Pennecon Limited

Wednesday, June 20, 2007 Financial Post Financial Post
Top FP News

Pennecon keeps offshore industry afloat
Energy division doubles in size inside five years
Moira Baird, CanWest News Service
Published: Wednesday, June 20, 2007

ST. JOHN'S - When the Henry Goodrich anchors at Conception Bay early next month, Pennecon Energy will help get that offshore drill rig ready for its next contract in U.S. waters.

It's the kind of work that has seen the energy division of Pennecon Ltd. double in size in the past five years.

"I think we can take on the rest of the world," said Don Noseworthy, vice-president of Pennecon, who runs the company's energy division.

"Our climate here, our environmental challenges have given us a unique ability. There's not that many other areas in the world that have to take on the type of challenges that we do. Once you conquer this, you can conquer many things," he said.

Newfoundland-based Pennecon began in construction in the 1970s and is now a diversified $200-million company with more than 30 subsidiaries and 1,200 employees in Atlantic Canada. About one-third of Pennecon's employees work with the energy division, which started up seven years ago.

Pennecon Energy was developed by acquiring companies, such as Hydraulics Systems Ltd., that have been around since the 1950s, and bringing them under one umbrella -- creating a one-stop service for the offshore industry. "That's how we try to market it," said Mr. Noseworthy.

"We'll give you everything from a needle to an anchor. We call it the synergy of many and the simplicity of one."

In the case of the energy division, that includes electrical, mechanical, hydraulics and fabrication services.

"They all complement each other to make the full package," said Mr. Noseworthy. "When time is money, [offshore companies] typically want you to take care of everything."

This week, Hydraulic Systems opens a new 11,500-square-foot shop outside St. John's, where the company maintains and manufactures hydraulic power units used to operate valves on drill rigs and production platforms and winches aboard fishing boats.

The company's resume includes last summer's drydock of the Terra Nova production ship in the Netherlands, refits of the drill rigs Henry Goodrich and GSF Grand Banks, and installing outdoor cables and hydraulic hoses aboard the Shell rig Kulluk, which is operating in Arctic ice in the Beaufort Sea.

That work has also taken the company to South Korea, the United Arab Emirates and Bolivia.

"Our guys get around," Mr. Noseworthy said.

Next month, up to 20 employees will head to the Gulf of Mexico with the Henry Goodrich, preparing the rig for deeper waters and the hurricane season. That hydraulic and instrumentation work is scheduled to take 30 to 40 days.

For the past two years, Mr. Noseworthy said, the Alberta oilsands has also kept the company busy. "Everything from shutdown support to assembly and fabrication on site. We're just completing one project and starting another with Canadian Natural Resources." Currently, Hydraulic Systems has a $20-million contract with Canadian Natural to build and test 14 separator units for the Horizon oilsands project north of Fort MacMurray. That contract finishes this summer.

This week, the company landed another order to build power units for land-based drilling rigs.

"We fabricate right from the raw steel frame all the way through to building the control panels."

Previously, those units have ended up in Alberta, China and Singapore.

"If you can make it in this market, you can make it most markets," Mr. Noseworthy said.