Eldon Ball
Editor-in-Chief
Singapore-based Keppel FELS is cashing in on a wave of new orders for offshore drilling and production units, and the end is not in sight. Business has been so good through the first nine months of 2005, in fact, that the company’s seven yards that specialize in offshore construction (of 17 total worldwide) are near capacity and still receiving inquiries.
Keppel currently accounts for more than 60% of all jackup rigs on order (19 of 30), with a contract backlog for the Offshore & Marine division of $4.7 billion. The company sees itself on track for another year of double digit growth.
Basic to its growth, says Michael Chia, executive director of Keppel FELS, are new design development and streamlined construction methods that deliver high-performance rigs - jackups, semisubmersible, spars, FPSOs and TLPs - quickly and at competitive rates. Much of the new demand has come in response to higher commodity prices and the robust economies in the Asia-Pacific region, particularly India and China.
“We saw a rapid surge in orders, beginning at the end of 2004 and increasing since the first of this year,” says Chia. “We had lots of inquiries before that, but no orders until a sudden turnaround late last year.”
With the value of production near $60/bbl, delivery times are as critical as construction costs to many operators, Chia says, particularly for production equipment.
“We listened to the market and concentrated on designs that would produce a better performing rig and at the same time allow more efficient construction methods,” he said. “Through our Offshore Technology Development (OTD) division, we designed many of the components, such as the jacking system and fixation systems, which added to operating efficiency and safety.”
The Keppel AmFELS shipyard located in Brownsville, Texas, recently secured an order to construct another two jackup rigs for Scorpion Offshore. This followed shortly after Keppel AmFELS was awarded a contract in July to build Scorpion’s first two rigs.
Keppel, which began operation as Far East Shipbuilding Industries in 1967, got its start in rig building in 1969 when it was contracted by Bethlehem Steel to build the mat for theMilton G. Hulmejackup. The yard later partnered with and then merged with Levingston Shipbuilding of Orange, Texas, and became Far East Levingston Shipbuilding (FELS).
Since then, FELS has gone through a series of purchases and internal changes, emerging today as part of Keppel Offshore & Marine, which comprises a total of 11 shipyards worldwide. The company has grown financially, with the shipyard showing explosive growth so far this year.
Through September, revenue for Keppel, the parent company, rose by 42.3% to $2.35 billion, while pre-tax profits rose by 27.3% to $357 million, due largely to increased workload at Offshore & Marine. Keppel’s revenue for 3Q 2005 surged by 70.3% to $979.7 million, and pre-tax profit went up by 15.4% to $117.1 million.
Offshore & Marine further augmented its order book in the quarter by $708.2 million, bringing the net order book to almost $4.7 billion, a figure that exceeds the total value of contracts during the previous three years. This hefty backlog is expected to keep the yards busy into 2009.
Recent successes include:
• A $180-million order from Scorpion Drilling Ltd. for two additional LeTourneau Super 116 jackups to be built at Keppel AmFELS in Brownsville, Texas. The new units represent the third and fourth jackups in Scorpion’s fleet. The first two, secured in July 2005, are currently being constructed by Keppel AmFELS. All four units are ultra-premium class jackups suited for both international operations as well as deep gas drilling in the GoM. Scorpion also holds one option for Keppel AmFELS to build another comparable rig. This option will expire at the end of November.
Keppel FELS Singapore yard recently delivered the KFELS B Class jackup rig Al-Hail to the National Drilling Co. of Abu Dhabi 18 days ahead of schedule.
•A $300-million contract with subsidiaries of Diamond Offshore for the construction of two KFELS B Class (Super) jackup rigs,Ocean ShieldandOcean Scepter. Both will be able to operate in 350 ft of water and drill to 35,000 ft with a hook load capacity of 2 million lb and a cantilever reach of 70 ft.Ocean Shieldwill be constructed in Singapore by Keppel FELS and theOcean Scepterin Brownsville, Texas by Keppel AmFELS.
•A $312-million order for fabrication of theEnsco 8500, which will work for Anadarko under the operator’s deepwater strategy to secure rigs for the next six years. Under Anadarko’s long-term plan (that includes consortium partners Dominion and Kerr-McGee) a four-year rig-share agreement was signed with Ensco International for supply of the newbuild semisubmersible drilling rig with a targeted delivery of mid-2008.
Although known primarily for drilling rig construction, almost half of the Offshore & Marine work is for production facilities. KFELS recently delivered its latest semisubmersible drilling tender,West Setia, to Smedvig Tender Rigs Pte Ltd. The delivery arguably places KFELS as the leader and pioneer in the design and construction of purpose-built semisubmersible drilling tenders for deepwater operations.
Developed by the Deepwater Technology Group,West Setiawas built to Keppel Offshore & Marine’s proprietary design, KFELS SSDT 3600-GOM-C42.
The six-column tender carries a drilling derrick set and has cranage to deploy the set onto production platforms. It also provides storage and accommodation facilities.
KFELS got into drilling tenders in 1993, when it undertook the first purpose-built semisubmersible drilling tender, thePelautfor Petrodril Offshore Holdings. It was completed and went to work for Shell Brunei nine months after construction began. The company followed with a similar vessel,West Menang, followed by theWest Alliance, delivered in 2001.
With the delivery of West Setia, the fourth semisubmersible drilling tender Keppel FELS built for Smedvig Tender Rigs Ptd Ltd, KFELS divested its entire 72% interest in the rig to Smedvig.
FELS branched into production units in 1989 with theJoiliettension leg wellhead platform for Conoco and expanded into semis with thePetrobras XVIII, Brazil’s first deepwater oil production semisubmersible in 1994. With the need for production facilities growing almost as quickly as for rigs, Keppel sees significant growth ahead for the foreseeable future.
“Job inquiries remain healthy with potential for more contracts to be secured,” Chia says. “The market we see for drilling rigs for the next two to three years is for high-performance jackups that can drill deeper and work in deeper waters,” Chia says. “And the market seems to be global - all of Asia, the Middle East, North Sea, and Gulf of Mexico.”•
Leveraging strengths to provide deepwater solutions
Keppel FELS and J. Ray McDermott SA (J Ray), a subsidiary of McDermott International Inc. have formed a new 50/50 joint venture (JV) company, to be named FloaTEC LLC (FloaTEC), to provide deepwater and ultra deepwater oil and gas development solutions.
To add to the JV’s offerings, Keppel FELS and J Ray plan to draw upon the purchased patent rights previously owned by ABB for the extended tension leg platform (ETLP) and single column floater (SCF) designs.
Combined with Keppel FELS’ semisubmersible expertise and J Ray’s existing SPAR technology, FloaTEC will be in a unique position to provide a wide range of solutions for deepwater developments, the companies say.
“J Ray and Keppel FELS are uniquely positioned to offer total solutions to customers through this new company,” said Choo Chiau Beng, chairman & CEO of Keppel Offshore & Marine Ltd (Keppel O&M), the parent company of Keppel FELS.
“We have established reputations in the international market for versatility, reliability, quality service, timely delivery, good project management and a commitment to excellence. FloaTEC will offer customers quality solutions enhanced by proprietary technology and critical engineering expertise.”
“We believe that the timing could not be better for this cooperation with our colleagues at Keppel FELS and the establishment of this exciting joint venture,” said Bob Deason, president and COO of J. Ray McDermott Inc.
“Both companies have developed unique technologies and capabilities over the years and command an attractive product portfolio, in particular within floating production solutions. This joint venture further strengthens that combined product portfolio and prepares us to take a leading role in global deepwater development prospects.”
Eric H. Namtvedt will be named COO to lead this new company. He joins the JV with over 25 years of experience in the industry. Namtvedt has worked for a major oil company, the Norwegian government, a global E & C contractor, and an oilfield service and fabrication company, leading projects ranging geographically from the US to West Africa, South East Asia, North Sea and Australia. His experience includes the establishment of JV companies, both in fabrication and technology development.
“Establishing FloaTEC LLC represents a significant commitment by both Keppel FELS and J Ray and a firm belief that jointly they can achieve more and provide better value to their clients,” Namtvedt said.
“J Ray is widely recognized for its marine construction and installation services, and Keppel FELS has a long history of client-focused product developments and deliveries of semis, floaters, jackups, and specialized ships. Field proven designs of spars and production semisubmersibles have been successfully delivered from Keppel and J Ray’s global fabrication facilities.”
Improved components and internal engineering
Keppel bases much of its success in winning contracts on the strength of its engineering department - a unit that participates in sales as well as design. Keppel also believes that performing design and customization in-house makes budgeting more predictable. When the company designs for fabrication, its goal is to keep designs simple and fit-for-purpose.
Among the rig components Keppel FELS has upgraded from previous designs, the jacking system and fixation systems have proved successful and popular. The newly designed jacking system speeds construction and has a capacity per pinion of 454 tons for normal jacking and 590 tons for preload jacking. It holds statically up to 848 tons.
Without a leg fixation system, the entire platform’s weight rests on the pinion gears of the jacking system. A fixation system takes the platform weight off the jacking system. The platform is supported by solid beams that form a firm joint with the rig’s legs.
The fixation system is an electro-hydraulically actuated, high-capacity self-positioning rack chock design. Once engaged, the chocks are locked against the leg rack by wedge blocks, which are in turn held by self-locking jackscrews driven by hydraulic drive. The system can automatically position the rack chock so that engagement/disengagement can be done in a few seconds, regardless of the rig elevation.
Both systems were the result of in-house engineering.
