Bud's Offshore Energy (BOE)

Background:

• Last summer, Trident Energy exercised multiple options for the use of the Island Innovator semi-submersible (pictured above), extending the duration of the Equatorial Guinea contract to approximately 230 days.
• The rig arrived in Equatorial Guinea in Nov. 2023.
• On 7 Feb, a Trident team briefed Equatorial Guinea Minister of Mines and Hydrocarbons Antonio Oburu Ondo about problems with the Innovator’s BOP system. Apparently, Island Drilling, the rig owner, was not present at that meeting.
• Mr. Ondo subsequently reported that the BOP had serious problems and failed to respond to control system commands.
• Trident terminated the rig contract on safety grounds.
• Island has publicly responded that (1) the Trident statements are inaccurate, (2) there have been no critical safety incidents, (3) the BOP has been checked and tested by the OEM representative on the rig and declared safe and ready for operations, and (4) they will challenge the contract termination.

Questions & comments:

• Since the rig had just arrived on location, the BOP issues were presumably identified during onboard stump testing. Were corrective measures discussed? Why was contract termination deemed necessary?
• Island’s statement indicates that the rig was tested with the OEM representative present. Presumably those tests were in accordance with API S53 or the ISO equivalent.
• Had inspections and maintenance also been conducted in accordance with the standard? Did Trident inspect the rig and review maintenance and testing records before signing the contract?
• Have other companies had similar issues with the Innovator? None have been identified in my web search.
• Was a bridging document in place to address differences in Trident/Island management systems? If so, what does that document say about BOP inspection and oversight.
• Why was the drilling contractor not present at the meeting with the Equatorial Guinea authorities? Was Island advised that the contract was being terminated prior to that meeting? Did the authorities speak with Island to hear their side of the story?
• Does the contract provide for mandatory arbitration in the event of such disagreements?
• Could other factors have influenced the cancellation decision? I was involved with an arbitration case involving an operator that used safety issues as the reason for terminating an expensive long-term rig contract. The arbitration panel ruled in favor of the drilling contractor resulting in a very large payment to the rig owner. Ironically, serious safety violations by the operating company (but not the drilling contractor) were identified during the arbitration process.
• Island Drilling is a Norwegian Company with an experienced management team. The Innovator has conducted operations in the Norwegian and UK offshore sectors. These factors typically imply a strong commitment to safe operations.

Hopefully, we’ll be able to learn more about the specifics of this dispute in the near future.

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