More assets “on the cards” for thriving Well-Safe Solutions

As it stands, the focus on the North Sea is ‘new’. New fields. New projects. New manufacturing. New sources of energy.

A drilling revival means available rigs are snapping up like hotcakes as companies try to ensure their operations run on time.

Although generally unpopular among oil and gas companies, the energy profit tax – and the investment relief that is part of it – has provided the necessary impetus for some slow-moving projects.

And with the price of oil hovering around $100 a barrel, it goes without saying that abandoning old fields would not be a priority for operators.

It’s a prediction that has also been echoed by analysts, and there are fears that with companies being incentivized to spend on new projects, decommissioning will not be factored in.

The price of oil does not slow down the decompression campaign

It might be in some cases, but good catch and drop (P&A) specialist Sure solutions’ activity levels suggest this is not the case everywhere.

“Since the second half of 2021, and certainly the first six months of 2022, it has been extremely busy,” said the company’s chief executive, Phil Milton.

Well-Safe Managing Director Phil Milton at Nigg’s Global Energy Park with the Well-Safe Guardian platform in the background.

He is also optimistic that even with daily drilling rates rising with demand, meaning P&A campaigns will be more expensive, work for the Aberdeen company will not slow down.

“We haven’t seen any impact to date from the energy profit tax or any direct correlation in the number of opportunities,” he said.

“What probably protects the wells, in terms of seeing them continue to move forward, is that a number of the wells that we have been contracted to complete – or are working towards – have already had their export route removed. .

“Whether it’s pipelines being decommissioned or the infrastructure they tie to their removal, FPSOs, etc. otherwise it is a matter of moving forward to fulfill the obligations of the operators.

Mr Milton added: “Part of our model is to offer a cost-effective, delivered service, and we like to think we would always be able to offer them a suitable solution to enable them to meet their decommissioning obligations.”

defender of course

After celebrating its fifth anniversary in early August, the company recently appointed Spirit Energy as operator for a 14-well contract for the Well-Safe Defender.

This is the first campaign for the rig in its new guise, having recently been acquired from Awilco Drilling, with work due to start in March 2023.

Safe WilPhoenix © Provided by Awilco Drilling
The Well-Safe Defender oil rig, formerly WilPhoenix

Well-Safe Managing Director Phil Milton said: “We took delivery of the Defender from Awilco in early June, and she is currently undergoing upgrades to prepare her for delivery of P&A projects.

“He has done a number of projects before, when he was part of Awilco, but now the rig will only be deployed on well dismantling campaigns.”

Continuous push to grow the business

Although it has only just expanded its fleet, Well-Safe is already looking at other opportunities, and other assets “are still very many and then the cards”.

With a chronic shortage of available units, that could be a difficult question, but Mr Milton says there is “tremendous support” behind the scenes.

“Our investors are very pleased with the progress we have made over our five years. Covid and the oil and gas downturn have impacted our business and our industry, but how we have successfully navigated it and taken Well-Safe forward has been well received by our funder. They continue to support us.

Ithaca Energy Well-Safe Protector © Provided by Well-Safe Solutions
The protector of course

“We are always looking for further opportunities to grow the business – both in the UK and overseas – and further assets are still in sight.

“The land market is also something that we are very interested in, particularly in continental Europe, so there are openings there that we are exploring and progressing.

“There is a real desire to continue to develop the activity and to offer more solutions around the dismantling of wells to our customers.”

A global game

Over the past year in particular, Well-Safe has built a significant pipeline of work, winning numerous contracts for P&A campaigns with operators such as Ithaca Energy and CNR International.

The company’s Guardian rig headed to the North Sea for its first UK contract, while a first contract for the Protector was secured in June.

With a growing number of projects on its resume, Well-Safe is now keeping its radar tuned for emerging decommissioning hotspots overseas.

Mr Milton said: “We have a solid foundation here in the UK. We have three assets and we want them all to be mobilized safely and to produce the efficiencies that we think we can implement. This is our primary goal.

© Provided by Bloomberg
Sydney Harbor Bridge Australia

“From there, we need to expand our offering in international markets and look at areas of the world where our solution can provide real added value.

“Well-Safe already provides a number of engineering desk studies for clients in Australia, New Zealand, Newfoundland and several other locations. It’s really about building on that and taking them from desk studies to more detailed engineering, and ultimately helping customers deliver projects when they’re ready to do so.

“Southeast Asia is another key area for us. Our model works very well in highly regulated areas, such as the UK. This is where our value proposition is strongest.

Looking for a “sweet spot” price

Of course, long-term planning will always be a difficult task in an industry that is so heavily dependent on the price of a volatile commodity.

“Whether it’s a low or high oil price, it can always impact our customers’ plans,” Milton said.

When a barrel of oil hits $100, companies will naturally prioritize other development opportunities, but that’s not necessarily bad news for decommissioning.

Mr Milton said: “With the price of oil where it is, it certainly helps our customers, giving them the funds to meet their decommissioning obligations.

“There is a sweet spot and prices are higher as it is, but things are moving forward nonetheless.”

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