conference review market overview
Opportunities and challenges abound for owners
Vessel operators continue to invest in new and more sophisticated ships as global oilfield investment increases. However, cabotage regimes are limiting the opportunities in some markets
I
ncreased investment in offshore oil and gas is opening up a range of opportunities for vessel owners and service providers. However, there
are also many challenges to overcome, from oversupply of older platform supply vessels (PSVs) to increasing demand for local content, a shortage of skilled crew and cabotage markets. When introducing the Annual Offshore Support
Journal Conference, Caterpillar’s offshore marine manager John Shock outlined some of the global opportunities. “Exploration and development investments rose in 2011 by 15 per cent. The expectation is for further investment increases in 2012, which is positive for OSV owners,” he said. Alan Pirie of consultants IHS Energy said this investment has already driven owners to order more OSVs. Vessel utilisation is improving due to growing demand. Mr Pirie estimated utilisation to be 70 per cent, compared with 65 per cent in 2010.
“By 2014, we expect there to be 3,360 vessels [up from 2,900 in 2012] with 250 deliveries expected this year,” he said, noting that the orderbook includes more than 430 PSVs and anchor handlers. “Demand for large, sophisticated tonnage is rising and owners may start looking at ordering more large anchor handlers in the next few months,” he added. South America and North West Europe
are key areas of growing demand for anchor handlers and PSVs over the next two years as oil companies require more sophisticated vessels for deepwater and more remote operations. The market in the Gulf of Mexico is also improving as the region recovers from the
quarter of 2010, leaving just four deepwater rigs in the Gulf,” Mr Wallace told delegates. “This went up to 23 drilling rigs in the fourth quarter of 2011. At least 45 vessels departed the Gulf of Mexico after Macondo. We have seen some return, but many are tied up on long-term charters elsewhere.”
Mike Wallace: drilling activity is beginning to recover to pre-Macondo levels
The number of permit approvals for drilling will rise as US industry adapts to the new safety regime, which is watched over by the US Coast Guard and new government agency Bureau of Safety and Environmental Enforcement. There will be more opportunities for shipowners as all deepwater drilling plans need to include control and containment and oil spill response contingencies, plus vessels with better fire- fighting capabilities. However, the US sector continues to be a
closed industry to many non-US-based OSV owners, as it remains a cabotage market under the Jones Act. Swire Pacific Offshore’s general manager George Horsington said it is not alone – other cabotage areas
include markets in
Brazil, Australia and Malaysia. Mr Horsington described the issues involved with operating in cabotage regimes. The benefits for owners are long-term charters at higher-than-average market rates, but there are challenges. These include a shortage in trained crew and local content demands on owners.
“Cabotage benefits local content, shipyards, shipowners, seafarers and politicians. We see cabotage increasing the problems of rising costs of operations
for John Shock: E&P expenditure is increasing
slump that occurred after the Deepwater Horizon/ Macondo disaster, said Hornbeck Offshore’s vice president Mike Wallace. However, OSV activity has not yet recovered to pre-Macondo levels despite the lifting of the US drilling moratorium and the return of some deepwater-capacity drilling rigs, he added.
“The drilling business collapsed in the third shipowners, lack of
experienced crew and higher employment costs,” he explained. “There is the complexity of flag state compliance, higher taxes and high local onshore support.
“Higher day rates are needed to justify the investment. But imperfect contractual terms restrict the flexibility of vessel movements, locking in vessels and raising cost bases. “The key is to find the right local partner, to get the right returns and maintain control,” he said. OSJ
Massive investment needed in offshore wind
Huge investment will be needed in offshore windfarms in Europe as the region’s nations strive to improve energy security and reduce dependence on hydrocarbons. This will lead to an increasing number of
6 I Annual Offshore Support Journal Conference and Awards 2012 opportunities for OSV owners.
The European Commission’s director general of energy, Philip Lowe, forecast that €44-€96 billion will be invested in European offshore wind projects, and a further €15 billion of investment
is needed in interconnection subsea cables. Rasmus Stute, classification
society
Germanischer Lloyd’s head of offshore service vessels, said that more than 200 support ships will be required for windfarm projects.
www.osjonline.com
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