Third 'i' on living space
  from: Offshore Engineer
  by: Darius Snieckus
  Sunday, August 01, 2004

Any change of ownership brings with it a degree of uncertainty. Happily, following four years of fast-paced international growth backed by private equity fund IDI, modular facilities specialist Pharmadule Emtunga is being encouraged by its new owner, venture capitalist 3i, to stick to its winning formula. Darius Snieckus reports from Arendal.

Since the transaction was finalised late last year, the first changes, according to Klas Wallin, vice president of marketing at offshore living quarters division Emtunga, 'have all been positive'.

'100% growth year-on-year for four years is quite tough and puts a lot of pressure on the organisational structure of the company,' he states. 'Following the takeover by 3i - we say we've gone from two "i"s [owned by IDI] to three "i"s - we were told to stop growing for a year and instead concentrate on consolidating what we had done over the past four and to organise ourselves for the next phase of growth.'

Emtunga has certainly earned the breathing space. Among its most recent contracts have been high profile jobs supplying living quarters for international offshore field developments including Statoil Kristin, BP Mad Dog, and AIOC Central Azeri. Last year, completing an order placed in January 2002 by Agip KCO, the contractor also floated out two LQ barges designed for grounded or floating operation in the north Caspian Sea.

For Kristin, Emtunga delivered its largest offshore LQ yet, a six-level module with a total area of 3600m2 that - once fitted with helideck - weighs 2000t. The LQ is made up of 104 single cabins, a gallery with provisional stores, recreation area, gymnasium, sickbay, central control room, heliguard shelter and utility rooms, all finished to the 'highest Scandinavian standard'.

In February, after testing at Emtunga's Arendal site, the module was single-lifted and shipped to Aker Kvaerner's Stord, Norway facility for installation onboard the Kristin production semisubmersible.

In the same month, Emtunga delivered its first accommodation module into the US Gulf: the LQ for BP's Mad Dog development. The five-level, 1220t module, which has a total area of 1950m2, consists of 45, 2/4-man cabins, along with the various facilities and amenities found in the Kristin LQ. A steel-built helideck and substructure were also provided as part of the order shipped to the Amelia yard in the US.

Weeks later, Emtunga built on its Caspian market segment with the supply of a modularised LQ for AIOC's Central Azeri platform - part of the giant ACG development offshore Azerbaijan. The unit, transported as module sections via Russia's Volga Don canal system and assembled on the platform topsides at the SPS yard in Baku, contains 198 beds, hospital, offices, central control room, and recreation and dining facilities, arranged over 2630m2 on five levels.

'The contract for the Central Azeri platform followed on from one we had on Chirag some years ago, which worked out for us and BP. Everyone was happy,' explains Wallin. 'It seemed quite natural for AIOC to come back to us when it came time to award Central Azeri.'

In the best tradition of repeat business, after the success of the Chirag job AIOC opted to sign up Emtunga to build three identical LQs for the sprawling Caspian field complex. The LQ for West Azeri was shipped out in June and the accommodation modules for East Azeri are currently being fabricated for delivery next spring.

'These three LQ are identical down to the screw-and-nut level. It has become something of an assembly line for us,' says Wallin. 'We have seen many advantages in this way of working, naturally. For one, you design one and build three so there are economies of scale to be found in procurement, and the learning curve in terms of fabrication only has to be learned once. It is really streamlined.'

Barge boom beckons
Much as this raft of contracts has had Emtunga putting both oars in in recent months, it must have seemed a leisurely pace after the workload demanded by the SKr920 million order made by Agip a year earlier for a pair of LQ barges.

The barges, Nur and Shapagat, were built under a workscope that encompassed design, procurement, fabrication, commissioning and start-up. Each vessel can accommodate 120 personnel in a total living area of 2200m2 that incorporates galley and mess, temporary refuge and muster stations, radio control room and helideck. The self-supporting barges themselves are outfitted with anchoring and mooring, towing and bottom jetting systems.

Certified by both the Russian Maritime Register of Shipping and London's Lloyd's Register, the barges are designed for the ultra-harsh offshore environments common off Kazakhstan - including temperatures that can range from -36°C to 40°C - as well as the region's uniquely shallow waters - 0-10m - which require that the LQ units be suitable for grounding on a prepared seabed or use in floating mode.

The decision to construct barges for use in the north Caspian - along with the southern sector, the market that has 'really taken off ' for Emtunga in the last few years - followed a similar pattern to that of building LQs for ACG. Under a contract with drilling contractor KCA Deutag, Emtunga has broken into the market via a design, fabrication, installation and commissioning contract for a 120-man LQ for an Agip KCO man-made island on the Kashagan field.

As Emtunga was hooking-up and commissioning the first modularised unit, notes Wallin, discussions were 'already under way' as to whether barge-mounted living quarters or further man-made islands were the way forward for the operator's exploration and development campaign in the north Caspian Kazakh sector.

The result, he continues, was that Agip opted to use 'exactly the same layout and facilities' as on Kashagan, but built on a barge. By the time price and delivery had been finalised, the Italian operator had doubled its order - while keeping to the same delivery deadline. 'We thought this might be a hellish timeline,' says Wallin, 'but we took it on and succeeded.' Three more barges, likely to incorporate drilling facilities, are in the offing for use offshore Kazakhstan.

'Thirty years has taught us the benefits of standardisation and this is something we are trying to push for a little more with our clients,' he adds. 'The argument is that if we can become more cost effective then everybody wins.'

Markets for accommodation modules are in the midst of a sea change, with demand in Emtunga's home patch offshore Europe shrinking. One market that the contractor is taking aim at is that of flotels, as the majority of this type of accommodation unit currently afloat are being employed for development work offshore Mexico.

West Africa, according to Wallin, is a potential future target market for these units.

'We have seen a number of enquiries - though none has moved ahead yet - for old semisub drilling units to be upgraded into completely new accommodation vessels,' he states. 'Most of this type of vessel built in the 1970s and 1980s have substandard living quarters - as well as things like asbestos insulation and so on.

Many of the world's rig owners would like to use these rigs but they are just not safe, so they are laid up at the moment. Most of the drilling equipment is in good condition but the LQs need upgrading before they re-enter the market.'

Unlike life under the ownership of IDI, which had a short-term strategy to advance Pharmadule Emtunga, 3i appears to be in for the long haul.With turnover last year of some SKr2.1 billion, the contractor remains a 'relatively small company', concludes Wallin, but one, backed by the financial depth and savvy of a new venture capitalist owner with 'a clear 10-year plan', that looks likely to continue punching well above its weight. OE

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