Oil prices hitting OSV and rig operators hard

The news continues to be ominous for rig and boat operators in the Gulf oil patch. Oil prices hit a six-year low in January with WTI falling below $44 bbl. for the first time since 2009. There’s also plenty of oil out there, and U.S. oil production continued to increase in January.

Most workboat industry veterans know that the OSV, rig and oil markets are cyclical. Some analysts are predicting that oil prices are expected to remain depressed for another 12 to 24 months.

At January’s Offshore Marine Service Association meeting in New Orleans, marine analyst Richard Sanchez of IHS-Petrodata delivered plenty of bad news, but he did offer a glimmer or two of hope for OSV operators in the crowd. “This downturn is not expected to be as severe or as sharp as you experienced back in 2010, 2011 and 2012,” Sanchez said. “But it is expected to last approximately two to three years.”

Also, Sanchez said, the deepwater and ultradeepwater market will actually grow in 2015 and the big deepwater projects will continue to move forward. 

Still, Sanchez delivered much of the same gloomy news that OSV operators have been hearing for months. He said that the majors are under pressure to reduce spending, thus they are seeking discounts and rate reductions from rig and vessel owners, “even on long-term contracts.”

And, he added, the PSV market is “very” saturated and about 18-20 new PSVs are scheduled for delivery in 2015. “High quality PSVs are getting coldstacked,” he said. “The competition is very strong for big PSVs.” 

— David Krapf

 

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