Will Rowley, group analyst, Acteon, explains recent developments in the Norwegian offshore market and reveals how operating companies are making their mark.
Many of the world’s major oil and gas companies are involved in exploration and development projects in the offshore regions of Norway. This renewed interest in the region has been stimulated, in part, by the 2011 agreement between Norway and Russia to define their shares of the Barents Sea: a deal that followed decades of negotiations and brought significant new offshore acreage onto the European oil and gas map. However, plenty of other attractive opportunities in Norway are drawing in the major industry players.
“A decade ago, activity focused on offshore southern Norway, where the water depths are relatively shallow and fields are generally developed using jackup rigs,” says Rowley. “Over time, this changed with a gradual move to deeper water and more demanding offshore environments. Now, the focus has shifted to exploration for new reserves in areas such as the Barents Sea, which may hold as much as one-third of Norway’s recoverable reserves, and the Kara Sea. Although this sea is in Russian territorial waters, it is serviced from Northern Norway.
“Acteon companies have a well-established record of delivering work in the Norwegian market,” Rowley continues. “IOS InterMoor, for example, has operated in the Norwegian market for nearly 30 years, and our operating companies share an extensive portfolio of customers in Norway, including Statoil, Odfjell Drilling, BG, Marathon Oil, GE, Subsea 7, ExxonMobil, Wintershall, Eni Norge, AGR, Lundin Petroleum, Transocean, Diamond Offshore Drilling, Dolphin Drilling and North Atlantic Drilling.”
At present, the Norwegian market has high levels of activity in all its key offshore areas. In addition to projects under way in the far north, there are secondary and tertiary developments in deepwater areas and, in the established areas to the south, there has been increased activity and focus on gaining access to deeper reservoirs.
This unusual spread of offshore operations has led to a tightening of supply for resources in the subsea services arena, says Rowley. “The subsea services supply chain within Norway must now offer even greater flexibility and be able to move equipment and personnel from area to area across a large geographical market. This can present significant challenges in managing equipment availability and even human logistics. For example, internal flights within Norway on routes such as Bergen to Hammerfest are often subject to delays or cancellations, which can easily interfere with planned crew changes and effective resource management.
“Acteon is growing its presence in Norway to help address these issues. Operating companies such as IOS InterMoor, Claxton, Pulse and NCS Survey provide support to customers out of four bases: Dusavik in Stavanger, Mongstad near Bergen, Vestbase in Kristiansund and Polarbase in Hammerfest. This will ensure that they can provide effective countrywide coverage. The development of the new base at Hammerfest represents a significant investment and underlines the high level of commitment required to work effectively in the Norwegian market.
"Acteon is building its capacity on the back of strong commercial growth, he adds. "Over the course of 2013, we saw a 35% increase in our operating company staff based in Norway and our turnover for work completed in Norway was up by 32% in 2013 compared with the figure for 2012.”
Acteon has managed this growth through a phased approach, as Rowley explains. “As the largest Acteon entity in Norway, IOS InterMoor provides office locations for its sister companies, thereby enabling them to grow and expand from small beginnings. This arrangement means the Acteon companies can share resources in areas such as quality, health, safety and environment, and maximise levels of inter-company interaction. The approach has the potential to deliver significant benefits for customers. For example, it may be possible to run a subsea survey from an anchor-handling boat that is engaged in a separate installation programme. This joint approach to using resources could deliver significant time savings and cost reductions.
“During 2014,” Rowley continues, “Claxton will be incorporating a business in Norway that results from the award of a multi-year contract with Det norske oljeselskap ASA for high- and low-pressure risers, auxiliary equipment and services offshore Norway. This is one of the largest riser contracts in Claxton’s history. It started in January 2014 and runs until June 2020 with optional periods of 1 + 1 year.”
Operations in Norway are conducted to demanding legal and regulatory standards. The country’s quality, health, safety and environment requirements are probably the highest in the world and achieving compliance with NORSOK guidelines can be challenging. The legislative framework within Norway is robust and interpretations placed on the law tend to be high and to become more so with time. However, Rowley views this as a positive factor for Acteon.
“Acteon operating companies are often at the forefront of establishing new tools and operational methods,” he says. “In Norway, Pulse has been asked to develop an integrated monitoring package that will cover issues such as corrosion, leak detection and defect analysis as part of the industry’s drive to introduce a more holistic approach to monitoring activities. Another example is chain inspection. In Norway, chains now require a full ultrasonic survey and a metallurgy quality check, requirements that are far in advance of those anywhere else in the world. We are well-placed to deliver what the Norwegian market needs and to apply this elsewhere as other regulatory regimes follow Norway’s lead.
“Offshore Norway is undoubtedly a place of challenges and opportunities for service providers,” he continues. “There are high levels of activity and demand, but operators are keen to control costs and the regulatory bodies are introducing ever more stringent requirements. This commercial landscape suits Acteon and its focus on adapting operations and introducing innovative solutions that can deliver the required quality of service with even greater efficiency.
“As committed and established players in the Norwegian offshore market, Acteon companies are conducting operations in one of the most technically demanding, logistically challenging and environmentally constrained markets in the world. The ability to thrive here and to operate at the leading edge of technology will provide these companies with a wealth of knowledge and experience that will benefit both Norway’s oil and gas operators and other global customers,” Rowley concludes.