Subsea aftermarket segment emerges

A new era is developing in subsea aftermarket service provision offshore Norway – one which is expected to set global standards.

In 2010 production from subsea wells on the Norwegian Continental Shelf (NCS) outstripped production from surface wells for the first time.

Statoil alone has some 500 subsea wells on the NCS. As field lives continue to be extended, exploration goes into deeper and colder water, and platform wells cease production. This trend is expected to continue.

The result is the stimulation of a new industry—aftermarket subsea service provision, highlighted recently by two large and long-term frame agreements (14 years with options to 2027) between operator Statoil and Aker Solutions and FMC Technologies.

The agreements not only help to ensure Statoil’s long term supply of maintenance and operational support and benefit the two companies involved, they also benefit the wider supply chain, says NCE Subsea chief executive Trond Olsen.

“The contracts secure both activity and predictability in building up the needed the Norwegian Continental Shelf (NCS) outstripped production from surface wells for the first time.

Statoil alone has some 500 subsea wells on the NCS. As field lives continue to be extended, exploration goes into deeper and colder water, and platform wells cease production. This trend is expected to continue.

The result is the stimulation of a new industry—aftermarket subsea service provision, highlighted recently by two large and long-term frame agreements (14 years with options to 2027) between operator Statoil and Aker Solutions and FMC Technologies.

The agreements not only help to ensure Statoil’s long term supply of maintenance and operational support and benefit the two companies involved, they also benefit the wider supply chain, says NCE Subsea chief executive Trond Olsen.

“The contracts secure both activity and predictability in building up the needed industrial capacity for the future,” he said. “This applies not only for Aker Solutions and FMC Technologies, but also for subcontractors. When workload increases for FMC Technologies and Aker Solutions, also more work will be demanded from companies in the subsea cluster. The contracts will also create new investments, new jobs, and new subcontractors.”

Both Aker Solut ions and FMC Technologies are already investing in their Norwegian facilities, expanding their footprints and increasing staff. However, such long term agreements also mean Aker, FMC, and others can develop and build their expertise and engineering.

Ingmar Westervik, director of FMC Technologies customer support at Ågotnes and a board member of NCE Subsea, predicts positive development on the engineering side of the aftermarket.

“We will in future, demand greater engineering skills,” he said. “We have today reached a stage where aftermarket and life of field services, such as upgrades and modifications, will evolve greatly.

“Nowhere are there so many (Xmas) trees as in the North Sea. They are the oldest too. Therefore, in addition to aftersales services such as upgrades and modifications, there will be a great need for analysis and studies on how to resolve these challenges.”

However, as well as the Norwegian aftermarket growing in size, there are global markets that the Norwegian supply chain could also apply itself to, he added. Olsen agrees: “Statoil is a global leader in this field and there are good reasons to believe that other oil companies will follow their trail. This means that subsea aftermarket services globally will be a rapidly growing segment.”

There are still challenges in the subsea aftermarket. According to Ove Magne Kallestad, vice president subsea technology and operations at Statoil and board member of NCE Subsea.

One has been to deliver equipment “on time and quality,” for instance when equipment on the seabed is upgraded, he said. This applies especially when old equipment is upgraded and new requirements have been introduced. He also hopes to reduce the gap in recovery from subsea wells and platform wells.

Jannicke Hilland, head of joint operations in Statoil, said: “Our facilities’ regularity is a key factor in the work we do, and maintenance and operational support subsea is an important part of this. Therefore we are pleased to have solid suppliers performing services for us in these areas.”