Norway’s Statoil and Aker Solutions agreed to cancel a contract for Category B rig hire after admitting the technology development challenges posed by the task were “considerably more demanding than initially anticipated,” according to the latter.

The so-called ‘Cat B’ rig contract was signed in April 2012, since which time Aker and Statoil have worked to define and solve the technical challenges posed by the rig’s subsea systems. Although significant progress has been made in tackling these challenges, further technology qualification still remains, according to Statoil.

“Unfortunately, we have to declare that it is impossible to achieve this important, major industrial project within the scope of the current contract,” said Jon Arnt Jacobsen, Statoil’s chief procurement officer.

Aker said that as a result it will strike off NOK 11.2 billion (US $1.8 billion) from its order backlog after the cancellation of the contract for the delivery of the semisub rig.

The original premise of the contract was for Aker Solutions to deliver to Statoil a semisubmersible rig (the Cat B concept, pictured) capable of year-round well intervention and drilling services on the Norwegian continental shelf, for an initial period of eight years starting in 2015. The concept was developed for undertaking different types of well intervention with the aid of cable and coiled tubing operations. In addition, this type of rig has been designed for through tubing rotary drilling (TTRD).

However, according to Aker the technology development needed to build the rig proved to be considerably more demanding than initially anticipated and the parties on 24 June mutually agreed to terminate the contract with immediate effect. “Aker Solutions and Statoil have together concluded that the project can’t be realised within the framework of the contract,” said Per Harald Kongelf, regional president for Norway at Aker Solutions. “Unfortunately, the technological issues weren’t solved in the initial system definition phase of the project. We still believe in the concept of Cat B, but the technology needs more time to be developed,” he said.

Developing the subsea technology needed for Cat B to provide the required services in shallow waters proved to be particularly challenging. “We made significant progress in developing Cat B. We will seek to use the experience we’ve gained to explore future possibilities for maturing and realising this type of technology,” Kongelf added.

Statoil’s Ivar Aasheim, senior vice president for field development, commented: “We still foresee a need to develop the supply of this kind of service. Statoil will now evaluate the project and consider alternative solutions.”

Both Aker and Statoil will each be accountable for its own project-related costs. Aker will in the second quarter book a one-off cost of NOK 375 million ($62 million), of which NOK 355 million ($58 million) will be
recognised as an impairment of the investments in the Cat B project, while the remaining are operating costs.

The charter period’s contract value of NOK 11.2 billion will be removed from Aker Solutions’ order backlog, which totaled NOK 71.7 billion ($12 billion) at the end of March 2013.

Aker added that the Cat B project was within the company’s oilfield services business unit, which it has previously said it intends to spin off. The clarification surrounding the contract is expected to aid this process, it said.

Offshore