Back from the stack

Hans Van Royen, CEO and president of Neptune Marine (left), Grace Fu, Singapore’s Senior Minister of State, Ministry of National Development and Ministry of Education, and Ong Poh Kwee, managing director of Sembawang Shipyard during the naming ceremony of the drillship.

Neptune Explorer was put through its paces in the South China Sea deepwater weather which included 3.5 knot/hour current, 40 km wind, and 1-m (3.3-ft) swells. It is designed to operate in as much as 4-m (13-ft) swells.

“It cost $340 million to upgrade the drillship to operate in 5,000-ft (1,524-m) water depth, and we have provision to upgrade it further to 6,500 ft (1,981 m),” says Van Royen in an interview withOffshore.

Built in 1982, the drillship was designed originally to operate in 1,000-ft (305-m) waters in anchor-mode. It now is equipped with a DP-2 system which can hold the vessel in place even if half the thruster system fails.

The 1.6-million lb derrick raises theNeptune Explorer’s drilling depth capacity to 7,500 ft (2,286 m), a five-fold increase from its original capacity. It has the capacity to assemble pipes, and the heavy-duty crane can install 80-ton (73-metric ton) trees, the heaviest of the subsea equipment.

“Though upgraded and reactivated over 36 months, it is as good as a newbuild,” stresses Van Royen, ratingNeptune Explorer among the world’s top exploration, development, and completion drillships, with accommodation for 143 people.

However, Van Royen acknowledges some unpredictable challenges in reactivating a stacked rig when the global economy is swamped and oil prices have nose-dived which have combined to cancel several drilling contracts.

Van Royen says the canceled contract has worked well forNeptune Explorer as it gave the company more time to prepare for long-term deepwater programs. “Original plans were to upgrade the rig to 3,500-ft (1,069-m) water depth, but we have gone ahead and increased its capacity to 5,000 ft,” he says, anticipating an additional $8 million in billing if a new contract calls for the drillship to operate in 6,500-ft water depth.

WithNeptune Explorer set to work on long-term contracts globally, Van Royen plans an extensive upgrade for another of the company‘s stacked semisubmersible rigs, Neptune Finder, formerly known as Sedco 708.

“Neptune Finder’s upgrade is definite but we are working out a long-term contract from 2012 as it would take about two years to prepare the semisubmersible for global deepwater drilling,” he says.

Neptune Marine is looking for a partner to share the cost ofNeptune Finder’s upgrade, as well as a global drilling partnership. The semisubmersible upgrade is being discussed with Asian shipyards, he adds.

Though it is still early to estimate theNeptune Finder’s upgrade cost, Van Royen concedes that the semisubmersible would have to match a newbuild deepwater unit, given the increasing deepwater and ultra deepwater drilling programs of international oil and gas companies.

“It would take us about two years to readyNeptune Finder, just as it would take us to build a new unit,” he says, stressing that the market would demand state-of-the-art technology in future units. He estimates a new high-end deepwater unit would cost $600 million.

Once the semi is upgraded, Van Royen plans to focus investments on newbuilds or acquisition of younger units.

“It is always productive to have a younger fleet which provides the flexibility of operating in all type of environments,” he says underlining his forward going plans for building Neptune Marine, the Norwegian company first registered in 2002 in Singapore by listed parent company Jasper Investments Ltd.

Van Royen is confident of a recovery in drilling rig day rates. He anticipates a 10% recovery in date rates for chartering drilling rigs from the second half of next year, expecting a number of international drilling tender calls.