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HMRC internal manual

Oil Taxation Manual

Non-residents working on the UK continental shelf: transfer pricing: what is a rig?

Drilling for oil from fixed platforms is not suitable for many locations. Drilling operations are often therefore carried out by mobile structures generically called ‘rigs’. The main types employed in the North Sea are currently (2009):

  • Jack-ups: platforms that can be jacked up above the sea using legs that can be lowered into the seabed, much like jacks. Typically used in water depths up to 400 feet (120m), although some designs can go to 550 feet (170m) depth. They are designed to move from place to place, and then anchor themselves by deploying the legs to the ocean bottom using a rack and pinion gear system on each leg.
  • Semi-submersibles: These have columns and pontoons of sufficient buoyancy to cause the structure to float, but of sufficient weight to keep the structure upright. Can be moved and ballasted up or down by altering the amount of flooding in buoyancy tanks. Semi-submersibles can be used in water depths from 200 to 10,000 feet (60 to 3,050 metres).

In addition, there are other vessels used in oil production and the oil industry generally which are commonly leased on bareboat charter including Floating Production, Storage and Offloading vessels (FPSOs), heavy lift and seismic vessels.

FPSOs can be either a decommissioned oil tanker or a new vessel. They are floating tank systems designed to take oil or gas produced from a nearby platform, process and store it until it can be offloaded onto conventional tankers or a pipeline.