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Last Updated: July 12, 2016
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Among the more illustrious drilling contractors that have crashed and burned or have been swallowed up, such as Zapata, Reading & Bates, Offshore Company, Sedco-Forex, Pride, Global Marine, Santa Fe etc. there are a host of other smaller lesser known outfits who have disappeared over the years. One such is the little know, at least outside of South East Asia, Robray Offshore Drilling. I recently had an inquiry asking if I could direct them to an website that gave some history of this erstwhile Singaporean company but it predated the internet and there is precious little information available in the public domain. However, I worked for Robray for 25 years from its inception in 1974 and including the years when it was absorbed up by Norway’s Smedvig in 1986. It seems right to correct this lack of historical information about this small but pioneering company by at least a blog!

Robray was started and owned by Singaporean multi-millionaire Robin Loh who owned a shipping line, an airline, an IT company, a shipyard and more besides and had close connections to Pertamina’s then head Ibnu Sutowo, both of whom profited significantly from the relationship. Robin wanted to participate in the oil boom of the mid 1970’s and in partnership with Ray Williams, then Regional head of Reading and Bates, they formed Robray, placing a significant number of orders with National for drilling equipment for their planned fleet of drilling rigs. Initially they began with three heli-rigs that all worked in Indonesia while a sister company, Robin Shipyard, begin construction of the first two self-erecting tender assist barge rigs. Reading and Bates had pioneered the tender rig concept for development drilling off wellhead platforms and Ray Williams brought the concept to Robray as well as decimating his ex-company by stealing many of its regional management and rig crews. Before moving into Robin’s Robina House in Shenton Way the company began life in the Marco Polo Hotel. The conference room was the hotel lounge, renowned in Singapore for its Irish Coffee’s and the dresses worn by the waitresses!

The heli-rigs worked in Sumatra, Kalimantan and especially in Irian Jaya (Sorong) where Robin had family links. The rigs were eventually sold off, two to Indonesian contractor Medco/Apexindo and the other into Australia but they had served their purpose in getting the company started.

Meanwhile the first self-erecting tender rig, then called the HP Thrower after a founder member who had passed away but later re-named the Robray T-1, garnered a contract with Dubai Petroleum. Not long after the rig began work they had a major blow-out and the wellhead platform plus the rig’s derrick set were burnt to cinders. Robray quickly replaced the derrick set with that from under construction Robray T-2 (initially called Aquarius Star) thus gaining a reputation for fast action which it maintained throughout the life of the company. Replacement of T-2’s derrick set was made that much easier because Robin also owned manufacturer Pyramid Derrick who were in the yard next to Robray’s yard in Singapore. When Robray T-2 was completed it went to work off Balikpapan in Indonesia for Unocal.

Robray also built a platform rig, P-1, which was contracted to Esso Malaysia, and sat on the Tembungo platform off Kota Kinabalu in Sabah. When Malaysia introduced the PSC system Esso initially refused to play ball and shut down all its operations. P-1 was shut in for around one year, on standby rate and full crew, until Esso capitulated and agreed to Malaysia’s PSC terms. P-1 had become the cleanest and best kept rig in the world as the only action on board was chipping and painting.

By this time Ray Williams had retired and Jack Walters assumed the Presidency and the construction of the T-3 was underway. It also went to work for Unocal but in Thailand in 1980. A deal was also struck with Elf, in 1980, to build two more tender rigs, T-4 and T-5, for contracts in Gabon, won because by this time Robray had perfected the art of fast rig up/rig down operations that left their competition in the shade. Robray was the only company that was prepared to accept Elf’s limit on rig up times, which if memory serves me correctly was 12 days. By this time Robray had rig moves down to a fine art and averaged 5 days. Under the Elf contract Robray was paid full dayrate for 12 days irrespective of the time it took to complete the operation, which made it a lucrative contract.

Robray had by now established itself as the leading tender assist company, aided by the fact that their direct competition all operated less specialized and larger fleets that included more sexy jackups and floaters as well as their few tender rigs and their full focus was not always on keeping up with such a small market sector. In the spirit of that age Robray became known for being a  “can do” company, something that probably is not appropriate in today’s health and safety dominated world and they also developed a reputation as a very efficient and professional drilling company albeit operating in a small sector of the industry. Tender barges were limited by environmental factors to shallow water and benign environments which meant operations were restricted to South East Asia, parts of West Africa, Egypt and the Arabian Gulf. It also limited the number of clients it could work for as they could only drill off wellhead platforms in shallow benign waters but these clients included Unocal (later Chevron), Total, ExxonMobil. Elf, Total, Shell and Petronas among others. Robray befitted from being a small company that was based in the region where most of its fleet worked and had a small and young management team capable of making quick decisions without reference to a headquarters in Texas.

Unocal was an especially tough and demanding client to work for but they liked the job that T-3 was doing and called up Jack Walters and asked him if Robray would build four more tenders to work in Thailand. Much to many people’s chagrin Jack would only agree to build two thus allowing in new competition, Great Eastern Drilling, who built the other two rigs. Thus T-6 and T-7 came about and entered active service in 1982 and 1983 respectively. T-7 must hold the world’s record for the longest contract term as it worked for Unocal (and Chevron after the acquisition) for 30 years. The rig was scrapped in 2015 having only ever worked in Thailand and only for one client.

Earlier the company had sidetracked from the tender business into jackups, brought about when Robin purchased a jackup design (and the designer) from ETA for Robin Shipyard. While Robin Shipyard was building ETA Robco 300 jackups for India and China, Robray were themselves having two built of the same design but in Hitachi Zosen shipyard in Japan. The first, Ednastar, was completed in 1977 but did not go to work until the following year when it started up with Elf Oman before moving onto Total Iran and Total Abu Dhabi. The Iranian revolution put a stop to the Total contract and the rig was then sold off mysteriously to later emerge as the Yu Song in North Korea. It is now the COSL 935 and is working in China. The second, Ednarina, was sold after delivery to interests in Brazil but later also ended up in China as the Bohai IV. Robray never operated this rig.

Things were looking good by the early 80’s. By this time Jack Walters had gone and was replaced by Clyde Stephens, formerly with Unocal. But then came oil crisis of 1986 and like all drilling contractors Robray suffered financial difficulties with low rates for their rigs, loss of contracts and financing issues. T-4, by this time working in Egypt, was smuggled out of the country with creditors chasing it and Robin Loh had become disenchanted with the drilling industry and wanted out. Initially Clyde Stephens had seemingly reached an agreement for Foramer, a main competitor, to buy the company but Robin was not impressed with the offer and instructed Clyde to look at other options.  Unocal had already suggested to Clyde that he should approach Smedvig in Norway, an ambitious contractor looking to expand, and a deal was struck very quickly. Although some of Smedvig’s operations people were not impressed with these “simple drilling machines” Smedvig-Robray turned into one of Smedvig’s best and most profitable purchases.

Meanwhile Robray narrowly escaped a tragedy in 1989. Typhoon Gay struck the Gulf of Thailand where it capsized the Unocal owned and Great Eastern operated drillship Seacrest with the loss of 97 lives. The T-4 and T-7 also were operating in the Gulf at the time. The T-7 was hit first, losing 7 of its 8 anchor lines and only hanging on, with the help of a workboat, from either crashing into the platform or heading into the unknown. T-4 was hit next and was not so fortunate, losing all 8 anchor lines and took off under wind and wave power heading towards Cambodia, leaving the drilling crew abandoned on the platform. The rig’s main crane, a 150 ton Favco, was ripped off the deck by the force of the wind and lost overboard and although a workboat was gamely trying to keep up, the rig was out of control and in danger of sinking through water pouring into the hole in the deck where the crane had been. The Senior Pusher, Axel Lutz, is credited with saving the rig by filling the hole in the deck with mattresses and putting out sea anchors to slow the rig down. Meanwhile the drilling crew still on the platform had to survive a day of no food and water, wondering if they would ever see their colleagues on the rig again. Eventually the rig was collared by the workboat and returned to Songhla and the drilling crew rescued but the Seacrest, hit after the other two, was not so fortunate. Robray had been lucky.

With the North Sea market flat Smedvig had Robray market their big North Sea semis into Asia Pacific, with some success. Both the West Delta and the West Alpha mobilized into the region for charters in Indonesia, Vietnam and China. They were quickly yanked back to Norway when the North Sea market improved but had helped Robray gain more exposure in the region outside of the tender sector.

Smedvig were always looking for expansion. Owner Peter Smedvig’s aim was to be one of the top three biggest drilling contractors in the world and they looked to increase their already dominant share in the tender market by buying or building more rigs. Robray had always failed to penetrate Brunei, a Shell stronghold and then dominated by Petrodrill as Shell’s favoured contractor. Smedvig acquired Petrodrill thus acquiring the Tiga Kali, a non-self-erecting barge which became the T-8 and the Pelaut, built in 1994, the first ever semi-tender assist rig that was the brain child of Petrodrill owner Foster Manning. Apart from now gaining entry into Brunei, Smedvig then financed Robray to develop the semi-tender concept by building a second improved unit, West Menang, in 1999 which also went to work for Shell. Since then six more semi-tenders have been built by the company in its various iterations and the concept has been repeated by the likes of Atlantica, PV Drilling and Energy Drilling, the latter company basically a Robray Mark II.

When Clyde Stephens moved on, ex Smedvig CEO Staale Roed took over and become an enthusiastic exponent of the tender market, so much so that years later, after he left Smedvig, he became involved with Energy Drilling where he joined many ex-Robray colleagues.

The end for Robray came in 2006 when Seadrill acquired Smedvig and the Robray name disappeared forever. Seadrill later sold most of its tender rig division to Malaysian company SapuraKencana in 2013.

But Robray lives on through the many close knit ex-Robray personnel still with SapuraKencana and with Energy Drilling. As part of the Robray “family” we all were fiercely protective of the tender market and as was always said “Once a tender hand always a tender hand”. It was quite a ride. RIP 1974-2006.

Robray upstream drilling
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The Strait of Hormuz and Oil Prices

The UK has just designated the Persian Gulf as a level 3 risk for its ships – the highest level possible threat for British vessel traffic – as the confrontation between Iran with the US and its allies escalated. The strategically-important bit of water - and in particular the narrow Strait of Hormuz – is boiling over, and it seems as if full-blown military confrontation is inevitable.

The risk assessment comes as the British warship HMS Montrose had to escort the BP oil tanker British Heritage out of the Persian Gulf into the Indian Ocean from being blocked by Iranian vessels. The risk is particularly acute as Iran is spoiling for a fight after the Royal Marines seized the Iranian crude supertanker Grace-1 in Gibraltar on suspicions that it was violating sanctions by sending crude to war-torn Syria. Tensions over the Gibraltar seizure kept the British Heritage tanker in ‘safe’ Saudi Arabian waters for almost a week after making a U-turn from the Basrah oil terminal in Iraq on fears of Iranian reprisals, until the HMW Montrose came to its rescue. Iran’s Revolutionary Guard Corps have warned of further ‘reciprocation’ even as it denied the British Heritage incident ever occurred.

This is just the latest in a series of events around Iran that is rattling the oil world. Since the waivers on exports of Iranian crude by the USA expired in early May, there were four sabotage attacks on oil tankers in the region and two additional attacks in June, all near the major bunkering hub of Fujairah. Increased US military presence resulted in Iran downing an American drone, which almost led to a full-blown conflict were it not for a last-minute U-turn by President Donald Trump. Reports suggest that Iran’s Revolutionary Guard Corps have moved military equipment to its southern coast surrounding the narrow Strait of Hormuz, which is 39km at its narrowest. Up to a third of all seaborne petroleum trade passes through this chokepoint and while Iran would most likely overrun by US-led forces eventually if war breaks out, it could cause a major amount of damage in a little amount of time.

The risk has already driven up oil prices. While a risk premium has already been applied to current oil prices, some analysts are suggesting that further major spikes in crude oil prices could be incoming if Iran manages to close the Strait of Hormuz for an extended period of time. While international crude oil stocks will buffer any short-term impediment, if the Strait is closed for more than two weeks, crude oil prices could jump above US$100/b. If the Strait is closed for an extended period of time – and if the world has run down on its spare crude capacity – then prices could jump as high as US$325/b, according to a study conducted by the King Abdullah Petroleum Studies and Research Centre in Riyadh. This hasn’t happened yet, but the impact is already being felt beyond crude prices: insurance premiums for ships sailing to and fro the Persian Gulf rose tenfold in June, while the insurance-advice group Joint War Committee has designated the waters as a ‘Listed Area’, the highest risk classification on the scale. VLCC rates for trips in the Persian Gulf have also slipped, with traders cagey about sending ships into the potential conflict zone.

This will continue, as there is no end-game in sight for the Iranian issue. With the USA vague on what its eventual goals are and Iran in an aggressive mood at perceived injustice, the situation could explode in war or stay on steady heat for a longer while. Either way, this will have a major impact on the global crude markets. The boiling point has not been reached yet, but the waters of the Strait of Hormuz are certainly simmering.

The Strait of Hormuz:

  • Connects the Persian Gulf to the Gulf of Oman/Indian Ocean
  • Length: 167km
  • Width: 96km (widest) to 39km (narrowest)
  • Controlled by Iran, the UAE and Musandam (Oman)
  • The conduit for 33% of all LNG trade and 20% of total crude oil demand
July, 16 2019
Your Weekly Update: 8 - 12 July 2019

Market Watch 

Headline crude prices for the week beginning 8 July 2019 – Brent: US$64/b; WTI: US$57/b

  • Bolstered by the renewed OPEC+ supply pact but rattled by increasing tensions between Iran and the US, oil prices started the week steady after gaining over the previous week
  • With the OPEC+ supply deal extended to March 2020, focus will now shift to adherence and in particular, Russian commitments to the agreement that previously wavered over 1H19
  • More critical to the market is the escalating standoff between the US and Iran around the Straits of Hormuz and even beyond; British forces seized an oil tanker off Gibraltar that was suspected to carrying Iranian crude to Syria, drawing share criticism from Iran
  • Iran itself confirmed that it was raising its level of nuclear enrichment above levels agreed to in the 2015 deal that ended sanctions, and accused European signatories to the deal of ‘not doing enough’
  • Iranian forces also confronted a British tanker escorted by a warship in the Persian Gulf, with the narrow channel now a flashpoint for action
  • As a recipient of Middle Eastern crude, China has also raised security levels for its vessel passing through the Straits of Malacca after doing the same for the Straits of Hormuz, raising some eyebrows
  • While the confrontation – or lack of – between the US and Iran will be the main driver behind oil prices movement in the second half of 2019, the trade policies of the Trump administration that may now hit secondary Asian manufacturing nations such as Vietnam is also leaving the global economy increasingly fragile
  • Against this backdrop, the US active oil and gas rig count fell again, dropping five oil sites and gaining one gas site for a net loss of four rigs
  • As the Iranian situation deteriorates, the market will be pricing more risk premiums into traded prices, which should inch up towards the US$65-67/b range for Brent and US$59-61/b for WTI

Headlines of the week

Upstream

  • Marathon Oil has completed the sale of its UK businesses to RockRose Energy, handing over the Brae and Foinaven area fields for US$345 million
  • Despite pulling out from the UK North Sea, ConocoPhillips is still active in Norway, recently submitting a new plan to re-develop the Tor field in Great Ekofisk, which was shut down in 2015 despite only 20% of resources extracted
  • In a bit to boost national production, Nigerian independent Aiteo Eastern E&P has announced plans to spend up to US$15 billion over the next five years to drill new wells and re-visit existing assets
  • Eni and Vitol have been awarded rights to Block WB03 in the offshore Tano basin in Ghana, with Eni holding 70% and expanding its presence in the country
  • Total has approved Phase 3 development at the onshore Dunga field in Kazakhstan that will increase capacity by 10% to some 20,000 b/d by 2022
  • Eni has launched production from the Mizton field in Mexico’s Bay of Campeche Area 1 – the first new offshore new field development by an international firm since reforms in 2008
  • Halliburton and Kuwait Oil have signed an agreement to explore for oil offshore Kuwait which makes Kuwait’s first foray in offshore upstream services
  • Energean Oil & Gas has purchased Electricite de France’s Italian unit for US$850 million, gaining assets in Egypt, Italy, Algeria, Croatia and the North Sea to complement its existing fields in Israel and Greece

Midstream/Downstream

  • China will be launching a new low-sulfur bunker fuel oil contract on the Shanghai Futures Exchange by the end of 2019, just as new IMO regulations on marine fuel oil sulfur content caps kick into effect in 2020
  • Just as American crude production hits new highs, American refining capacity has also reached a new record high of 18.8 million b/d
  • China has issued a new round of crude oil import quotas for private oil refiners, allowing them to bring in an additional 56.85 million tonnes (~1 mmb/d) over the remainder of 2019
  • In the fallout over the contaminated crude scandal at the Druzhba pipeline, Russian pipeline operator Transneft has capped volumes of Rosneft crude that can be transported to Germany and Poland on the pipeline
  • The US Environmental Protection Agency (EPA) has proposed an increased biodiesel mandate to 20.04 billion gallons in 2020 up from 19.92 billion gallons in 2019, but may not extend the hardship waiver program which drew criticism
  • Iraq and Oman have signed a new MoU to cooperate in the oil and gas sector which includes plans for a shared Omani refinery processing Iraqi crude

Natural Gas/LNG

  • Kosmos Energy has struck new gas at the Greater Tortue Ahmeyim-1 well in the Albian reservoir offshore Mauritania and Senegal, which will support the Greater Tortue Ahmeyim LNG project that is on track for a 2022 start
  • Kenya and Tanzania have entered into talks to explore cross-border natural gas trading, aimed at delivering Tanzanian natural gas to Kenya to bypass requiring and building facilities for LNG imports
  • Energean Oil & Gas is reportedly looking to sell its stake in the major Glengorn gas discovery in the UK once its acquisition of Edison E&P is completed
  • Saudi Aramco has started work on the Jafurah gas terminal that will take unconventional gas from the Ghawar oil field to the coast for processing
July, 12 2019
TODAY IN ENERGY: U.S. utility-scale battery storage power capacity to grow substantially by 2023

Utility-scale battery storage units (units of one megawatt (MW) or greater power capacity) are a newer electric power resource, and their use has been growing in recent years. Operating utility-scale battery storage power capacity has more than quadrupled from the end of 2014 (214 MW) through March 2019 (899 MW). Assuming currently planned additions are completed and no current operating capacity is retired, utility-scale battery storage power capacity could exceed 2,500 MW by 2023.

U.S. utility-scale battery storage capacity

Source: U.S. Energy Information Administration, Annual Electric Generator Report and the Preliminary Monthly Electric Generator Inventory

EIA's Annual Electric Generator Report (Form EIA-860) collects data on the status of existing utility-scale battery storage units in the United States, along with proposed utility-scale battery storage projects scheduled for initial commercial operation within the next five years. The monthly version of this survey, the Preliminary Monthly Electric Generator Inventory (Form EIA-860M), collects the updated status of any projects scheduled to come online within the next 12 months.

Growth in utility-scale battery installations is the result of supportive state-level energy storage policies and the Federal Energy Regulatory Commission’s Order 841 that directs power system operators to allow utility-scale battery systems to engage in their wholesale energy, capacity, and ancillary services markets. In addition, pairing utility-scale battery storage with intermittent renewable resources, such as wind and solar, has become increasingly competitive compared with traditional generation options.

The two largest operating utility-scale battery storage sites in the United States as of March 2019 provide 40 MW of power capacity each: the Golden Valley Electric Association’s battery energy storage system in Alaska and the Vista Energy storage system in California. In the United States, 16 operating battery storage sites have an installed power capacity of 20 MW or greater. Of the 899 MW of installed operating battery storage reported by states as of March 2019, California, Illinois, and Texas account for a little less than half of that storage capacity.

U.S. operating utlity-scale battery storage by state

Source: U.S. Energy Information Administration, Annual Electric Generator Report and the Preliminary Monthly Electric Generator Inventory

In the first quarter of 2019, 60 MW of utility-scale battery storage power capacity came online, and an additional 108 MW of installed capacity will likely become operational by the end of the year. Of these planned 2019 installations, the largest is the Top Gun Energy Storage facility in California with 30 MW of installed capacity.

As of March 2019, the total utility-scale battery storage power capacity planned to come online through 2023 is 1,623 MW. If these planned facilities come online as scheduled, total U.S. utility-scale battery storage power capacity would nearly triple by the end of 2023. Additional capacity beyond what has already been reported may also be added as future operational dates approach.

Of all planned battery storage projects reported on Form EIA-860M, the largest two sites account for 725 MW and are planned to start commercial operation in 2021. The largest of these planned sites is the Manatee Solar Energy Center in Parrish, Florida. With a capacity of 409 MW, this project will be the largest solar-powered battery system in the world and will store energy from a nearby Florida Power and Light solar plant in Manatee County.

The second-largest planned utility-scale battery storage facility is the Helix Ravenswood facility located in Queens, New York. The site is planned to be developed in three stages and will have a total capacity of 316 MW.

July, 11 2019