Awilco Offshore

Submersed in success

In recent years Awilco Offshore ASA has expanded rapidly, becoming a recognised name in the provision of semi-submersible drilling rigs for the mid-water drilling market.

Additionally, the business is an oil service company involved in drilling and accommodation services. Awilco Offshore was incorporated in January 2005, and the company was listed on the Oslo Stock Exchange in May 2005. Following this development, Awilco Offshore and Sinvest entered into an agreement to establish a jointly owned company, Premium Drilling, for commercial and operational management of its fleet of jack-up drilling rigs. The company is currently well established, and key personnel are in place.

In December 2005, Awilco Offshore entered into agreements to acquire a substantial part of the shares in OffRig Drilling ASA (formerly Offshore Rig Services ASA). This ownership increased through 2006, and in January 2007 a compulsory acquisition of the remaining outstanding shares was initiated, resulting in OffRig Drilling becoming a wholly owned subsidiary of Awilco Offshore. Today, the organisation has three jack-up drilling rigs and two accommodation units in operation, and a further five jack-up drilling rigs and three semisubmersible drilling rigs under construction at yards in Singapore and China, which are scheduled for delivery from 2007 through 2009. In addition, Awilco Offshore has two remaining options for the construction of semi-submersible drilling rigs.

Petter H. Tomren, CEO of Awilco Offshore’s semi submersible business, expands on its exciting history, and the reasons for its enormous growth in such a short timeframe: “The semi submersible part of the business was originally founded in 2005, based around the idea of building and developing a semi-submersible drilling rig fleet that was ideally suited to covering the large majority of the North Sea market, and its harsh operating environment. Following rapid initial growth the business was awarded its first letter of intent in early 2006 for the Skarv development in Norway with BP, after the market recognised the excellent potential of the rig design, and its suitability to such operations.

“In early 2006 Awilco Offshore ASA, took over around 40 per cent of Offrig Drilling, which only served to encourage further investment and expansion,” he continues. “It meant a great deal in terms of being able to finance the development of further new builds and equipment, and led to the decision to commence building a second rig of the same design. Following this, we have embarked on a further new-build programme to add more rigs to our fleet in the coming years in order to continue to expand. As a mark of how far the business has progressed, in March 2007 we were able to land a historic contract with StatoilHydro, which is one of the largest ever drilling contracts in Norway.”

When asked what he attributes the rapid growth of the business to, Tomren offers a number of reasons: “Primarily, it is to do with the rig design that we pursued, and the confidence of the originators of the business. Our plan was to target a niche market with a rig that perfectly suited the conditions of that operating area, and I think that this has been recognised by industry. Furthermore, having the backing of Awilco Offshore has meant that we have been able to take on commitments that would have otherwise been impossible. This is particularly true in the case of our rig-building programme, which has been phenomenal. So much so that we are the only company in the world operating all new-build drilling rigs within this sector.”

Awilco Offshore is dedicated to building and operating fit-for-purpose semi-submersible drilling rigs. The rigs in question are developed and designed as fully equipped harsh environment units that reach full DNV Drill and Well Intervention II Class. Operating in 750-metre water depths, they are capable of full HPHT conditions and have full rig outfitting that allows for the most optimal mechanical pipe handling system. The centre and main decks hold the rigs’ knuckle boom crane and mud system respectively. The former is designed to support the handling of materials on deck to reduce the main crane operations, which will have beneficial effects in harsh weather conditions.

The rigs’ 650-ton derrick drilling systems have an X-Y racker, with built in stand building facility and a racking capacity for 7000 metres of 5.5 DP. All of the company’s rigs have drilling equipment supplied by National Oilwell Varco, and provide excellent functions, such as auto drill, creep, BOP landing, limitless constant tension, and active heave compensation. Alongside drilling, the rigs have superior Christmas tree handling capabilities for offshore operations.

Tomren expands: “We chose the rig design in order to meet the specific needs of the particular niche that we wanted to operate in – what we refer to as the mid-water sector. This means that the first three of our rigs are capable of drilling in water depths up to 750 metres, and are ideally suited to the conditions and operating requirements of the North Sea market. They all have drilling capability up to DP3, and all of the latest drilling equipment and processes. Furthermore, each rig has a single cabin layout, meaning that every single member of crew on board has a single bed cabin, which of course is extremely good for attracting new personnel.”

With the fleet capabilities that Awilco Offshore has, it has been able to take on some significant contracts. Tomren comments: “We have recently signed a contract with Norsk Hydro for a project on the Troll field, which is actually now with StatoilHydro, following the recent merger. The first rig will be operational in the Troll field by the middle of 2009, and the second will commence about a year later. It is a firm eightyear contract, with options on eight-year, which is the first in Norway that has been for this duration of time. Taking into account that they have actually contracted two rigs, it is one of the biggest projects ever in Norway. As a company, if you look at the backlog of work that we have with potential customers, compared to the share value of the business, we have the biggest demand of all of the drilling contractors in the world. This is a key factor in the consistent generation of new business, and underlines the quality of tasks we complete.”

This increase in contracts requires an expansion in Awilco Offshore’s fleet, as Tomren recognises: “I think that it is important to highlight that within Awilco Offshore, we have eight high-spec jack-up drilling rigs under construction. Three have now been completed and three more will be completed next year. Awilco Offshore has a huge portfolio of contracts – nine out of 13 rigs now have contracts, which is excellent for the long-term view of the company. Of course, our reputation has enhanced to the point that the semisubmersibles have been contracted two years before they have even been completed. This is a very comfortable situation, and is indicative of the competence throughout every level of the company.

“We have two more options for new builds at the same yard that is now constructing our three first rigs,” he continues. “In addition, we have ordered a fourth drilling package for a further possible semi-submersible drilling rig. Our next step in developing new rigs will be to increase the size of the unit to allow us to drill in water depths up to 1500 metres. We are happy to remain in the middle depth market as the current nature of the industry means that there is a massive demand for the size of rigs that we offer – we really feel like the world is our oyster at the moment with these rigs. Although they are all currently operating in the Norway sector of the North Sea, we will certainly be looking outside of this market for the next new-build.”

Talking about current trends in the market, Tomren explains the challenge of employing trained, experienced personnel: “The biggest problem for the industry at present is finding the correct people. For example, there will be around 160 crew on each of the new-build semisubmersibles when they are in operation, which is a very large number of people. To help achieve this, we have extensive training programmes, which include using various sub-contractors such as National Oilwell, who provide us with a state-of-the-art training simulator. I think that this will be one of our main challenges moving forwards as we have a tremendous amount of people to hire and train in the coming years.”

Despite this, he is confident that there are further opportunities for Awilco Offshore: “Looking at all of the fundamentals of the industry, such as energy consumption, the demand for oil, and current oil prices, there are no indications that the high activity levels will change yet. Many oil companies are already contracting rigs as far forwards as 2011, and the backlog that they have for exploration drilling is tremendous.”

Since the inception of the business, Awilco Offshore has been bound by Norwegian law to demonstrate complete corporate responsibility in its operations. The company has a clear and open model to achieve high levels of efficiency, as well as a clear division of responsibility. Like all nations, Norway has its own code of practice, covering the necessary accounting, stock exchange, and security legislation applicable to Awilco Offshore’s corporate infrastructure. The company adheres to the ‘comply or explain’ principle, whereby it either complies with the recommendation, or explains any deviations annually in the annual report.

With regards to future development, Awilco Offshore has not finished its expansion, as indicated above: “We will continue to develop a new fleet of up-to-date, high-spec, very capablem equipment, to position ourselves as one of the major expanding international drilling contractors. We currently have a very good position in the North Sea, and most importantly, we have an excellent strategy for long-term growth, and want to build ourselves as an international drilling contractor. We have made a great start at this and now we believe that it can only get better,” Tomren concludes.

Through an open-business operating ethos, Awilco Offshore has become one of the most popular drilling rig suppliers in the offshore market. Since its inception in 2005, the company has expanded at a rapid rate and completed projects to a very high standard. Equally, Awilco Offshore’s flexibility and responsiveness within the market has encouraged investment in its fleet, with new structures being prepared at docks across the globe. As the challenges of the oil and gas industry continue to become more complex, the organisation is fully prepared to produce a new set of solutions for the future.

Awilco Offshore ASA

Services: Oil service company involved in drilling and accommodation services