Scaling new heights

In some frontier environments the profitable price is around the $85 mark, and this is where exploration will really suffer if the depressed market conditions are sustained.

"In the current price environment the attraction drops off quite quickly in Canada because it is a combination of harsh environment, expensive, and it is regulatory heavy, so oil companies can find it difficult working there. Because of this the Canadian offshore market felt the impact of the drop in price fairly early."

Activity report

The MIS yard in Sharjah remains a hive of activity and has managed to buck local and global trends by continuing to deliver a series of headline grabbing achievements.

Last October Hull 104 was completed, a significant landmark for the company and region, as it became the first jackup fabricated in the Middle East. The rig is a Friede & Goldman Super Mod 2 design jack-up rig with 30,000 foot rated drilling depth and an operating water depth capability of 300 feet (92 metres).

Since then, the building programme has picked up quite substantially. The yard now has a back-log of 7 offshore jack-up drilling rigs on order at MIS yard, with the newest order from MENAdrill - Hull 109 and 110 scheduled for delivery Q3 and Q4 2010. The last order has taken MIS' back-log to the US$ 1 billion mark.

Hull 107, contracted to KSAM2 Petrodrill Offshore, a joint venture company led by Singapore-based KS Energy Services, Saudi-based Amwal Al Khaleej and MIS, is now scheduled to be delivered months ahead of its original contract delivery date of February 2010.

Benefits of the learning curve were evident at the launch of Hull 107 with a greater degree of completion in comparison to the launches of the first two rigs, Hull 104 and 105. Hull 107 was loaded-out at a heavier weight of 5200 tonnes compared to 4200 tonnes at the time of launching the previous two rigs thus contributing to greater efficiency in terms of work completed while the hull was still on land.

Additionally, Hull 107 now has its four modules for the living quarters already installed compared to Hulls 104 and 105 which were installed post launch. 150 tonnes of steel outfitting has already been completed vis-a-vis 50 tonnes for Hull 104, and 80% of the mechanical installation has already been completed compared to 40% on the previous rigs.

"We're very pleased to see such visible benefits of our steep learning curve which is already delivering results for Hull 107," says Hudson.

"We plan to maintain this strong momentum to ensure that the rig is delivered well ahead of its contract delivery date and to further benefit the other rigs currently on order."

These lessons have been an organic part of the building process, but the advantages don't stop there. Hudson says that because the company has managed to enter 2009 with the launch of Hull 104 under its belt, it can perform very competitively for future unit orders.

"If you balance cost against number of units, particularly highly engineered products such as a jackup rig, the cost for the first unit may be high, but that drops up to 30% for the second unit because initial investments have been made, and that covers everything from machine tools to getting the people with the necessary skills onboard. If you are first into the market that's quite an advantage."

Essentially, the people, procedures, and design are all in place for the second and any subsequent units. "That's all investment that's needed and there's simply no short-cut to where we are now," he beams.

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