Never burst, buckled, or bent

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.

Liked it? Take a second to support Tim Newman on Patreon!
Share

18 thoughts on “Never burst, buckled, or bent

  1. “. 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. ”

    Yeap. When I was at NOV, they were trying to create a standardised FPSO. The problem was very simply there could never be enough of a cost saving to get clients to abandon decades of internal standards to buy a generic spec.

    Just getting a standardised skid frame was a challenge, even on things we built frequently. The drive from all the engineering teams from client to our own was always for bespoke, even if it was different by just mm’s.

    “And I’d be interested to know just how much liability they’re willing to take on.”

    ‘Return to base’ warranty!

  2. When I was at NOV, they were trying to create a standardised FPSO.

    That discussion has been going on for years. Companies can’t even agree on a standard FPSO design internally: I was the engineering manager of two built a few years apart for the same company, and even the stuff common to them both were totally different.

  3. “and even the stuff common to them both were totally different.”

    If this was anything like the projects I worked on, they would have been very effective at duplicating everything that was a fuck up.

  4. File this under the same environmental folder that has Richard Branson and Elon Musk claiming green credentials while burning more fuel in one rocket launch than most African countries use in a year.

    I asked my neighbour how he was enjoying his coal-powered Tesla. We’ve not spoken since.

  5. If this was anything like the projects I worked on, they would have been very effective at duplicating everything that was a fuck up.

    Oh yeah, we made double-sure of that.

  6. “The company will look to harvest and polish up a variety of subsea components, including electrical connectors, hydraulic couplings and sensors”.

    That looks more like a one man band garden shed operation rather than renting what appears to be a large industrial unit… There’s quite a few yards in Texas filled with scrap looking for an opportunistic sale….

    If they’re supplying majors they’re going to bump into ISO and other supplier bureaucracy (+ associated costs) unless they’re looking to service markets where such things are routinely swerved….

    Good luck to them.

  7. “Companies can’t even agree on a standard FPSO design internally: I was the engineering manager of two built a few years apart for the same company, and even the stuff common to them both were totally different.”

    Jesus- my experience in shipyards is that two sister ships being built at the same time, in the same yard in adjacent drydocks will be significantly different.

    Team one on Ship one gets to frame 33 and discovers that the plans mean that you need to run line 1 then line 2 then line 3… but you can’t run line 1 before line 3. So some guerilla engineering takes place.

    Meanwhile, Team 2 on Ship two discover that the bulkhead that should be in Frame 33 actually needs to be in Frame 34. And they solve that problem, obviating the need to run two of the lines at all.

    And so on.

    The surprising fact is that sister ships are even approximately similar, not that they vary in the details.

  8. “This isn’t the sort of kit which lends itself to using secondhand parts to reduce costs,”

    After the BP thing, how many of these companies – already low-volume purchasers, do they think would be willing to risk the liability that they’ll bear if it gets out that the next rig to have an accident was using ‘discarded parts’?

  9. Legasea repeats “refurbishment” countless times, then at end – after everyone has stopped reading they use the important word “remanufactured”.

    Assuming they’re going to buy scrap above scrap, price oil companies should be queuing up to sell to them.

    I hope no taxpayer grants/loans/funding have been given to Legasea, but fear this will be the case and named will become rich at our expense.

  10. We all understand the financial advantages these days of stressing “sustainability” in a business plan — even in an extractive industry. But these guys should have tried harder. With a bit of effort, they could have squeezed in references to “greenhouse gas minimization”, “nano-technology”, and maybe even “gene-splicing”.

  11. Tim,

    You used to work in the oil industry, so I’ll defer to your comments about non-standardisation and the consequent difficulties of parts reuse.

    That said, I wish Legasea well, so long as no taxpayer money is involved. After all, isn’t that what capitalism (which the right-wingers who frequent this site are supposed to support): finding niches and opportunities which others have missed?

    If they succeed, good for them. If they fail, well, that’s business.

  12. “And I’d be interested to know just how much liability they’re willing to take on.”

    I’d be interested to know just how much liability their insurers are willing to take on, since a few problems will probably wipe out their own bank account. Just make sure you get certified certificates of liability insurance for all possible damages.

  13. Time is money, and production downtime is double bubble. Cheaper and quicker to hoick the whole unit out and replace it than to fart about repairing bits in situ.
    The only time I can recall where piecemeal repair was tried was on some separation unit. (I dunno what it did, I just measured how fucked it was.) Occidental decided to repair only the most fucked up bits, the 90 degree elbows.

    It was part of the Piper Alpha complex.

  14. That looks more like a one man band garden shed operation rather than renting what appears to be a large industrial unit…

    Indeed, buy some old gear refurbish a few parts yourself, chance your arm if and when an oil company needs a part in a hurry.

    If they’re supplying majors they’re going to bump into ISO and other supplier bureaucracy (+ associated costs)

    Yeah, the majors won’t go for this.

    unless they’re looking to service markets where such things are routinely swerved….

    Yup.

  15. That said, I wish Legasea well, so long as no taxpayer money is involved. After all, isn’t that what capitalism (which the right-wingers who frequent this site are supposed to support): finding niches and opportunities which others have missed?

    Absolutely. But I can’t help feeling their business model is on the idea of “sustainability” rather than supply and demand. As I said in my recent post about the entrepreneurs, a lot of people seem to think environmentalism is a product in itself and the business just the vehicle it’s riding around on. And as others have speculated, I wouldn’t be surprised to find state funding somewhere in all of this.

  16. It was part of the Piper Alpha complex.

    I’ve heard of that. What happened there, then? 😉

  17. Refurbished kit will probably be popular in areas where the regulatory regimes are less stringent as a PP has said. Just like Bhopal then? In fact I have an inkling that the last major project that I was involved with made rapid use of some cannibalised wellhead valves because the produced sand was eating the innards of originals at an alarming rate and there was no way they were going to sanction an unplanned shutdown (and the associated loss of face) to deal with it properly.

Comments are closed.