SPECIAL REPORT: State of the Offshore Market
Specialized vessels, enhanced fuel efficiency and a reduced environmental footprint are keys to success.
By Kathy A. Smith
Increasing capital investments in offshore vessels indicate the market is steadily on the rise. The annual spend on OSVs has boomed from almost $500 million to nearly $1.4 billion during the last five years, says a report by Douglas-Westwood Associates. And according to a late 2010 study by Germanischer Lloyd, the number of OSVs worldwide is projected to increase beyond 2,500 through 2020, with demand not only in the oil and gas markets but the offshore wind industry as well.
Clearly the need for these specialized ships is growing, as is the gradual recovery of work in the Gulf of Mexico after the Macondo blowout of April 2010. As of the end of October, 65 of the 116 offhore rig units in the region were under contract with fleet utilization at 56 percent, according to ODS-Petrodata, with the numbers creeping up toward those at this time last year. "We are once again beginning to see deepwater drilling permits issued, albeit at a much slower pace than before," says John S. Cook, Senior Vice President of Hornbeck Offshore Services in Covington, Louisiana, which owns a fleet of 80 vessels primarily serving the energy industry.
Shane Guidry, President of Louisiana-based Harvey Gulf Marine, agrees: "There are very few rigs out there drilling. Sixty-two OSVs have left the Gulf for other places to operate around the world, so that created a void which allowed the day rate to stay strong and the market to remain tight when the oil companies got back to work this year. It has created quite a downturn in the anchor-handling towing segment of the business, but the overseas segments are up."
High-Spec Vessels Are in Demand
All of Hornbeck’s OSVs have two to three times the drybulk capacity and deck space, three to 10 times the liquid mud capacity, and two to four times the deck tonnage of conventional 180-foot OSVs, which are used primarily on the continental shelf. They also have advanced dynamic positioning systems and state-of-the-art lifesaving-monitoring, emergency power, fire-alarm and fire-suppression systems. The company is seeing increased demand for high specification DP 2 equipment, and many of its clients are also seeking larger capacity vessels like Hornbeck's 370-ft. HOS Centerline and HOS Strongline, each offering 8,000 deadweight tons or nearly 30,000 bbls. of liquid storage capacity.
With the industry’s eagle eye on oil spill response in the Gulf region, more such vessels are being deployed. As part of Hornbeck’s partnership with Marine Spill Response Corporation’s "Deep Blue" program to enhance response capability, the HOS Centerline and HOS Strongline are outfitted with dedicated skimming systems, ocean boom, and a support boat. "We are currently pursuing spill response notations from the class society and the U.S. Coast Guard that would make these vessels the largest and most capable response vessels in the U.S. fleet," says Cook.
Harvey Gulf recently announced an agreement with Trinity Offshore to build two OSVs (with an option for a third) that will operate exclusively on natural gas and will also meet the ENVIRO+, Green Passport ABS certification, the first OSVs in the Gulf of Mexico to achieve this certification. Requirements include having the ships be manned continuously with a certified Environmental Officer, be built with only certified environmentally-friendly materials, and be equipped with advanced alarms for fuel tanks and containment systems.
Netherlands-based Offshore Ship Designers offers a wide range of offshore vessels and tugs, including PSVs, SSBVs, and AHTs. The firm is currently designing six 53-meter seismic support/chase vessels for the Paris-based Bourbon Group. Each vessel is equipped with a fuel-efficient hybrid propulsion system, and delivery of the first ships is set for the end of 2012.
Earlier this year, OSD began work on a new, compact AHT offshore support vessel for Netherlands-based Neptune Marine Services BV and two Azistern24/56 tugs for Singapore-based Pacific Offshore Engineering and Trading Pte. The vessels are being designed with the capabilities of their larger counterparts, but their smaller size will help reduce purchase and operational costs. Their configuration is based on a loadline length of less than 24 meters, and the design can be upgraded to 70 tons BP.
"Size certainly matters, especially when it is related to costs,” stated OSD Managing Director Michiel Wijsmuller. “What wind farm operators need is compact but versatile vessels, and the offshore sector needs vessels that are less expensive to operate but equally capable. The answer in both cases is to find a way to squeeze more out of a smaller platform, and that is what these two new designs will do."
It certainly worked for Louisiana’s SEACOR Marine, LLC, which has developed the first CrewZer Class vessel, a 170-foot catamaran built specifically for the oil and gas industry. Designed to ferry offshore personnel from sea to shore and back, it can carry 150 people and run at a top speed of 40 knots plus, over twice that of a conventional crewboat. The first such vessel, the MV SEACOR Cheetah, has a cost per seat-mile that is 30-48 percent less than a traditional helicopter used for crew changes. The vessel has a wide workdeck, DP 2 rating, and state-of-the-art electronics, communications, and navigation systems, along with top-of-the-line safety features and logistics capabilities.
Beneath the Deep Blue Sea
Another crucial part of offshore vessel work includes complex subsea operations like laying cable, pipeline connection and repair, installation workover and control systems, and repairing oil platforms, and here again highly-optimized and cost-effective vessels are key. Texas-based Oceaneering International Inc.’s Oilfield Projects Group provides subsea installation work and inspection, maintenance and repair services on subsea facilities, offshore platform rigs, subsea pipelines and production facilities.
Oceaneering’s Olympic Intervention IV is the largest multipurpose support vessel in its deepwater fleet. At 312 feet, the DP 2-certified vessel is built to work on projects such as well intervention services and installing subsea trees, jumpers, flying leads and manifolds. The vessel is equipped with a satellite communications system capable of transmitting streaming video for real-time work observation by shore personnel. It has 1,600 tons of deck capacity, a large moon pool, a 150-meter T Crane with Active Heave Compensation, and accommodations for 100 people. Marketing Manager Peg Newman reports the Olympic Intervention IV recently installed a tree in more than 9,600 feet of water for a client.
Additionally, Oceaneering’s specialty DSV (diving support vessel) fleet performs more than 200 (government-mandated) underwater structural inspections each year for operators in the Gulf of Mexico. The newest vessel, scheduled for launch in the last quarter of the year, is the 240-foot, ABS-class SDSV Ocean Patriot, with a permanently-installed 12-man SAT dive system rated for 1,000 feet of water and a 12-man hyperbaric rescue chamber with dedicated launch system.
Fuel of the Future?
Offshore vessel design is also adapting to ever-changing environmental regulations. "From a regulatory standpoint, there has been a lot of impetus toward emission controls aboard vessels, particularly propulsion-drive technical solutions, auxiliary machinery as well as onboard waste management," says Carl Annessa, Hornbeck’s Executive Vice President and COO. “There may be some technical evolutionary changes to internal combustion engines using diesel or other non-oil or petroleum derivative fuels. It may be different fuel technologies similar to what we’re seeing with Norway with LNG-powered vessels.”
Annessa notes that, by using LNG, these vessels generally have cleaner stack emissions but have complications logistically and operationally that may or may not be a factor in every geographic region. They require a market with ready access to liquefied gas or natural gas supply. “It is not a silver bullet, but you might see more solutions like it,” he noted.
“The biggest thing for our company is that we recognized 23 months ago that the way we operate in the Gulf of Mexico is going to change in response to people wanting vessels that are built clean, so we decided to build OSVs that operate 100 percent off liquefied natural gas,” says Harvey Gulf’s Guidry. “In 2016, boats contracted out will have to meet Tier 4 exhaust emission regulations. I am building boats today that are going to exceed Tier 4 requirements by running off LNG. We have $370 million of boats under construction that all meet or exceed any rules that are being contemplated in the near or even far future.”
Deepwater and Beyond
Deepwater focus is gaining momentum beyond the traditional markets of Brazil, the Gulf of Mexico and West Africa, and demand is growing for vessels capable of longer transits and higher deadweight deliveries, which is also impacting design trends. Yet there can be challenges in adhering to international regulations. “I can’t think of an industry that has been more significantly affected than the marine business,” says Hornbeck’s Annessa. “We operate in an international community. We aren’t building a refinery or factory that will exist for its entire commercial life in a single location. We have to be responsive to international regulations and guidelines, but ultimately our regulator is the local authority. We have to comply with local regulations plus the international regulations. As those continue to drive green solutions, sometimes without regard to the practicality of those solutions, our business will be impacted.”
It’s clearly evident that, as offshore industries expand operations and head into deeper and deeper water to carry out ever more complex operations, highly-specialized offshore vessels will continue to be developed for current and future needs. Back in the U.S. Gulf of Mexico, the outlook is optimistic. “Our clients remain committed to the Gulf and appear to be quite bullish on the region’s future prospects,” says Hornbeck’s Cook. “The trend is upward at this point,” adds Annessa. “There are rigs available to work, and more of them going to work than just a few months ago. That’s an encouraging sign.” Let’s hope it continues! – MarEx
Kathy Smith writes from Victoria, British Columbia.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.