Shallow vs. deep water

The U.S. Gulf workboat industry was a tale of two markets in 2007. Vessels that service the shallow water have seen day rates and utilization dip while rates for deepwater OSVs stayed strong in 2007.

However, an improved shallow-water market may be on the horizon. In the meantime, smaller supply vessels and crewboats that typically service the shelf market continue to see depressed day rates and utilization, with average rates for small supply vessels falling in January. Day rates for smaller crewboats also dropped slightly while utilization remained flat.

In this tale of two markets, day rates and utilization for larger supply boats rose, as did rates for large crewboats.

In a recent report, ODS-Petrodata , Houston, said that it is seeing signs of a possible recovery in the jackup market. In fact, the number of working jackups increased by five units, from 48 in mid-December to 53 in mid-January. The company noted that the jackup market has historically been linked to the price of natural gas.

In early January, natural gas prices were $6.84 per mmBtu compared with $5.85 a year earlier. When the ODS-Petrodata report was released in January, gas was at $7.88 per mmBtu ($7.94 per mmBtu as of Feb. 6).

Colder weather is a significant contributor to high natural gas prices, but the U.S. Energy Information Administration (EIA) said in its Jan. 24 report that despite the seasonably cold weather across much of the lower 48 states, natural gas spot prices decreased at most markets for the week. Price decreases ranged between 1 cent and 48 cents from the previous week. The above-average supplies of natural gas undoubtedly contributed to the spot price declines, the EIA noted.

Still, the EIA expects average gas prices in 2008 and 2009 to be higher than last year. This could result in a continued strengthening of the jackup market in the Gulf.

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