Deepwater, abandonment focus of Gulf of Mexico contractors

J. Ray McDermott's subsea lowering system onboard their DB-50 Derrick Barge. (Photo courtesy J. Ray McDermott) Platform installations and removals (1947-1998) [25,665 bytes] PART II: This is the second part of a two-part series on heavy lift vessels and contractors, platform installation, and decommissioning. Part I appears on the pull-out section preceding this article.


Offshore lift, fabrication contractors diversify

E. Kurt Albaugh, PE
Mustang Engineering
J. Ray McDermott's subsea lowering system onboard their DB-50 Derrick Barge. (Photo courtesy J. Ray McDermott)

PART II: This is the second part of a two-part series on heavy lift vessels and contractors, platform installation, and decommissioning. Part I appears on the pull-out section preceding this article.

The offshore construction and abandonment industry is evolving to meet the challenges of the operators to perform more services, quicker and at less cost. The price of oil and gas, contractor competition, the increasing demand for single source for services, and deepwater challenges are just some of the factors forcing both operators and heavy lift contractors to look for cost effective solutions to these challenges.

Practical cost effective solutions developed by individual operators or contractors eventually evolve into accepted industry practices and trends. In addition to trends, new lift techniques and technology have been or will be introduced to the Gulf of Mexico (GOM) which will potentially offer major costs savings.

Installation trends

All of the interviewed contractors were asked about trends they are seeing for offshore installation projects. Below is a partial composite list of trends identified by the contractors.

  • Platforms are becoming more generic with fewer company or personal preferences.
  • Customers are asking contractors up front what can be done to make the installation safer and more efficient.
  • Customers are incorporating contractor input ideas into the next structural design which can save time and money (for example, ideas that make the installation less weather sensitive, particularly near the sea surface).
  • Greater desire by operators to use integrated lifts for topsides in order to reduce hookup costs and time for first oil.
  • Deepwater contractors are upgrading or building modular deepwater lowering systems for subsea work.
  • Improved professionalism in the industry over the past 2-3 years.
  • More cooperative attitudes between the operator and contractor.
  • The large heavy lift vessels (HLV) are evolving from crane vessels to installation vessels with multi-function capability.
  • Upgrading or installation of DP systems on the ultra HLVs.
  • For awkward or special lifts contractors prefer to lease slings and spreader bars.
  • Increased use of braced caissons, tripods, and other minimal structures in shallow water as an alternative to 4-piles.
  • Sizes of decks and deck weights have increased because lift capacity has increased.
  • Operators are including contractors as part of the team. A team approach is being used more and more for everyone's benefit.
  • Deepwater operators are incorporating post project performance review into the contractor's contract.
  • More contractors are seeing the market benefit of web sites.
  • Operators and contractors are maintaining personnel continuity on deepwater projects in order to effectively build up in-house deep water expertise.
  • Operators and contractors that focus on deepwater projects have been developing long term relationships.
  • Operators prefer EPIC contracts for deep water projects.
  • There is increased interest in gain sharing or risk/reward contracts.
  • Sharing of information between contractor and operator is continuously improving.
  • More and more of the operators are involving the contractor earlier in order to obtain their valuable input early on in the design process.
  • Alliances continue to be a trend among operators and contractors for new construction and installation phases.
  • Lifts in the GOM are becoming heavier as the ultra heavy lift vessels migrate outside of the North Sea.

Abandonment trends

Interviewed contractors were also asked about trends they are seeing with platform abandonments or decommissioning work, a growing segment of the offshore heavy lift market. Below is a composite list of trends based on the interviews and observations from conversations with others in the industry.

  • Platform abandonments increasily are being referred to as platform decomissionings.
  • Many operators are getting away from explosives, trending toward use of abrasive cutting for cutting piles and conductors.
  • There is a steady increase in the number of platform decomissionings.
  • There is a continued interest by yards to solicit storage of jackets and decks.
  • The demand for turnkey abandonments by independents is increasing.
  • There has been an increase in the number of calls to buy structures.
  • Earlier release of liability offshore; operators are releasing ownership and liability while the platform or deck section is on the hook.
  • There is more safety on removal side.
  • There is more customer cooperation and better understanding by the customer of the removal process.
  • There is increased use of a one contract approach to plugging and abandonments (P & A), remove platform, and pipeline abandon ment.
  • The state of Texas is increasing the number of reef sites.
  • Operators are assigning their young engineers to decommissioning projects as a way to train them.
  • Operators have been contractor friendly and more negotiable over the past several years.
  • Increased use of turnkey contracts for platform removal, refurbishment, and reinstallation.
  • Operators are selling or giving away properties early (prior to ending production), as a way to eliminate future decommissioning costs.

Platform decommissioning

In the North Sea, platform abandonments are referred to as a platform decommissioning; however, in the GOM, the platform removal process is still referred to as an "abandonment." Win Thornton, President of Winmar Consulting Services, advises that it is currently proper to refer to the process as "decommissioning."

Platform removals are growing (Graph 1), according to Offshore Data Services (ODS). ODS tracts platform removals with two piles and greater, whereas MMS tracks all platforms, including the caissons or single well protector structures. Consequently, MMS data has slightly higher figures each year. Data from both shows similar trends - a steady increase in the number of platform removals. The platform removal market in the US GOM is healthy and growing. Some of the HLV contractors have targeted this market as their primary source of work. For example, SVS Offshore feels the market is strong enough to justify the cost of bringing their DP stiffleg barge Rambiz to the GOM specifically for the platform removal market.

Win Thornton supports this anticipated growth. "There appears to be room for competition. There is a limited number of contractors on a bid list for decommissioning projects - five or less. I would like to see more," he explained. Thornton judges the supply and demand aspects of the market by monitoring the availability of the contractors to "handle schedule and scope changes."

The most commonly used type of equipment to remove platforms is the stiff leg crane. Cal Dive, Cross Offshore, Laredo Offshore, and Bisso Marine remove platforms with stiff leg crane barges. All of the contractors with stiff leg barges point out that the stiff leg crane is much more cost effective than a revolving crane barge. There is much less maintenance and smaller crew size requirements.

Jon Buck of Cal Dive comments further: "When operator cash flow is reduced, there is less money in the budget. Operators try to put off abandonments as long as possible. They prefer to find reserves and spend on new construction." Platforms normally have to be removed prior to 18 months after production ceases. However, for one reason or another permission is obtained from MMS to defer the decommissioning work.

"The present attitude is to defer, "says Thornton. This deferral is building a backlog of platforms that will have to be removed. Tommy Jahncke of Cross Offshore also confirms that the industry continually tries to defer de commissioning work. It is this backlog of platforms that several contractors have identified as their reason for predicting that the platform decommissioning market will continue to be strong. The MMS has a backlog website -

Tarn Springob of Laredo Offshore says that, "in the early 1990s, there was a rush for platform abandonments, however, the installations have picked up in the last two years, and in the last several years the abandonment market has been steady.

Stan Mendenhall, V.P. of Operations at Bluewater Industries, part owner of SVS Offshore, L.L.C., said that "the abandonment market is a regulatory driven market. We anticipate it to be a good market. We estimate the abandonment market to be $80-100 million per year."

John Driscoll of Smit Americas has another view: "I still maintain that platform abandonment, with the exception perhaps of the shallow water units, is not a business one should consider as a standalone or core activity."

Decommissioning mentality

The platform decommissioning work has it own psychology and mentality. First and foremost, pricing is very important, because operators want to spend the least amount of money on decommissioning. They want results which will allow them to perform the work safely and comply with federal and state agencies. John Driscoll of Smit International says that "the lowest possible bidder wins in the abandonment market. The market is extremely low price."

Engineers in general don't want to work on decommissioning projects. They prefer to build and install new structures. Decommissioning work is not glamorous and doesn't provide the exposure that most engineers desire for their career.

Tommy Jahnacke of Cross Offshore notes that "as things slow down, we are seeing young in-house oil and gas company engineers being assigned to abandonments. They are not as busy as before, and are being shifted from postponed or cancelled new construction projects. The assignments are being considered as a good training program, because they learn to manage and negotiate with contractors, and deal with contractors."

Even after the operator awards the decommissioning work, operators are usually not in a hurry to remove structures. They usually tell the contractor to "get to it when you can, but before a certain date."

Lifting methods

Since the birth of the offshore oil and gas industry in the GOM over 50 years ago, the dominant lifting equipment used to install or remove platforms has been the derrick barge with a revolving crane or a stiff leg crane barge. However, other methods are technically and economically being considered for use in the GOM.

There are basically six methods to install or remove offshore platforms or facilities:

  • Revolving crane method, which includes monohulls and semisubmersibles.
  • Fixed shearleg crane method
  • Floatover systems
  • Versatruss' lifting system
  • The "Offshore Shuttle" system
  • Jacking system methods.
Each group of methods has it advantages and disadvantages, both technically and economically. The predominate reason for considering other methods for installations is to be able to install integrated decks, thus reducing offshore hookup costs and time. For abandonment projects, the alternate methods allow the removal of a large section in one lift and thus improve the ability to re-use the deck.

Recently, the Versatruss lifting method was tested in the GOM for potential worldwide application. Also, Saipem plans to use their Anteo floatover system in the GOM offshore Mexico in mid-2000 for a 8,000 mt deck installation.


In August 1996, Bisso Marine introduced a new lifting method to the GOM when the firm subcontracted Versatruss to use their lifting system to remove a 220-ton, 4-pile deck section for Mobil Oil in West Cameron Block 71. The jacket was removed by the traditional method, using the 700-ton stiff leg vessel Cappy Bisso.

In August of 1997, the method was repeated when Amoco contracted Versatruss International directly to remove and transport their Eugene Island Block 367, 1,300-ton 8-pile deck section. The deck removal operation was completed in 10 hours. The lift was performed using the Versatruss 4,000 short tons (st) capacity system which consists of: two 180 ft by 54 ft by 12 ft deck cargo barges, 8 lift booms, 4 tie members, 8 Skagit RB90 winches, and rigging. No mooring lines were used during the lifting operation. The deck was towed nearly 150 miles in a catamaran configuration to shore for disposal.

Pat O'Conner of Amoco's Worldwide Engineering & Construction Group in Houston, explains that the project was funded by Amoco UK (Tim Watson) and executed by the New Orleans Business Unit (Alton Perry). "The Gulf of Mexico is a good testing arena for demonstrating new offshore lifting methods, since it represents a low cost and low risk environment. Versatruss was a success technically, and perhaps more importantly, showed the value of business unit cooperation. Amoco is now well placed to evaluate the use of Versatruss in areas such as the Caspian Sea, Trinidad, Venezuela, and the more hostile areas of the North Sea."

Win Thornton believes it is an excellent alternative to conventional lift methods. "It is not accepted yet in the industry, because a lot of people still see it as a prototype."

Subsea lowering

An emerging trend among the deepwater contractors is to increase their ultra heavy lift vessel's capability and versatility by having a subsea lowering capability.

  • J. Ray McDermott, Saipem, and Heerema all have, or will have, a subsea lowering system. Their competition is the new generation of diving support vessels (DSV) and multi-support vessels (MSV) with subsea lowering capability. J. Ray McDermott is the first among the heavy vessel contractors to use a subsea deepwater lowering system (DWLS) on their GOM projects. They have invested in a lowering system that can handle 1,200 st to 2,000 ft, 600 st to 4,000 ft, and 200 st to 8,000 ft. McDermott has used the DWLS successfully on the Chevron Genesis Project and the Texaco Petronius Project. The system is modular and can be put on any of the McDermott barges, when needed.
  • Saipem is spending over $1 million modifying the S-7000 block to permit lowering of subsea equipment in 5,000 ft water depths for a Gulf of Mexico installation in late 1999. Saipem has been bidding the Maxita on GOM projects, a MSV with crane that can lift and lower. The vessel can lower a maximum weight of 600 mt at the surface, 200 mt to 1,200 meters, and 100 mt to 2,400 meters of water. The load is fully heave-compensated to full depth.
  • Heerema is planning to modify the Balder in the second and third quarters of 1999, so that it will be able to lift and lower equipment to the seafloor. The vessel will be able to lower 5,000 metric tons (mt) to 500 meters or 500 mt to 3,000 meters in one continuous movement without a sling handover. According to John Reed, "we see the subsea components of the deepwater work becoming a bigger and bigger share of the installation pie. In some cases, 100% of the pie."


The versatility and capability of the fleet of liftboats as heavy lift vessels has gone largely unrecognized. Liftboats have been installing the majority of the minimal structures in the GOM since they are very cost effective in comparison to derrick barges. As a decommissioning tool, they are primarily used for plugging and abandoning wells.

Since last year, there has been a tremendous expansion trend in the GOM liftboat fleet. These new liftboats are being delivered with much larger cranes that have the capacity to install a minimal platform or remove a platform.


During this year's HLV survey, several contractors expressed some of their ideas concerning potential cost savings that the industry could utilize. Listed below are suggestions to be considered in project bidding and platform design:

  • Bill Riles of Van Kirk & Riles Interests: "For insignificant costs, an operator can make the platform so much easier to remove and install. Padeyes can be made bigger, aids for platform removal should be incorporated in the original design."
  • Stephen Davey of Saipem: "Historically, the industry has competitively tendered on an equal competition basis. The industry designs facilities for the next lower installation bidder in order to have a competitive basis." However, this approach more often does not utilize the additional capability of the vessel above the low bidder. Vessel day rates increase with capability, because contractors need to recover their investment. The additional daily costs for this capability can be offset by a decrease in the installation or hookup time. The ability to compress the schedule is much more valuable than the price of the vessel. Thirty to forty days can be saved on a deepwater installation."
  • Stephen Davey and John Reed of Heerema: The contractor needs to be involved earlier. This recommendation is very important if operators want to fully utilize the capabilities of the ultra HLVs for deepwater installation projects in order to save CAPEX costs.


E. Kurt Albaugh, PE is a Senior Consulting Engineer at Mustang Engineering, specializing in economic, cost and feasibility studies for offshore and onshore field developments. He holds a BSCE from Youngstown State University and a MCE from Rice University. He has been involved in the oil and gas industry for over 24 years. E-mail your comments to

Copyright 1998 Oil & Gas Journal. All Rights Reserved.

More in Home