ROY MacGregor, of Global Energy Group, has just come through an excellent 2009, especially with regard to inspection, repair and maintenance of drilling rigs.
However, like Captain Ken Gray, of Cromarty Firth Port Authority, he is worried about the implications for the UK’s offshore industry of having so much North Sea drilling tonnage lying idle.
He fears that, while Global has done very nicely thanks to the 2009 IRM and overhaul windfall, the long-term future for some rigs in the North Sea must be in doubt.
“Rig investment like this? It has not happened in 20 years. Why now? That worries me for the North Sea. It’s good for Global in the short term, but it concerns me longer term.”
MacGregor warned that the real decision-making regarding whether to drill or not was gradually drifting back towards Houston, even though it was mostly UK exploration and production minnows that were hit hard by the credit crunch and therefore had little or no money to spend.
He also warned that the currently large sums of money being invested in upgrading some of the drilling tonnage currently lying idle was historically uncharacteristic of the industry and wondered if some rigs were being quietly prepared for work elsewhere in the world, never to return.
“As a result of this, we on the Cromarty Firth will have to take a wider view … we’re in a global market and must behave accordingly, even from a small place like this. It’s crucial,” MacGregor told Energy.
Indeed, Global has been doing precisely that.
“We have our JV in Norway that’s going very well; we have a JV in Malta and it covers that region very well, plus we’ve just signed a JV with CNIC in Cameroon and we’re looking at Namibia, trying to cover the West African coast.
“Cameroon deals with the Gulf of Guinea sector … it’s a user-friendly country, too. Plus we have an office in Ghana because of Tullow drilling there.
“The Namibian interest is because of Angola. The African coast is so big that you cannot conceive it from here.”
Rig work isn’t the only thing going for Global on the firth. The area’s largest company is also heavily engaged in pipeline-related work, currently mostly international.
“In our pipeline business, which is a JV with CRC Evans Pipeline International, we’re doing a job here for Acergy which is for the Deep Panuke development offshore Nova Scotia. We’re doing all the work here, then shipping it and then doing the lay for Acergy.
“We’ve also just picked up a (subsea-related) contract with ExxonMobil where the procedures alone are going to be worth £400,000. We’ve had a team at Kawasaki in Japan for ExxonMobil which is looking at welding techniques for a particular type of sour gas. Maybe there’s a trend there. Because the global supply chain has been overheated, especially with more and more subsea developments going to the subsea contractors, operators are beginning to take more of a direct interest again and are taking some stuff back in-house.
“Consider Shell, for example. It has, through our Isleburn fabrication division, allocated all its subsea work for the next five years. That was not given to a subsea contractor.”
But while Global has prospered, MacGregor said other local firms were faring less well.
“I do feel again for the subsea business on the firth. Look around … RBG is empty, we’re struggling in Isleburn, though we’ve managed to keep going through this year because 40% of our work is being exported.
“But even with countries to which we’re exporting … Brazil, Nigeria, Gabon, even Ghana … they are increasingly taking capability in-country. That’s 80-90% of the work, so it’s important to internationalise the business.”
As for renewables, like others in the area, MacGregor wants a decision out of KBR on Nigg, not least because the group’s Isleburn business leases space there.
“If KBR was to go back into Nigg, the process could take a couple of years, so we have breathing space in terms of setting up a new major fabrication facility (at Invergordon) for subsea and small-scale renewables.”
Aside from the increasingly commoditised wind side of renewables, MacGregor remains worried about wave and tidal technologies progress, with little prospect of a decent contracts flow for perhaps several years.
“We’re building another prototype just now … this one is for OPT. We’ve so far built five wave and two tidal machines … all prototypes. I see that, for the next five to 10 years, we’re likely to be largely still at the prototype phase. Its expensive compared to offshore wind just now … four or five times the cost (per MW equivalent).
“That said, I’m really optimistic. See the investment I’ve got here on the firth; it’s huge … that’s how optimistic I am. But I would just like to see the money supply relaxing a little; oh, and an easing of North Sea taxation, too.”