Ding-dong battle over Siri solution

The 50:50 partners in Denmark's Siri oil field fell out last month over the latest proposals to deal with the subsea cracks that have beset the 13-year old Siri production and storage platform in recent years. Meg Chesshyre reports.

The row kicked off on 15 June with Danish operator Dong's announcement that it had found a permanent repair solution for its North Sea Siri platform, and had awarded Subsea 7 a contract – worth about $220 million – on a call-off basis under its existing engineering and construction frame agreement with the contractor. Dong said its chosen repair concept – installing cable stays between the platform legs and connecting a new support structure to the wellhead to permanently secure the caisson – had emerged from intensive work with external engineering companies.

‘There are still significant oil resources in the Siri area and we are pleased to have found a solution for the platform in order to produce the reserves from the field and its related satellite fields,' commented VP Flemming Horn Nielsen.

Norwegian partner Noreco immediately criticised the proposal, however, describing it as ‘technically immature' and contending that since it had not approved the plan it would not participate in it, nor finance it. ‘The licence agreement requires unanimity, consequently Dong would have to execute the project at its own cost and risk,' said Noreco, adding that it has developed a repair plan which would offer the best commercial and economic solution and could be implemented immediately.

In response, Dong Energy said it considered its plan – expected to cost DKr2 billion ($384 million) all up – ‘the only possible and sufficient repair solution that as soon as possible as required by the law can accomplish an operation of the Siri platform that permanently fulfils the needed safety and environmental standards and satisfies the regulatory requirements'.

Søren Gath Hansen, Dong Energy EVP for exploration & production, said as operator his company would not ‘compromise on environmental and safety matters and therefore we will proceed with the permanent repair solution. A prudent operator is expected and required to perform the operations in a safe and environmentally responsible manner in accordance with regulatory requirements including the Danish Offshore Safety Act. Our licence partner is obligated to support us in securing a responsible operation and shall bear the costs accordingly. We act on behalf of and to the benefit of all the Siri area owners.'

Noreco said it had three main concerns:
l that it was a fast-track project combined with an unproven and complex design; l that the solution could not be implemented prior to winter 2012; and l that class society DNV had not verified that the concept could be certified once installed.

‘Consequently, there are two possible technical solutions for repair of the Siri platform which require further investigations, and which must be given equal consideration and evaluation. Noreco cannot sanction a technical solution for the Siri platform until the full information basis about the two possible technical solutions is available.'

Noreco has suggested a re-grout solution (including drilling stop holes).

‘Re-grouting will significantly improve the current as-is situation, reducing the safety, environmental and business risk further. Noreco's solution deals with our understanding of the root cause. The concept needs verification by Det Norske Veritas.'

The Siri platform, built at the Kvaerner Rosenberg yard and installed in 65m of water in 1998, was the first application of GustoMSC's innovative MOPUstor design, comprising a three-legged jackup with process facilities standing alongside a wellhead tower, both structures slotted into a 300,000boe capacity steel storage tank on the seabed. A second MOPUstor platform, this time provided by SBM on a lease-operate basis for five years, is expected to go onstream at the end of this year for Talisman Energy's Yme field redevelopment in 92m of water off Norway.

Siri production was suspended by Dong in August 2009 after a routine inspection revealed cracks in a subsea structure connected to the oil storage tank. Production resumed in January 2010 following the implementation of temporary measures, which included connecting a drilling rig to the caisson and using specially designed lifting gear to support the load and prevent further damage (OE November 2009).

Insurance claims are being pursued in connection with the remedial work, but have not yet been settled. Dong has not included any impact of insurance claims in financial guidance for 2011.

Meanwhile, with 2012 targeted for project completion, Subsea 7 said it was making an immediate start on the engineering work and expected offshore operations – using the newbuild Seven Havila and the Skandi Acergy – to get under way 2H 2011. OE

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