Cosco Shipping Heavy Industry is breathing new life into the abandoned Octabuoy floating production, drilling, storage and offloading unit, which it built, by converting it into an offshore wind installation vessel for deployment in Chinese waters.
The new scheme is an answer to Beijing's call to accelerate the development of offshore wind energy in order to reduce China's carbon footprint.
A decree that the government will end subsidies for offshore wind power generation by the end of this year has triggered a rush to build wind installation vessels, some of which are being converted from offshore drilling rigs abandoned by foreign rig owners at Chinese yards.
Octabuoy's conversion will involve adding a forecastle deck, poop deck and living quarters to the vessel, which within Cosco is known as N262.
Well-placed contracting sources said Shanghai-based Xiong Cheng Offshore Engineering has chartered the unit for a job related to wind farm installation work in China.
Xiong Cheng was incorporated in 2013 with an offshore business focused on foundation piling for wind farms and oil and gas platforms.
In 2008, ATP Oil & Gas’ UK subsidiary ordered the Moss Maritime-designed Octabuoy for the Cheviot development in the UK sector of the North Sea.
The unusual octagon-shaped unit is designed to work in water depths between 1500 and 3000 metres.
Cosco started construction on the vessel in 2008 and completed the unit in 2013.
The platform incorporates topsides and a drilling tower capable of carrying out drilling, well completion and workover operations.
US-based ATP filed for bankruptcy in 2012, and while a few companies and brokers have expressed interest in the semisub since then, no deals have emerged.
Sources said that Cosco has almost recouped the cost of Octabuoy’s construction because it was covered by insurance with China Export & Credit Insurance Corporation (Sinosure).
As a result, the yard received a one-off payment of about S$90 million (US$72 million).
It is not clear what ATP's upfront payment to Cosco was in order to get the project started. The contact value for the semisub was US$99 million.
The Octabuoy was designed to store up to 170,000 barrels of oil in its columns, according to Moss Maritime, which provided hull engineering services to ATP.
The unit has processing capacity of 25,000 barrels per day of oil and 50 million cubic feet per day of gas.
Sources said that Cosco has scrapped the vessel's topsides.
A few rig owners and FPSO operators have expressed interest in Octabuoy by offering to re-modify it into a production unit.
In 2017, China’s Sinopec suggested the semisub could be used as a production facility to process, store and offload oil produced from its Weizhou oilfield at the Weixi Trough in the Beibu Gulf of the South China Sea.
However, that proposal did not work out in the end due to the cost of conversion and delays in the Weizhou field’s development.