MODUS HAVE NEW LEASE

ON LIFE

By Mr. Robert Bowie

Introduction

During the past ten years, the offshore industry has been confronted with unique situations which have forced oil companies, drilling contractors and related industries to develop innovative solutions to continue offshore drilling and production activities. They include:

accelerated worldwide offshore exploration, resulting in the discovery of oil and gas in geographical areas where refineries, pipelines, transportation facilities etc., typical in the Gulf of Mexico and North Sea, were not available;

depressed crude oil prices, providing little incentive for developing costly offshore projects; and

the discovery of significant reserves in water depths exceeding the limits of conventional fixed platforms.

These three actualities highlight the dilemma faced by the offshore industry. In short, why should exploration for additional reserves continue when newly discovered supplies were already too costly to develop? One solution is the use of a floating production system. The industry today is creating numerous types of floating production systems, and converting existing MODUS for use in production service.

The American Bureau of Shipping (ABS) has developed specific criteria for the conversion of MODUS to production systems, based on experience gained in working with the offshore oil industry in the Gulf of Mexico, the Coast Guard and Mineral Management Service (MMS).

Criteria

When a MODU is identified for conversion to production service, the design review work, fabrication records and survey reports over the unit's life help determine its adequacy for sitespecific use. ABS has devised a system of four production categories, recognizing different operating scenarios and indicating applicable requirements and the extent of ABS involvement.

Category A

Well or drill stem testing

This is a short-term test using portable equipment brought on board a drilling unit. The test is conducted as part of drilling or work-over operations.

ABS requires the description of the locations where the equipment may be temporarily placed on the unit and any actions necessary to safely accommodate it. The MODU retains its class designation, requiring no additional ABS involvement. (No production can be exported.)

Category B

Dedicated well testing

This testing is conducted on permanently arranged units primarily dedicated to well testing. Such units do not have drilling systems, and typically move from site to site, connecting to the drillstring to conduct their operations from alongside the rig.

The major concern of ABS for these units centers on arrangement and equipment installations. Design details of the installation must be submitted for review, and components must be either certified by ABS or by other recognized authorities, such as the American Society of Mechanical Engineers for pressure vessels or the Underwriters Laboratories Inc. for electrical

equipment. In addition, the fabrication and installation of equipment must be inspected by ABS. It is also subject to periodic inspection by ABS surveyors. (No product can be exported.)

Category C

Short-term production

Vessels, barges and MODUS outfitted for temporary or early hydrocarbon production of marginal fields or for extended well test operations fall under this category. The product may be stored on board, and is exported by flexible hose either to a storage vessel, a single-point mooring, a subsea pipeline or manifold center. In some cases, the units may be arranged for simultaneous drilling and production. ABS considers production to be short-term when its duration does not exceed two and one-half years at a site.

A detailed design review of the arrangements, systems and components of the production facility is conducted to assure compliance with ABS "Guidelines for Building and Classing Hydrocarbon Production Facilities on Offshore Installations." ABS surveys are carried out during fabrication of critical process components, as well as on board installation and testing. Surveyors are in attendance during initial start-up and commissioning offshore. In retrofitted units, structural fire protection of accommodation spaces may have to be upgraded if production equipment is placed nearby.

ABS does not review the site-specific adequacy of the system, such as environmental, mooring or foundation considerations, as a mandatory condition of classification. It is up to the Continued on page 12

Hydrocarbon production installations These are permanent installations where provisions have been made for extended on-site deployment without drydocking. The installations include fixed platforms, tension leg platforms, compliant towers, floating production systems and MODUS used for long-term sitespecific production.

ABS classification requires plan review and survey of topside facilities similar to installation for Category C. In addition, the site-specific adequacy of the entire system and stationkeeping capabilities are reviewed for compliance with the ABS Rules for Building and Classing Offshore Installations, part 1- Structures.

An important difference between Categories C and D is the duration of production service contemplated. The two and one-half-year production limit was selected based primarily on ABS requirements for drydocking, and the policy that a unit is drydocked before going on location: Successful review and acceptance according to the rules leads to naming the unit as an "A-1 offshore installation production platform."

This approach involves the following

the operator to meet their requirements for structural adequacy of a design. The owner is allowed to submit process facility design information to MMS for approval.

In meeting its requirements, MMS has advised owners that ABS classification of the converted MODU is acceptable as demonstrating the structural adequacy of the unit. However, MMS does not recognize ABS classification as a replacement or substitute for its own requirements for approval of the production facility.

In most cases, owners have chosen the option provided by ABS to classify only the structural adequacy of the unit as if it were a fixed platform. ABS believes that this one exception for conversion of MODUS to production service is justified, since a jack-up approved for site-specific applications (with jacking capability removed once the unit is elevated, is, in fact, a fixed platform).

Coast Guard requirements

MODU owners must also comply with the following Coast Guard requirements:

The unit must be operated in accordance with 33 CFR, subchapter N for fixed outer continental shelf activities, and it is not subject to Coast Guard in-service inspection requirements for MODUS. Furthermore, if any of the above Coast Guard requirements are not met, then the unit is considered a vessel under either 46 CFR, subchapter I or I-A, depending on whether drilling capability is maintained. In either case, ABS requires a full review of the production facilities, since either application is subject to the MODU rules requirements and Category Cor D-type production service requirements.

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