Exclusive: New Subsea Company to Challenge the Traditional
- Business & Finance
A new subsea company was launched this month, comprising of a group of ex-FMC employees in alliance with subsea installation player DeepOcean, aiming to cut subsea tree installation costs by 80%.
Subsea World News has used this opportunity to learn more about the newly established firm, bringing you an exclusive interview with one of the company leaders, Chairman and COO at Optime Subsea Services Thor Arne Løvland.
First of all, congratulations and best of luck with your newly established company. How would you introduce Optime Subsea Services to our readers?
Thank you! It would be great to say that we created Optime Subsea Services in order to secure the future of subsea oil and gas. Although, we have our visions for the future it would be best to put it in a bit more context and add some Norwegian modesty to it. As we have worked in this industry for a long time and seen the increase in cost, we have not seen the effort of wanting to change it. We did however see an opportunity to be part of changing this. We felt the time was now, so here we are, presenting just a start of what we will introduce to the market in order to change the industry, ensuring innovative and technological cost efficient subsea well installation and intervention services for the future.
The 2015 seems to be the year when a lot of companies have decided to team up, how did you come up with this idea and what made you partner with DeepOcean?
In order to reduce the cost of operations, we believed it couldn’t be done with traditional technology and/or service offerings. We looked at operations and technology available today to put this together in a different package and realized we can expand current subsea services from IMR/FSV type vesssels, thereby having a more focused operation at even a lower cost. It just so happened that DeepOcean wanted to expand its services and expertise so our paths crossed. For us, having an industrial partner rather than a financial institution or similar funding, is a world of difference. Our industry is built on expertise and experience. With DeepOcean having delivered quality and great services for a number of years, makes our introduction to the market for a new company such as ours easier. It is also great to see the great culture that DeepOcean is driving, is exactly what we want to build upon.
As with our background in system engineering, we are good at understanding the overall picture and we believe we have an overall set of advantages from the competition. At the same time, we believe that we differentiate ourselves by being clear on who and what we are. We are a true subsea well completion and intervention services company. We deliver more cost efficient solution for the operator. There are not a lot of companies that can clearly articulate their strategic position and thus having challenges in operating lean and efficient. That means that now as we have developed our organization and technical strategy, we are able to ensure our organization is lean and quick to respond. We build technology and systems that are multifunctional, including building blocks to be leveraged for our future technology developments.
In addition, we are bringing new technology and new services to the market but avoiding large qualification programs, we instead leverage existing technology and components, but repackaging it. I would also like to add that we do have amongst the best resources at their field, when working together and seeing how well we operate, makes us quite extraordinary.
You have offices set up in Houston and Notodden, does this mean your focus will be on the Gulf of Mexico and Norwegian offshore market?
Our office locations were not coincidence. They were in a large part also driven on where the market currently is and going to be in the future. The three markets, UK/Norwegian sector, North America (including Canada Atlantic) and Africa (West and East) are absolutely critical for subsea well completion and intervention moving forward, and we are positioned to operate and deliver in all of them together with DeepOcean. In addition, with DeepOcean onboard, we are also able to keep focus on the other key markets such as Brazil and Asia Pacific. DeepOcean is already established in these areas and have personnel we are working through to promote our offerings and technology. This gives us the true global reach we need to penetrate the market quickly.
You previously worked with FMC, tell us a little about that experience and did it help you in establishing Optime Subsea?
Our background is pretty much only from subsea oil and gas and most of it well access and workover operations. The background comes from great companies such as Aker Solutions (Kvaerner at the time) and Vetco/GE Oil & Gas. It was however in FMC that all four of us were able to work together and further develop and understand how to focus on technology and the customer. FMC is a great technological company and working there has been a great experience. We have, however, come up with technology and services that are slightly outside of what FMC, or anyone else in the market, is currently offering, so the creation of Optime, is more a result of how well the four of us founders collaborate and develop new good strategy and technology together.
From what we know, Optime Subsea Services is the company that develops its own technology with emphasis on Light Completion Intervention System (LCIS) and Remove Operated Completion System (ROCS), can you tell us something about that?
We are very proud of our new technology. However, I say that with a slight frown as new technology in our industry often is associated with expensive and lengthy qualification programs. Our technology is new in the way we design our systems, but components that comprise the system is for the most part off the shelf and qualified. Standardization is key, as well as thinking long term and leverage core components to avoid future re-engineering.
Our first system is a multi Completion System (mSC) which installs and pulls any type Xmas tree, from a small IMR/FSV type vessel or a rig. As for the first system referred to as Light Completion Intervention System (LCIS) – patent pending, it is particularly targeted to install Vertical Xmas trees by having a feature that without taking hydrocarbons on deck, or penetrating any of the safety barriers, is able to perform this without a riser or wireline. It is a closed barrier system. This installation off of a lighter vessel can save up to 80% of the installation cost on a single Vertical Xmas tree compared to a drilling rig installation.
The next system, Remote Operated Completion System (ROCS) – patent pending, is able to install the tubing hanger without the use of a large umbilical. Depending on whom you ask there will be different degrees of frustration, but most customers and operators will share some frustration and experience with the umbilical being damaged in the marine riser. Imagine a pipe inside a pipe and then a thick control umbilical being clamped to the inner pipe in open sea at large depth. This will and is currently causing significant damage to the umbilical and also clamps dropped down the hole and resulting in long delays to repair or remove equipment. In addition, the size of umbilical’s and reels is a challenge on deck and this challenge is only increasing as the water depth is increasing. With this technology we can remove all that and also other type of subsea equipment such as the Umbilical Disconnect Function (UDF) connected on the Blow Out Preventor (BOP). With our solution we will instead communicate to the tubing hanger through a control module within the marine riser. This system also makes it possible to install Horizontal Xmas trees from a vessel after the rig has drilled the well, thereby avoiding the time and cost of having the Xmas Tree onboard a drilling rig.
What will be the first steps in securing new contracts and work for the company, when do you expect the first awards to start coming in?
This is a great question that we ask ourselves every day. At the end of the day, this is where the rubber meets the road. We have everything else in place and now we need to secure the right opportunities. We believe in today’s market that it is a benefit to be able to communicate to the customer; “you do not need to put up any upfront capital expenditure as we will provide the equipment, even at a lower operational expenditure than anything else out there”. We are working through this process now and seeing that our sales cycle is approximately as we anticipated so that we are still on target for signing our first contract by this year. That will immediately drive a need for additional 15 employees and once that is landed, we expect significant growth rate from there and aiming for 5-10 systems in operation in 2020.
2015 will be a very challenging year, how do you plan to tackle the current slowdown on the market caused by tumbling oil prices leading industry reductions in both capital and operating expenditures?
We went into this market with a fall in oil price, in fact, we anticipated a drop in oil price but just not this extreme and not this quickly. So for us, this is the reason why we believe we can succeed and will grow, because we are able to challenge the traditional. When the traditional solutions are more costly and time consuming, we believe that a significantly more cost efficient operation for subsea installations would be exactly what the customers would go for. As others in the market are downsizing, we have built our organization on a lean cost structure and can focus on scaling instead.
In addition, in our back pocket we do have an opportunity due to the great drivers existing in Norway on wanting to maintain the technological leadership in subsea oil and gas, to actually have a 3rd party fund us as a new and highly innovative start up with a large R&D project. We just haven’t had the time to sell it to customers yet … so if anyone should see a reduced R&D budget this year and wanting to work with us for new subsea installation system, well…, concludes Løvland.