing rotating equipment, living quarter enhancements, crane overhauls etc.”

“Many rig owners have asset enhancement and integrity programs in place to prolong the rig life and make the operation safer and more efficient, so a 30 year old rig, if systematically maintained, will give years of future service,” he adds.

“The ‘essential’ or ‘basic’ maintenance needs will be what carries this segment until the market changes substantially. This in itself will generate a fair deal of refurbishment work,” Smith says.

With the Middle East being the premier hub of global energy production “cold stacking” – effectively mothballing jack-up rigs in dry docks – has not been as commonplace as it has in the US and elsewhere.

“A couple of companies started cold stacking rigs in late 2008, but the majority decided to weather the storm,” Anderson explains. “We did a couple of temporary conversions from driller to living quarters and these rigs found contracts waiting, lower day rate of course but at least it kept the crews mobilised and the client happy,” he adds.

“After the effect of the credit crunch first hit, yes there was a process of cold stacking rigs,” Stephen Smith says. “And it has been continuing to a degree driven by the continued effect of the credit crunch, oil prices, etc. but this is not expected to be a long term trend,” he adds.

The Abu Dhabi-based Gulf Marine Services is one company in the sector that is deciding to focus on new build rather than maintenance in 2010. The company is attempting to use 2010 to broaden its opportunities in the Middle East market with state-of-the-art barges.

“We already have five working jack-up barges and we are looking to further increase GMS’s presence in the Middle East and internationally,” Andy Cobban, technical manager of the construction division says.

“Although part of GMS’s business is third party build and maintenance, our current focus is on the GMS Endurance and Endeavour as we complete construction and put both vessels out to contract.”

“As the most sophisticated vessel we have built, the GMS Endurance combines an operating water depth of up to 65 metres, accommodation for 150 persons, deck space of 1000 m2, deck load of 1,200 ms, self propelled DP2 (dynamic positioning), heavy lift crane capacity of up to 1,350 tonnes and four legs for faster jacking on location,” he adds.

So what does the future hold for the jack-up rig maintenance market in 2010? Ian Anderson remains optimistic that the next 12 months will be see an upturn in drilling activity and with it an upturn in demand for jack-up rigs.

“Lamprell are very keen to expand our new build activity,” Anderson concludes.

“Unfortunately the new build market is rather saturated right now with rigs ordered before the downturn still in the builders yards and about to be launched, some 40 jack-ups are still under build, mostly in Singapore, plus all the idle units docked in various ports around the world.”

“We would like to see an upturn in drilling activity, linked with a continued healthy oil price (not over the top, as we had in 2007) This would reduce the backlog and encourage new order activity.”

So 2010 is looking bright for the dockyards around the Middle East who are offering operators the opportunity to upgrade or replace their rigs and to ensure that offshore drilling activity can be carried out with both the latest technology as well as up to date safety and comfort for their workers.

Jack-up rig classification

M.P. Bijali offshore manager DNV Middle East

Where does a classification company like DNV fit in with jack-up rig maintenance?
In the Middle East operators of drilling rigs need to stay longer on location, executing complex activities with the use of new technology and many of these units have passed original their design life. Maintaining these units is a challenge for the owners especially with problems such as corrosion fatigue. As a result, ensuring the integrity and safety of offshore units is more important than ever before.

Are your classification standards internationally recognised?
Of course. DNV has more than 45 years of experience in providing classification and statutory certification services for offshore units. Our offshore classification is based on our own offshore standards which are internationally accepted. Classification implies a process of verifying unit standards against a set of requirements and aims to verify that the required rule/standard is built in, observed and maintained throughout the unit’s life. Our approach incorporates advanced theoretical analysis and relevant industrial standards as well as our industry experience and vast internal knowledge base.

What specific checks do you apply to jack-up rigs?
Structural integrity is a key element in the DNV classification scope. Thorough verification of the hull, leg, jacking system and spudcan structures of a jack-up are very important part of any classification survey on jack-ups. Basis is on detailed inspection, thickness measurements and strength calculations, if required. DNV has developed a rig specific IIP (In-Service Inspection Plan) for the rigs in DNV class.

Has the technology you use to classify the rigs changed?
Yes. Now DNV is using integrated software tools which helps customers to proactively identify and tackle various risks. Our classification offers an excellent system for safeguarding life, property and the environment due to operational consequences. It is a lifetime approach.