Idling Offshore Assets and Equipment with Less Disruption and Cost

May 4, 2020

Idling Offshore Assets and Equipment with Less Disruption and Cost

by Jan Verdaasdonk, Technical Business Consultant, RSC Bio Solutions

The offshore oil and gas industry has been slowly recovering from the last downturn in 2014 that savaged the industry. The current COVID-19 crisis and related decrease in global demand for crude, combined with the lack of cooperation between the major producers to limit production, has resulted in an unprecedented decline in oil prices.

How do operators respond to this crisis? How long is this downturn going to last? What is the best strategy to get through this extremely difficult period? These are all questions that undoubtedly go through the minds of managers working in the offshore industry.

A consequence of low oil prices will be offshore rigs taken out of service at the expiry or cancellation of current contracts. With virtually no new work available, a suitable asset strategy needs to be implemented to weather this storm. There are three scenarios for rigs coming of contract: scrapping, cold stacking and warm stacking.

Scrapping is the most likely scenario for old outdated rigs, with limited remaining economic lifetimes. This scenario will cost the least in the long run, but obviously reduces your number of assets and capabilities long term and will require cash outlay in the short term. With the current closure of many country borders, it can be difficult to secure a scrapping slot at an approved scrapping yard and securing transport from the current operational area to the scrapping location will dependent on availability.

Warm Stacking, the common short-term solution for rigs between jobs, can also be used if the downturn is expected to be short to medium term. The ongoing operational cost of the rig will be higher. In the range of USD$40,000 to 70,000 per day depending on the rig and its location. Class requirements for surveys will continue as per normal.

Cold stacking is used for rigs that are still valuable to keep within the company, but there is no near-term contract available for them. The cost to stack the rig is many millions and the same to re-activate or return to service. The upside is that the daily operational cost goes down significantly to USD$3,000-10,000 per day. To cold stack rigs properly, a lot of preservation work needs to be performed as the rigs are effectively shut down – with the exception of some emergency equipment like firefighting and bilge pumps. Equipment needs to be properly protected against corrosion and seizing, so water-based fluids will be drained and replaced with inhibitors, lubricants need to be checked for longevity and tendency to develop acids over time. Upon re-activation the inhibiters need to be replaced with the correct viscosity fluids and the lubricants need to be tested for operational suitability. Class requirements for survey will be changed depending on stacking methodology and class society.

RSC Bio can help you Solve Smarter with the appropriate choices of lubricants and greases to protect your equipment during stacking in a cost-efficient way, with improved reactivation costs. RSC Bio Solutions products are:

Learn More

Back to Discover