Flexible. Aligned. Driven

NORTHERN OFFSHORE I PROFILE

Northern Offshore is a modern offshore oil and gas drilling company, created at the turn of the millennium, providing streamlined and bespoke services for its clients. Not only is the company building a next generation fleet of jack-up rigs, but it is also aligning itself with the needs of its clients and the trends of the industry. As CIay Coan, President of Northern Offshore, explained to Jordan Yallop, Northern Offshore is structured to respond to any problem with state-of-the-art solutions for greater productivity and efficiency.

Created in July 2000, Northern Offshore is a specialised offshore oil and gas drilling company. With the corporate office located in Houston, Texas, Northern Offshore has regional offices in Doha, Abu Dhabi and Aberdeen. Approximately 50 staff are based onshore with over 500 employed in various offshore roles, including contracted labour.

“What separates us from the competition is the fact that we are a small company,” said CIay Coan, President of Northern Offshore. “Specifically, the focus of the senior management team of Northern Offshore is directly on the performance of our rigs. This means that any challenges on our rigs get the focus and the attention of the entire entire senior management team.

“This enables us to be nimbler and if there is an action that needs to be taken, we can really respond quickly. Or if there’s just an operational decision that needs to be made offshore on the rig, we can respond much quicker than the larger, more bureaucratic service providers.”

A new kind of drilling contractor

A brief but incredibly insightful three-minute video on Northern Offshore’s homepage eloquently details how the company is committed to challenging the status quo of working in the industry. It is perhaps best described by the following statement (also courtesy of the company’s website): “In today’s environment, the first thing our customers need is a drilling contractor that listens. The last thing they need is a company layered with bureaucratic processes. We aim for quick, thoughtful, and practical solutions.”

As such, Northern Offshore describes itself as a ‘new kind of drilling contractor’. Not content with simply building the nextgeneration fleet of jack-up rigs, Northern Offshore is building a next-generation company, one that is in alignment with customers’ needs, structured to swiftly respond with state-of-the-art solutions for greater productivity and efficiency.

It achieves this through a collaborative culture, which emanates from the board room to the rig floor, as many of Northern Offshore’s senior management have clocked up many years working offshore. Combine this with a commitment to invest in technology and people, and you end up with a company that can confidently ensure that the people working the rigs know how to maximise the benefits the technology brings in order, to ultimately improve the integrity of safe operations and to reduce well construction times.

Historically Northern Offshore operated a diverse fleet of rigs, from jack-up rigs in the North Sea, to floating rigs operating in various locations in Asia and West Africa. In 2013 the company made the decision to invest heavily in the renewal of its fleet and entered into agreements with shipyards to build additional rigs: Northern Offshore made the strategic decision to build a fleet of high-specification and high-performance jack-up rigs.

Northern Offshore subsequently took delivery of – and secured long-term contracts for – its entire fleet of newbuild jack-ups rigs; two of them are GustoMSC CJ46 design rigs with a maximum water depth of 375ft, while the other two are GustoMSC CJ50 design rigs with a maximum water depth rating of 400ft. All four rigs have been built with automated systems, greater power and torque capabilities for increased mud-flow and hole-cleaning capacity, greater hoisting limits, safety enhancements and efficiency improvements.

In 2015, Northern Offshore was acquired by Shandong Offshore Equipment Co Ltd, a subsidiary of Shandong Marine Group Company,

NORTHERN OFFSHORE I PROFILE

Ltd. At the time, Blue Ocean Drilling, which was an affiliate of the above parent companies, was merged with Northern Offshore into a single organisation under the Northern Offshore brand.

Northern Offshore has a highly skilled QHSE-driven management team, providing a value-driven service collaboration with all customers. Currently, all Northern Offshore’s active drilling operations are in the Middle East and centred on its fleet of four high-specification jack-up rigs.

Whilst a comparatively small company, it is a highly skilled one, as explained by Mr Coan: “All of our rigs are drilling very challenging wells, whether it is development drilling or exploration wells that inherently involve a lot of unknowns. Our young fleet of rigs have already successfully drilled wells with high pressure and high temperature, extended reach wells and wells with high H2S content.”

Breaking into the market

Northern Offshore is proud of the fact that, as a new entrant to the Middle East market, it was able to secure contracts for its entire fleet of newbuild jack-up rigs with major operators. As an organisation, it had no previous history in this region, and counts one of its biggest achievements as breaking into this market by securing contracts for all four of the rigs in 2019.

With the Middle East being one of the world’s largest oil and gas producers, competition in the sector is fierce.

“Competition is increasing in the sense that there are more rigs being mobilised into the Middle East market. So, while there is indeed more competition, there are also greater opportunities,” Mr Coan said.

“All of Northern’s rigs are contracted under long-term agreements so while we do not have any current or near term rig availability, we are looking to grow by either chartering or purchasing additional rigs to add to our existing fleet.”

One trend the industry is seeing – and one that that Northern Offshore is adopting – is a move towards more local content and local spend in the areas that those rigs operate in.

Mr Coan explained: “In the locations where we operate, it is important to us that we hire, train, and develop people from the communities where we are working; we also emphasize the procurement of local purchases. We believe that we have a responsibility to invest in the communities and the countries where we are working.

“We always act in a responsible manner. We never push back on hiring local people, we embrace it, and actively seek out opportunities to hire talent locally.”

Another trend that Mr Coan highlighted is a definite shift towards the notion that bigger is better; more horsepower, higher capacities, larger crew, and larger deck space. These all mean one thing: increased production. In periods of down-turn it is these larger rigs that will continue to be contracted, and in good markets these rigs can command a premium.

Commitment and integrity

The onset of the Covid-19 pandemic impacted typical working practices in the offshore industry. Differing restrictions and regulations from country to country resulted in travel bans and foreign workers remaining away from home for extended durations. Mr Coan was keen to share his admiration for the employees of

Northern Offshore who soldiered on through some of the most difficult times the industry has ever faced.

“Throughout these disruptive times I believe we have done a good job of consistently delivering high quality drilling services to our clients, and our success is attributed to the shore-based management and individual employees at Northern Offshore.

Throughout the year 2020, if not for the loyalty and commitment of our offshore workforce I do not think we could have survived that period. We had people who made real sacrifices to go to the rigs, not knowing when they would be able to go home because of quarantine periods, flight cancellations, travel restrictions and other measures the various governments implemented to control the spread of the virus. Our offshore workforce was heroic in their actions and they deserve recognition for the sacrifices that they made.”

Another area of praise that Mr Coan was keen to highlight was the assistance from the company’s shareholders.

Mr Coan said: “Having the financial backing of our shareholders really enabled Northern Offshore to withstand the financial challenges that we had in 2020. We had costs ongoing and expenses that we had to incur without any real revenue to speak of up until the very end of 2020.

“The financial support of Shandong Offshore Equipment Co and ultimately the Shandong national reserve enabled Northern Offshore to fulfil our contract obligations and commence operations on our rigs.” n