North Sea fabrication filling order books

Elaine Maslin

July 16, 2013

A high level of fabrication activity in and around the North Sea is attracting new players. Elaine Maslin reports.

The Gudrun topsides nearing load out at Aibel’s yard, Norway.Platform fabrication for new installations in North Sea will reach fever pitch this year as a historically high number of facilities are completed for load out.

Yards around Europe, including Norway, the UK, Italy, The Netherlands, Spain, and Sardinia, are all busy completing jackets and topsides for North Sea projects.

The work is also spilling out worldwide; South Korea, home to Samsung Heavy Industries, Hyundai Heavy Industries, and Daewoo Shipbuilding and Marine, are all also busy with work for the UK sector, as well as Dubai’s Lamprell and SMOE in Singapore.

Floating production features highly in the new projects coming out of South Korea in the next few years. ENI’s floating production unit Goliat, based on a Sevan Marine Sevan 1000 design, is due to be installed next year in the Barents Sea, followed by BP’s 270m-long Schiehallion FPSO a year later and Chevron’s 292m-long Rosebank FPSO after that, both west of Shetland.

Apache’s Forties Alpha Satellite platform (FASP) in the Hadrian Yard.In addition, and in construction more locally, there is a growing amount of brownfield work, including new compression or accommodation modules or satellite platforms to extend life or increase capacity on fields.

IHS Petrodata, based in Aberdeen, says: “While the North West Europe region is undoubtedly dominated by subsea tieback projects, feeding socalled hungry hosts, the last couple of years have seen a higher level of activity for platform-based projects.” Data from IHS Petrodata’s Fields- Base shows that 10 platforms are currently under construction and due to be installed in the NW Europe region this year. ConocoPhillips’ Jasmine quarters, has already been installed, and Apache’s Forties Alpha Satellite platform is nearing completion.

Looking ahead to 2014, 11 platforms are currently under construction and due for installation in that year, with a further five platforms due to be loaded out and installed in 2015. These figures compare well with historical trends, as only five new platforms were installed in 2010, seven in 2011 and seven installed last year, says IHS.

Apache’s Forties Alpha Satellite platform being towed out to sea.Catherine MacFarlane, IHS Petrodata’s field development analyst, says: “These figures, do not, of course include future projects still in the planning stage. If all platforms with a status of possible, planned, or tendering come to fruition between this year and the end of 2017, then that is an additional 53 fixed platforms. In fact, in 2015 alone, there are 13 platforms in the planning stage and a further seven possible platforms. Of course, some of these projects will fall by the wayside, or fall victim to development delays but overall, the project pipeline remains fairly strong.”

According to engineering consultancy AMEC’s projections the UKCS market alone will see 32 new fixed structures (with average 6-7000 tonne topsides) built in the next five to seven years by 16 operators, exceeding historic capex spending. However, it says “considerable market constraints” are visible, for major equipment, fabrication capacity, and lift vessel/accommodation.

Apache’s Forties Alpha Satellite platform being towed out to sea.The buoyancy in the fabrication market follows a period of some instability, particularly in the UK, after a slump in activity in the 1990s. Last year, the McNulty Offshore yard was sold after it went into administration.

Norway’s Kvearner has built a strong order book since it was spun out into a standalone company from Aker Solutions. But, the company says it needs to focus on addressing cost challenges, optimizing capacity, and increasing competitiveness.

Further afield, Dubai ship, rig and platform builder Lamprell has been regaining control of its business after a string of profit warnings throughout 2012.

There have also been projects cancelled. BG Group recently dropped its plans for a bridge-linked platform on its UK North Sea Lomond installation, after it went out to tender to platform fabricators. The project would have unlocked the nearby Dana Petroleum Arran fields and Serica Energy’s Columbus field. Dana and Serica are now looking for alternative export routes for their fields.

Heerema’s heavy lift vessel Thialf lifting the FASP into place, image courtesy of Apache.Two floating projects have also been cancelled. Shell is reassessing its plans for the Fram field, for which SBM Offshore had been designing a floating unit, after seeing drilling results on the field. Antrim Energy also cancelled plans for an FPSO on the Fyne field, saying the economics no longer worked.

There is still work, however. Lowestoft-based SLP Engineering, now owned by Singapore’s Sembcorp Marine, is back building after being in administration in 2009 and then again in 2011 when the firm which had bought it also went into administration.

It also recently gained an exclusive license with Seahorse Platform Partners to use its Seaharvester and SeaHorse minimum facilities technology for platforms in UK waters.

OGN Group, based on the Tyne near Newcastle, saw the float out and installation of its first major project, the Forties Alpha satellite platform—the largest central North Sea platform built in the UK in 25 years—last month (May 31).

HSM Offshore, in The Netherlands, is working on its largest platform project, the southern North Sea Leman compression platform for Shell. Heerema Fabrication Group, at Vlissingen, also in The Netherlands, says the jacket for Gina Krog offshore Norway will be the largest launched jacket it has built.

The market is also about to see some new competition. With a number of significant UK North Sea projects already completed, including three jackets and a gas sweetening module for ConocoPhillips' Jasmine development, and integrated decks for Total’s Elgin B and West Franklin platforms, Italy’s Rosetti Marino Group is looking to build a presence in the UK.

Marco Deserti, Rosetti general manager, says to be more competitive in the North Sea the firm is looking to work in partnership with a yard in the UK.

By building projects in the UK, it could be more cost competitive by removing transport costs, he says. It has already started recruiting, having recently advertised for an Aberdeenbased branch manager, and has set up a UK-registered company, Rosetti Marino UK.

Rosetti, which more traditionally works for the Mediterranean and West African markets, has already shown it can work overseas; it opened a yard in Kazakhstan in 2008, which now accounts for 30% of the firm’s turnover, says Deserti.

It is currently also working on a four-legged jacket and for the Ivory Coast Marlin project for Foxtrot International, with sail-away 2014-25; two integrated decks for ENI for the Fauzia and Elettra platforms in the Adriatic Sea, and a deck for the IKA JZ platform project off Croatia.

Meanwhile, large North Sea investments will continue, says Mark Wallace, Maersk Oil’s Danish unit’s managing director, after announcing $800million of investment in a new platform to be built by Denmark’s Bladt Industries for Tyra Southeast in the Danish Sea, following a competitive tender.

“The Danish North Sea still contains significant oil and gas resources,” he says. “However, the remaining oil and gas is becoming progressively more difficult to extract requiring efficient development, new technology, and continued large investments. The Tyra Southeast development is an example and represents an important part of the next chapter in the Danish oil production.”

Engineering consultancy AMEC agrees. ‘’We are continuing to see a huge demand from our customers operating in the North Sea” says Sandy Clark, AMEC’s strategy and growth director. “For those businesses like AMEC who are able to meet the challenges and complexities, it is an exciting time.” OE