The other day I received a PR email from a company based in Aberdeen which:
is aiming to significantly reduce the environmental impact caused by the oil and gas industry, by offering a new sustainable solution with the refurbishment and reuse of decommissioned subsea equipment and component parts.
This immediately struck me as a venture started by people who think sustainability is a product in itself.
Presently, the industry recycles as much of its subsea equipment as possible once it has no further need for them.
Meaning, they take it off the sea floor and sell it for scrap.
Instead of the traditional recycling process, Legasea takes the subsea production equipment from decommissioned fields and reuses as many parts as possible following a rigorous refurbishment process at its base
Here’s where I think the problem is. Despite the enormous cost of subsea equipment creating a massive industry, there’s not actually a lot of it made. Industry efforts to standardise subsea Xmas trees for example ran into the problem that at the height of the boom only about 150 were installed in a year. A couple of years ago it was in single figures. This is not the sort of mass-volume industry which lends itself to standardisation, and the potential savings not enough to persuade oil companies to abandon their own standards in favour of a common industry-wide design. In other words, these pieces of equipment are bespoke and have to be ultra-reliable, hence they’re very expensive. This isn’t the sort of kit which lends itself to using secondhand parts to reduce costs, and even if it were, how many units do these guys think they’ll be selling each year?
This leads to huge cost and lead time savings for clients and results in saving obsolete components, such as many types of subsea electrical connectors and hydraulic couplings making them available for reuse on producing fields.
The long lead times are due to oil companies demanding bespoke units. If they were willing to be flexible on that score they’d have agreed to a standard design and be buying brand new, off-the-shelf kit. But they haven’t, so they will still want bespoke designs and I suspect the long lead times are down to design and approvals rather than an availability of the parts this company is refurbishing. And what percentage savings will they make using refurbished parts instead of new? I can’t see many engineers in an oil company signing off on using refurbished parts for a piece of kit which will sit at the bottom of the sea for twenty years unless the cost savings really are substantial.
A common occurrence in many other industries, this repurposing of subsea parts helps to preserve vital resources for continued use and reduces the environmental impact of the oil and gas companies themselves.
Preserve vital resources? Such as? And it is debatable whether refurbishing these parts with all the material and manpower involved will use fewer resources than just producing them from new.
Co-founded by Lewis Sim (Managing Director) and Ray Milne (Operations Director), the Legasea team has been joined by team members Chris Howley (Service Technician), Graham Petrie (Projects Manager) and Chris Moffat (QHSE Manager).
So you’ve got your overheads sorted, then. How many units will they be refurbishing each month, do you think?
“We offer an alternative route for unwanted and recovered subsea production systems and will take liability and ownership for the equipment; making it safe, clean and disassembling it to its component parts. Reusable parts will then be used to fulfil the demand for urgent remanufacturing and spares when crucial production is at risk during routine preventative maintenance or when an unforeseen failure is encountered subsea.”
Okay, the business model might work if they’re providing urgently-required spare parts, but how many emergencies are they expecting each year? And I’d be interested to know just how much liability they’re willing to take on. One component failure and they could be on the hook for millions within an hour.
Hey, I wish them well and I’m just some bloke on a computer, but if I’m gonna get unsolicited PR emails I feel I’m entitled to look at them critically.