Two major players in the offshore construction market have been operating in the sector for years. Both plan to stay there, but recognize they might have to adapt to new demands.

At present McDermott Marine Construction has no plans to make heavy investments to build new construction vessels, said Steve Bertone, general manager, Worldwide Marine. "However, we are always looking at ways to better match our installation capability to the market requirements to maximize our return on the investment in those capabilities," he told E&P.

Nor does the company expect crane-lift installation techniques to be outstripped by float-over methodologies. "Float-over technology has been around for years, as have the heavy lift vessels," said McDermott's Bill Soester, vice president of engineering. "Each has exclusive markets and share a part of the market. Remoteness of facility locations, average wave characteristics, topsides weight and contracting strategies are some of the parameters that influence the choice of installation methods," he explained. He suggested that no major installation technology changes have been seen in recent years.
Crane lift and float-over techniques are both seen as viable going forward for Cal Dive, too.

Answering the same question, Cal Dive's Kurt Hurzeler, commercial manager for Well Ops US, said, "It is unlikely float-over technology will supercede crane lift operations. Augment may be a better word. The Q4000 demonstrated in Trinidad, with the BP Bombax 450-ton manifold deployment, that for specific applications, a float-over deployment method is a cost effective alternative as compared to the utilization of a heavy lift derrick barge. The Uncle John was similarly employed for a manifold installation in 5,000 ft (1,524 m) of water."

In deepwater, said Hurzeler, deployment utilizing the Q4000 multipurpose tower, which has active and passive heave compensation, offers significant advantages over crane deployment:

• The weight of the wire is not a factor;
• No likelihood of block twisting;
• Better vertical control when landing sensitive payloads; and
• The orientation (compass direction) of the payloads can be adjusted to a much finer degree than using a crane and a remotely operated vehicle (ROV).

Hurzeler believes some practices, including the use of smaller, more cost effective platforms, have gained industry acceptance in deepwater operations, such as deployment of Cal Dive's own Q4000 and Intrepid, in place of traditionally high-cost derrick barges.

He expects the trend towards utilization of purpose-built deepwater vessels like the Q4000, the Intrepid and the Northern Canyon to continue, instead of reliance on derrick barges and drilling rigs for deepwater.

"The Q4000 driving piles for Gunnison in 3,200 ft (975 m) of water; the Q4000 pulling in the Princess SCRs (steel catenary risers) in 3,700 ft (1,128 m) of water; the Intrepid pulling in the Marco Polo SCRs in 3,900 ft (1,190 m); and the numerous reeled pipeline installations performed by the Intrepid demonstrate the expanding capabilities of these vessels, the value of a "fit for purpose" asset and the acceptance of smaller assets on high risk projects by major oil producers," Hurzeler stated.

When asked about expected customer needs in the next 5 or 10 years, McDermott's Soester said, "I personally don't see a change in needs in the 5- to 10-year time frame. Existing lift vessels will still be in service. Float-over technology will continue to be tweaked. Probably, one purpose decommissioning ('hook-down') vessels will be built." He added, "It is hard to see how current softness in the installation
market will support an upswing in alternative installation solutions."

Within 5 years Hurzeler expects to see the development of a fleet of specialized vessels optimized for deepwater installation. Within 10 years he expects to see deepwater well intervention and repair vessels.
Hurzeler observed that, at present, the market has a surplus of dive and ROV support vessels. "Light construction DP (dynamically positioned) vessels are also competing aggressively to the detriment of prices. Cal Dive will build vessels to serve specific market needs more effectively. A sister vessel to the Q4000 is not out of the question as the population of deepwater and subsea field developments increases."

Hurzeler went on to explain why his company might consider constructing a new vessel and the sort of specifications it might need.

"The lessons learned from the Q4000 and the medium sized pipelay vessel Intrepid strongly encourage heavy lift capability in excess of 300 MT (metric tonnes). Weather stability is critical to maintaining a flexible schedule involving more than one vessel. Transit speed and self-support capability will be even more critical in markets outside the Gulf of Mexico. The value of a full 600 MT derrick, a 150 hp ROV or 400 MT crane was questioned during the construction phase but each of these capacities has been fully utilized on multiple projects which would not have been successfully completed otherwise. The trend towards using smaller, less robust assets to install or recover deepwater equipment must be carefully assessed. The economics of failure are very punitive and safety requirements/concerns become an issue as operating limits of vessels and equipment are approached," Hurzeler suggested.

Already he said the Q4000 has fulfilled its potential since built, "It has performed the majority of functions and services originally envisaged. In many cases we have approached the design limits, and successfully demonstrated the vessel's capabilities. However, these services have been provided on a piecemeal basis for the most part.

"The true value and potential of the Q4000 will not be demonstrated until it is deployed in a full field development or across several neighboring developments. The ability to combine in-field pipelay, umbilical installation, jumper installation, tree installation, well testing, subsea repair, mooring installations, seabed coring, well intervention and decommissioning offers an integrated oil company the opportunity to save large sums in vessel mobilization and to efficiently utilize specialty vessels which are typically very expensive."

Looking at market activity levels, Dan Houser, vice president of business development for McDermott, said, "We see a parallel trend of continued growth in deepwater as well as a slight resurgence of activity in shallow water primarily driven by the development of gas transportation infrastructure. The deepwater development is mainly hub and spoke in nature, with floating production systems (spars, semisubmersibles and TLPs) coupled with subsea tie-backs. There is little intermediate water depth activity."

Looking at activity on a global basis, Houser said continued growth is expected in West Africa, Brazil, the Caribbean and the Caspian area. And what is driving this growth? Houser said, "The large oil reservoirs that create huge economies of scale as wells as growth in the need to [obtain] gas supply."

Global installation activity is expected to be the greatest in all of the areas previously mentioned, plus the Gulf of Mexico. Safety issues, scale of opportunity, availability of gas supplies and demand, plus oil supply are the major factors driving the market.

Hurzeler concurs in his view of the high activity regions. He expects the Gulf of Mexico region and Brazil to remain strong markets for installation services. "Deepwater Gulf of Mexico and Brazil are exploring the deep limits of economic field and well development. Equipment design and installation methodology will be developed in these areas first. Mexico has become extremely active. West Africa is developing several significant fields and may offer the greatest growth potential in terms of subsea field development."

Personnel

Looking at anticipated customers needs 5 or 10 years down the line, Houser thinks the key issue concerns personnel, "A shortage of experienced and competent people is a real threat to the health of the industry. There has been constant erosion in the industry's intellectual inventory that has not been effectively addressed. The trend to less, but larger projects worldwide has created an environment which does not foster training on entry level people in a manner which allows them to grow incrementally."
Turning to the decommissioning market, Soester pointed out his company is still busy in the Gulf of Mexico and is pursuing further work in the North Sea. "Activity will be significant in both areas due to the depletion of old fields," Houser said. "We are positioned well in most areas of the world with marine equipment suitable for decommissioning as well as land-based facilities to serve as receiving and demolition sites."

McDermott's most recent successes have been in the Gulf of Mexico. In 2003 it completed the Devil's Tower spar platform for Dominion Exploration, the world's deepest spar so far, installed in a water depth of 5,610 ft (1,711 m) in Mississippi Canyon block 773. Workscope included front-end engineering and design (FEED), detailed engineering, procurement, fabrication, project management, subsea and marine installation after being awarded the contract in June 2001.

In April 2004, JRM was scheduled to complete the Front Runner spar for Murphy Exploration and Production for installation in Green Canyon block 338 in a water depth of 3,330 ft (1,015 m). Again, McDermott has been a turnkey contractor, providing FEED, detailed engineering, procurement, project management, fabrication, subsea and marine installation.

Next year, the company is due to complete the Atlantis semisubmersible platform for BP, at its Morgan City fabrication yard in the United States, one of four deepwater installations for the client. Atlantis is scheduled for installation in 2005, exploiting reserves in Green Canyon blocks 699, 700, 742 and 744 in water depths from 4,400 ft to 7,100 ft (1,341 m to 2,164 m).

Also underway at Morgan City is fabrication of the Mad Dog facility, due for completion and installation in 2004 in Green Canyon 782 in a water depth of 4,500 ft (1,371 m) and the Holstein spar for Green Canyon 645, again for completion and installation this year.

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