By David Wethe
(Bloomberg) — Diamond Offshore Drilling Inc. is turning over care and handling of the massive rig safety devices designed to stop well blowouts to General Electric Co. in an agreement that establishes a new industry model.
GE Oil & Gas will buy the blowout preventers on four of Diamond Offshore’s newest drillships for $210 million, and rent the devices back to the driller. The arrangement gives GE responsibility for all maintenance and certification checks on the equipment, according to a joint statement Monday by both companies.
“We are changing the game by building the new blowout preventer service model for the industry,” Lorenzo Simoneli, chief executive officer at GE Oil & Gas, said in the statement. “With improved control, maintenance and servicing of our equipment, we are putting skin in the game and guaranteeing performance.”
Blowout preventers are stacks of valves, pipes and seals that sit atop the well on the sea floor ready to cut off the flow of oil if the company loses control of the well. A defective blowout preventer failed to stop the largest U.S. offshore oil spill in 2010 on a BP Plc well in the Gulf of Mexico, focusing attention on maintenance of the machines.
The 10-year agreement requires Diamond Offshore to pay for the blowout preventers only when they’re in service, cutting downtime costs during maintenance.
Offshore rig owners have suffered the double whammy from a glut of new drilling vessels hitting the market at the same time that the oil industry plods through the worst crude market downturn in 30 years. The industry has slashed more than $100 billion in spending and cut more than 250,000 jobs globally to cope with oil prices that fell by more than two thirds since the middle of 2014.
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