We touched on mothballing in a previous post, contemplating an Enviropeel-protected future where assets could achieve their full potential, free from the threat of corrosion. We also mentioned that the idea for Enviropeel sprang from the downturn of the 1980s and our CEO, Arthur Haycox's insight into the potential for a sprayable encapsulation system to protect decommissioned equipment from offshore platforms.
The French have some words for it ...
Apart from Déjà vu, which tells us that we have seen it all before, the French also point out that plus ça change plus c'est la même chose - the more things change, the more they stay the same - and it seems they are right.
Several news stories recently have been reporting 5-year lows in the price of crude oil, with falls of about 40% in the past six months to below $68. This is close to the marginal production cost of more expensive offshore projects and, as a consequence, drillers and operators are looking to slowdown production by taking the most expensive units offline.
Warm and Cold Stacking
So, as they did in the eighties, platforms are being readied for an uncertain future. Warm stacking is the first phase, where a rig goes in to standby but basic operations are maintained - on the basis that any downturn will be of short duration. However, according to some observers, there is increased talk of cold stacking, a much longer-term process with complete shut down of the least cost-effective production platforms until prices rise well beyond the cost of production.
With operational costs of around $30,000 a day for a working platform, a reduction to as little as $2000 a day for a cold-stacked platform is an attractive option. A return to service, however, may be a distant prospect if the platform is not adequately safeguarded against deterioration while out of use.
It is surprising, for example, how quickly pumps and valves become unserviceable if left for prolonged periods of inactivity without protection. As the English say, use it or lose it, or perhaps they should be saying, use it or Enviropeel it! It doesn't rhyme as well - but it makes a lot more sense to protect your assets than let them go to waste. It must be worth a little time and $50 of material to save, for example, a valve that would cost many thousands to replace, especially when there are hundreds of valves and thousands of components on every platform which could benefit from such a small investment.
Oil prices will rise. You don't need to be clairvoyant to understand the ebb and flow of the market, nor does it take rocket scientists to understand the maths.
For more information on Enviropeel and mothballing, go to www.mothballing.net