Subsea 7 Awarded Two Long Term Support Contracts by Shell

Subsea 7 Inc. has been awarded two separate contracts by Shell Exploration and Production in Europe, both for a firm period of six years and with a combined value in the region of US $1.1 billion. These contracts, which will both have 4 x 1 year options to renew, will necessitate the design, build and operation of a Remotely Operated Vehicle Support Vessel (ROVSV) and a Diving Support Vessel (DSV). A vessel charter will be entered into for the ROVSV whilst the DSV will be built and owned by Subsea 7. These vessels will be used to carry out a wide range of subsea intervention activities in support of Shell's European operations.

Mel Fitzgerald, CEO of Subsea7 said, "We are delighted to have been successful in the award from Shell of these prestigious North Sea contracts. These awards clearly emphasise Shell's commitment to the North Sea going forward, and their desire to continuously improve the efficiency and safety of offshore operations through investment in new, state of the art technology. These contracts will involve Subsea 7 bringing two new subsea vessels to the market, and is inline with our company strategy to modernise and expand our fleet of subsea intervention and construction vessels, in order to provide our customers a best in class subsea service."

The first contract award valued in the region of US $400 million is for the design, build and operation of a fully equipped, state of the art Remotely Operated Vehicle Support Vessel (ROVSV) that will be used to support subsea activities throughout Shell's subsea infrastructure.

Steve Wisely, Vice President for Subsea 7 UK, said, "We are very excited with this award from Shell, which underpins their strong commitment to the North Sea long term. It follows the successful working relationship we have had with Shell over many years, for field inspection, repair and maintenance (IRM) activities of their North Sea facilities. With both Subsea 7's and Shell's continued drive for improving safety performance, innovation and environmental consideration, we have jointly delivered continuous improvement in our project performance.

Subsea 7 has an extensive track record, not only in IRM, but in deepwater field support operations in the North Sea and the West of Shetlands basin. We will bring this valuable experience to support Shell's Ormen Lange and Corrib deepwater assets, as well as their existing North Sea infrastructure."

Subsea 7 will deliver a fully equipped, state of the art, 114 x 24 m vessel equipped with two Hercules work class ROVs and four Cougar eyeball vehicles. Subsea 7, through its in-house engineering and design capability, will also provide high performance vehicle handling systems allowing the spread to operate safely and efficiently in up to 5.5metre sig. wave heights. This will enable year-round performance in the harsh environments of the North Sea and the Irish Sea. The vessel spread will also include an integral 35 tonne module handling tower for intervention on Shell's deepwater assets.

Tor Espedal Vice President for Subsea 7 Norway, stated, "This is a very exciting project for Subsea 7, and allows us to expand the significant infrastructure we have already established in Norway. We will require to develop a base in Kristiansund to support Shell's operation on the Ormen Lange field. The vessel, which Subsea 7 will charter in on a long-term basis, was designed and is being built in Norway by its Norwegian owners. We look forward to working with Shell on this project with what will be a market leading ROVSV and support team."

The second contract award valued in the region of US $700 million is for DSV support and the execution of Shell's North Sea field's IRM works, entailing some 400 to 500 vessel days per annum. In order to service this demand, Subsea 7 will commit to the design, build and operation of a fully equipped, DP3 Diving Support Vessel (DSV), which will be used to support subsea activities across Shell's European operations.

The vessel, which will have an overall length of 141metres and a beam of 26 mtrs, will be fitted with a new 24-man twin bell saturation diving spread compliant with both UK and Norwegian legislation. The vessel will have 1200 metres2 of clear working deck with a 150 tonne crane, and have the capacity for 150 personnel onboard. This new DSV will continue the programme of IRM works which are presently performed by Subsea 7 from its current DSV fleet. The introduction of this new DSV in 2008 will provide new employment for around 300 offshore staff on a year round basis.

David Cassie, Snr. Vice President of Global Business Acquisition for Subsea 7, stated, "This award comes on the back of many years of carrying out Shell's field IRM work scopes. Subsea 7's aim is to enhance our service delivery to Shell building on our extensive knowledge and experience of their subsea assets coupled with a market leading new-build DSV. The financial value of this combined award represents the largest single contract award in the history of the UK subsea sector. With the extensive current and predicted volumes of oil and gas production in the North Sea being delivered through subsea facilities, our sector of the oil & gas industry will play an increasingly critical role in the future of the North Sea."

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Posted 03/07/06

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