Partnering to win

It has been an unusually prolonged dry stretch for rig and drillship owners, no doubt. With oil prices at subterranean levels for years, many owners started considering their options: what to do with their unused assets, how to tackle the financial challenges or whether to let go of their staff are just a few challenges that need to be overcome. Smart decisions needed to be made to avert a worst-case scenario.

In this environment, the recent news that the offshore contractor Vantage Drilling International reported a solid third-quarter operating result was a rare glimpse of hope. The Houston-based company, owner of three ultra-deepwater drill ships, four premium jack-up drilling rigs, and one standard jack-up drilling rig, had taken appropriate steps at an early time to avert the issues encountered by most other drilling contractors. Apart from restructuring before the financial pressures got out of hand, Vantage had evaluated its options in terms of optimizing operations and cutting costs, and decided in favour of a transfer of class to DNV GL.

A case for change

Bill Thomson, VP Marketing and Business Development at Vantage, provides some background: “We’ve always been a small company. The management structure is pretty flat and most of the people have been here quite a while and as such there are short lines of communication which means we can take decisive It takes prudence and a steady hand to persist in the current economic environment. As the leading classification society, DNV GL can offer a high level of expertise to help customers cut operating costs. PARTNERING TO WIN action when we see things need to be done. We have good rigs, good processes and procedures, but it’s the quality and diversity of our people that make the difference.” When Vantage came out of restructuring in early 2016, it was these “good people” who played a key part in allowing the company to refocus on ways to keep the same operating performance whilst saving costs. One of the areas reviewed was the role of the classification society: “We wanted to figure out how to get the best value for our money in terms of classification. We did a rigorous comparison of the class societies and found that not only the price of DNV GL was competitive but we also liked their approach; they were organized, proactive, aligned with our needs and had some good ideas for managing the operations of our rigs more efficiently. It was clear that in DNV GL we had found a partner that understood our needs. That’s when we made the decision to take our four jackups and the three drill ships and switch them over.”

Craig A. Koehne, Offshore Class – Business Development Manager at DNV GL – Maritime in Houston, who was working closely with Vantage explains: “Our focus to reduce downtime due to regulatory requirements was an important decision factor, as this is where the major cost savings are found. Vantage also appreciates DNV GL’s principles regarding transparency and working towards a relationship that will allow them to operate their assets in the most cost-efficient manner, while simultaneously maintaining high rigour towards the safety and reliability of their assets.”

Transferring class to DNV GL is an easy process. A dedicated project team at DNV GL takes care of all the coordination, including documentation reviews, making sure of a smooth transfer. Customers can expect more efficient rig operations and streamlined class-related procedures. DNV GL places great emphasis on providing comprehensive, 24/7 customer support and optimizing the vessel lifetime costs. “What has truly paid off for Vantage,” says Bill Thomson, “is the proactive approach DNV GL takes to classification. They have some good ideas on how to do things differently. In the current market situation, you can’t always take some big piece of equipment and send it to shore for overhaul, shutting down a rig. You need to find ways of keeping your operations working efficiently offshore.” In particular, he points out, challenging the traditional, rigid five- and ten-year overhauls in favour of a more condition-based inspection scheme that accounts for actual usage and is less disruptive on rig operations makes a big difference for Vantage. Many OEMs have moved to this condition-based maintenance, an approach vigorously supported by DNV GL, but not all OEMs are there yet.

Always ready to go

Unlike many competitors who cold-stacked their unoccupied rigs during the critical years and laid off their crews to save costs, Vantage had decided in favour of warm-stacking its rigs so they could be reactivated and be ready for deployment at short notice and without major investments. Acknowledging the immense value of its workforce, their experience and familiarity with the hardware, Vantage agreed with the crew to find all means necessary to reduce the cost to be able to keep the rig warm-stacked. This included reducing salaries and changing positions to minimize the warm-stacking cost. This allowed Vantage to keep the personnel available and the rig in a good condition ready for reactivation, where others had decided to cold-stack their rigs and release their trained and experienced people. Doing so enabled Vantage to seize any new opportunity in the market quickly with experienced crews. The benefit of retaining the people, keeping the vessel warm-stacked, and working with DNV GL was seen when Vantage reactivated the Platinum Explorer in less than four months from contract award for a three-year contract with ONGC in India.

The transfer of class made sense as part of the company’s strategic approach to riding out the crisis. “It’s lining up with people like DNV GL that helps,” says Bill Thomson. “DNV GL is present in most markets and works with many drilling contractors, and they’ve got lots of good ideas. Our technical teams in Houston and Dubai appreciate that the DNV GL teams are approachable, willing to listen to ideas, discuss their differences of opinion and reach positive solutions.”

Maximizing asset value

Vantage’s four DNV GL-classed Baker Marine Pacific Class 375 jack-up rigs are the company’s workhorses, says Thomson. “These jack-ups are designed to be robust and we have over the past eight years been impressed with how capable they are. Our technical team, working with DNV GL, has been able to find areas where it has been possible to significantly improve on the original design and push the vessel performance to the next level. This is done in full conjunction with the experts at the class society to ensure that we not only improve performance but maintain the same levels of redundancy and safety.” In a highly competitive environment, an expanded range of operating conditions for the rigs can make a big difference for Vantage – another example that shows how working with the right classification society can produce very tangible benefits. A fifth jack-up Vantage purchased recently is currently being evaluated, and DNV GL has supported the drilling contractor in this process as well.

Whether it is maintaining the assets in the most cost-efficient manner while maximizing safety, performance and uptime, handling the complex interaction with local regulatory bodies, providing technical advice and support, or offering flexible inspection and testing schemes and reducing regulation-related downtime, transferring class to DNV GL has paid off for Vantage, especially now that nearly 100 per cent of the company’s assets are under contract.

It may still take a couple of years until the drilling business fully rebounds, but the people at Vantage are confident they have chosen the right partner to support their three “wildly important goals”: firstly, maintain their stellar safety performance and operational record; secondly, put all of their rigs back to work to maintain their continuous operational track record, and finally to manage costs and preserve the cash to safely reach the end of this industry downturn.