Part 2 of 2: Asset Preservation, Re-Activation & Stacking

Since 1998, Athens Group has worked on over 300 high specification drilling and production projects worldwide, for major oil companies, drilling contractors and shipyards. During this period of time we have been part of two major oil price cycles. In 1998 the OPEC barrel of oil price was $12.28. Today the barrel is $26.25. In between, oil hit highs of $94.10 and $109.45. Our most dramatic fall is the one we are living through today.

Athens Group has supported our clients through these highs and lows; both of which have their unique challenges. Today’s challenges center on “stacking” of assets. Athens Group uses its industry leading Proven PracticesSM and SmartListSM tools to reduce the risk of asset preservation.

This two-part series on asset preservation will first look at the terminology, economics and risks of stacking. The second part will focus on the Class Society view of “idle time” and how to ensure a smooth re-activation. If you did not initially develop a fleet/asset preservation plan, at this point you will need to develop a re-activation plan for your asset. If this is a “new” asset to your fleet, acquired through an acquisition, you will need to start with a complete vessel survey in order to develop the re-activation plan.

Part 2: What do the Class Societies say about idle time?

Idle time, stacking, preservation and laid up are not terms universally used by all members of the International Association of Classification Societies[1]. What is universal to the IACS members is the class renewal; sometimes called special survey; done on a periodic; usually annual; basis. When one of these surveys is not completed by its due date, class is usually suspended. If your MODU has been stacked and is not reactivated by the survey due date you will end up having the entire class redone by your class society. Based on initial commissioning costs for your MODU, this “re-class” is a complete re-commissioning last done at the shipyard.

Based on industry best practices and basic HSE processes, if your asset is not “classed” but self-insured, you will need to re-commission all vessel and drilling/production equipment in order to re-activate. Based on our industry experience, your stacked MODU re-commissioning will cost 1.5 to 3 times the original shipyard commissioning cost.

Ready for Re-activation?

Based on the preservation/re-activation risks we addressed in Part 1 of this series, these are the steps you will need to take in order to re-activate your MODU:

Step #1: Review your fleet preservation plan that includes:

  1. Regulatory regime governing the asset’s lay-up location, with required standards and re-activation notifications;
  2. Class Society re-activation notification procedures and surveys;
  3. Records on all completed OEM recommended maintenance actions; and
  4. Review all fleet re-activation timeline risks with mitigation plans as required.

Step #2: Review the individual asset preservation status prior to re-activation that includes:

  1. Environmental and Safety integrity survey of the laid-up MODU;
  2. Lessons learned from similar laid-up MODUs that apply to yours;
  3. Specific class society work done during the laid-up period of this MODU;
  4. Regulatory requirements specific to your MODU, its laid-up geographic location, its re-activation geographic location and the location of its first drilling campaign after re-activation; and
  5. Specific MODU OEM recommendations for re-activation.

Step #3: Review the as laid-up condition assessment of the asset and all equipment that includes:

  1. Updated Asset Registry including current preserved status of all systems (i.e. power management, vessel management, dynamic positioning, jacking, drilling), subsystems (i.e. fire and gas, subsea, cranes) and individual pieces of equipment (i.e. drawworks, top drive, BOP);
  2. Review equipment status prior to preservation with emphasis on all issues and problems addressed just prior to or during preservation;
  3. Review as built and as is drawings noting all electrical, communication, mechanical and hydraulic lines; and
  4. Review areas of restart risk due to timing, cost and future asset acceptance, ensuring that they have all been mitigated.

Step #4: Ensure that you have competent onsite management and verification of the re-activation activity that includes:

  1. Conduct audit of asset re-activation against plan and procedures, documenting with photos and noting deviations, areas of concern and identified and unidentified risks;
  2. Review and analyze all system, subsystem and individual equipment maintenance schedules, plans, and records against industry best practices, classification requirements and OEM recommendations; noting findings and recommendations for post activation and first drilling campaign; and.
  3. Verify if any item or area, due to its current re-activation status, has a risk of not performing both its primary function and secondary function considering:
  1. Environmental and Safety integrity
  2. Control, containment, comfort
  3. Appearance
  4. Protection

Conclusion

If you have cold stacked the asset for more than 12 months, you will have to re-class/re-commission the vessel, accept and validate all the systems, subsystems and individual equipment. Based on our extensive experience, this can take from 6 to 12 months. Make sure that you have planned and executed your preservation with this in mind.

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[1] http://www.iacs.org.uk/document/public/explained/class_whatwhy&how.pdf, page 17

Copyright 2016 Athens Group. All Rights Reserved.

About the Author: Don Shafer – As cofounder of Athens Group, chief security, safety, health and environment (SSHE) officer, and technical fellow, Don Shafer leads engineers in delivering software engineering services for our clients. He is a software engineering subject matter expert for the Cockrell School of Engineering’s Advanced Research in Software Engineering Center at the University of Texas at Austin. As a charter member of the FBI Infragard organization, he presented the first Offshore Cybersecurity presentation at the 2005 Homeland Security Regional Infrastructure Security Conference.

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