![]() ![]() What is cold stacking?Ĭold stacking is where a rig is stored at minimum expense. Even in a relatively short period of time, rig conditions can deteriorate, meaning a cold stacked rig might not be available when needed, or need expensive repairs before redeployment. ![]() The ocean is a hostile environment where there’s humidity, salt water and battering from the weather. Rigs are warm stacked all the time, even during boom times, but usually for short periods such as when they’re in-between contracts or locations. The reason why rigs are warm stacked is so that they’re ready to go when needed. This is easy to remember as the ‘warm’ can refer to the engine room, kitchen or the crew beds… This means that the lights are on, the engines are running and there is a smaller, but adequate crew on board. Warm stacking is where a rig, platform or drillship is taken to port, but kept running in a similar state to as if it was operating. This means if you know the answer to one, you can just scroll down to save time! What is warm stacking? This article will take the form of a list of common questions, with brief answers. One example of a hard decision might be forward hedging strategies when margins are thin. The hardest decisions of all must be the ones where there’s no good answer, and its a case of choosing the lesser of two evils, nether satisfactory. Other decisions are challenging, but need to be done for survival, an example of this might be freezing a new project, or laying off workers. Some decisions are relatively easy for an oil company, for example there are accounting policies that can defer tax or expenses. A downturn massively changes the dynamics of utilization rates of manpower and equipment. The recent downturn in the oil and gas industry was hard to predict, and more importantly hard to estimate in duration. All the political or CEO confidence in the world wont make a difference to the people who can see a cold stacked ‘rig graveyard’ rusting away. The best market indicator in the oil and gas industry is probably the active rig count. Inventory numbers are a good indicator, global consumption figures are as well. Historic price charts offer clarification in the rear view mirror. There are some figures that don’t lie and are true guides to an industry. If someone were to map all of these predictions and speeches, how many would be in line with reality? More than 50%? Less than 50%? We all know about technical analysis, business confidence and the conferences of world leaders. We all get inundated with oil price predictions, and opinions about politicians and leaders speeches on a daily basis. Any O+G SCUBA diver will tell you how quickly metal can deteriorate in the ocean. Hopefully we can shed some light on the topic here. Outside of the upstream sector, many people in the industry are unaware of the differences between the cold stacking and warm stacking of drilling rigs. We answer a few questions and then look at how the industry has adapted. INTRO: This article covers the topic of the smart stacking of rigs in relation to an industry downturn like the one we’re still experiencing.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |