Big Rig Gamble Cianbro takes a chance on oil-drilling vessels

Its decks painted, the crew’s beds made and its systems certified sea worthy, Pride Portland, the second of two deep-sea drill rigs assembled by Pittsfield-based Cianbro Corp. in Portland Harbor, is gearing up to go exploring for oil.

The rig returned from 12 days of sea trials on May 10, and was turned over to Petrodrill, the development company that hired Cianbro.

The commissioning capped a two-year project that generated almost 2 million hours of work and channeled an estimated $140 million into the state. The project easily ranks among the largest gambles ever undertaken by a Maine-based company.

The two unfinished rigs that made their way into the Portland skyline in April 2002 represented Cianbro’s first shipyard contracts. Ranked the 14th largest bridge builder in the country in 2003 by Engineering News-Record, Cianbro has in recent years expanded into an increasing array of civil engineering, industrial processing and specialty manufacturing projects.

But the jump into shipyard work was a personal mission for Cianbro president and chief executive Peter Vigue, who conceived and pushed the project to completion even as the nation scraped through recession.

“Certainly this is one of the most significant achievements our company has taken on in its 55 years,” Vigue said at a ceremony marking the completion of the second rig in Portland on Tuesday.

Cianbro took on the project after work was abandoned on the rigs by the now-defunct Louisiana shipyard, Friede, Goldman, Halter. The work had begun in 1999 under the management of Petrodrill, a joint venture between Houston-based Pride International (which owns the world’s second-largest drilling fleet) and Brazil’s Maritima Petroleo e Engenharia Ltda.

Two similar deep-water semi-submersible exploration rigs, the Pride Carlos Walter and the Pride Brazil, were completed for Petrodrill in Korea in 2000. The financial failure of Friede, Goldman, Halter left the two Petrodrill rig projects that Cianbro eventually inherited scattered between two shipyards in many millions of corroded, unidentified pieces, with no accurate records or construction plans.

“These things should have cost less than $200 million to build,” said Derek Leach, who managed the Portland project for Petrodrill. “But that is nowhere near the cost because of the train wreck we had down south.”

Where most saw disaster, Vigue recognized opportunity. He convinced the project bondholder, Fireman’s Fund, to accept a bid from a non-shipyard contractor based upon Cianbro’s performance on other large, complex projects.

After a half-million dollars’ worth of engineering research and estimates, Cianbro won the contract for a project some in the rig business saw as a lost cause.

Cianbro transported each rig’s pontoon assembly and deck boxes to Portland, where workers welded each deck box and derrick onto the pontoons, essentially creating square-shaped ships about the size of a football field and 324 feet tall from the bottom of the pontoon to the tip of the derrick.

After assembling the rigs, the crews went to work outfitting each rig with plumbing, electricity, heating and ventilation systems, a desalination unit, water treatment plant, and basically everything required of a small floating city. They installed engines and thrusters, built control rooms, and created living quarters for the crews that would eventually inhabit the rigs as they went about exploring for oil or gas. Each completed rig, now weighing about 12,000 tons apiece, even has a health clinic, recreation room and sauna.

“The biggest plaudit I can give Cianbro is, at the end of the day, these rigs are every bit as good as the rigs built in Korea – at one of the world’s premier shipyards,” Petrodrill’s Leach said.

Maritima owns 67 percent of the two rigs, the first of which, Pride Rio de Janeiro, has been in that city since February. Pride Portland is likely to remain in Portland Harbor until the owners find a company to lease it for offshore exploration. When that will happen is uncertain given the current industry condition.

“The climate near-term looks pretty soft,” said C.K. Poe Fratt, a financial analyst that follows Pride International for St. Louis-based A. G. Edwards & Sons, Inc. “There have been a lot of rigs built over the last six years, so, in the deep-water market, there are a lot of rigs available.”

In the past, when oil prices rose above $40 a barrel, there would be a stampede of industry investments and rig-building contracts in a rush to poke more holes in identified reserves. But in the past half-decade, producers saw that booms created busts. Vast build-ups in production led to oil gluts and subsequent price crashes, and to a business cycle that perpetually heaved the entire industry into imbalance.

Mergers in the past decade consolidated production in the hands of fewer producers. Such consolidation also has increased those companies’ ability to influence the boom-bust cycle. Currently, in spite of spiking prices, the biggest contractors are conservatively increasing capital spending programs, remaining cautiously aware of the potential influence of OPEC, demand from China and supply from Iraq.

All of these factors could affect just when the Pride Portland lands a contract and heads to sea. It holds one advantage in that its predecessors, the Pride Carlos Walter and Pride Brazil, are built according to a similar compact, deep-water drilling design as the Portland-built rigs and have proven to be strong performers off the coast of Brazil.

“That certainly won’t hurt Pride’s standing with Petrobras [the largest oil producer in Brazil] when it comes to having them commit to contracts on these new rigs,” Fratt said.

The completion caps a year in which Cianbro earned an Associated General Contractors of America Build America Award for its innovative approach to solving cable replacement issues on the Waldo-Hancock Bridge. In addition, the rig project helped boost the company to its most successful year in terms of both revenue and profit in 2003.

Cianbro and the city of Portland are both now pursuing other marine projects, including possibly refurbishing cruise ships, to fill the Ocean Terminal space once the Petrodrill rig ships out.

“They said it couldn’t be done,” Vigue said. “But this is nothing more than an indication of the capacity and capability of the people in Maine. We sometimes just don’t want to believe that.”