The tide is turning for UK port authorities as, thanks to significant investment, they emerge from the industry downturn well equipped to support offshore oil and gas operations. Wireline checked out the current situation at Lerwick and Montrose.
In Shetland, Lerwick Port Authority has looked to build on its inherent attributes – location, natural deepwater and capacity – with an investment programme totalling close to £30 million in recent years. The resulting upgrades strengthen the port’s ability to host large-scale, heavy-duty operations.
Similarly, at Montrose, the authority is continuing to roll-out a multi-million-pound development strategy to future-proof the port against the evolving demands of the industries it serves. The work is set to bolster its flexibility and competitiveness in a demanding modern-day market.
Lerwick has long been a hub of oil and gas activity, supporting new field developments in the northern North Sea and west of Shetland, as well as routine crew change and supply operations. Plus, ever more prominently, decommissioning work.
“Our strategy is to be a multi-user port and not have all our eggs in one basket,” says chief executive Sandra Laurenson. “For oil and gas, we’ve always supported new field developments – and that’s still part of the package – but over the past 20 years we’ve focused increasingly on decommissioning. We really see that as the next big thing for us.”
To that end, the authority has recently completed:
- an £11.95 million expansion of its Dales Voe base, creating an extra 75 metres (m) of quay length and 45,000 square metres of lay-down space. It offers a water depth of 12.5 m and quay strength of 60 tonnes per square metre – one of the strongest quay capacities in the UK
- the £16.5 million development of new facilities at Mair’s Pier that can accommodate larger oil-related vessels. It is the biggest single capital investment in the port’s history.
Lerwick’s industry offering also includes the multipurpose Greenhead service base – operated by energy logistics business Peterson and hosting decommissioning, fabrication and engineering companies, warehousing, storage and laydown facilities.
Over the years, Lerwick has supported some of the UK Continental Shelfs’ largest development projects. Recent examples include the BP-led Quad 204 programme and Statoil’s Mariner Field development. This year it will host activities for Hurricane’s Lancaster Field project west of Shetland.
“Lerwick can act as a hub; we have the quayside space to store large quantities of equipment so various elements of the project can be situated in one place, close to the development location,” says deputy chief executive and harbourmaster Calum Grains.
More broadly, he believes the overall investment strengthens Lerwick’s capabilities as ship owners and subsea contractors deploy ever-larger vessels for industry projects.
“For oil and gas, we’ve always supported new field developments – and that’s still part of the package – but over the past 20 years we’ve focused increasingly on decommissioning. We really see that as the next big thing for us.”
The Dales Voe investment has further boosted Lerwick’s ability to accommodate both decommissioning and field development work, and supported its efforts to attract new custom. Most notably, Dales Voe is hosting the decommissioning of the Buchan Alpha floating production unit.
The dismantling and recycling programme for the 12,000-tonne steel structure is the biggest project of its kind to be undertaken at Lerwick (although Greenhead has decommissioned around 70,000 tonnes of material in total over the past ten years).
“The quayside strength capability and extra space are game-changers for us,” adds Calum. “It would have been possible to host the Buchan Alpha project previously, but it would have been less efficient and more challenging to execute. It has been successful so far and we’re optimistic about future decom work.”
That optimism is reflected in the port authority’s enthusiasm for creating the UK’s first ultra deepwater facility, able to host the largest semi-submersible crane vessels. The facility would allow a simpler and more efficient straight to quayside process rather than the conventional, barge-based transfer system for larger sections.
“We are the only location on the east coast of the UK with the water depth to host such a facility,” notes Sandra. “We’ve been looking at the prospect for several years, but market conditions haven’t been right for the decisive investment needed. As the decom sector continues to mature, and with a growing political recognition that this gap in the UK market can be capitalised on, we’re keen to move it on.
Oil and gas accounts for about 25% of the port’s income and its status as a mature industry hub extends into its supply chain. “We’ve been involved in oil and gas for 50 years and in decom for 20 years,” says Sandra. “Lots of local companies are well used to working with the sector, so they have all the accreditations and skills the industry is looking for. They come as standard here.”
Calum believes decom suits the local labour market and supply chain capabilities. “It’s not labour intensive – you don’t need hundreds of people to deconstruct a platform. Buchan Alpha involves about 30 people. Local companies are well equipped to support projects of that scale, so it fits our model and supports good quality jobs.”
Montrose has steadily augmented its maritime infrastructure for the industry since an oil and gas service base was first established at the Angus town in the 1970s.
The port effectively comprises two large quays, one on either side of the River South Esk as it reaches the North Sea, and the process of improvement has taken on extra impetus in recent years. Around £15 million has been invested in quayside upgrade work since 2010, including opening two new deepwater berths on the south quay in 2011, as well as deepening and strengthening two berths on its north quay.
Similar enhancement work is starting this year on a further two berths on the north quay, taking the overall investment to well over £20 million. In this latest project, the quayside at the berths in question is being strengthened to 7.5 tonnes per square metre, while a new heavy lift pad is being installed to complement the heavy lift facilities.
“Our role essentially is to provide the infrastructure our customers need and this modernising programme reflects that,” says port authority chief executive Nik Scott-Gray. “Ships are getting bigger, the equipment we use to handle cargo is getting bigger and cargoes are getting larger, so this work is all part of our response to market development. We have to keep pace with things.”
The port supports the oil and gas industry with conventional services, with a specific focus on the chain and anchor market – storing, checking, certification and shipping kit such as chains, anchors and floats for rigs and floating production vessels.
Montrose also has a track record of successful project support, including the hook-ups of Total’s MCP-01 platform, Brent C and Fulmar A installations, as well as the fabrication and load-out of offshore accommodation vessels. Examples of the latter include the load-out of a 615 tonne two-storey module for Arco’s Thames project.
“We have a specialist capability that equips us to take, for example, piece-small subsea sections. That’s an opportunity for us and we have to make sure we are positioned to seize it.”
Overall, oil and gas business makes up about 70 per cent of revenue, derived from areas such as vessel operations or industry players that rent space at the port. “The investment programme certainly consolidates our position,” adds Nik. “Would we be handling the same level of chain and anchor work if we hadn’t done the quayside upgrade work? It’s hard to tell, but it has certainly helped to make sure we secure business for the long term.”
At the same time, Montrose is looking ahead at new opportunities, including the decommissioning market. “Because of our scale we’re unlikely to host the biggest top sections, but we have a specialist capability that equips us to take, for example, piece-small subsea sections. That’s an opportunity for us and we have to make sure we are positioned to seize it.”
The port authority has just completed an infrastructure masterplan looking 30 years ahead. Some of its focus is on the redevelopment of quaysides to provide more space, for example, and some is on deepening its approach channel to accommodate new generations of vessels.
“As we look at the recovering oil and gas market, we need to make sure we keep the port profile high so people understand what our investment is all about and what we are equipped to do,” says Nik.
Decom is very much part of Montrose’s focus – the recent investment programme is being rolled out with that market in mind – as is the fast-growing offshore wind sector on the east coast of Scotland. “We are in a competitive market in just about every respect in the modern-day industrial environment, and our strategy is to remain competitive and flexible,” adds Nik.
To an extent, decom is already a feature of port activity, with local businesses processing materials such as disused drill pipe or old chain for recycling or re-use. Leading North Sea contractors and operators such as Schlumberger, Transocean, Shell and BP have used, or continue to use, the port as a support base for offshore operations.
Montrose’s services are underpinned by a wider local supply chain. “Part of our role is to make sure we have the right providers based here in the port, ready to service vessels as and when required,” explains Nik.
“We’ve worked hard in recent years to develop a good reputation with stakeholders such as vessel owners and shipping agents – not least by focusing on our flexibility – and we need to ensure we continue to do good work to protect and enhance that reputation.”
This article first appeared in the Summer 2018 issue of Wireline.