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Interview

with Tore Lea, Managing Director, REMORA ASA

19.06.2009 / Energyboardroom

To begin, would you please introduce Remora’s technology and the HiLoad concept to our readers?

Offshore loading of oil has always been a challenge, especially in harsh environment areas like the North Sea. Offshore loading to tankers was a necessity as, of the time, the technology did not allow for installing pipelines deep enough to cross the Norwegian Trench to shore. But use of tankers have been favourable over pipelines, because it provides more flexibility, even though the challenge has been the weather, and the need for keeping continuous production. Therefore it has been a constant aim to increase the uptime of the export systems, several generations of technology has been developed. Early on this involved huge loading buoys, such as those seen on the Statfjord and Gullfaks fields, having tankers with the first type of dynamic positioning (DP) system. DP tankers are tankers that can keep themselves in place, developed with Kongsberg as one of the main software technology developers. Statoil as the big producer was also pushing the development of DP systems. The DP Systems got class numbers, first DP1 and secondly DP2. The latter which is the most advanced for shuttle operations, with double machinery and redundant systems for safety and uptime reasons. The huge loading buoys were very expensive, and although affordable for big elephant fields, they are uneconomical for smaller or marginal fields. There are also challenges in entering deeper waters with mooring systems.

The systems were further developed with new ideas like smaller submerged buoys, but these still needed specialized tankers, which was naturally restrictive as since specialised tankers will have limited sailing area for export of the crude oil. Eventually, with rising North Sea oil volumes, a fleet of dedicated tankers was built up, with the objective to increase uptime and regularity. But even with the most advanced technology, it was still necessary to adapt specialised systems on each tanker, which made tankers even more specialized and expensive.

How to solve these challenges was the main question asked at Hitec Marine, of which Remora is the continuation of. In 2000, Hitec Marine had more than 20 years history as a major supplier within different generations of loading systems. The company asked whether it was possible to develop an offshore loading system which could operate independently of water depth, field, and tanker vessel, with acceptable export and production regularity by use of standard commodity tankers. These were really the design criteria: Is it possible to develop a system which is independent of water depth, field, and can be utilized on any tanker without any vessel modification, while still being able to meet high operational requirements?

This was the kickoff of the HiLoad technology, and actually the vessel we are currently building. It will be ready for sea trials together with the world’s largest operators later in Autumn 2009, and answers these important questions mentioned above. The Hiload is a fully DP2 category system, and can be used on any water depth – the deeper the better because operators’ cost reduction increases proportionately to water depth. The main design criterion of a tanker vessel is really quite simple – you have straight sides and flat bottoms with midship crude oil manifolds. That simple design criterion is the key for this system to operate on any tanker vessel ranging from the small HandyMax vessels, to the very large crude carriers (VLCCs). In a way, the only connection link with the field is a 24-inch hose, so basically Remora can use its technology on any field, tanker, and water depth. The key feature of the HiLoad concept, and the basic principle is very simple: We use the physical laws of nature to stay attached to the tanker. It is not based on any mechanical connections, and there are no additional forces imposed on the tanker’s hull. In itself, it seems strange that such a thing is possible, but we’re talking about an area of 600m2, with friction rubber used on any tugboat all over the world put together in a different manner, and using a ballasting system. When the HiLoad attaches to the tanker, it moves some 3m below the tanker hull and begins deballasting. When this friction area meets the tanker hull, it replaces the hydrostatic pressure, the water force working on the vessel hull. By replacing the water by this square area, the resulting friction force is 20 times more than needed to keep the tanker in position. When the HiLoad is connected, it takes over the positioning of the tanker vessel. In other words, the HiLoad makes any conventional trading tanker into an advanced DP tanker while connected. That is basically the key feature. Compared to typical competing concepts, the HiLoad will replace the pipelines on the seabed over to the buoy, the buoy itself, part of the field’s capex investment, and also opex to become independent of the tugboats.

It seems like there are numerous cost, operational, and safety improvements to be had with use of the HiLoad system. What are we talking about in terms of quantifying it to potential clients?

Different operators have different budgets, and it’s difficult to compare one field to another. However, taking two tugboats and a typical moored buoy along with the average budgets used by operators in West Africa today, the typical cost of one HiLoad system is about one third of the cost of the alternative. Additionally, the reduction of surface vessels increases safety, a very important matter on offshore fields, by implementing an intelligent system with a high degree of redundancies which can actively handle the operations.

In the past, there have been some incidents, where a crude oil spill occurred during loading operations. After accessing information about why the spill happened, we have put elements of the later recommendations into our design. In other words, the risk of oil pollution during loading operations is minimized by the way we have designed transfer systems and barrier thinking with the HiLoad system.

In addition to the pure economic side, which may be the most important for operators to go for new technology and solutions, Remora has made an improved solution environmentally, as well as in a safety perspective during operations.

You’ve mentioned potential on the NCS, but the company has also gone abroad to investigate potential in the gulf of Mexico, Brazil, and West Africa. Where do you expect the most prospective markets for the HiLoad system in its initial stages?

The greatest potential is where water is the deepest, because the cost benefits of a system without moorings increases proportional to depth, and also where there are environmental challenges. Therefore, Remora has identified the deepwater regions of the Atlantic as a key focus right now. This incorporates the Gulf of Mexico, Brazil, and West Africa. In those areas, wave, wind, currents and sea squalls can create challenging situations and reduced uptime especially during the winter season. In all these areas, the HiLoad system is really the answer as Remora sees it. We have run model testing in the Marintek ship model tank in Trondheim, and after finalizing design back in the Autumn 2005 two weeks after Hurricane Katrina, we simulated hurricane weather conditions to perform a survival test of the HiLoad, which saw a great result even in extreme weather conditions. The HiLoad vessel we are currently constructing can operate in the same kind of conditions as advanced shuttle tankers meet daily in the North Sea. Looking at those kinds of weather stats and wave heights, it’s possible to achieve close to 100% uptime during the year in areas like the Gulf of Mexico, West Africa, and Brazil.

The next natural question is: when will it be available? What’s the plan going forward?

Remora acknowledges that this is a business where there are so many consequences in doing something wrong, E&P companies have not been on the first line to utilize new technology. Therefore, Remora and its shareholders decided to build the first vessel solely with equity funding, so we were able to put up a sea trial program and full scale operation before putting the HiLoad into operation on the first field. After funding the first HiLoad’s construction and entering into contracts, we are now in the completion stage for the first vessel. We will have the first vessel ready for operation in the Autumn, and have invited 10 of the leading oil companies in the world to participate in this sea trial project which will take place after delivery. That will really be a big happening for Remora and also for the offshore loading community. The operators onboard are among the most experienced operators in the world, and the vessel will be subsequently available for full-scale operation following that sea trial. In current economic climate, when Hiload provide a cost effective solution combined with high regularity and flexibility, we are ready for first contract after the Sea Trial. It may be a short contract on an existing field, but the most important thing is to get an operational track record with this technology.

What will be the keys to achieving the necessary trust to get some of the world’s biggest operators to put their faith in the HiLoad-DP technology?

First the fact that it is physically there, and no longer just an idea, glossy picture, or data animation. Secondly, it’s the proof of concept, which comes through the sea trial program. The sea trial program will occur over a period of three weeks together with some of the world’s major oil companies. Remora has used input from dialogue with them, with the result that what they will achieve with this program is what they need for their own new concept qualification criteria.

And as mentioned when we meet the criteria in the Sea Trial, operators will be attracted to that the Hiload DP will provide them with a cost effective solution with high regularity and flexibility.

Operators will also find it attractive that they can lease the system. We have proprietary patented technology and believe the potential lies within this technology, and we plan to own and operate the vessel in addition to providing service contracts. Remora also plans to extract the technology’s full potential is qualified by the operators. There are also several other areas where the concept will make a difference compared to the more conventional solutions in the market today.

Looking to the three to five year time horizon, what are your hopes for Remora? Do you envision the HiLoad as a new industry standard?

We are ambitious yet modest. Remora expects to have a fair share of the market after having qualified the technology’s potential. We predict to have a position as a leading supplier within our segments, based on our belief that we will make a difference compared to current systems being used on today’s fields.

Remora will also introduce a new niche within the service agreements. The HiLoad DP unit has been certified as a vessel, and given a totally new class by DNV, with a unique IMO number by Lloyd’s Register. As part of the international rules and regulations of vessels, it now becomes possible to enter into a time limited service contract for the complete loading system, which historically has been a field specific investment. Such a business model offers shorter or longer contracts on a timecharter basis, and becomes quite interesting when looking at the type of fields down the road – with a lease-based system, fields with shorter lifespan of two to five years can avoid field-specific investments. In other words, one vessel can be used on several field development projects without any modification, essentially changing the investment from a fixed to a variable cost. The cost is split to several fields for several uses instead of field-specific solutions which are depreciated as sunk costs for each particular project. That is why Remora intends to operate as a shipowning company for managing several vessels at a time, controlling a fleet that can serve this segment of the marketplace.

As a final message to OGFJ readers from the Gulf of Mexico, Brazil, or even West Africa, what would you like them to know about Remora?

First of all, I want them to know we are not a newcomer. Although it may seem as if the company was registered in 2002 with a new technology, Remora has a strong basis of more than 25 years of history in the Norwegian oil industry. The step-by-step development within a specialized segment, due to the nature of the Norwegian shelf and its many challenges with wells, waves, and wind, has meant constantly improving technology that has been the basis and foundation for the HiLoad concept.

Remora is building on long-term competence and experience, has a strong owner group backing us, and a strong financial position with close to 100% equity financing. Remora is a company with a long tradition, with a unique concept which can reduce cost and enhance safety and regularity for operators all over the world.

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