Monday, 27 August 2018

What is the difference between an oil rig and an oil platform?

You often hear reference to oil rigs and platforms, and sometimes people will say, that wasn't a platform, it was a rig; or the opposite. So why do the terms cause so much confusion? As usual, it is because there is some crossover in the terminology. But if you understand the underlying mechanics, you will be much clearer.

The short answer:
~ A platform is a permanent structure fixed to the seabed.
~ A rig is moveable platform, which is moved into place by barges and then secured in each location temporarily.

The long answer:
1. Platforms
Firstly, let's look at platforms.  They have three main parts; the jacket (the legs which are secured in the sea/ocean), the deck (a large flat surface area), and the modules (crew quarter blocks, drilling aparatus, storage containers etc. which are fixed to the deck).

A basic fixed platform is fixed in a permanent position on the seabed with anchors (as above) and is not intended to move. It provides a long-term, stable facility from which a lot of oil can be produced because it can host so much equipment and crew. As a result, they tend to be build in locations with known long-term oil deposits.

However, there are other types of platform which are similar. Compliant Towers (below) are like fixed platforms, but have more narrow, flexible jackets, meaning they move with the wind and waves. There are also tension-leg, subsea and SPAR varieties, as well as numerous other iterations and combinations of the above.

2. Rigs
Generally rig refers to a jackup rig. This is a moveable platform with very tall legs, which can be jacked up and down, meaning it can be towed into place and then lowers its legs into the seabed, creating a stable but temporary platform from which drilling or other work can take place. They tend to be used for smaller oil deposits and shallower water.

So why the confusion?
Well, the thing is, as you'll see from the above, jackup rigs, are moveable platforms, so you might see an incident where, for example, their platform is damaged. This would lead to references to 'the platform'. In the same way, fixed drilling platforms will have equipment onboard called the drill rig (the gear which actually drills into the seabed). So the word rig could be used in reference to a platform sometimes too.

Thursday, 9 August 2018

Remember that UKSTC is not upheld in Australia!

The UK Standard Conditions for Towage and Other Services (UKSTC) is probably the world's most popular towage agreement. The 1986 version is the latest one and probably the most popular. It is used, sometimes by other names or in similar versions, worldwide, and is the go-to contract for people asked to tow other vessels. This is because it protects you from liability effectively.

The point is that small tugs often tow much, much more valuable vessels. They should not be responsible for damage done to them. Therefore, the conditions include (at 4(a)) a full exclusion of liability for damage to the other vessel, to the tug, to other property and for 'any claim by a person not a party to [the] agreement for loss or damage of any description whatsoever'.

So, a very wide exclusion. However, Australia is a good example of a country where the user needs to be careful. The courts in Australia have said that an exclusion clause of this sort is not allowable under Australian law (the Koumala)*. What is the effect? The court will strike the clause out, and you will return to a basic common law type allocation of liabilities, where you are fully liable in the event of negligence.

Can this be avoided? It can. The trick is to not have an exclusion clause (which is not allowed) but instead have a contractual limitation of liability clause (which is allowed). Limiting liability for these type of claims to, say AUS 1 Dollar would be such a nominal sum that the court might say the effect is to make the clause an exclusion of liability in all but name. Therefore, the recommended advice is to amend the conditions to limit liability to the value of the services provided, which might be a few hundred or thousand dollars.

It is important to remember, if doing this, that incorporation will be all important. There is no point having a perfectly amended contract if it is sitting in your office or available on request. You must make sure that, at the point of contracting, the consumer of the services is aware of the conditions as amended.

PNSL Berhad v. Dalrymple Marine Services Pty. Ltd. and Others [2007] QSC (Helman J., 19 April 2007)

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