Archives for posts with tag: fixed platform

The global fixed platform “fleet” consists of over 7,700 installed structures, equivalent in unit terms to 58% of the mobile offshore fleet. Yet the significant role played by fixed platforms in generating requirement for offshore vessels and services (such as platform installation and IMR) is at times overshadowed by the role of the mobile offshore fleet. So what, then, is the current outlook for the fixed platform sector?

Back To Basics

Fixed platforms are immobile structures that are attached to the seabed and used to exploit offshore fields. All but 32 fixed platforms are located in water depths of less than 200m and the average water depth of the 7,744 installed units is 42m. Platforms usually consist of a ‘jacket’ (the legs) and ‘topsides’ (the decks), and are fabricated from steel, though concrete or wood have been used. Indeed, the first ever fixed platforms were wooden structures off California in the 1930s; these have been dismantled, but North America still accounts for 31% of the fixed platform “fleet”, a legacy of shallow water E&P in the GoM. Other major historical areas of fixed platform installation include the Middle East/ISC (15% of the fleet), SE Asia (22%) and the North Sea (7%). The North Sea is home to most larger structures, such as the 898,000t “Gullfaks C” gravity base platform. Most structures in areas like the Middle East and the US GoM, meanwhile, are at the opposite end of the scale – unmanned monopod/tripod wellhead platforms of less than 100t.

Construction Crunch

Historically, fixed platforms have been a core business area for a number of fabrication yards and EPCI companies. Installation of small structures tends to involve units like liftboats in the US GoM and crane barges in the Middle East. Larger structures (in the North Sea or West Africa) have required more robust transportation and heavy-lift vessels. At present though, the fabrication and installation outlook is subdued. As shown in the inset graph, 96 platforms were ordered in 2014, down 49% y-o-y; in 2015, 42 were ordered, down another 56% y-o-y. Most ordering has been for smaller units in the Middle East (14%, 2014-15) and SE Asia (39%): platforms like the 43,700t “Johan Sverdrup CPP” (North Sea) are exceptional. Reduced contracting is partly due to the weaker oil price, but it also reflects a longer term shift towards subsea developments and deepwater E&P.

A Shift To Services?

It seems, then, that outside of expansion projects in a few areas, the near term demand generated by fixed platforms is likely to be mainly from servicing existing units: facilities need maintaining, paint needs reapplication and so on. For example, long-term, multi-field IMR contracts have reportedly been awarded for platforms in the UK and Saudi Arabia in recent months. PSV and helicopter demand to supply manned platforms (and ERRV demand in the North Sea) will also persist unless fields are shut down. And even then, potential exists in platform removal: there are currently five planned decommissioning projects involving platforms, each project with a value of c.$400m.

So the fixed platform construction market is fairly challenged. But there are other ways in which fixed platforms can create opportunities. These may be quite niche or oblige EPCI companies to adapt, but with 7,744 units in place, the sector is in several regards still worth some attention.


OIMT03Since the country’s oil reserves were nationalised by Lázaro Cárdenas in 1938, the state ownership of Mexico’s oil production has been an issue of totemic pride for Mexicans. For years, the bounty provided by the Cantarell project minimised the need to think about other options. But as the decline of ageing Bay of Campeche fields accelerates, increasing investment has been needed by Pemex both to shore up existing fields and also to appraise future areas of production.

Exploring Investment Expansion

The Graph of the Month shows the extent of the growth in Pemex’s Exploration and Production budget, as greater focus has come on developing new areas of oil production, some involving deeper waters or more complex development types than the fixed platforms found on Cantarell or Ku-Maloob-Zaap. Pemex’s E&P budget in 2013 was around 74% greater than five years earlier, and its projection for total expenditure is for further growth in its CAPEX budget through to 2018 at a rate of 3.8% per annum. Although this forecast is at an aggregate level, including all business units, the line on the graph shows the level of E&P spending that this implies given the share which the latter has been in recent history.

A Landmark Policy Change

On December 23rd, in the face of not-inconsiderable political opposition, the Mexican president signed a constitutional reform which, will end the 75-year old state monopoly on Mexican production, and allow private investment in Mexican developments. This could add to Pemex’s already substantial $149bn five-year investment plan.

Supporting Structures

This is, of course, all positive news to owners of offshore structures, raising the potential for greater future demand for structures off Mexico. Mexico is already beginning to generate demand for increasing numbers of rigs and OSVs. A number of Mexico-based companies have attracted investment from US and Asian sources of finance looking to gain exposure to the Mexican market (notably the expected need for additional high-specification jack-ups: at least 18% of the current orderbook is for deployment there).

As well as continued work to shore up output on the major fields, plans for new fields are underway. These include the FPSO development on the Ayatsil heavy oil field (targeting 2016 start-up) and Lakach, Pemex’s first deepwater project (2015). This field has been followed by several other finds in the Catemaco fold belt off Veracruz, results of the recent step-up in exploration by Pemex. Hub development may be possible, although falling American gas prices could be an issue. Looking further to the future, potential further deepwater activity could include a SPAR in the Perdido fold belt near US waters.

So, the future for investment offshore Mexico looks relatively bright, with optimistic projections for the levels of state investment. The lack of local experience in deep or more complex fields could be an issue, but as private investment and more third-party offshore contractors get involved, these challenges may be solved. All together, this makes Mexico an attractive prospect, as the drive towards new production stimulates additional demand for offshore units.