Oil rig project to create Teesside jobs

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The biggest drilling rig construction project undertaken in Britain for more than a generation is expected to create hundreds of jobs in Teesside.

SeaDragon Offshore plans to float on the London Stock Exchange next year to raise funds for the $1.5bn (£800m) project. It is being announced today and come after the oil services firm struck a deal with the Tees Alliance Group to build the rigs at the local group's yards.

SeaDragon intends to build three semi-submersible rigs worth $500m each in Teesside, with the hulls to be bought from Russia's Sevmarsh shipyard.

The project will bring hundreds of support jobs to Teesside, filling the gap that has been left by major construction companies such as Odebrecht and Kvaerner, which left the Tees in the late 1990s.

SeaDragon, chaired by Stephen Baird, a management consultant, has teamed up with KCA DEUTAG, an international drilling contractor and part of the Abbot Group, and the naval architects Moss Maritime. The rigs will be among the largest in the world and are designed for oil and gas drilling in harsh deep-sea environments such as the Barents Sea in Norway and the Gulf of Mexico.

SeaDragon has secured a large debt funding package from Lloyds TSB for the project. It is eyeing a flotation towards the middle of next year, which is expected to value the company at $850m, comprising $150m of equity and $700m of debt. The firm is also considering a possible private placing before the float to raise funds.

Mr Baird said: "SeaDragon will provide three deep-water, harsh-environment, semi-submersible rigs in what will be the largest rig construction programme to take place in the UK for a generation. SeaDragon recognised that Teesside, through its offshore construction experience, can offer the skills to create a world-class vessel."

The bottom part of the rigs, which will sit in the water, is to be built in Russia, while the top part, with the accommodation, will be constructed in Teesside. The rigs will house between 50 and 100 workers.

Designed by Moss Maritime, the rig hulls are to be purchased from the Sevmarsh shipyard in Russia and delivered to the Tees Alliance Group, based at Haverton Hill shipyard in Teesside, for the fitting out of the topside.

The first rig is set to be delivered in 2009. The hull has already been bought and is due to arrive in the latter half of next year. SeaDragon is in the middle of securing options on two other Russian hulls and has agreed on fit-out times for two additional vessels from the Tees Alliance Group.

The Tees Alliance Group is led by David Eason, a former divisional manager within the Odebrecht Group. He said: "The project will secure major employment for locally skilled people in a field of work that has been in recession in this area during the last eight years."

The project has the support of Frank Cook, the MP for Stockton North.