The Rise of the Semisub Floatel
by Murray Dormer, Douglas-Westwood London
Declining North Sea production and increasingly mature assets are expected to drive demand for offshore accommodation support, with the attributed maintenance, refurbishment and shutdown work requiring additional personnel-on-board and workshop capacity. However, the harsh met ocean conditions of the northern North Sea (NNS) ultimately limit Operator choice to two types of accommodation - jackup barges and semisubs – due to the greater stability and safety offered.
Despite growing demand for semisub units, the sector is plagued by constrained global supply and limited availability, placing upward pressure on day rates. This is having a significant impact on contract costs in the NNS, with day rates typically ranging from $200-350k. Additionally, operators are placing contracts several years in advance to ensure maintenance or construction schedules are satisfied. This is forcing operators to seek more efficient contracting practices, either through unit sharing agreements or securing units on an annual basis.
Notably; although costs continue to rise, a key emerging trend in the floating accommodation sector is employee welfare. International oil companies are using their global footprints to help drive the adoption of the ‘quality equals efficiency’ concept. This is now being mirrored in the NNS, where several large operators and service contractors have identified a trend between ‘spanner time’ – hours worked by offshore personnel – and the quality of worker accommodation. While this may incur greater costs in terms of unit day rates, the cost advantages gained from reduced downtime and improved worker efficiency could make this increased expenditure worthwhile.
The industry is screaming for offshore accommodation capable of working in harsh conditions. Although the market will see 11 new units delivered between 2015-2016, continued growth in demand for accommodation semisubs, intensified by unit retirement, will further constrain supply. We are already seeing the market respond with new orders; however, will this be enough to offset growing demand pressures?