John Sheehan reports from French cables group Nexans’ technology round table, and finds how the firm is staying afloat during the downturn.
Nexans’ Skagerrak installation vessel. Photo from Nexans.
Despite the unprecedented downturn in the oil and gas market, umbilical and power cable manufacturer Nexans has managed to keep its head above water, with equipment supplies ongoing to a number of key projects around the world.
Nexans as a group is relatively well-sheltered from the worst of the oil and gas downturn, because of its work in a variety of sectors including telecommunications, buildings and railways.
In the oil and gas sector, however, Ragnvald Graff, Nexans’ sales and marketing director for the subsea market, said field developments are under constant evaluation and pressure to reduce capital and operational expenses.
“There is high activity on concept development, tendering studies, front-end engineering and design (FEED) concept evaluation and cost pressure throughout the value chain in order to make projects viable in this low oil price environment,” Graff says.
“The target for the oil companies is to reduce hardware costs by at least 30%. That affects us, it affects everyone. We have, however, managed to secure an acceptable order backlog for umbilicals and direct electric heating (DEH) systems in this difficult market.”
The company has a number of ongoing projects keeping it busy, before a hoped-for pick up in 2017 or 2018.
Graff cites gas projects as being one positive area for Nexans, which turned over US$5.18 billion (€4.7 billion) in 2015. “For some reason it seems like gas projects are being sanctioned and developed, especially in countries like Egypt where there is a great need for gas. These countries are importing billions of dollars-worth of gas every year, but they require 100-150km-long step-outs in order to be self-sufficient in gas as soon as they possibly can.”
Nexans has just supplied the West Nile Delta Taurus/Libra project offshore Egypt with 50km of umbilical that was recently loaded out from the deepwater quay at its Halden fabrication plant in northern Norway.
It is also supplying 100km of umbilical for BP’s Giza, Fayoum, Raven project, part of phase 2 of the West Nile Delta project, with delivery scheduled for 1H 2018.
Meanwhile, Graff describes winning a contract from OneSubsea to supply 32km of power umbilicals and accessories to be installed in 915m water depth for Woodside’s Greater Enfield project off Australia as a “big milestone” for the company. Delivery is due in Q1 2018.
The oil field, which is 60km from the coast of Exmouth, will be developed using a 31km subsea tieback to a floating production, storage and offloading facility. Six subsea production wells and six water injection wells will produce around 69 MMboe. OneSubsea will supply subsea pumps for the project.
Graff says that Australia is a target market for Nexans going forward. “We are aiming to complete a good project and make a name for ourselves down there.” The deal includes Nexans’ SUTA-FLEX modular umbilical termination assembly, a unit that is lighter than rival systems. It can weigh in at between 1.5-4-tonne and handle up to 20 electric and 32 hydraulic connectors. The SUTA-FLEX system is based on standardized components, which are assembled in accordance with the project’s specific needs.
SUTA-FLEX can accommodate hydraulic, electrical or fiber-optic components–or any combination of the three–within its compact outer dimensions. The design contributes to significantly improved reel packing as well as smoother handling and lifting operations.
Nexans’ biggest ongoing project is work on Shah Deniz in the Azeri sector of the Caspian Sea. It is supplying both umbilicals and DEH systems to the world’s largest industrial project, with deliveries scheduled for 2018, 2019 and 2020.
A study on cost reduction has reduced the diameter of the umbilicals from 184mm to 149mm, with resulting cost savings.
“It is a big logistics project,” Graff says. “The umbilicals are supplied on drums, which are picked up at Halden on barges and taken to the Baltic Sea, and then transferred onto barges that can take them through locks into the Caspian Sea. There are limitations as to when you can do this because of the climate and risk of icing.”
Graff also warns of the risk of freezing out staff on the long-term health of the oil and gas business.
“Another challenge is that the industry could go from a full-stop to full speed ahead in a very short time. How do you handle that? There is a risk of a competence drain – that you lose the people who know how to do things,” he adds.