Big Oil Reuses Platforms in Latest Cost-Cutting Trick
(Bloomberg) -- Oil companies have pushed through draconian cost cuts during the recent industry slump, but they’re not quite done yet.
Spain’s Repsol SA unveiled plans to re-use its Gyda platform in Norway’s North Sea on another field, an unprecedented step for a fixed installation, according to the head of Repsol’s Norwegian subsidiary Vidar Nedrebo.
Repsol has spent almost a year with partners Kvaerner ASA, Allseas Group SA and Subsea 7 SA studying ways to move the platform from its current location, make necessary modifications at shore, and transport it to a new field, Nedrebo told the Operators Conference in Stavanger on Wednesday. Repsol is in talks with two companies that could use the platform, or may possibly reserve it for use on a future discovery of its own, he said in a subsequent interview.
Gyda started producing in 1990, with output peaking at almost 90,000 barrels of oil equivalent a day in 1994. It’s due to cease production in May but is in “very good technical condition,” Nedrebo said. The move would cut decommissioning costs, estimated at 5.7 billion kroner ($672 million) for Gyda and result in a big reduction in what could be billions of dollars of investments for its new user.
“There’s significant upside for the owner of the fields that can use this,” Nedrebo said. “A 25 percent cost reduction compared to the best available alternative.”
The platform’s steel jacket could also be re-used, provided it fits the water depth at the new field, Nedrebo said. Possible new locations span the entire North Sea, from the U.K. to Denmark and the Netherlands.
The re-use of Gyda and similar platforms has become a realistic option thanks to the ability of Allseas vessel Pioneering Spirit to move and install a structure of this size in one single lift. The world’s biggest construction vessel earlier this year placed a 22,000-ton drilling platform on Equinor ASA’s Johan Sverdrup field in the North Sea.
In 2011, Equinor unsuccessfully attempted to sell the Huldra platform in the North Sea for re-use. It posted the platform on classified-ad website Finn.no in a humorous tone that suggested it had limited hopes of finding a buyer.
That’s not Repsol’s intention.
“Quite the contrary,” Nedrebo said. “By advertising it on Finn you actually ridicule the whole concept in my opinion. We’ve actually made a real investment in looking at the possibilities for re-use.”
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