New Know-how from the Black Sea

The Danish branch of Vetco Gray getting an extra kick after assuming responsibility for Eastern Europa. Experience in subsea technology to be transferred into the North Sea.

The Danish branch of the offshore giant, Vetco Gray, as a part of its modified structure has got access to new markets which might be useful to operators in the Danish sector of the North Sea in the years to come.

Since July 1st last year the Vetco Gray’s Esbjerg office took over responsibility for the East European market, too, so now it is able to work with a type of subsea technology likely to be useful in the North Sea in the years to come.

“We have got new opportunities for development. If you only operate in the Danish North Sea, you will soon run out of innovation. We need to see how people ope-rate elsewhere in order to get new ideas and inspiration for solutions,” claims Director John S. Andersen, Vetco Gray.

The construction yard in Esbjerg recently tendered for a Ukrainian project in the Black Sea where three subsea wells are to be established and tied-in to an existing field. It is remarkable that the project is to be carried out at a water depth of 20-30 meters, and that the subsea control valves, the so-called Christmas trees, are installed from a jack-up rig.

Off Gdansk in Poland Vetco Gray is involved in subsea projects, too. The state-owned company, Petrobaltic S.A., is purchasing mudline equipment and is negotiating a contract for Christmas trees and control systems for an extension of its subsea fields.

Suitable for the North Sea
Subsea systems are used in the southern part of the North Sea off Great Yarmouth and Holland. They require less maintenance and less cost, so they are attractive for the marginal fields characterising the North Sea in the years to come.

“To us it is a question of maintaining our skill within subsea and transfer our experience from alternative projects in Eastern Europe to the Danish sector of the North Sea. In my opinion it is only a question of time before we gain access to the market,” claims John S. Andersen. His estimate is based on the fact that production at many of the existing fields is decreasing, so the operators get excess capacity for treatment and transport of oil. The redundant infrastructure could easily make it commercially attractive to drill two or three wells in marginal discoveries near existing fields.

“We develop hand in hand with our smaller -clients, and the way to success in Eastern Europe is to offer measured amounts of technology. Denmark could be a bridgehead to Eastern Europe, and we would like to create value in the chain of development and use our workshop here at Esbjerg for mounting and testing.”

Room for smaller players
As a minor company in the large Vetco Gray family the Esbjerg office is mainly inte-rested in contracts worth up to 100-150 million DKK typically seeing one or three Christmas trees placed on the wellheads in a subsea solution combined with a service contract for a number of years. Projects of that size are seldom attractive to the major players in the market.

When it comes to oil production Eastern Europe to some degree may be considered a marginal area, and there are few service companies in countries like Ukraine, Poland and the Baltics being the most important single markets for Vetco Gray, Denmark. That is why they fit in so well with the business plan for the years to come.

“My plan is to let Eastern Europe account for 30% of our turn-over in 2009. In that way this area should provide a substantial contribution to our total growth of 60-80% for the next three years, but the continued high level of acti-vity in the Danish sector of the North Sea will contribute, too.”

If the market develops as expected it may be required to establish a workshop or enter into a partnership with somebody in one of the East European countries. Post-market service providing spare parts, service and workshop activities should preferably be close to the -client.

Need for new drive
Vetco Gray’s new manager in Esbjerg returned to the global concern just as the market was extended, and John S. Andersen makes no secret of the fact that the new structure in Northern Europe, where the offices in Aberdeen and Stavanger play an important part have been useful to Esbjerg.

As early as in 2000 the company sold Grayloc pro-ducts which were produced and distributed from Esbjerg to Norway and the rest of Europe. These products accounted for 25% of the company’s activities, and since then the promotional drive has been somewhat limited.

“Now we are able to grow as an independent company. In addition to providing and servicing wellheads and Christmas trees primarily to Maersk Oil and our growing activities in eastern Europe in 2007 we shall start up assisting our department in Aberdeen assembling subsea chokes. Our aim is to be a centre of competence within this discipline.”

The annual world production of Christmas trees is some 450, but the global demand is some 550.

More engineers
As the largest but one of the Northern European members of the Vetco Gray family Esbjerg expects to act as the supporter of the largest – the one in Stavanger – and consider Russia as a client for typically minor onshore projects.

“We need more engineers in Esbjerg, but I expect to have a department with four-five engineers running in a few years, and then we shall be self-sufficient with regard to tenders and handling of contracts. We have the IT technology for drawings and installations, so we need not be dependant on Stavanger and Aberdeen when it comes to engineers,” states John S. Andersen.

Vetco Gray has a turn-over of some 80-100 million DKK, and a staff in Esbjerg in excess of 40 persons. Both figures are expected to grow in the years to come.