Robert E. Rose
Diamond Offshore Drilling Inc.
Houston
Worldwide mobile offshore drilling unit (MODU) supply and demand charts are often based on the unchallenged assumption that rigs have a life expectancy of 20 25 years, after which time they somehow automatically become obsolete and are (or should be) removed from service.
Implicit in this assumption is the notion that older rigs (generally described as those built prior to 1980) do not have the experienced crews, safety and environmental protection equipment, and efficiency upgrades that operators need today. This inaccurate oversimplification is a serious disservice to the oil industry.
The fact is that well maintained, competitively upgraded, older mobile offshore drilling units can compete effectively with, and in some cases exceed the performance of, newer rigs of similar design.
Many industry forecasters use a theoretical offshore rig life expectancy of 2.5 years, but this number may be inaccurate if the rig is continuously maintained and upgraded with new technology.
Newer rigs are not necessarily more efficient than older rigs that have added recent technology or use more experienced crews. Additionally, newer rigs do not necessarily have better utilization rates or earn greater day rates than upgraded older rigs. Industry statistics indicate that older equipment can be as safe, as environmentally protective, and as operationally efficient as newer units.
It is a mistake to give the impression that rig attrition, safety, efficiency, or environmental performance is determined solely by time. Age should not be confused with quality.
Older rigs that have been properly maintained and upgraded compete in all respects with younger, similarly equipped units.
To understand better the factors contributing to rig life and, eventually, to attrition, it is helpful to analyze those rigs that have been removed from service. One must also consider what keeps the older units active.
OPERATING LIFE
The offshore drilling industry began in the mid-1950s, but the first real spurt of rig building activity was in the mid to late 1960s. These earlier rigs were, in many respects, prototypes for today's MODU designs. Many of these units retired after 20 25 years; however, the retirement of most of these rigs was more a function of their basic first generation design and not age.
The drilling industry tried many different concepts and designs in its early years. However, the basic designs, which are still competitive today, were not developed until the early 1970s.
Certain offshore drilling rigs, because of their basic design capabilities and maintenance history, can have an operating life significantly greater than their depreciable life. This extended life results from modifications that enhance operating capabilities at a cost substantially, less than that for newly constructed rigs with comparable capabilities.
If a basic rig design remains technically competitive, the other important criteria for long term competitive service is maintenance history.
All rigs should have a program for monitoring the structural integrity and condition of such items as critical connections, hull and stiffeners, piping, and electrical wiring. The stiffeners, hull, and steel piping can have almost infinite life if they are properly painted, coated, or protected from wear and corrosion.
Steel wastage is easily repaired by cropping out and replacing affected areas. Special care must be taken during a rig's regularly scheduled surveys to inspect these items properly and correct any discrepancies promptly.
In a formal preventive maintenance program, critical items are regularly monitored, and needed repairs become routine. As new technology becomes available (for example, top drives and cascading mud systems), upgrades can be retrofitted to maintain a rig's competitive position. If these operating practices are followed, the rig is effectively in a perpetual state of renewal or upgrade.
JACK UPS
The early jack ups, designed for Gulf of Mexico use, were a mixture of independent-leg and mat type rigs. Because of certain operational limitations of mat-type rigs, however, the worldwide industry standard became the popular independent leg slot unit. The cantilever feature, developed in the late 1970s, greatly enhanced the operating capability and flexibility of the basic design.
The earlier independent-leg slot rigs are easily retrofitted with a cantilever. Many older rigs have been upgraded with only modest expenditures, allowing them to continue to compete in all respects with newer units.
Diamond Offshore Drilling Inc. has developed several criteria, quite distinct from age, to determine a rig's potential for extended service.
For example, to be considered for upgrading, a jack up must meet the following basic criteria:
- Have independent legs
- Be capable of having a cantilever installed
- Be capable of having a top drive system
- Be able to operate in 250 ft of water.
Using these criteria, Diamond Offshore has converted three of its 300 ft, independent leg jack ups to cantilevered rigs and equipped them with top drive systems, making these rigs competitive with similarly equipped newer rigs.
All mat designs and all independent leg units that precede the Marathon LeTourneau Class 53 are excluded as upgrade candidates by Diamond Offshore. Such rigs, because of basic design shortcomings, have a shorter life expectancy than upgradeable units.
The drilling industry's attrition statistics support this position. Offshore Data Services reports 105 jack ups have left the active drilling fleet since 1981 (Table 1).
Age played no part in the 18 jack ups lost to accidents during the past 12 years. These rigs had an average age of only 8.4 years.
Of the 87 jack ups converted or retired, 23 were noncompetitive (that is, they did not participate in bidding for drilling jobs). Fifteen of these were rigs owned by the former Soviet Union, Maraven SA, or China. Eight were workover units.
Subtracting these rigs leaves 36 retirements and 28 conversions. Studying these 64 units helps one better understand the types of rigs that have been removed from active drilling service.
Of the 64 competitive rigs removed from active drilling service since 1981, not one would qualify for an upgrade using the aforementioned criteria. One rig (a Marathon LeTourneau 116 C built in 1982) was converted for another use. Of the 63 remaining rigs, 54 were mat designs or independent leg rigs rated for less than 250 ft of water. All 9 independent-leg rigs with water depth capabilities greater than 250 ft had first generation jacking systems and, therefore, could not be competitively upgraded, according to the criteria.
SEMISUBMERSIBLES
To be considered for an upgrade, a semisubmersible should have suitable deck area and should permit variable load enhancement. The attrition statistics support these requirements for upgrading. Offshore Data Services reports that 37 semisubmersibles left the active drilling fleet since 1981 (Table 2).
Again, the accidents were not age related; the two rigs lost had an average age of 5.5 years. Six of the nine converted rigs are now used as mobile offshore production units, two are accommodations conversions, and one is a work ship.
Of the 26 retired semisubmersibles, all but one failed to meet the aforementioned basic design criteria for upgrading because of their prototype designs.
The requirements for semisubmersibles have grown to include deeper water capability and greater variable-load capacity. Many, but not all, earlier hull designs allow for cost effective modifications, which efficiently increase both the variable load and water depth capability of the semisubmersible.
UTILIZATION RATES
A comparison of the industry's Gulf of Mexico average utilization and day rates to those of the upgraded units in the Diamond Offshore fleet in the same area illustrates the operators' acceptance of the enhanced rigs.
The comparison included two semisubmersibles, Ocean New Era (built in 1974, 1,500 ft water depth, top drive system) and Ocean Rover (built in 1973, 2,000 ft water depth, top drive system, 15,000 psi blowout preventers), and three jack ups, Ocean King (built in 1973, 300 ft water depth, independent leg cantilever, top drive system), Ocean Summit (built in 1972, 300 ft water depth, independent leg cantilever, side drive system), and Ocean Nugget (built in 1976, 300 ft water depth, independent leg cantilever, side drive system).
In the 3 year period since the enhancement of these rigs, their performance compares very favorably with the statistics for the whole industry (Table 3). The enhanced rigs have had better utilization rates and the same day rates as newer units. Additionally, a large number of major and independent operators have contracted these enhanced rigs.
SAFETY AWARDS
During the last few years, half of the U.S. Minerals Management Service (MMS) safety awards for excellence (SAFE) have been given to rigs built before 1975 (Table 4).
The SAFE recognition is a field oriented program in which inspectors from each of the four MMS regions in the Gulf of Mexico nominate candidates in drilling and production categories based on safety records and environmental performance. The nominees are reviewed by the MMS district supervisors, and awards are considered semi-annually. If no candidate meets the MMS criteria, the SAFE award is not issued for the period.
From 1989 to 1993, there have been 36 opportunities (four regions, twice each year for 4/2 years) for an MMS SAFE award in the drilling category in the Gulf of Mexico. During this period, the MMS gave the SAFE recognition to only eight rigs. These eight rigs had an average age of almost 13 years, and half were built prior to 1975.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
