A question of integrity
  from: Offshore Engineer
  by: Darius Snieckus
  Monday, October 06, 2008

Recent contracts for iicorr in the Caspian, China and Malaysia tell the tale: the oil industry is increasingly seeing both the virtue and economic value of integrity management. Darius Snieckus reports.

Rust never sleeps – particularly, it seems, in a period where the offshore industry is placing greater emphasis on enhanced oil production and extended field lives. And so, busy days for Aberdeen-headquartered integrity, inspection and corrosion specialist iicorr. The company has seen its revenue climb steadily from £19 million in 2007 to a projected £23 million this year on the back of contracts in offshore regions including the US Gulf, the Caspian, Malaysia and China, but now expects – aided by an ‘acquisition and organic growth’ strategy – to propel its turnover to better than £50 million by 2010.

The integrity market is at the heart of its plans. ‘The age of the assets in the North Sea and many other mature basins, under the influence of what has been happening with the oil price, means that installations that were supposed to have stopped producing long ago are still in production – and the operators of those installations need to be pointed in the direction of maintenance that needs to be carried out or indeed be given the peace of mind that everything is up to spec,’ says chief financial officer Gary Connel.

To underpin these turnover-trebling goals, iicorr last November set in motion a restructuring process that involved the appointment of seven new business managers and restructured its divisions from ‘integrity on one hand and field services in the other’ to seven units ranging over integrity, inspection and corrosion, providing consultancy, management, engineering and operational support.

‘The aim was to create more responsibility across the company and more entrepreneurial business skills,’ adds Connel, ‘while distributing the weight as we continued our internationalisation.’ Iicorr has subsidiaries in Kuala Lumpur, Perth, Houston and a branch office in Baku. And recently added addresses in the south of England and Singapore to its network through the acquisition of Subspection, an Alresford, UK-based outfit that specialises in cathodic protection surveys, engineering and subsea sensor equipment.

The industrial fit is neat. ‘They were a competitor so we knew the company well and they were operating in two locations we weren’t,’ he says. ‘With Aberdeen feeling the skills shortage, having a base in Hampshire that drew on a different employment market seemed a good idea, as did Singapore. And they had some advanced technology that we felt we could benefit from.’

‘Technology and equipment that is potentially more reliable, more compact – and so more easily repairable offshore should it need to be repaired, and faster,’ adds Connel. More widely, the tie-up has found synergies in areas such as sacrificial anode-based solutions: where Subspection’s ships CP department has one of the world’s most advanced impressed current cathodic protection systems and avoided sacrificial anodes, iicorr’s CP team by contrast were focused on providing solutions centred on sacrificial anodes.

‘The combined entity is now able to deliver the best of both solutions with the CP team carrying out combined visits to customers where the full product range can be discussed,’ he notes. ‘We can now do the CP survey, and add the interpretation and the engineering around that. This approach has proved very successful.’ There have already been contracts wins directly related to the wider CP suite now offered by iicorr, with the company having secured £220,000 in CP services deals since the takeover.

Acquisition of a company like Subspection, it could be argued, had been brewing for some time. In 2006, iicorr took on a contract with BP Americas for its first US Gulf of Mexico assignment, thought to be the first-ever pipeline integrity/ecathodic protection survey in the region and one that become ‘a foothold in the North American market for [iicorr]’, says Connel. Two years later, the contract has been extended to cover all of the major’s subsea assets in the US Gulf – ‘risers, flowlines, manifolds, distribution and control systems, mainly from the pressures point of view’. Run from its Houston office, opened in October 2006, the contract has pushed the total value of its work in the region to over £1 million.

Risk and reward

There is a world beyond CP for iicorr, of course, as recently signed contracts in the Caspian, China, and Malaysia point up.

BP recently awarded Iicorr’s integrity consultancy business unit the job of conducting a risk based inspection (RBI) assessment of the onshore-based water injection well intervention items for the Deep Water Guneshli asset in the Azeri sector of the Caspian Sea. The project is part of a five-year contract, valued at ‘£1 million-plus’, that overarched a range of services, with iicorr acting as independent inspecting authority for all of the oil company’s regional assets.

The style of assessment that will be implemented is based on iicorr’s RBI methodology for subsea and controls which has been developed from successful applications in the Caspian Sea, North Sea and the Gulf of Mexico, states Connel. ‘Essentially, the methodology involves calculating the risk from a series of probability and consequence assessments and devising solutions to monitor and manage the risk.

‘Having completed the assessment review, the diverse range of threats identified by iicorr has set an industry benchmark which can be rolled out on a global scale to be adopted by operators who want to add this area to their total integrity management portfolio.’

In the meantime, in China, iicorr is currently at work on a pressure systems and structure risk-based integrity (RBI) assessment for The Republic of China Oil Company. The second RBI to be carried out by iicorr in China, the job is worth some £150,000 and will see the contractor’s integrity consultancy team dividing its time between working on location and in Aberdeen.

‘iicorr has carried out similar RBIs on the structural integrity of oil pressure systems for clients at locations globally and when the opportunity to carry out this work in China presented, the team was keen to get involved in what is an emerging market for us,’ offers Connel.

‘Getting involved in a major project such as this in China helps show existing and potential clients that iicorr has the capacity and expertise to compete for integrity work in any location. It shows to the market how we are dedicated to supporting development in the emerging markets using our ‘best practice’ technology,’ he adds.

And in Malaysia, iicorr has girded its newly-acquired position in the Southeast Asia market with contracts in the ‘growing areas’ of topside corrosion and sand monitoring systems. Over the last few months iicorr has been closely involved in a number of projects with operators – such as Petronas, Shell and Talisman – that are devising solutions that have included specialised nonintrusive corrosion/condition sensors for J4, PC4, F13, Northern Fields, and the Magpie, Bugan and SNF projects.

iicorr estimates the cumulative value of this work to be in excess of £650,000 for deliveries that range over onshore and offshore commissioning services, project support, ‘as well as operational maintenance once these new facilities become operational’.

‘With the advent of increased exploration activity in Southeast Asia, this region remains a focus for future growth,’ says Connel, pointing to the company’s track record leading the sand monitoring project for the Murphy Kikeh dry tree unit now operating on Malaysia’s first deepwater field and its assignment work on various Shell developments offshore Sarawak and Sabah as standing it in good stead for future deepwater contracts. Eyes are on Shell’s Gemusut- Kakap field, set in Malaysia’s ‘second’ deepwater development.

With Oil & Gas UK’s HSSE director reporting findings recently that some 15% of hydrocarbon leaks are partly explained by corrosion, the wider issue of asset integrity is clearly a most pressing one. ‘When it comes to corrosion protection and, more generally, asset integrity, the phrases being used most now are “working smart” and, without veering into cliché, “optimisation”, working with fewer but nonetheless top quality people,’ concludes Connel. ‘Maintaining integrity has a lot to do with knowing when to check integrity based on the risk of it – and preventing lapses before they happen.’ OE

Click here to register to receive your own copy of Offshore Engineer each month.