PGS faces titanic challenge
On 23 March this year in Nagasaki, Japan, Per Arild Reksnes was able to breathe a sigh of relief.
It was the day that the company took delivery of the Ramform Hyperion, the last of four gigantic seismic vessels built for Petroleum Geo-Services (PGS) by Mitsubushi Heavy Industries Shipbuilding, in the process taking a big responsibility off his shoulders.
Reksnes is executive vice president, operations, PGS and has been overseeing the final stages of the $1.1 billion newbuild investment, begun in 2011, upon which the company has staked much of its future.
The outcome is still open to question. One issue is whether the outsize technology and performance of the appropriately named Ramform Titan class is what the offshore oil and gas industry is looking for going forward. Just as important, do these huge vessels make economic sense in the PGS fleet?
On the latter point Reksnes is adamant. “Based on experience, we have never regretted building big,” he says.
Like its three Titan-class sisters, the Ramform Hyperion is instantly recognisable for its distinctive delta-shape hull, first introduced by PGS with its first two Ramforms in the mid-1990s.
The difference now is the massive increase in scale, based on PGS’ unerring faith in greater productivity as the key to success.
The first four Ramforms were 89 metres long, already with over-size back decks of 40 metres to accommodate more towed streamers that any of their competitors. The S-class Ramform vessels Sovereign and Sterling, built in 2008 and 2009, respectively, were longer (102 metres) and more powerful than their predecessors but still retained the 40-metre back deck working area.
The Titan class, while marginally the longest at 104 metres, features a preposterously wide 70 metre back deck, approximately the size of your average English Premier League soccer pitch. As such, it facilitates the potential towing of up to 24 streamers with 16 dedicated lead-in reels.
To date the biggest Titan-class spread was deployed by Ramform Atlas on a survey off Myanmar. It towed 18 streamers, each 7.5 kilometres long, 100 metres apart.
But that is not really the point, according to Reksnes. “Our strategy is well defined. We want to build vessels that will be good for 25 years, not with a ‘best before’ date of tomorrow. The key is flexibility.
“Even if we never use all 24 streamers, we have back-up should a problem arise. If something goes wrong with a conventional vessel towing its full quota of 12 streamers, repair and maintenance issues may well affect progress of the survey.
The Titan-class has the space and capacity for spare streamer storage and onboard repair. In addition, we have a fuel capacity of around 6000 cubic metres, which is enough to keep us going for 150 days without refuelling.”
Big advantages
Although an expensive option, going big has other benefits.
“We have seen our competitors having to modify their new vessels after market to meet modern seismic survey requirements,” Reksnes says.
“In many cases, power and propulsion have had to be increased to tow more streamers effectively. In our case, we have six engines delivering 28,000 kilowatts of power with plenty of built-in redundancy.
“That’s also reassuring for customers when we are working in challenging areas and don’t want to be close to the limit.”
The largess extends to the comfort and safety that the crews can expect on board. Cabins, all with their own entertainment systems, are large enough to be comfy but not at the cost of everyone becoming a reclusive hermit.
Instead, most people congregate in their spare time around the sports court area, a full-size basketball court, two gyms and several TV rooms. There are many other options provided to keep the crew healthy and motivated.
The emphasis on safety is evident in the crew’s disciplined wearing of personal protection equipment, the immersion suit wardrobes and other equipment in the communal areas, and posters and HSE reminders to promote safety consciousness.
Predictably, Reksnes disagrees with naysayers who argue that PGS has gone over the top, and that the Titan-class is unnecessarily large to carry out the type of marine seismic surveys needed by oil companies.
Because of the stagnant price of crude, oil companies have been saying they will be focussing on accessible projects to find additional hydrocarbons close to known reservoirs, or on 4D monitoring of producing fields, rather than splash out on large-scale deep-water and frontier exploration, where the new Ramforms would seem best suited.
Reksnes says: “We have done 4Ds very effectively with the Titans, using 16 short five-kilometre streamers, 50 metres apart, in order to match the legacy data. What’s more, we have the flexibility to immediately mobilise for a bigger survey, because our size enables automation of a lot of processes, which keeps our crew costs comparable with everybody else.
“For us, geophysics is in the driver’s seat,” he continues. “Our goal is to provide a platform able to launch and recover streamers widely or closely grouped with a vessel that has the stability to operate in all weathers.
“This enables us to deep-tow our GeoStreamer broadband dual sensor streamer system and so provide images of exceptional quality. In our view, it is an unrivalled combination.”
Reksnes acknowledges that, in the current market, technology differentiation is often not the winner over the lowest price for a contract.
“It isn’t entirely true that our clients only have cost in mind. It really depends on the type of company and what they are looking for.
For example, preliminary exploration of an area with a sparse streamer and source configuration may provide sufficient data for not much more than the cost of a 2D survey. Other companies don’t want to compromise and prefer to use the best technology available,” he says.
“The trouble is that we are in the third year of vessel owners struggling with too much capacity for the jobs we are asked to do. We all have to hang in as long as we can, hoping things will get better, and the same applies to investors in the marine seismic space. It does not make for a favourable price environment for marine seismic survey work.”
The Ramform Hyperion will start its career on industry-funded multi-client projects in the eastern Mediterranean. It is making its debut nearly two years later than scheduled — symptomatic of the times, PGS had to negotiate a new delivery time to ease the strain on its finances as the downturn worsened.
Arguably, PGS was unlucky with the timing of the final phase of its fleet renewal programme. When the first two Titan-class Ramforms (Titan and Atlas) were ordered in 2011 and the option for two more (Tethys and Hyperion) was taken up a year later, the price of oil was still sky high.
No one anticipated the severity of the ensuing price collapse and the devastating impact on oil company E&P spending, especially marine seismic surveys.
In terms of potential overcapacity in the market, PGS did go in with its eyes open. Five or six years ago, long-time competitors such as WesternGeco and CGG had more or less completed vessel renewal programmes.
In addition, newcomers Polarcus and Dolphin Geophysical were making inroads with their fleets of new vessels. And of course, PGS itself had already built two Ramform S-class vessels.
Today the PGS fleet consists of the “ultra-high-end” fleet of four new Titan-class Ramforms and two S-class Ramforms. Of its five first-generation Ramforms, four are cold-stacked and the Ramform Vanguard is warm-stacked.
It can readily be brought back to the market, whereas the estimated cost of re-rigging a cold-stacked vessel is upwards of $50 million.
PGS also has in its fleet three high-capacity conventional 3D seismic vessels, which sit oddly with the Ramforms but are said to give the company extra flexibility.
When Dolphin got into financial trouble in late 2015, PGS stepped in to charter two virtually new conventional vessels from shipowner Sanco on a five and six-year lease.
In retrospect, this looks like a prematurely opportunistic move to acquire capacity in the expectation of a faster market recovery.
The Sanco Swift is active but the Sanco Sword is currently cold-stacked, apparently the most economic option. Lastly there is the 10-streamer PGS Apollo, which is on the active list.
Reksnes jokes that he is much more popular with the company chief financial officer now that the borrowing for the newbuild capex can stop. However, he remains responsible for equipment procurement.
In that capacity he foresees a looming issue, less urgent for PGS than other companies, namely the need in a year or two to replace ageing streamer spreads at a cost of some $40-60 million per vessel.
“Let’s not go there,” he says. “You’ve got to stay optimistic in this business.”
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