Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion

Offshore
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a somewhat interesting & bizarre article. Probably one for c.captain, as I recall he posted similar Shell-Noble comments in the past.

[SIZE=3]Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion

RoyalDutchShellPLC.com - Jun 25th, 2015 by John Donovan

[/SIZE]FROM A REGULAR CONTRIBUTOR

The former owners of the Frontier drilling company sold their rigs to Noble for $2.16 billion in 2010. Given that their fleet of five vessels consisted of ancient rust buckets which were fit only for the scrapyard, this has always seemed like an inordinately large sum. The five vessels had been acquired by Frontier for about $100 million. The only client of Frontier was Shell. See http://www.reuters.com/article/2010/06/28/us-noblecorp-idUSTRE65R2C520100628.

Noble operated two rigs for Shell in Alaska (Discoverer and Kulluk) during the disastrous 2012 drilling campaign. In spite of their performance in 2012, Noble will once again be operating the Discoverer (now over 50 years old) during the upcoming drilling campaign. Discoverer is one of the rust buckets that Noble acquired from Frontier.

It is a curious coincidence that we discover today that the figure of $2.16 billion corresponds precisely to the amount owed by Shell to the Iranians.

UPDATED FROM THE SAME SOURCE:

Pure Speculation

Let us suppose that Shell was under pressure from the Iranians to pay their due, and sought to find a way to do so.

What better arms-length transaction than a process along the lines of:

(1) Set up a privately held company called Frontier, whose shareholders are uncertain
(2) Frontier buys some cheap hardware. Hardware doesn’t come much cheaper than 2nd generation rigs that are 35 years old such as the Transocean Explorer, the last rig stacked in Invergordon and about to head out of Cromarty Firth for the scrap yard. Rename the rig the Frontier Driller, and then rename it again to Noble Driller and suddenly an ancient 1976 Aker H3 with a water depth capability of 1250ft becomes a 5000ft ultra deep water rig. And for just $15 million (including fresh paint) you have a rig which on paper appears comparable to a $500 million 5th generation rig. Magic! Or take a 1973 Pelican class drillship, call it the Frontier Phoenix, and market it as a DP deep water vessel. Even if it can’t hold its position in flat calm water off Brunei, the analysts won’t notice. And the analysts will believe you when you say a 1973 Pelican is just the same as Transocean’s latest $600 million sixth generation vessel. They will never see them side by side or realise that the sixth generation vessel is actually about ten times larger
(3) Shell awards contracts to Frontier at grossly inflated rates to lease the hardware (of course these contracts can easily be cancelled when the rigs don’t work as advertised, just as they were in Brunei)
(4) Get Noble to buy Frontier at a grossly inflated price of $2.16 billion in order to take over the contracts
(5) Suddenly the phantom shareholders of Frontier are $2.16 billion richer. Who are they? Where did the money really go? Iran?
(6) Noble are paid $415000/day for the Noble Driller, so the monthly lease rate is roughly what Frontier paid Transocean for the rig.
(7) Noble get their $2.16 billion back from Shell through the inflated day rates
(8) The authorities around the world reimburse Shell for the inflated day rates under cost recovery and tax rebates
(9) If the money ultimately went to Iran (or offshore Iranian accounts), Shell has managed to successfully work around sanctions, pay Iran, and the IRS has provided much of the money!

You can be sure of Shell…

FURTHER UPDATE 26 JUNE 2015 FROM THE SAME SOURCE

Drilling contractors lease their rigs to oil companies on the basis of a daily rental rate. This is known as the dayrate, and applies from the time the rig is hired (mobilised) until it is released (demobilised).

The dayrate paid by Shell for the Noble Phoenix (formerly the Frontier Phoenix) was $306,000. Shell paid Noble $55 million “compensation” when they cancelled the contract of the Noble Phoenix.

The JOIDES Resolution (formerly the Sedco-BP 471) is a DP drillship of similar age and capabilities to the Noble Phoenix (day rate $306,000) and the Noble Discoverer (day rate $363,000).

The day rate of the JOIDES Resolution is $86,000.

The key difference is that the contract for the JOIDES Resolution involves neither Shell nor Noble. Why are the Shell-Noble dayrates four times higher than the rate for comparable vessels in the market?

Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion – Royal Dutch Shell Plc .com

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I don’t think they can compare the JOIDES Resolution here. It’s been a drilling research vessel for years and as far as I know still is. It’s not in the same ballpark as rigs drilling for big oil companies.

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[QUOTE=Drill Bill;164980][SIZE=2]a somewhat interesting & bizarre article. Probably one for c.captain, as I recall he posted similar Shell-Noble comments in the past.[/QUOTE]
Thats how it works at the big table…

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I just came across this thread and this article, which I found interesting but not necessarily believable. (I don’t say it is not possible)
I know the background story and the continuation of Frontier Drilling and are familiar with many of the persons involved. (No names here)
I’m also familiar with the site it originated from, which is dedicated to find something (ANYTHING) wrong with Shell. (Like Fox News vs. Obama)

We have a discussion going on in another thread about the Noble Discovery, which is one of the rigs mentioned here, but that was not my main interest.

What is NOT mentioned here is that Shell and Frontier was in the process of building two Drillships with Ice class and state of the art Drilling equipment at the time of the take-over, the Bully I and Bully II: https://exchange.dnv.com/Exchange/Main.aspx?EXTool=Vessel&VesselID=28089

They were built at Keppel Singmarine in Singapore and are on long term charter to Shell. These were said to be the reason why Noble were interested, aside from the lucrative contracts with Shell for some of the “old scrap heaps” owned by Frontier.

These ships and their sisters with Huisman drilling equipment has proven able to out-perform anything else in the Shell fleet: http://www.offshoreenergytoday.com/noble-bully-i-receives-global-floating-rig-of-the-year-award-from-shell/

One question comes to mind; why didn’t Shell use one - or both - of these modern, efficient and Ice classed ships for their drilling campaign in the Alaskan Arctic?? OK, these are DPS-3 ships and does not have a mooring system. The water depth in area of operation is shallow so DP may be seen as a wast, but the ability to drill with surface stack and to move away quickly in case of drifting ice should be an advantage, which may even stretch the drilling season by several months.

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[QUOTE=ombugge;171997]

One question comes to mind; why didn’t Shell use one - or both - of these modern, efficient and Ice classed ships for their drilling campaign in the Alaskan Arctic?? OK, these are DPS-3 ships and does not have a mooring system. The water depth in area of operation is shallow so DP may be seen as a wast, but the ability to drill with surface stack and to move away quickly in case of drifting ice should be an advantage, which may even stretch the drilling season by several months.[/QUOTE]

Drilling in shallow water and DP do not mix. The limits on the drill string are usually only 1.5 to 2 degrees. The shallower the water the quicker you hit those limits if something happens. One hiccup of the DP system you would probably be out of the green watch circle, past the yellow and into the red before the DPO got off face book and went to the screen to see what all the alarms are about, by that time the drill floor is calling screaming, and all hell has already broke loose. Since neither of the Bully rigs have the capability of anchoring, I would say that is a huge decision in not using them. The max drilling depth for the Disco is rated at only 1000 feet according to Noble’s home page. I am told the Burger wells were only in 200 feet of water. (thanks kingrobby).

I work on a harsh environment semi and the couple shallow wells we drilled, one in 250 meters and one in 400 meters of water. We were allowed to spud in on DP, but before we started drilling we had to have 8 anchors out. I am sure every government, oil company, and drilling company have different parameters on when to use DP and when you have to use anchors. I know when I worked in Newfoundland all the rigs had to have at least 4 anchors out, except some of the drill ships that work in deeper water and only during the summer.

As for a surface stack, perhaps that got lost in translation, because if you are talking about a surface stack like on a jack up, I would love to see the written procedure for disconnecting and driving away from the ice boogey man.

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besides why on earth would you want to run all those generators and thrusters to stay on DP when anchors do it for cheap.

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I was present for all of the saga of Frontier going to Noble and believe the buyout was at the request of Shell who had lost faith with Frontier being able to finish the ships. I cannot mention the name of the person in charge at Frontier as he has formally complained to the gCaptain administrators what he does not want his name to appear but everyone in the drilling work knows who I refer to. He was at R&B/Falcon before that company imploded in a mountain of debt and shady dealings.

We have a discussion going on in another thread about the Noble Discovery, which is one of the rigs mentioned here, but that was not my main interest.

What is NOT mentioned here is that Shell and Frontier was in the process of building two Drillships with Ice class and state of the art Drilling equipment at the time of the take-over, the Bully I and Bully II: https://exchange.dnv.com/Exchange/Main.aspx?EXTool=Vessel&VesselID=28089

NOBLE DISCOVERER was chosen because a decision was made to not complete the BULLY drillships to go right to the Arctic but rather with the ability to someday go although there would have been an incredible amount to reworking to do to the BULLY ships to be able to work in the ice. No anchor spread, no enclosed rig floor, no insulation in the superstructure, etc… They have an ice classed hull is all.

The basic idea behind the ships were hulls small enough to fit through the Panama Canal which would allow for summer drilling in Alaska and winter drilling in the GoM but somebody forgot that there are bridges over the canal and the MPTs were too tall to pass under them. Later, the ships came in topheavy and had to be sponsoned before they were even finished. Pure Wile E. Coyote genius there!

They were built at Keppel Singmarine in Singapore and are on long term charter to Shell. These were said to be the reason why Noble were interested, aside from the lucrative contracts with Shell for some of the “old scrap heaps” owned by Frontier.

These ships and their sisters with Huisman drilling equipment has proven able to out-perform anything else in the Shell fleet: http://www.offshoreenergytoday.com/noble-bully-i-receives-global-floating-rig-of-the-year-award-from-shell/

I am really truly shocked to think that the BULLY drillships outperform a fullsized Samsung, Hyundai or DSME built drillship and Shell only made that self serving award to try to wipe some egg off their face with the bastard children the BULLY ships proved to be. But maybe I am wrong…I was not still with Noble after the BULLY 1 started working.

One question comes to mind; why didn’t Shell use one - or both - of these modern, efficient and Ice classed ships for their drilling campaign in the Alaskan Arctic?? OK, these are DPS-3 ships and does not have a mooring system. The water depth in area of operation is shallow so DP may be seen as a wast, but the ability to drill with surface stack and to move away quickly in case of drifting ice should be an advantage, which may even stretch the drilling season by several months.

again, not finished for work in the Arctic and I would estimate 1.5years and $175M more to make them Arctic ready. I never knew how the BULLY ships were supposed to work in the ice without having a turreted anchor spread like the DISCOVERER’s. The way the moonpool was constructed, there was no way one could be retrofitted without completely gutting everything there and building a whole new center section of the ship.

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We may know some of the same people I believe.

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[QUOTE=ChiefRob;172015]
As for a surface stack, perhaps that got lost in translation, because if you are talking about a surface stack like on a jack up, I would love to see the written procedure for disconnecting and driving away from the ice boogey man.[/QUOTE]

Surface stack for a floater is not a novelty, SEDCO 601 was drilling in up to 2,000 ft or more off Mahakam Delta, Kalimanta Timur, Indonesia, using surface stack and synthetic rope moorings at least 15 years ago. They didn’t have a moon pool though, as the drill floor was over the stern.

I don’t know how these Bully rigs can move off, but I presume they have a disconnection point on the riser close to surface and a buoyant riser.

Correction: SEDCO 601 drilled in over 2,000 m. (6,700 ft.) of water with surface stack.

Surface BOP technology enables the rig to far exceed its original water-depth rating of 1,500 feet (460
meters), and the Sedco 601 has drilled in more than 6,700 feet (2,040 meters) of water with the process
that involves using the BOP in the moonpool

There is a detailed description of the system in this old Transocean in-house magazin (Page 40 onward) http://www.deepwater.com/Documents/Frontiers%20Magazine/Frontiers_Dec_2002.pdf

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[QUOTE=ombugge;172025]Surface stack for a floater is not a novelty, SEDCO 601 was drilling in up to 2,000 ft or more off Mahakam Delta, Kalimanta Timur, Indonesia, using surface stack and synthetic rope moorings at least 15 years ago. They didn’t have a moon pool though, as the drill floor was over the stern.

I don’t know how these Bully rigs can move off, but I presume they have a disconnection point on the riser close to surface and a buoyant riser.[/QUOTE]

Synthetic mooring has been around for a long time, it is very common to only use chain where it touches the sea bed or a chance of it chafing. Everything in the middle being synthetic.

All of the SEDCO rigs had the derrick over the stern, and were supposedly very good rigs for the time frame. The only 3 that were self propelled were the Sedco Energy, Express and Cajun Express, the rest were anchored. The 601 and 602 did experiment with surface stacks back in the 90’s. Surface stacks are used almost exclusively on jack ups and a few shallow water semis use them. Obviously it did not catch on because no one still uses that I am aware of other than jack up’s. When there is a blow out on a jack up, the only choice is to abandon the rig. With a anchored semi non self propelled, with a blow out they will slack off all the anchors on one side and pull the rig out of harms way with the other anchors. With a self propelled rig you just disconnect and drive away. Risers are for the most part buoyant neutral, even if you do make it buoyant positive, if you disconnect at the surface and drive away you will still have what ever the depth of water you are working in riser sticking straight up, free to the affects of mother nature without the rig there to hold it up. That is why self propelled rigs disconnect on the bottom and take everything above the BOP with them hanging. How would you get the riser out of the moon pool if you disconnect at the surface? Even the semi’s have bracing between the pontoons for and aft most of the time.

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[QUOTE=c.captain;172018]I was present for all of the saga of Frontier going to Noble and believe the buyout was at the request of Shell who had lost faith with Frontier being able to finish the ships. I cannot mention the name of the person in charge at Frontier as he has formally complained to the gCaptain administrators what he does not want his name to appear but everyone in the drilling work knows who I refer to. He was at R&B/Falcon before that company imploded in a mountain of debt and shady dealings.

NOBLE DISCOVERER was chosen because a decision was made to not complete the BULLY drillships to go right to the Arctic but rather with the ability to someday go although there would have been an incredible amount to reworking to do to the BULLY ships to be able to work in the ice. No anchor spread, no enclosed rig floor, no insulation in the superstructure, etc… They have an ice classed hull is all.

The basic idea behind the ships were hulls small enough to fit through the Panama Canal which would allow for summer drilling in Alaska and winter drilling in the GoM but somebody forgot that there are bridges over the canal and the MPTs were too tall to pass under them. Later, the ships came in topheavy and had to be sponsoned before they were even finished. Pure Wile E. Coyote genius there!

I am really truly shocked to think that the BULLY drillships outperform a fullsized Samsung, Hyundai or DSME built drillship and Shell only made that self serving award to try to wipe some egg off their face with the bastard children the BULLY ships proved to be. But maybe I am wrong…I was not still with Noble after the BULLY 1 started.[/QUOTE]

They did have one of the “Globe Trotters” in the Black Sea about a year ago. The only good thing I heard was that the derrick was much faster to take down than a standard derrick. I know they took it down to get under the bridges in Istanbul Turkey and the ‎Bosphorus straights. I never worked on one of the only 4 drill ships in the world equipped with that Huisman Derrick, but I have worked on some Huisman cranes and pipe handlers, and can honestly say they are not that great. A maintenance nightmare.

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As moorings for FPSOs yes, but I believe it was the first time it was used for a mobile drilling unit. They had two sets of moorings. One set in use and one being moved. They were using one the Maersk S-class AHTS, which was kept busy, exclusively for this, since they drilled very fast holes.
They did have some severe kicks - not amounting to a blow-out - once or twice, but I cannot remember if they ever had to move off. (I was working in Balikpapan at the time, but not for UNOCAL)

All of the SEDCO rigs had the derrick over the stern, and were supposedly very good rigs for the time frame. The only 3 that were self propelled were the Sedco Energy, Express and Cajun Express, the rest were anchored.

You are right, incl. the Sedco 135s, which was among the earliest semisubs ever built. The SEDCO 700s had the derrick in the middle, however.

The 601 and 602 did experiment with surface stacks back in the 90’s.

They did a lot more than experiment. They drilled a lot of well around in S.E.Asia using this system.

Surface stacks are used almost exclusively on jack ups and a few shallow water semis use them. Obviously it did not catch on because no one still uses that I am aware of other than jack up’s. When there is a blow out on a jack up, the only choice is to abandon the rig.
With an anchored semi non self propelled, with a blow out they will slack off all the anchors on one side and pull the rig out of harms way with the other anchors.

That is called “sling shoot” and can be used even without power on the winches. If you had chain mooring system and reasonable water depth this worked fine.
On some rigs there used to be a selector switch, where you could activate this function from the Bridge, or the Drilling office. On one rig in transit from Singapore to Australia one smart person decided to test this in the middle of the Indian Ocean, without having fully understood the function. 6 anchors and chains dropped in 4000 m. of water.
This switch became named up after the person and, at least on that company’s rigs, it was always clearly marked the “(name)-switch”.
As Master on a Drillship in that same company, I would test this function occasionally. In the log book and the daily report this would be noted as; “Tested the “xxxx” switch.OK” (No name here, in case the person is still around in the business)
I have never used it “in anger”, but we frequently had to move off manually due to shallow gas in the South China Sea.

With a self propelled rig you just disconnect and drive away. Risers are for the most part buoyant neutral, even if you do make it buoyant positive, if you disconnect at the surface and drive away you will still have what ever the depth of water you are working in riser sticking straight up, free to the affects of mother nature without the rig there to hold it up. That is why self propelled rigs disconnect on the bottom and take everything above the BOP with them hanging. How would you get the riser out of the moon pool if you disconnect at the surface? Even the semi’s have bracing between the pontoons for and aft most of the time.

I have been trying to search for any description of how it is done when drilling through the moonpool. I have not found any, but there may be somebody here that knows??
Sorry if OT here.

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[QUOTE=ChiefRob;172030]They did have one of the “Globe Trotters” in the Black Sea about a year ago. The only good thing I heard was that the derrick was much faster to take down than a standard derrick. I know they took it down to get under the bridges in Istanbul Turkey and the ‎Bosphorus straights. I never worked on one of the only 4 drill ships in the world equipped with that Huisman Derrick, but I have worked on some Huisman cranes and pipe handlers, and can honestly say they are not that great. A maintenance nightmare.[/QUOTE]

the difference between the BULLY and GLOBETROTTER MPT towers was that the latter had a section at the top which could be disconnected and send down to reduce airdraft. Regarding the performance of the Huisman equipment, I will say that in theory they are wonderful pieces of engineering but I really wonder how they are proving to be in practice? I know there is no way to slip and cut the drilling line in them and the drawworks is inside the towerbase with no room to do any serious work on them if required. Yes, I can see them being a maintenance nightmare for the rig mechanics.