More about Offshore drilling .....

The present offshore drilling industry is involved in an unprecedented construction and drilling boom. Hundreds of millions of dollars are being spent to capture the much-needed energy supplies and offshore drilling activities around the world have never slowdown. The technology for drilling and producing in deeper waters and in more hostile environments have been rapidly and continuously expanding with better drilling tools and interphase software technology to enable safer and more productive when carrying out drilling and exploration.

With the advancement in technology, these factors have created an acute shortage of trained and qualified personnel to operate the rigs now under construction by various shipyards over the world. 

Offshore mobile drilling units as we know them today contained alot of sophisticated machineries for the running or drilling into the deep. However, in the old days, original units were simply land rigs taken into shallow waters and placed on a structure for drilling. The same drilling techniques that had been developed on land were used on the first offshore rigs. These techniques worked for some time, but the need to drill in deeper waters created a new type of offshore structural design. And along with the new engineering concepts came the new breed of drilling rigs which we see today.

Following offshore market trends, we find that there are basic types of offshore mobile drilling units: the submersible, the jack-up, the semisubmersible, and the drillship. 

The early breed of jack-ups was primarily designed to operate in the U.S. Gulf of Mexico area in water depths up to 200 feet. Wave heights in the range of 20 to 30 feet with winds up to 75 mph were considered as design criteria for these units. In most cases, in the event of a pending hurricane, the rigs were withdrawn

to sheltered areas. Today's jack-ups, however, are being used in international waters in a range of environmental conditions that many years ago were considered to be unrealistic. For example, a rig designed for 250-350 feet of water will have to meet the following range of criteria:

a. U.S. Gulf Coast- 50foot wave, 125 mph wind, minimal current.

b. North Sea- 75 foot wave, 115 mph wind, 1 to 2 knot current.

c. Southeast Asia- 30 foot wave, 100 mph wind, minimal current. 

As the water depth increases, the criteria rise accordingly and for 400 foot water depths the range becomes:

a. U.S. GulfCoast- 65 foot wave, 125 mph wind, 1 to 11/2knot current.

b. North Sea- 90 foot wave, 125 mph wind, 2 to 21/2knot current.

c. Southeast Asia- 50 foot wave, 115 mph wind, 1/2 to 1 knot current. 

http://kimwhye.blogspot.sg/2010/10/insights-of-jack-up-drilling-rig.html

Semi-submersibles permit drilling to be carried out in very deep waters and they are held on location either by a conventional mooring system or by dynamic positioning thrusters installed at the bottom of the floating pontoons. The conventional mooring system usually consists of 8 anchors placed in a spread pattern and connected to the hull by chain or wire rope, sometimes even a combination of both. The dynamic positioning method is an evolution of the ship sonar system whereby a signal is sent out from the floating vessel to transducers set out on the ocean floor. Dynamic positioning becomes a greater necessity as the water depth increases and is generally considered necessary in water depths beyond 1,000 feet. However, a semi-submersible in the past been contracted for 1,500 foot water depths using the anchor and chain method. Much of the necessary chain will be carried on supply vessels. Nowadays, semi-sub have enough capacity to carry such additional variable load without having to depend on supply vessels. 

Because of the submerged maps of the semisubmersible, rolling and pitching is of a low magnitude, The motion that causes problems for the semisubmersible is heave, or the vertical motion. Because of forces on the drill string when the vessel is heaving, the semisubmersible with a low heave response is considered to be the most suitable. Heave is generated in response to exposed waterplane and is expressed as   T =  2π/√(gt/D)   where T = time in seconds; t = tons per foot immersion; D =displacement in tons. 

Therefore, the smaller the waterplane area, or 't', the lower the heave response. This is achieved in the semisubmersible by submerging the lower hulls ( pontoon ) and floating at the column or caisson level. With the loss of waterplane area to reduce heave response, a reduction in stability follows. Designer must reach a compromise between acceptable heave response and adequate stability. There are, of course, other methods of reducing heave induced forces on drill string. 

In selecting a semisubmersible, it is therefore necessary to consider the following criteria:

a. Water depth.

b. Drilling depth requirement.

c. Environmental criteria.

d. Motion characteristics.

e. Consumables capacity.

f. .Mobility

http://kimwhye.blogspot.sg/2012/08/more-on-ultra-deepwater-drilling-semi.html

Drillships

The last type of mobile drilling unit is the drillship. As the name implies, it is simply a shipshape vessel used for drilling purposes. Earlier drillships were converted vessels, either barges, ore carriers, tankers, or supply vessels. However, although conversions are still being done, there are now many advanced drillships being designed purely for drilling, such as the earlier ones Glomar Challenger or the Offshore Discoverer. Drillships are the most mobile of all drilling units, but they are the least productive. The very configuration that permits mobility results in very bad drilling capabilities. Drillships are being used extensively in the U.S. Gulf Coast to bridge the gap between the jack-up and the semisubmersible.

However, it is the drillship that has drilled in the deepest water, over 1,000 feet ( now 10 times the depth capability). As discussed earlier, heave is the major problem when using a floating vessel. The drillship, because of its surface contact with the sea, develops very large heave response compared to the semisubmersible. It is possible, by means of stabilizing tanks and other methods, to reduce roll on drills hips but heave cannot be reduced. A subsequent increase in "rig downtime" or "lost" time occurs. Because of this there is a bigger demand for the use of compensation devices.

Mooring for drillships is very similar to the methods previously discussed for semisubmersibles. However, there is one additional system that has been developed on a drillship-the "Turret" system. 

http://kimwhye.blogspot.sg/2012/08/offshore-drillship-design-and-building.html

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Drilling Operation Guide 

Drilling Equipment and Operations 

Marine Engineering Knowledge 

China shipbuilders yet to recover from setback while singapore yards still in good shape

With the last few years of shipbuilding and global economy downturn, 2013 we see the global economy with mild recovery but the shipbuilding industry still set with some China big players facing severe credit crunch and some are well-established with strong fundamental chinese shipbuilders. Cosco's share price has plunged 28 per cent to 74 cents while Yangzijiang was down 25.4 per cent to 85 cents as of this month, while they contended with the shipbuilding downturn in China and now the credit squeeze in the mainland banking system.

Going by the gloomy forecasts from analysts on the sector, these Chinese shipbuilders' fortunes may not change for the better any time soon ( while I hold some shares of Cosco two years ago, seems likely it will not be any sooner to see sign of "ROI" with the small sum being set aside to this counter.. . :(   

One long, dark shadow is being cast by another fellow shipbuilder Hong Kong-listed China Rongsheng - once billed as the biggest shipbuilder in the world in terms of tonnage of orders on hand - which faces the grim prospect of insolvency. It has gotten workers to take "holidays" and even had to borrow money from its founder to stave off a cash crunch.

RS also had to contend with laid-off workers who formed a blockade outside the company's Nantong shipyard over a wage dispute, even as it tried to fend off other problems such as a lack of orders this year. Its woeful tale provides a cautionary lesson for investors on the problems plaguing China shipbuilders. China Rongsheng Heavy Industries Group, China's largest private shipbuilder, appealed for financial help from the Chinese government and big shareholders on Friday after cutting its workforce and delaying payments to suppliers.

Analysts said the company could be the biggest casualty of a local shipbuilding industry suffering from overcapacity and shrinking orders amid a global shipping downturn. New ship orders for Chinese builders fell by about half last year.

Hours after China Rongsheng made its appeal in a filing to the Hong Kong stock exchange, where the company is listed, Beijing vowed to bring about the orderly closure of some factories in industries plagued by overcapacity. The statement by the State Council, or cabinet, laid out broad plans to ensure banks support the kind of economic rebalancing Beijing wants as it looks to focus more on high-end manufacturing. It did not mention any specific industries or companies and there was no suggestion it was referring to Rongsheng.

RS said it was expecting a net loss for the six months that ended June 30 from a year earlier, according to the filing. The company reported a net loss of 572.6 million yuan ($93.47 million) in 2012, its worst-ever, despite getting government subsidies of 1.27 billion yuan in that year, its latest annual report shows. It's shares plunged 16 percent to a record low in heavy turnover on Friday, leaving its market capitalisation at just under $1 billion.

Some Investment Research think that Cosco with its large debt burden will be vulnerable. The group's net gearing climbed to 131 per cent as at the end of the first quarter from just 10 per cent at the end of 2010. Cosco's existing $3.4 billion debt would need to be refinanced within the next 12 months. The yard's  free cash flow is also likely to remain negative for the next few years, due to its low net profit margin and increasingly back-end loaded contracts in its order book..

However, one analyst believes that the stress on the Chinese shipbuilding industry from the slowdown in vessel orders may not affect all shipbuilders in the same way. On the flipside, signs of instability at a yard can become a self-fulfilling prophecy, as shipowners withhold progress payments if there is concern that the yard cannot complete the order. As of the first quarter, Yangzijiang's order book was US$3.3 billion, 75 per cent of which is in container vessels. In our view, Yangzijiang's ability to produce high quality, large container vessels and a strong balance sheet with 11 billion yuan in new cash and financial assets makes it a long-term winner in the shipbuilding industry.

By contrast, another Chinese shipbuilder, Singapore-listed Yangzijiang Shipbuilding (Holdings) Ltd, has secured total orders of $1 billion in the first half, Barclays said.

While the Chinese shipbuilding industry faced "unprecedented challenges", China Rongsheng's board was confident management could ease pressure on working capital in the near future and maintain normal operations, the company said in the filing.

The Chinese government has been trying to support the domestic shipping industry since the 2008 financial crisis, and local media reports said this week Beijing was considering policies to revive the shipbuilding business.

The holding orders of Chinese shipyards dropped 23 percent in the first five months of this year compared with a year earlier, according to the China Association of the National Shipbuilding Industry. New orders dropped to a seven-year low in 2012. ($1=6.1258 yuan)

Following the setting up of YOEPL, together with one of our wholly owned subsidiaries, Jiangsu Yangzijiang 

Shipbuilding Co. Ltd (“Jiangsu Yangzijiang”), another new subsidiary named Jiangsu Yangzijiang Offshore Engineering Co., Ltd (“JYOEC”) was set up in Taicang.  On 3 December 2012, JYOEC secured its maiden offshore contract – a Jackup Drilling Rig worth US$170 million. 

Some of YZJ other recent ventures that extend on shipbuilding capabilities include steel fabrication for building facades of petrochemical plants, energy equipment manufacturing as well as other non-shipbuilding activities. 

Beyond shipbuilding and its related activities, they have developed supplementary income streams from conservatively managed businesses such as low-risk financial investments. They also leveraged on strong balance sheet to assist ship owners in ship finance and lease vessels for income. 

YZJ currently manage more than Rmb 11 billion of financial assets that are over and above its Rmb 2 billion cash reserve, which is held for working capital, expansion and dividend payment needs. 

Having supplementary income streams puts them in the favorable position of being able to be selective on shipbuilding contracts during downturns. That means they need not enter contracts on compromised terms and conditions. They expect the shipbuilding environment to remain difficult in 2013 and intend to deliver 42 vessels in 2013, which is lower than the 51 vessels done in 2012. 

The poor shipbuilding market has proven to be an opportunity for YZJ to become more client-oriented and competitive. They will focus on developing vessels that meet ship-owners’ needs and focus on large vessels, for which there is greater demand.  Even though faced with stiff competition as many other shipyards are likewise trying to enter this sector to mitigate the shipbuilding downturn, they will not easily take orders with unfavorable terms just to secure contracts. 

Rather, they intend to secure offshore orders selectively, and work towards a good track record of timely and successful deliveries. During the downturn, they will seize opportunities to generate additional income streams through joint ventures with established players in low-risk business sectors that are synergistic with their Group’s development. 

OIL rig-building yards in China may offer lower prices and more attractive financing, but Keppel Fels remains unfazed by talk of keener competition and tighter margins. The world’s largest rig-builder has its own competitive edge – on-time delivery and costs that are kept within budget.

Keppel Fels told The Straits Times: “Look at our orders. The Chinese story has been there for at least two years now, but today, we’re still getting our B Class orders. This year alone, when the Chinese have been playing in full swing, we’ve already got eight jack-ups. ”

This year, Keppel Fels is delivering a record 20 rigs, well over the previous peak of 13 seen in 2009. http://kimwhye.blogspot.sg/2013/02/keppel-handover-first-few-of-twenty.html

Our Tuas yard was abuzz with activity during a recent visit by The Straits Times, with workers clocking overtime hours and the building docks fully occupied. This amid reports of widespread job layoffs at Chinese shipyards even as they diversify into rig-building to offset their ship order slump. There has also been the recent credit crunch on the mainland.

The B Class is Keppel’s signature rig and is its most popular design. Since 2010, its B Class rigs have accounted for about 45 per cent of the total number ordered among rigs of its class globally. Developed by its technology arm and launched in 2000, the rig is able to operate in water depths of up to 120m and drill to depths of 9,000m.
http://kimwhye.blogspot.sg/2013/04/the-61st-b-class-jackup-ordered-since.html

We just delivered its 45th B Class rig recently – a fitting milestone given that this year is parent company The rig was delivered to Arabian Drilling Company (ADC) 14 days ahead of schedule,  on budget and with a perfect safety record. Keppel FELS was awarded an early delivery bonus of US$210,000. Named ArabDrill 50 at a ceremony yesterday, the rig will be chartered to Saudi Aramco for operations in offshore Saudi Arabia. The innovative and cost-effective KFELS B Class jackup rig has proven to be the trusted, reliable workhorse of the industry, and has performed excellently in major offshore exploration and development programmes in various locations worldwide. It has been employed by some 20 international drilling operators in over 15 countries. With usage rates calculated on a daily basis, and costing about US$150,000 to US$190,000 a day, having a more efficient rig can result in cost savings of several million dollars per drilling project. This could amount to many more millions of dollars, if one considers that the lifespan of a rig is typically at least 20 years.

http://kimwhye.blogspot.sg/2010/10/insights-of-jack-up-drilling-rig.html
http://kimwhye.blogspot.sg/2011/09/more-on-drilling-jack-up-and-some-of.html

Listing 2013 MODU Construction