Marine salvage offers lessons in cost reduction to platform owners
Whether a sunken ship or an oil rig, there are only so many ways to lift an object weighing thousands of tons from the seafloor; which is why the oil and gas industry can look to marine salvage for lessons on cost reduction, according to someone who has had an inside view of both sectors.
Related Articles
In each case “there is a manmade asset that needs to be removed. The asset has an owner or an operator, and that owner has an issue: he needs to get rid of that thing,” Boskalis Offshore decommissioning chief Gerard Lubbinge said at the recent DecomWorld conference in Malaysia.
“It could be an environmental hazard. It could be a hazard to navigation. It could be a hazard to fishing. But it is a hazard, so something needs to be done with it. And unfortunately it has little value in the end… So what do you do? You hire a contractor to get them to remove the asset; and he needs to do that in a very safe manner. And that’s common for both decommissioning and salvage.”
Common testing ground
One of Boskalis’ biggest ongoing projects is in the southern portion of the Northern Sea, where it and joint-venture partner Scaldis are preparing the decommissioning of the Thames Alpha Complex of three platforms: consisting of a production platform, wellhead platform and riser platform. The bridge-linked platforms weigh a combined 8,929 tons. The production platform, the tallest and heaviest of the three, rises to 47m from lowest astronomical tide.
About 50 miles to the south, Boskalis recently completed a different kind of project: the removal of the roughly 13,000-ton Baltic Ace from its position near the North Hinder Junction, a busy crossing point for vessels moving between Belgium and the Netherlands on one side and the UK on the other. The Baltic Ace had been lying on its side at a depth of 35 meters, and only 10-12m from the surface, since colliding with a container ship in 2012.
In both cases, said Lubbinge, the objects were not designed for removal. In the ship’s case, it was “definitely not designed to become a wreck”. As for oil and gas platforms, those built in the past one or two decades may have been built with decommissioning in mind, “but certainly the assets we are taking away from the ‘70s, from the ‘80s – they have not been designed to be removed”.
The Thames Alpha produced first oil in October 1986.
Unlike decommissioning, which can be delayed for a myriad of reasons, wreck removals are time-limited operations. Lubbinge commented: “The status of the wreck is going to deteriorate, certainly in [cases of] harsh conditions; the North Sea wreck could be totally different six months from now because of currents, because of storms, because of other things”.
Public opinion adds to the urgency of marine-salvage operations. Major incidents – such as the grounding of the Costa Concordia off the coast of southern Italy in 2012 or the sinking of the Russian nuclear submarine Kursk – which Boskalis salvaged in 2001 – tend to attract media attention as soon as they occur. Platform removals only cause headlines in rare cases; Lubbinge gave the example of Shell’s Brent Spar, where a plan to dispose of the rig in deep waters drew the ire of environmental campaigners.
Turned into an advantage
The high level of uncertainty in marine salvage is also a source of strength, according to Lubbinge, especially when it comes to contractor-client relationships. Marine salvage is dominated by a small number of insurance firms with which Boskalis claims to have developed close working relationships.
“In decommissioning you must guarantee your performance one way or the other, whereas on the salvaging side we have our due-care principle. We know best but we do not guarantee a result. One of the key drivers [in salvage] is reputation. If you don’t perform, you will not get the next job,” he said.
“On the contractual side, it takes a few hours to negotiate a standard salvage contract. It’s well tested over the years and the people we work with understand the difference between risk, reward, responsibilities,” he said.
From an operational standpoint, operators of sunken vessels are usually able to produce reliable information, he said, whereas getting one’s hands on accurate information can prove more difficult in the case of decades-old platforms that have undergone multiple ownership changes.
Owners of oil and gas platforms slated for decommissioning would benefit from investing in long-term relationships with contractors, Lubbinge suggested.
A first step, he said, would be to accept that decommissioning is nothing like installation: “There are inherent risks related to this job and that needs to be discussed; that needs to be balanced; and that needs to be shared [between operators and contractors] in a proper way.”
Early planning would also help: “I hear a lot of talk about what needs to be done [in terms of decommissioning… [but] there is nobody who says: ‘I have 20 to 30 to 40 platforms which I’m going to decommission in the next five to 10 years’.”
On a positive note, he applauded the development by Oil & Gas UK subsidiary LOGIC of standard contracts for use between operators and contractors.
The more collaboration the better, he said, adding that understanding a contractor’s concerns “definitely helps in terms of getting a better result, a more predictable result and a cheaper result”.