The building of new offshore service vessels for the U.S. Gulf of Mexico continued at an impressive clip over the past year, and more of the same is expected through 2015.
“I think we have as many as 90 offshore supply vessels under construction in the U.S. Gulf. If you limit it to the really large vessels, you’re probably looking at 50 to 60 that are going to all be delivering from now going forward,” Richard Sanchez, senior marine specialist, IHS PetrodataMarineBase, Houston, said during a WorkBoat OSV webinar in March.
The new OSVs are the most technologically advanced in the history of the industry, sporting dynamic positioning systems and wheelhouses that resemble Star Trek’s USSEnterprise. The boats are also the most environmentally friendly in OSV history. “The oil companies want the best available boat on the market,” said James Schureck, vice president, business development at Bordelon Marine, Houma, La. “As the bar goes up, that’s what they want. That’s the way it is.”
Bordelon Marine got into the new generation building mix late last year with the delivery of the first of three Stingray-class 255'×52'×18' DP-2 multipurpose platform supply boats, the Connor Bordelon. Two more are under construction at the company’s Bordelon Marine Shipbuilders. The Shelia Bordelon is scheduled for delivery in October, and the Brandon Bordelon will be out in late spring 2015.
“We saw a need in the market for a light [IMR/ROV] multiplatform supply vessel to operate in the deepwater subsea universe,” said Schureck. “The Connor is working for Baker Hughes and doing well. We’re very happy with it and so are they.”
Stingray-class capacities include 158,000 gals. of fuel; 10,400 bbls. liquid mud; 4,000 cu. ft. dry bulk; 23,000 gals. potable water; and 240,000 gals. drill water.
Most of the action is focused on the deepwater and ultradeepwater market. From now until June, Sanchez said that 10 deepwater floaters are expected to mobilize to the U.S. Gulf.
“And all those rigs coming into the market in the U.S. Gulf have long-term contracts with operators here in the Gulf.”
To service these new deepwater rigs, companies like Hornbeck Offshore Services and Harvey Gulf International Marine have built multiple state-of-the-art OSVs to meet the need. “This new group of vessels that’s been entering the market I want to call them jumbo size,” said Sanchez, “because we’re going from 3,000 to 3,500 deadweight tons to more like 4,000 to 6,300 deadweight tons.”
Hornbeck contracted with Eastern Shipbuilding Group in Panama City, Fla., to build 12 HOSMAX OSVs and MPSVs, and HOS is also building 10 Super 300 OSVs at VT Halter Marine, Pascagoula, Miss.
Harvey Gulf contracted with Eastern to build two 327'×73'×29'3", Z-drive MPSVs and the 302'×64'×24'6" ultradeepwater installation vessel Harvey Deep-Sea, which was delivered in July. The New Orleans-based company is also building six dual-fuel (LNG and diesel), 302'×64' OSVs at Gulf Coast Shipyard Group, Gulfport, Miss.
Schureck said Bordelon took a different approach than Harvey Gulf. “We’re a smaller company, and we want to do it our way. We take things a little slower,” he said. “We’re putting one out a year, for now.”
All the action is not in deepwater. In December, Houma, La.-based New Generation Shipbuilding delivered the 171'×36'×12' mini-supply vessel Mr. Ernie to its parent company New Generation Marine Services. The company believes there will be a rebound in the natural gas market on the shelf, and they want be ready to pounce.
“We know that the drop in natural gas reserve capacity in this country is considerable,” said the company’s owner, Joe Gregory. “Prices are getting ready to jump up, and we’re in a position to seize the opportunity to take advantage of that.”
Mr. Ernie is only the second vessel built by the two-year-old company. New Generation took delivery of the Mr. Ed last September. “We believe in the shelf,” he said. “Within a year we should see some real increases out there.”
With all the new OSVs already in the Gulf and another 80 to 90 scheduled to come on line over the next two years, some question whether the industry is getting overbuilt.
“No matter how much work is out there, with too many boats, people start to get a little scared,” said Schureck.
G. Allen Brooks, managing director for PPHB, a Houston-based investment banking firm focused on the energy service industry, said the question is how many older rigs will be taken out of service once the new equipment enters the Gulf.
Another question, he said, “Is how many old vessels are going to be parked or scrapped to make room for the new ones?”
He said that the Gulf would probably be overbuilt, “but it works its way out because there are a lot of old vessels that can be eliminated from the fleet, plus there’s obviously geographic expansion opportunities.”
Michael Sano, global offshore support vessel market sector lead, American Bureau of Shipping, said that though exploration and production budgets for many of the major oil companies are flat, the existing rigs are still out there with more scheduled to come online. He agreed with Brooks that some of the older equipment would find its way to other parts of the world.
However, Sano added, “When older vessels are scrapped or sidelined, the newer vessels coming online have greater capabilities and greater capacities. So it’s not necessarily a one-for-one replacement.”
Sanchez said the term “overbuild” is relative. “If you’re on the operators side and you’re actually looking to charter vessels you want the kind of environment with competitive prices and a wide variety of equipment to choose from,” he said. “If you’re looking at it from the vessel owner’s side, you generally favor a tighter market with elevated day rates.”
He said that the excess supply would be coming at an opportune time to move older vessels because of increased activity in Mexico, new contracting in Brazil, “and also potential activity in some of the micro-markets of Latin America, where you have small-rig programs sort of smattered throughout.”
LNG: The marine fuel of the future?
Liquified natural gas as a fuel for workboats has become an extremely popular idea because it burns cleaner and costs less than diesel. However, the infrastructure is not there right now, and boat company executives are cautious about building costly LNG-fueled vessels.
As Walter Blessey, owner of inland tank barge operator BlesseyMarine Services, said about LNG, “Where are the gas stations?”
Harvey Gulf International Marine is investing $350 million in an LNG-fueled fleet, and it will need gas stations. So the company is building a multimillion dollar LNG supply facility in Port Fourchon, La.
Michael Sano, global offshore support vessel market sector lead, American Bureau of Shipping, told WorkBoat that there is some give-and-take when considering LNG as a fuel.
“The minute you go into LNG, the OSVs have a higher initial capital cost to construction due to the need for specialized LNG tanks, duel-fuel engines, other LNG related features and equipment, double-walled pipes, etc., and nitrogen systems,” he said. “But the return from this higher initial capital cost is realized over time in lower operating costs and then the emissions compliance.”
Guido Perla, chairman of Guido Perla & Associates, Seattle, is not sold on LNG. He said the main issue is cost.
“We are going to pay dearly in any direction we go, LNG or diesel. There are not good solutions for the future as long as we stay with oil-based, non-renewable products.”
GPA has its LNG PowerPack modular design that deals with the inefficient way of storing LNG and its supporting equipment, but the bottom line, said Perla, is that LNG is not more efficient than diesel.
“LNG is like the pretty girl in high school. Everyone talks about her, but there is not much essence behind her and it costs a lot to take her out to dinner.” — K. Hocke