Wednesday, September 6, 2000

FPSO to be upgraded to reduce roll

Petroleum Geo-Services ASA says that , after several weeks of discussions with the U.K. Health and Safety Executive and the Banff oil field partners, it has received approval to proceed with a vessel improvement plan for the Ramform Banff FPSO. The upgrade will significantly reduce the roll motions of the FPSO and allow it continue North Sea operations for the foreseeable future.


The Ramform Banff began producing Conoco's Banff field in 1999. A purpose-built, turret-moored vessel, the ship employs a unique wedge-shaped design. The double-hulled ship has a beam that equals 45% of the LOA. The turret is located forward of midships, allowing the ship to "weather-vane," or turn with the waves.

The modifications will reduce the vessel roll motion, both in storm and in more moderate sea states, by around 50%, improving the vessel's production and availability record. This upgrade, which is expected to cost less than $20 million, will require a short shipyard stay in the fourth quarter of 2000. The Ramform Banff is expected to be back in operation before year-end.

The upgrade will bring the motion characteristics of the Ramform Banff to the original design specifications and exceed all the necessary safety standards, says PGS chairman and CEO Reidar Michaelsen.

Preparation of the Banff oil field is now complete for the installation of the Floating Storage and Offloading (FSO) vessel, Nordic Apollo. replacing
the current offloading system which has proven unreliable in heavy sea states.The Nordic Apollo contract will be deferred until the return of the Ramform Banff to regular production duty.

While the Ramform Banff is in the shipyard, the two Banff field shuttle tankers will be utilized in the shuttle spot market. Over the past few months, part-time spot market utilization of these tankers has been successful, with a healthy market for such vessels. As a result of this and other actions, PGS expects the operational cost of the vessel to be minimized while it is out of production.

Can aging offshore fleet cope?
"The upturn in the offshore industry is beginning, bringing with it a demand for more high quality offshore vessels," said John Westwood of energy industry analysts Douglas-Westwood in the opening presentation to delegates at the Ship Design Conference 2000 in Aalesund, Norway .

Because of their highly specialized roles,offshore vessels generally represent a higher investment than many other vessel types. Over the past five years (measured by year of delivery) Douglas-Westwood analysis shows that annual expenditure on offshore vessels has grown from about $500 million to nearly $1.4 billion and a large part of this has been spent in Europe, in particular Norway.

Westwood noted: "There have been three distinct peaks in vessel deliveries; 1975, 1982 and 1998. The 1975 peak followed the first major oil price rise and the beginnings of North Sea oil production. The 1982 peak was associated with the large surge in offshore activity following the 1979 oil price rise. The 1998 peak, although it followed two years of rising oil prices, was probably also associated with the considerable growth in deepwater and subsea activity during that period."

"The result of the peaks in vessel deliveries." he said, "is that the average age of the total offshore vessel fleet is 20 years and nearly 30% of the fleet (over1,000 vessels) is more than 25 years old. One result is that much of the existing fleet probably has a fairly limited economic lifetime and is not well suited to operation in the future growth sectors of the industry such as deepwater and subsea operations."

"The next five years," he predicted, "will probably see firm oil and gas prices. As activity moves into deeper waters and the existing fleet ages, there is likely to be an increased requirement for new offshore vessels. The competition to build them will intensify and the concentration of European yards on special vessels will be even greater. Globalization offers great opportunities for European companies, but great threats for European jobs. In an increasingly global marketplace cost effective designs carrying recognized brand names will be a key to continuing success."

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