Busy, busy days for Signal International

by

Published: October 10,2005

Pascagoula — The Signal International shipyards that provide overhaul, repair, upgrade and conversion for offshore oil drilling rigs had plenty of business prior to Katrina due to the high price of oil leading to increased incentives for exploration and production in the Gulf of Mexico, says Dick Marler, president and CEO of Signal International.

However, with a large number of rigs damaged as a result of hurricanes in the Gulf this year, even more business should be coming in to the Signal East Facility and West Facility in Mississippi and the company’s Orange Yard in Orange, Texas, and Dock Yard in Port Arthur, Texas.

“We were in a good market to begin with, but the misfortune brings more opportunity,” Marler said. “A lot of rigs in the Gulf of Mexico were damaged by Katrina, and we saw further damage with Rita. What some people don’t remember is that although Rita had weakened some before landfall, it was a Category 4 and 5 in the Gulf. A lot of equipment underwent very tough conditions. The industry had significant damage from both hurricanes.”

Katrina struck Signal International’s Mississippi Operation with an estimated 13-15 foot storm surge and sustained winds in excess of 100 miles per hour. While Katrina caused an estimated $15 million in damages at the yard that employed 900 before the storm, it could have been far worse.

“We had implemented a hurricane contingency plan that prevented catastrophic damage,” Marler said, who lost his car and his home in Gautier to Katrina. “Fortunately for us, power was restored quickly and within days we had employees returning to work cleanup. The team leaders of our hurricane contingency plan did an outstanding job. They closely monitored the storm conditions. As the situation deteriorated, the team implemented a planned effort to remove and secure major pieces of capital equipment.”

“At our East Bank facility, Signal suffered no damage to any of the rigs in work,” Marler said. “However, low-lying shop and production areas sustained damage due to wind and wind-driven water. The most significant damage was done to Signal’s panel line, pipe, structural and electrical shops, welding machines and equipment and miscellaneous hand tools.

Facility and shore power feeds were also heavily damaged.

“Offices in trailers close to the work site were lost or damaged. However, Signal’s main administrative office on the East Bank suffered no damage, nor did other facilities located nearby on high ground.”

On the West Bank, significant damage occurred throughout the facility, Marler said. This included loss of an office/trailer complex, empty shops and limited warehousing.

“The 4600 ringer crane was the principal asset on the facility and survived with minimal damage,” Marler said. “However, one used 15-ton cherry picker was damaged and may be a total loss due to salt water.”

Back on the job

A month after the storm, more than 600 of the 900 employees at Signal have returned to work. Marler said it was unclear if some workers were still taking care of personal business such as dealing with hurricane-damaged homes and vehicles, or if they were taking advantage of other employment opportunities such as doing cleanup work for FEMA.

“In recognition of job competition, plus increased living cost and expenses, we have raised our labor rate $1 per hour for skilled crafts to an average of $18 per hour,” Marler said. “We are waiting to see what the impact of the rate increase will be on hiring in all trades.”

Signal had expected to have more than 1,000 employees by the end of the year based on the work they had won or bid on and expected to win before the hurricane. Now with added storm-related work expected, that number will be exceeded.

“We’re generally in an area that has a lot of the types of employees we are hiring,” Marler said. “And we expect more of our previous employees will return to work when they get their lives back together.”

Hurricane Rita gave Signal International’s yard in Texas a glancing blow.

“We didn’t have the magnitude of damage in Texas that we saw here,” Marler said. “But we had to shutdown because so many homes were damaged, and people weren’t being allowed back to their communities while damage assessment and clearing was underway. The military and civilian authorities in charge of the roads wouldn’t let people back in because of the lack of water and sewer services. So a lot of people couldn’t come back to work right after the storm.”

The toughest customer

Marler said that Ron Schnoor, senior vice president and general manager of Signal International in Pascagoula, and Tom Rigolo, senior vice president and general manager of the Texas operation, both did outstanding jobs implanting the hurricane contingency plans and restoring services after the hurricanes.

“These plans prevented catastrophic damage at both places, and prevented damage to customer’s rigs, as well,” Marler said.

All offshore oil rigs are designed to withstand storm conditions, and more is learned after each storm about building drilling rigs that can weather hurricane conditions.

“But Mother Nature is a tough customer,” Marler said. “When you get hit by a Category 5 hurricane, it can do some real damage.”

For more information on Signal International, see the Web site, www.signalinternational.com.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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