One of the biggest integrated services contracts in the UK North Sea is likely to be awarded in October by the oil giant, Shell.
We can reveal that a shortlist of three main contractors has been drawn up by Shell. They are PSN, Petrofac and Wood Group.
Two further bidders for the contract, Amec and Aker Solutions, have been knocked out of the competition.
Even allowing for Shell’s shrinking UK North Sea asset base, the asset support contract will be substantial and, we are advised, will continue to employ the bulk of the current workforce servicing Shell’s UK assets via the Sigma-3 alliance comprising Amec, PSN and the Wood Group.
It would appear that most if not the entire alliance workforce will be retained – about 550 engineering and trades personnel. Belief is that those involved will be offered the opportunity of transferring into the new contract, which covers the super-major’s Central North Sea assets, plus Brent.
While guarded on which companies are still in the running, Shell said in a statement: “The precise numbers will be a matter for the contract holder. It is too early to say what specific skills and experience will be needed for the project. This will be for the winning contractor to decide. Retaining skills and knowledge is an important factor.”
A source said of the jobs position: “It’s very hard to get to the bottom of this at the moment, in part because we don’t yet know who the asset support contractor is going to be. Initially, it looks like being broadly the same number.”
The new contract will spell the end of Sigma-3, which has been in existence for a decade, netting its member companies billions of pounds in revenues over that period and covering maintenance and modifications work, plus preparation for decommissioning. However, under the new arrangements, Shell has split that package into two separate contracts.
Decommissioning, initially covering the Brent Delta platform, has already gone to PSN in a £200million deal, as reported in the Press and Journal on July 27, leaving integrated services still in bid.
It is understood that, unlike Sigma-3, the contract soon to be awarded will be open-ended – flexible rather than a core contract with options to extend.
A key driver to the change in the upheaval of Shell’s North Sea contracting arrangements is the upcoming decommissioning of the giant Brent field. But there remains huge uncertainty as to when production will be shut down for the last time.
Factors that will influence that include prevailing oil prices and the volume of hydrocarbons being produced. Shell started the Brent decommissioning caravan trundling about five years ago and is proceeding at a deliberately careful pace.
Until such time as the plug is pulled and the family of platforms becomes “hydrocarbon-free”, Brent will be a core part of the asset support contract. Only then will it be handed over to the decommissioning contractor, therefore initially PSN.
Another asset that looks set to remain in the production portfolio for a limited period is the Central North Sea field produced by the ship-shaped floater, Anasuria.
That was recently offered for sale, plus a number of other concessions which Shell considers no longer relevant to its North Sea future.