A matter of course

Sarah Parker Musarra

October 2, 2014

Sarah Parker Musarra spoke with well intervention vessel providers, following a panel discussion at the 2014 Deepwater Intervention Forum, to examine the pros and cons behind using purpose built or dedicated vessels.

Helix’s Grand Canyon purpose built construction/ROV/survey vessel is an example of the company’s life-of-field unit, offered as an improvement or replacement to the vessel of opportunity.Photo from Helix Well Ops. 

Since the 1980s, subsea wells have gone from tie-in satellite fields, without stand-alone commercial viability, to being the sole method of development for fields such as Ormen Lange and Snøhvit by the mid- to late- 2000s.

With these increased subsea wells comes an increased need for intervention work, as they traditionally have limited recovery rates compared to their topside counterparts. Schlumberger places the differential at 25%. Gregory Brown, transaction services manager for Infield Systems, says in a recent report on the topic, that the difference in production could equate to as much as a US$20.7 billion loss annually.

In light of this, intervention activities are becoming necessary to enhance production. At this year’s Deepwater Intervention Forum (DIF), held in August in Galveston, Texas, Brown as well as representatives from companies including Blue Ocean Technologies and Helix Well Ops UK presented on what is a burgeoning topic within the well intervention industry: choosing between purpose-built vessels or vessels of opportunity to carry out intervention work.

Phil Bosworth is the director of business development for intervention pioneers Helix Well Ops, a business unit of Helix Energy Solutions Group. Helix Well Ops uses both dedicated intervention vessels and vessels of opportunity for intervention work, although dedicated vessels perform the brunt of the work. Bosworth says that Helix Well Ops has completed more than 800 well interventions with dedicated intervention vessels and 19 wells with vessels of opportunity.

“We see a consistent underlying trend towards dedicated vessels, but we can do everything,” he says.

Vessels of opportunity need no introduction. They are good for short well intervention campaigns in benign, emerging, and remote markets. Where the vessel of opportunity requires modular intervention equipment, purpose built intervention vessels are designed with intervention equipment integrated onto the vessel, such as subsea stacks and deployment/compensation systems, and both come at a cheaper day rate than drilling rigs.

At DIF, Bosworth discussed purpose built vessels’ dedicated crews and equipment to ensure continuity; providing increased operability, and cheaper job costs. Quicker mobilization, preparation and turnaround times also result.

“There’s a quick turnaround between jobs. A vessel of opportunity can take a couple of weeks,” he tells OE. “With dedicated vessels, it’s measured in hours.”

Of course, cost also factors into the decision of what type of vessel to use.

Helix is bringing its Skandi Constructor, a 120m-long dedicated intervention vessel, to the Gulf of Mexico in 2015 for spot work.Photo from Helix Well Ops.

Bosworth says that while the attraction of vessel of opportunity can lay in its availability, selecting such a vessel can still work against those who are trying to cut costs.

“The mere advantage with the vessel of opportunity is that there’s a number of vessels you can use. And as a result, the day rates are fairly low,” Bosworth says. “However, when people look purely at the day rate of the vessel, it’s attractive, but the reality is that it’s a lot slower. It’s a bit of a false economy to an extent, although certainly it’s key that they have a vessel around in their region that they can use.”

However, Brown says that while he sees the market moving towards purpose-built monohull vessels, semisubmersible drilling rates have trended lower and lower over the last few quarters, diluting one of the strongest arguments for purpose built intervention vessels: day rate cost.

“The key selling point of monohull vessels is that it’s cheaper than a semisubmersible,” he says. “So a semisub is costing about $500,000 per day as compared to your monohull vessel, which is about $250,000-$300,000 per day.”

Bosworth, however, says that that the substantially greater efficiency of the monohulls does counter this lowered rate.Brown points out that the decline in the semisubmersible day rate has contributed to the erosion of the market for intervention vessels. Also adding to the industry’s discomfort, he says, is the nullification of Total’s two-year, US$250 million contract with Aker Solutions for the Skandi Aker.

“If it had gone well, you would have seen some real positive indicators. Basically that asset, which was almost a flagship for this new breed of intervention vessels, is now not working,” Brown explains. “Over the last six months or so the market took a bit of a step back, and a lot of the positivity that was there has been eroded somewhat. That fuels my conservative outlook in terms of where this sector is for the next couple of years.”

Total canceled the contract in June. The Skandi Aker’s capacity utilization had only been 37% due downtime from repairs. In 2010, the year Skandi Aker was built, the 157m-long vessel was named “Ship of the Year” at the SMM Hamburg maritime convention. Capable of working in 3000m water depth, it was the first intervention vessel to be classified under DNV GL’s WELL-Notation, meaning it can take oil onboard.

Brown notes that the industry is particularly hesitant to choose companies without a proven track record of success.

“That gives those [experienced companies] a really big lead over new entrants in this sector, where I’ve heard a lot of people struggling to pick up some market share. They have an awful long way to go. So, while there are some positive fundamentals, it’s important to say those fundamentals are not addressable by everyone,” he says.

Gulf of Mexico

The Harkand Subsea, currently in use by Blue Ocean Technology. President Neil Crawford says that during the campaign, the company has increased its riserless intervention depth record twice: first to 6700ft and now 8200ft.Photo from Blue Ocean Technology. 

Neil Crawford, president of Blue Ocean Technology, also presented at DIF. Talking to OE, Crawford acknowledges the success of dedicated vessels in the North Sea, but warns against thinking that the issue is merely that of dedicated versus vessel of opportunity. Crawford points out that Blue Ocean is the only company doing riserless work in the ultra-deepwater (greater than 4000ft) Gulf of Mexico – and they are using vessels of opportunity. He says that using purpose-built vessels from the North Sea sector in any other waters might not be the best solution for every operator. Other regions might need specialized equipment.

“There’s a lot of focus on these big vessels coming out of Norway. They might be state-of-the-art for the North Sea, but not necessarily for the rest of the world. They are very capable, but [the vessel] is just your work platform – if it’s carrying anything you don’t need, you’re paying for it and not using it,” he says. “If you’re going out and doing IMR or ROV work, it’s a very expensive vessel at that point.” And in that instance, operators would pay for the systems that they do not need if they try to use an intervention vessel for tasks other than dedicated work.

Crawford says that the choice of vessel ultimately comes down to economics, but that intervention equipment should remain at the heart of the discussion.

“I’m not dismissing [purpose-built vessels]. It’s there to facilitate the delivery of the system onto the well,” he says. “Because you have a big vessel with a whole bunch of equipment on it, it doesn’t mean you can get more work done downhole. It’s all about that little tool string you run into the well.”

Beyond cost, there is availability to consider. Vessels of opportunity simply outnumber dedicated vessels, at least in today’s market.

“The real advantage is the number of vessels available to use,” says Helix Well Ops’ Bosworth of vessels of opportunity. “If you have low-frequency or single well jobs in emerging markets where there’s availability issues with the dedicated or life-of-field vessels then the vessel of opportunity is ideal.”

The life-of-field concept vessel is Helix Well Ops’ own. It attempts to combine positive aspects of both purpose-built and vessels of opportunity while remaining more economical for non-intervention activities than dedicated intervention vessels. The life-of-field vessel is a construction vessel with classed intervention equipment. Bosworth says that the intervention systems for the life-of-field concept are likely not going to be built on spec. However, the vessels already exist in the fleet.

Market outlook

Despite Brown’s conservative outlook, he still sees some positive indicators in the intervention market.

“The fundamentals of demand are really quite positive,” he says. “The operational base of subsea wells is increasing year-on-year. The industry is moving towards deeper and deeper water, and with drilling rigs as your alternative to using a monohull vessel being in relatively tight supply, there is still a good opportunity here if you can prove that you can do it.”

Click Here to see a video of Helix’s Grand Canyon vessel as it departed its Turkish shipyard for final fitment in Norway.