Archives for posts with tag: platforms

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.

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Self-Elevating Platforms (‘SEPs’) are generally used to provide offshore support for construction and maintenance projects. These units fall within the wider ‘construction’ sector in the segmentation of the offshore fleet, and can generally operate in water depths of up to 120m. The key deployment areas for these structures exist in the US Gulf of Mexico (GoM), West Africa and the Middle East. Despite high numbers of shallow water developments in the North Sea and South East Asia, there has been relatively little deployment of SEPs in these regions, although recent contracting patterns within South East Asia suggest this may soon change.

Rising Above Regional Regimen

The Graph of the Month shows the regional breakdown of producing fields with a water depth of <100m, as well as the share of self-elevating platform deployment across these regions. South-East Asia contains the largest number of shallow water developments with 552 active fields, closely followed by the US GoM (508) and the North Sea (452). However, there is a large disparity between these regions in terms of SEP deployment, with the US GoM accounting for the deployment of 161 units compared to the North Sea and South East Asia where just 10 and 19 structures are deployed respectively.

Lower deployment numbers in these regions can be largely attributed to a major factor in each region. In the North Sea, self-elevating platform use is often restricted by harsh operating conditions. In South-East Asia an ample supply of support vessels has provided ships for use in construction and support duties in the region.

Jacking-Up Orders

The current SEP orderbook includes 24 units with a record combined contract value of almost $2bn, of which 13 are for South-East Asian owners. Of the 15 contracts agreed in 2014, 60% of these are for Asian owners. Although these units will be capable of operating internationally, indications from owners including Teras Offshore, Swissco Marine and East Sunrise Group hint at a South-East Asian target market. There is a large fleet of mid-sized supply vessels in the region and historically these units have worked similar roles to the SEP fleet. However, the mid-sized supply vessel orderbook has diminished from around 200 units in 2012 to the current total of around 70 vessels, potentially supporting future deployment of SEPs in the region.

Lifting Expectations

An abundance of shallow water fields and relatively benign conditions means that South-East Asia is a region with strong potential for the future deployment of SEPs. Despite a lack of historical deployment, the attraction of competitive day rates in comparison to support vessels has reportedly begun to attract interest, in turn leading to investment in newbuild units from Asian owners.

So, a reduced orderbook for mid-sized supply units and an expected increase in field developments within China and South-East Asia could be positive news for SEP owners. Whilst still way below levels of deployment in the Gulf of Mexico, this region could provide impetus to self-elevating platform demand in the future.

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OIMT_2013_09The South East Asia Oil Producing Area, consisting of Brunei, Myanmar, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, accounted for 6.4% (1.6m bpd) and 16.8% (16.5 bcfpd) of global offshore oil and gas production respectively in 2012. Its 409 active offshore fields – 63.8% of those in the Asia Pacific – are mostly fixed platform developments. However, indicators suggest this historical tendency may be changing.

Shallow Water Bonanza

As the Graph of the Month shows, shallow water development types predominate within South East Asia. Together, fixed platforms, subsea tie-backs and extended reach drilling (ERD) accounts for 95% (388) of producing oil and gas fields in the area, reflecting the historical concentration of E&P activity in shallow Malaysian and Indonesian waters. The average water depth of producing fields is 70m and only nine are located in depths of more than 200m. SE Asia is thus comparable to the North Sea, where these development types also equate to 95% (614) of active fields and average field water depth is 91m.

Topsides Upside

Unlike in the North Sea though, active fields in South East Asia are heavily skewed towards fixed platforms: 77% (315) of active fields produce via fixed platforms in SE Asia. For the North Sea this figure is 40% (258). For every field exploited by subsea tie-back or ERD, there are 7.3 (for subsea) or 10.5 fields (for ERD) developed by fixed platforms in SE Asia. The equivalent global ratio is 2.9 or 9.0 fixed field developments per subsea or ERD field. SE Asia is also likely to remain a source of fabrication contracts for the foreseeable future: development by fixed platform accounts for 56% of fields under development in the area.

Subsea Rising

However, the Graph of the Month also shows a pronounced rise in subsea development: 11% of active fields are subsea tie-backs but 24% of fields under development are such. The average water depth of existing subsea fields in SE Asia is 150m whereas for fields under development by subsea tie-back, the average is 806m. The comparable figures for the North Sea are 129m and 168m. Rather than combining with existing platform infrastructure (as in the North Sea), subsea growth in Asia seems to be being driven by deepwater projects like Gehem, Gendalo and satellites like Gandang (off Indonesia).

MOPUs Multiplying

This suggestion is reinforced by the trend in Mobile Production Unit deployment in the region. While 5% of active fields in the OPA are MOPU developments, 15% of fields under development will employ MOPUs. In deep water, satellite fields with subsea producers are often tied to MOPUs, especially in later project phases. South East Asia accounts for 44% of global developments by MOPUs other than FPSOs (e.g. TLPs or jack-ups).

Fixed platforms will remain common in Asia, particularly given a push to develop many marginal Malaysian fields. Yet equipment and service suppliers will be encouraged by the growth in more complex development types, as more fields are developed and then start up in deeper waters.