January/February 2017 www.osjonline.com
FPSOs and field development create work in West Africa
Oil spill responders expect growing role for unmanned aerial vehicles Decommissioning heavy-lifters have a decades-long back story
“Financial institutions and governments are taking action that, far from helping to solve it, actually postpone the solution to the problem� Larry Rigdon, chairman of the board, Jackson Offshore Holdings, see page 7
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contents January/February 2017 volume 20 issue 1
22 11
Regulars 5 COMMENT 45 IMCA NEWS 46 BEST OF THE WEB
News focus 7 The downturn in the offshore vessel industry is eerily reminiscent of the 1980s, when inaction by banks and governments prolonged the situation 11 Seacor CEO Charles Fabrikant believes consolidation is needed if the OSV industry is to recover
Area reports
33
38
14 North Sea: 2017 is expected to be one of the toughest years for the industry in recent times 17 Gulf of Mexico: industry organisations have reacted with anger to president Obama’s ban on exploration in the Arctic 18 Brazil: after several years of decline, demand for offshore support vessels could be about to begin picking up again 21 Middle East: Shell and Total have signed agreements to invest in gas resources offshore Iran, as Saudi Aramco looks to rejuvenate Arabian Gulf fields 22 West Africa: like most other markets in 2016, the market offshore West Africa was a shadow of its former, busier self, but was not without activity for vessel owners 26 East Africa: the excitement and activity associated with the East African market in the early part of this decade is now a distant memory, but there is a positive sentiment about the longer term 29 Southeast Asia: POSH has revealed more details about its ongoing legal dispute with Makamin in Saudi Arabia 30 Mediterranean/Black Sea: Allseas is to install 900km of pipeline for the TurkStream project in the Black Sea
Oil spill response 33 Unmanned aerial vehicles or drones could play a leading role in oil spill response in future
Communications 34 Satcom Global has begun a Ku-band service, NSSLGlobal has acquired media content specialist SnapTV and SpeedCast has introduced Sigma Net for vessel communications and network management
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Offshore Support Journal | January/February 2017
contents Offshore accommodation 37 Prosafe has completed the acquisition of two semi-submersible accommodation units
Heavy lift 38 Shandong Twin Marine in China has ordered a trio of specialised heavy-lift vessels for decommissioning projects
Propulsion 41 Voith has proposed new propulsion concepts for service operation vessels
Repair and conversion 42 One of the most distinctive vessels operating in the North Sea has undergone a multimillion pound refit
Market data 48 Statistics 51 VesselsValue
Next issue Main features include: • main area report: Southeast Asia • simulation & training • walk-to-work • propulsion: diesel-electric • anchor handling • ice-class vessels • standby/rescue vessels.
Front cover photo: Total Congo’s FPU Likouf was dry-towed by Dockwise from Ulsan, South Korea, to Gabon in November 2016 before being positioned on Moho Nord by a five-vessel-strong Boskalis armada (photo: Boskalis)
January/February 2017 volume 20 issue 1 Editor: David Foxwell t: +44 1252 717 898 e: david.foxwell@rivieramm.com Deputy Editor: Martyn Wingrove t: +44 20 8370 1736 e: martyn.wingrove@rivieramm.com Brand Manager – Sales: Ian Glen t: +44 7919 263 737 e: ian.glen@rivieramm.com Sales: Indrit Kruja t: +44 20 8370 7792 e: indrit.kruja@rivieramm.com Sales: Colin Deed t: +44 1239 612384 e: colin.deed@rivieramm.com Head of Sales – Asia: Kym Tan t: +65 9456 3165 e: kym.tan@rivieramm.com Sales – Asia & Middle East: Rigzin Angdu t: +65 6809 3198 e: rigzin.angdu@rivieramm.com Sales – Southeast Asia & Australasia: Kaara Barbour t: +61 414 436 808 e: kaara.barbour@rivieramm.com Production Manager: Ram Mahbubani t: +44 20 8370 7010 e: ram.mahbubani@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Editorial Director: Steve Matthews Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK
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Offshore Support Journal | January/February 2017
ISSN 1463-581X (Print) ISSN 2051-0594 (Online) ©2017 Riviera Maritime Media Ltd
Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.
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COMMENT | 5
CONSOLIDATION THE KEY IN 2017 2 David Foxwell, Editor
“There are too many small entities, and from a practical perspective, this has implications on costs and on revenue”
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016 was one of the most challenging years in decades in the offshore vessel sector. 2017 is unlikely to be any better. Many OSV companies spent the year trying to refinance. Several managed to do so, but for others, the route to survival was consolidation. Industrialist consolidators such as Kristian Siem and Kjell Inge Røkke could play an increasing role in the sector in 2017, a year that many owners are expecting to be worse even than 2016. Some regions fared better than others – the Middle East was a bright spot – but owners in long-established basins such as the North Sea were very hard hit, as were owners in the Gulf of Mexico. Some observers see the current situation as uncannily like that in the early to mid-1980s. Irrespective of the oil price, there are just too many ships. Such is the extent of the oversupply in the industry that it will take a long time for the market to return to some sort of balance. As seasoned observers such as Larry Rigdon note, the lack of the ‘creative destruction’ in the oil and gas industry through foreclosures, forced consolidation and reorganisation only serve to postpone the downsizing of the global fleet. Other leading players, such as Charles Fabrikant at Seacor Holdings, are waiting patiently for consolidation opportunities to arise, as they undoubtedly will. As Mr Rigdon told OSJ recently, to date, there has been too little action by banks and financial institutions that could have led to vessels being removed from the market and reduced competition for contracts. As Mr Fabrikant told OSJ, apart from oversupply, the other major issue with the offshore support vessel market is that it is too fragmented. Just as in the US in the early 1980s, financial institutions are kicking the can down the road and hoping that higher oil and gas prices will be their salvation. They may have a long wait. As one well known broker noted, in the North Sea, there has been a dramatic expansion in the offshore fleet in the last decade, with well over 400 offshore vessels
trading there, managed by getting on for 70 different companies. A quarter of these vessels are managed by companies with five or fewer ships. There are too many small entities, and from a practical perspective, this has implications on costs and on revenue. With so many different companies running so many different operations, the cost per vessel for the entire North Sea fleet is far higher than it needs to be. Consolidation would reduce costs, with more vessels managed by fewer entities. Some owners have begun talking about a turnaround in the market. Gulf Marine Services has reported seeing an increase in tender opportunities in the Middle East and has talked of there being “clear signs of recovery”, but the company operates in a very specific niche. Few companies are as well placed as, for instance, DOF Subsea, which stands out from the crowd in as much as, although it owns the largest dedicated subsea fleet in the world, it only has two of its 29 subsea units laid up. It also has one of the highest utilisation rates of all companies. Project costs have undoubtedly fallen significantly, as have labour costs in dollar terms in countries such as Brazil, Mexico and the UK, and the number of active vessels in some regions could potentially come into balance before too long as more vessels are stacked. As Mr Fabrikant noted recently, there has been more stability and even a slight increase in activity in the Mediterranean, Middle East and India, and there are political developments that augur well for the future in South America, where Brazil has enacted legislation allowing international oil companies to hold acreage and operate. Mr Fabrikant said that, although the prevailing view is that we should not expect a significant increase in activity before 2020, he would be surprised if Brazil did not come back to life sooner than that, assuming rates for rigs remain depressed, the Brazilian real remains at its current level against the US dollar and oil prices hover around US$50 per barrel, although, as he said, “I realise this is an outlying opinion.” OSJ
Offshore Support Journal | January/February 2017
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NEWS FOCUS | 7
“Déjà vu all over again” in the offshore vessel industry The depression in the offshore vessel industry is eerily reminiscent of the situation in the 1980s, when inaction by banks and governments prolonged the downturn by Larry Rigdon
Y
ogi Berra was a famous New York Yankee baseball player and team manager. He was also well known for his malapropisms and pithy and paradoxical statements. One of the most famous was: “It’s déjà vu all over again.” After more than 40 years in the offshore support vessel industry, I am experiencing that sense of déjà vu all over again. In the early to mid-1980s in the US, we experienced the full impact of overbuilding all types of offshore oil and gas equipment. There were simply too many offshore drilling rigs, construction barges, tugboats and anchorhandling and supply vessels built in the late 1970s, with many still being delivered in the early 1980s. The oversupply was caused by a widespread consensus that oil was going to continue trending upwards to the magical US$100 per barrel level, combined with the ready availability of investment capital for the oil and gas industry. As long-serving oil and gas industry veterans know, the oil price collapsed in 1981and the offshore oil and gas industry suffered more than a decade of depression.
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My sense of déjà vu all over again comes from the huge and growing oversupply of all types of offshore oil and gas equipment that has been built with easy money resulting from an overly optimistic belief in ever-increasing oil and gas prices. The current collapse in the offshore oil industry only serves to confirm that uneasy feeling of history repeating itself. However, the recurring circumstances that I am now
observing are centered in the North Sea and Southeast Asia and not the US this cycle. Of course, the Gulf of Mexico is currently suffering from an oversupply of offshore supply vessels (OSVs) at the existing low level of drilling activity, but the cabotage protection provided by the US Jones Act provides the potential for the market for deepwater OSVs to rebalance with an eventual return of expanded deepwater drilling. Unfortunately, the oversupply in OSVs for the shelf or shallow-water drilling support work in the Gulf of Mexico will be worked off for many years, mimicking the early 1980s experience. Outside the US, the oversupply of OSVs and of all types of offshore oil and gas equipment will take an extended period to
Larry Rigdon: “banks and governments are propping up the industry, postponing recovery”
find balance with demand. The lack of the ‘creative destruction’ in the oil and gas industry through foreclosures, forced consolidation and meaningful reorganisation only serves to postpone the downsizing of the oversupply of offshore oil equipment. For the OSV industry, the eventual recovery of international charter rates is being pushed well into the future. Today, new charter contracts are mostly at daily rates below cash flow breakeven levels, with vessel owners ignoring future regulatory drydock, insurance and maintenance costs. Charter rates adequate to pay interest on debts are often no more than a passing thought, and amortisation payments are not even a consideration to many OSV
8 | NEWS FOCUS
owners when responding to current environment to Creative destruction caused work opportunities. continue. This symbiotic by foreclosures, reorganisations Of course, working relationship was allowed to and consolidations did not equipment at such low exist in the US in the 1980s. occur until the mid-1980s, charter rates is only rational The huge overbuilding of all when the US government if the owner believes that types of offshore oil and gas actively pursued foreclosure of they can survive until the equipment was largely driven mortgaged offshore equipment market upturn eventually by loan guarantees and very and honoured its loan arrives. More importantly, attractive tax policies provided guarantees. The removal of the working below cash costs by the US government. many OSVs from the market requires financial institutions When oil prices collapsed combined with a recovery in that have provided the in 1981, the financial oil prices eventually resulted in finance to acquiesce through institutions that had received the OSV industry beginning generous loan covenant US government guarantees a slow, but cyclical, recovery. modification, a moratorium for the mortgaged offshore Nevertheless, it was not until on payments and extension oil and gas equipment felt 1993 that the first new OSVs of the term of the loans on secure because of the loan were built, for early deepwater mortgaged equipment. For guarantees. As a result, the exploration by Shell in the the financial institutions to banks were very slow to Gulf of Mexico. engage in aggressive loan foreclose on mortgaged assets, It is obvious in retrospect relief measures, government and distressed borrowers that too much capital in the agencies that regulate quickly reduced pricing below US in the late 1970s and early institutions must also cashflow breakeven pricing 1980s created an oversupply acquiesce to these measures in a desperate struggle for of all types of offshore oil and through inaction. It takes survival. This continued gas equipment. The symbiotic a symbiotic relationship because the government was relationship among the owners, between owners, financial not aggressive in enforcing financial institutions and the institutions and the banking regulations on the government resulted in a lack government to the financial of foreclosure the non- 15:51 Sonardyne_Cruise Indallow News_1/2pp Horiz_ 125.5 xinstitutions. 189_Ranger 1/2pp Horiz_130 x 185_01on31/08/2016
performing loans, resulting in an extended downturn for the owners of offshore oil and gas equipment. Today in Norway, Singapore and China, it is dĂŠjĂ vu all over again. To date, there has been very little action by the Norwegian banks and financial institutions that has led to OSVs being removed from the market. Just as in the US in the early 1980s, financial institutions are kicking the can down the road and hoping that oil and gas price increases will be their salvation. Recently, the head of the Export Credit Guarantee Agency (GIEK) in Norway indicated that it had provided US$3.1 billion in loan guarantees to the OSV industry. A senior official of DNB, a major Norwegian bank, said that many of the reorganisations of companies in Norway that only provide cash flow runways to 2018 and 2019 1will probably have to be Page
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NEWS FOCUS | 9
further modified to give those companies loan relief until 2021 or later. In Singapore, the best available estimates suggest that major banks there have US$5 billion in loan exposure to the offshore oil and gas industry. To confirm the symbiotic relations with the offshore equipment owners and the banks, the Singapore government recently announced the establishment of a S$1.6 billion (US$1.1 billion) loan fund that will be made available to shipyards and their contractors, exploration, production and offshore services firms, oil and gas equipment and services companies and their suppliers. The scheme will provide government loan guarantees for commercial loans of S$5 million to S$15 million. In addition, a separate government loan scheme targeted at project and asset financing support is to be increased from S$30 million to S$70 million per loan. In China, local and national governments have provided massive loans and guarantees for all types of offshore oil and gas equipment and all types of ships. This financial assistance focuses on maintaining employment for hundreds of thousands of people in shipyards and factories that were constructing these assets. Today in China, there are 300–500 OSVs complete, ready for service, or that can be quickly completed that are sitting in shipyards with no buyers. The total amount of the government-supported loans in China is unknowable but is undoubtedly enormous. The current downturn in the offshore oil and gas industry began in mid-2014, and today, I cannot identify a single significant action by financial institutions or governments in Norway, Singapore or China that has removed OSV tonnage from the market. All the actions to date have simply
moved the chess pieces to different positions. In fact, these financial institutions and governments are taking action that, far from helping to solve it, actually postpones the solution to the problem. The symbiotic relationships between OSV owners and owners of drilling rigs and other offshore oil equipment owners,
financial institutions and governments are self-evident. As long as these symbiotic relationships continue, any recovery in the offshore oil and gas industry and the related OSV industry will be delayed. I think that I can safely say that Norway Inc, Singapore Inc and China Inc are alive and well and that the symbiotic
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relationships are fully functional and are postponing the creative destruction that is going to be needed to restore a supply and demand balance in the OSV and drilling industries. So, the big question is, will we see déjà vu all over again with another 10 years of depression in the industry before we experience a real recovery? OSJ
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NEWS FOCUS | 11
SEACOR CEO PREPARED TO WAIT FOR CONSOLIDATION Charles Fabrikant’s proposal to the board of GulfMark Offshore may have been rebuffed but he remains convinced that consolidation is essential if the offshore vessel industry is to emerge from its current malaise
O
versupply may be the word on everybody’s lips – along with the oil price – but Charles Fabrikant, chief executive of Seacor Holdings, believes that there is another issue affecting the industry: its highly fragmented nature. Speaking exclusively to OSJ at the end of 2016, Mr Fabrikant – who will provide the opening keynote at the 2017 Annual Offshore Support Journal Conference, Awards & Exhibition, which takes place 8-9 February 2017, London – said that although excess capacity is undoubtedly the offshore support vessel (OSV) industry’s biggest problem right now, fragmentation is another important one and has been for a long time. “Consolidation would be beneficial for everyone,” he said. Mr Fabrikant believes that, although the banks have been supportive of distressed owners so far, eventually lenders will lose patience and seek to preserve value in their loans by forcing consolidation. As he noted recently, operating offshore vessels is relatively overhead intensive in relationship to the underlying value of capital assets, and that ratio of overhead and operating support costs to vessel values is even higher today in light of the depressed value of assets. As he noted when Seacor released its latest results, for the time being there are few cash buyers for vessels, and there are few willing sellers so actual transactions are relatively few, except when a lender decides to foreclose, but that will change. “Restructuring is currently the name of the game,’” he says, but Seacor is “committed to wait patiently for opportunities to acquire more assets or collaborate with others interested in reducing costs and rationalizing fleets in conjunction with restructuring.” He notes that the company’s strong balance sheet and differentiated fleet distinguishes it from others who are struggling with debt or those that are dependent on an upturn in deepwater drilling to provide employment. Another factor that distinguishes Seacor from most other OSV companies in the Gulf of Mexico is that it did not plunge headlong into acquiring expensive deepwater vessels when capital to do so was freely available from the banks and the bond markets. “I’ve always been a little eclectic like that,” he said. “When I see everybody rushing in one direction, my reaction is usually ‘get me out of here.’” Even so, as he also notes, the severity of the downturn in the industry is such that the very circumstances that might enable Seacor to acquire offshore equipment at distressed prices makes assessing the value of its own assets challenging. “Making educated guesses about the ‘recoverability’ of the carrying value of our assets from projected future income and cashflow is not a science,” he said. “It is difficult to find data points for clearing prices when there are few buyers
www.osjonline.com
Charles Fabrikant: “not all companies are invested in shale oil and not all countries are interested in it”
Offshore Support Journal | January/February 2017
12 | NEWS FOCUS
Mr Fabrikant anticipates that some offshore markets could recover more quickly than others, depending on costs and political considerations
and almost all sellers are being forced.” He described Seacor’s performance in 2016 as “dismal” and believes that it will be a long haul for the industry out of the current malaise. He said he also believes that we are still in the early days of the downturn. “2015 was difficult, but not as bad as 2016,” he told OSJ. He expects 2017 to be little better and, perhaps, worse, and foresees a ‘winter of discontent.’ “Our customer base is hurting,” he said of the oil companies. “If the price of oil improves sufficiently for them to make any money they are likely to put it into shale oil or pay dividends to shareholders, or improve their balance sheets. They aren’t likely to begin spending money on deepwater projects any time soon.“ In the longer term, Mr Fabrikant believes a Trump administration could, potentially, help the industry, if it opens up new areas offshore for leases, although outgoing President Obama’s recent decision to make some offshore areas ‘off limits’ for exploration has complicated any plans the Trump administration might have had. Even without the Obama ban, the process of opening up new areas would be a slow one, he notes, and in the short term there is unlikely to be any benefit for the industry. There is plenty of acreage to drill, and more acreage than appetite for drilling. There has been a lot of debate about where the oil companies will spend their money after they have rebuilt their balance sheets, but as Mr Fabrikant also pointed out shale oil isn’t the only option
Offshore Support Journal | January/February 2017
and offshore could eventually attract dollars, particularly the shelf. He described a scenario in which rising oil prices might lead to a gradual recovery in some offshore markets, but not in others, a two-speed recovery perhaps, where high cost basins take longer to come back into play. Asked about the potential benefits of rising prices, Mr Fabrikant said: “Not all companies are invested in shale oil and not all countries are interested in it. Offshore Brazil is potentially interesting and so is India. Iran is opening up and deals are being struck. US-based independents and super majors may be focused on shale, but state-owned oil companies have to drill in home waters and political imperatives often dictate developing national resources. Not every government is sufficiently powerful that it can accept what America tolerated and now appears also to be true of China: dependence on other countries for vital resources which could be developed locally,” he told OSJ. At the time of the interview OPEC had not acted to cut production and the price of oil was poised at slightly above US$40 per barrel. At the time of writing, Brent crude was at US$56/barrel and West Texas Intermediate at US$53.00/barrel. Throughout 2016 the consensus was that US$60 oil might bring capital back into the offshore industry. Would US$50 oil do it? “It depends on which region you’re talking about, costs in those regions, political risks, and local incentives,” Mr Fabrikant concluded. OSJ
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14 | AREA REPORT North Sea
OSV OWNERS SET FOR TOUGH YEAR AHEAD Owners and operators of anchor handlers and platform supply vessels are under no illusions about the year ahead. 2017 is expected to be one of the toughest years for the industry in recent times, with oversupply, the highest number of cold-stacked vessels on record and demand that shows little signs of improving sufficiently to encourage an upturn
T
he founder and CEO of Olympic Shipping – which recently announced a restructuring to help it through the difficult times ahead – has been upfront regarding his views on the 2017 offshore support vessel (OSV) sector. Stig Remøy was quoted as saying that “there is no doubt” that 2017 will be the worst year for the OSV industry “in many decades”. Rival owner Havila Shipping very narrowly escaped going bust at the end of 2016, and now the vast majority of Norwegian OSV players are actively talking to their creditors and bondholders about financial restructuring in a bid to see them survive through the perceived challenges. At the time of writing, Boa Offshore is the latest to commit to restructuring talks with its financiers. Boa says its financial situation “has become significantly worse than anticipated only a few months ago”. The weakening of its financial situation is attributed mainly to the offshore construction vessel market having weakened much more than anticipated, as well as the sale of two anchor-handling tug/supply (AHTS) vessels not progressing as planned and the weaker performance of Boa’s tug fleet. “Consequently the group’s liquidity position is now severe, and certain liquidity covenants are expected to be
breached by the end of fourth quarter 2016 or during first quarter 2017,” said Boa in a statement. Boa has spent recent weeks working on a financial restructuring plan. It added, “While such discussions will be ongoing with the creditors, the group will continue to operate normally in all material respects, upholding the highest level of service to all its customers and continue to honour all its external suppliers and trade creditors. However, during the restructuring process, no interest and amortisation will be paid to bondholders and intercompany creditors.” Helge Kvalvik, CEO of Boa Offshore AS, commented, “Boa Offshore is now deeply affected
Stig Remøy: “2017 is likely to be the worst year for OSVs in decades”
Offshore Support Journal | January/February 2017
by the market situation. The outlook continued to weaken throughout this fall, and our financial situation is such that we have to go to our financial creditors. We will strive to carry out such discussions in an open and constructive way.” The weakness in the OSV market has already led to consolidation, with December seeing the merger between Solstad and Rem Offshore complete. Siem Oilservice Invest Holdings also took control of Farstad Shipping in the final month of 2016, with the latter stating that the deal was required to ensure the vessel owner can continue trading through current and future challenging market conditions. It is likely that further consolidation and more mergers between OSV owners will take place in 2017 as owners aim for one key thing in the short to medium term – survival. Financial restructuring is one thing that most OSV players now have to do. Most have already agreed deals, or are hoping to agree deals, to see them through until around 2020, when it is hoped that the industry can be back on its feet again. Companies still have the problem of somehow utilising their expensively ordered fleets in the meantime, however, in the face of diminishing demand from within the sector. With the oil price low and more and more rigs being stacked,
there is less demand for the services of platform supply vessels in particular. AHTS vessels are at least picking up short-term work in moving rigs to scrapyards and layup locations, though more than this is required to keep fleets busy. Many vessel owners are now looking at options for utilising their tonnage outside of the traditional OSV sector, with Farstad being one of the latest to commit to a new type of work. Farstad Offshore AS has been awarded a contract by Ocean Farming AS for the complete mooring installation and hook-up of Ocean Farming’s semi-submersible offshore fish farm. The scope involves project management as well as execution of the offshore operations. The project will utilise AHTS vessels from the Farstad Shipping fleet trading the spot market in the North Sea. Operations are scheduled to take place during the first half of 2017. “The introduction of offshore fish farms of this size and specification is opening a new market for utilisation of large AHTS vessels, and we are excited to take part in making this first pilot a success and look forward to further developments in this market,” said Karl-Johan Bakken, CEO of Farstad Shipping ASA. “We highly appreciate Ocean Farming’s confidence in Farstad Shipping as demonstrated by the award of this interesting contract in this new market segment,” he added. Several other players will be looking for similar contracts in the aquaculture industry, should the opportunity to put their OSVs to work on such contracts arise. OSJ
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Gulf of Mexico AREA REPORT | 17
Industry associations decry withdrawal of offshore areas President Obama’s decision to make some offshore areas ‘off limits’ for exploration has drawn the ire of industry organisations
R
eacting to president Obama’s December 2016 decision to permanently ban oil exploration in the Arctic and withdraw parts of the Atlantic from future leasing, Randall Luthi, president of the National Ocean Industries Association (NOIA), issued a statement in which he described the outgoing president’s decision as “short sighted”, noting that unilateral withdrawal of Atlantic and Arctic Ocean areas from future oil and gas leasing “not only risks the long-term energy security and energy leadership position of the US” but also “violates the letter and spirit of the law”. Mr Luthi said that such a withdrawal, particularly when argued as being ‘permanent’, “is clearly inconsistent with the Outer Continental Shelf Land Act’s declaration that ‘the Outer Continental Shelf is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs…’ “Today’s decision puts the US at a competitive disadvantage and sacrifices thousands of potential jobs and billions of dollars in government revenue. While other countries are ramping up offshore oil and natural gas exploration in the Arctic and in the Atlantic basin, president Obama has benched the US, dismissing his own advisors who have argued that energy development, particularly in the Arctic, is
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imperative to our national security,” Mr Luthi said. “The decision also ignores the fact that global energy demand is projected to increase by as much as 48 per cent by 2040 and that fossil fuels are projected to meet about 80 per cent of that demand. A robust offshore leasing programme is crucial not only to meeting America’s domestic energy needs but to providing an affordable, reliable and safe source of oil
Randall Luthi: “a Trump administration could potentially overturn President Obama’s decision”
and natural gas to developing nations.” Mr Luthi said he was hopeful that the incoming Trump administration could “repair some of the damage done to the offshore energy industry and America’s energy security” by putting policies in place that increase, rather than decrease, access to federal offshore areas. The American Petroleum Institute’s upstream director, Erik Milito, said the decision “ignores congressional intent, national security, and vital, good-paying job opportunities for our shipyards, unions and businesses of all types across the country”. Mr Milito said, “Our national security depends on our ability to produce oil and natural gas here in the US. This proposal would take us in the wrong direction just as we have become world leader in production and refining of oil and natural gas and in reduction of carbon emissions. Blocking offshore exploration weakens our national security, destroys goodpaying jobs and could make energy less affordable for consumers. Fortunately, there is no such thing as a permanent ban, and we look forward to working with the new administration on fulfilling the will of American voters on energy production.” Mr Milito also claimed that a permanent withdrawal conflicts with Congress’s stated purpose in creating the Outer Continental Shelf Lands Act (OCSLA), which was to make the Outer Continental Shelf “available for expeditious and orderly development”. He said a permanent and unilateral withdrawal by the president also conflicts with the special role that OCSLA gives governors in OCS leasing decisions. He said that past instances show that the next president has power to undo the decision through a presidential memorandum. “We are hopeful the incoming administration will reverse this decision as the nation continues to need a robust strategy for developing offshore and onshore energy,” Mr Milito concluded. “The US offshore industry has a long history of safe operations that have advanced the energy security of our nation and contributed significantly to our nation’s economy.” US secretary of the interior Sally Jewell applauded president Obama’s announcement that he was withdrawing offshore areas in the Atlantic and Arctic Oceans from future mineral extraction to protect these ecologically sensitive marine environments from the impacts of any future oil and gas exploration and development. OSJ
Offshore Support Journal | January/February 2017
18 | AREA REPORT Brazil
CHANGES SUGGEST BRAZIL COULD BE ABOUT TO TURN THE CORNER After several years of decline, demand for offshore support vessels could be about to begin picking up again by Rob Ward
President Temer has praised Pedro Parente (shown here), president of Petrobras, for turning the oil giant around and divesting non-core businesses
B
razil’s president Michel Temer recently made a number of decisions that could benefit the offshore oil and gas and offshore support vessel (OSV) industry in the South American country. On 10 November 2016, a new law was approved in Brazil’s lower house allowing private oil companies to become operators of Brazil’s pre-salt oil reserves, paving the way for new bidding rounds and the divestment of certain fields by state-owned Petrobras. The new law amends the provisions enacted in December 2010. Under this 2010 law, concession contracts were replaced by production-sharing agreements (PSAs) in the pre-salt area, and Petrobras was granted sole operatorship. However, in the midst of a deep and prolonged economic slowdown and fiscal crisis, president Temer has recognised the need to stimulate
investment in the oil and gas sector and has supported a parliamentary initiative to remove this bottleneck. Under the revised arrangements, Petrobras still has first pick of any new oil fields, but if it decides not to go ahead, it is an open market for all international oil companies (IOCs) and especially those already operating in Brazilian waters. Secondly, president Temer is trying to finalise the text of a revision to local content policy, which many believe is also holding back IOCs investing more in Brazilian exploration and production, and thirdly, he had promised to renew and extend for up to 20 years the Repetro law, which allows companies to import drilling equipment and, indeed OSVs, into Brazil tax free. Fernando Coelho, the minister for mines and energy, said renewal of Repetro will
Offshore Support Journal | January/February 2017
come “very soon” and that, instead of the usual three to five years, it is likely to be extended by 20, so that companies operating in the Brazilian offshore sector can “make long-term plans and investments”. Mr Coelho added that the government is also close to finishing the final draft of the local content policy, and the National Energy Policy Council (CNPE) was due to meet just before Christmas to give it the final stamp of approval. Interestingly, president Temer attended the Rio Oil and Gas conference in September and heaped praise on Pedro Parente, the new president of Petrobras, for rapidly turning the oil giant around and divesting non-core business. All of these measures plus the rise in oil prices to more than US$57 a barrel and more money being made available for newbuild OSVs
suggest some flickers of light at the end of a dark tunnel in the OSV sector in Brazil. Armando Freigedo Rodrigues, a director for the Aquapar consultancy in Rio de Janeiro, said the local content legislation and Repetro extension were “fantastic ideas” and would help get the oil and OSV sector rolling again. “The idea of Petrobras reducing its share of pre-salt fields is a great idea as it will free up more of their cash,” said Mr Rodrigues. “This would prevent future gridlock in terms of developing more fields once the oil price picks up. On top of that, the Repetro extension is a fantastic development for the OSV industry, and the plan for an extension of that regime is welcome news.” But not all the good news in Brazil at the end of 2016 was emanating from Brasília. Bram Offshore, the Brazilian subsidiary of American OSV and shipyard operator Edison Chouest, has been given priority status by the Fundo Mercante Marinha (FMM, or Merchant Marine Fund) for the construction of six 4500-type platform supply vessels (PSVs) to be built over the next few years. The FMM has granted a provisional R$1.015 billion (US$297.8 million) for the large PSVs that will be built at Bram’s shipyard in Navegantes. The FMM offers soft loans, with very low interest rates, to encourage shipbuilding and repairs in Brazil. This is the first time in over 18 months that the FMM has granted a loan for the construction of new OSVs and is a sign that better times are around the corner in the Brazilian OSV industry. OSJ
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Middle East AREA REPORT | 21
ENERGY MAJORS RETURN TO IRAN FOR OFFSHORE GAS
Kuwait Gulf Oil and a subsidiary of Saudi Aramco. Renewed operations would require drilling and well intervention services and support vessels. Saudi Aramco has its own projects offshore Saudi Arabia. It is renewing facilities and adding new infrastructure in the Marjan, Zuluf and Safaniya oil fields. During the fourth quarter of 2016, it signed US$1 billion of contracts with Saipem for offshore engineering, procurement, construction and installation work. This includes installing subsea systems, laying pipelines, subsea cables and umbilicals and installing platform jackets and decks as Saudi Arabia renews these ageing fields. It also includes maintenance and dismantling work on the existing platforms. McDermott is also working with Saudi Aramco on offshore projects. It opened an office in Al Khobar, Saudi Arabia, for its 300 staff working in the country. Shipowners are sending more support vessels to Saudi Arabia to begin longterm contracts. PACC Offshore Services Holdings (POSH) has mobilised the anchor handler POSH Raptor to Saudi Arabia following delivery from PaxOcean Engineering Zhuhai shipyard in China. The 8,000 bhp, 70m vessel is due to begin a long-term charter with Saudi Aramco. Brokers also reported that Abu Dhabi National Oil Co subsidiary Esnaad has taken delivery of another platform supply vessel from De Hoop Shipyards in The Netherlands. Esnaad 228, a 65m vessel with 475m² of deck space, is the eighth of 10 vessels ordered by Esnaad to update and expand its fleet. OSJ
SHELL AND TOTAL HAVE SIGNED AGREEMENTS TO INVEST IN GAS RESOURCES OFFSHORE IRAN, AS SAUDI ARAMCO LOOKS TO REJUVENATE ARABIAN GULF FIELDS BY MARTYN WINGROVE
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pipelines. A second investment phase could involve construction of offshore compression facilities when they are required. All this investment will require vessels to support offshore drilling, construction work and pipelay. Across the Arabian Gulf, Saudi Arabia and Kuwait are expected to resume operations on the Khafji oil field that lies offshore of the neutral zone between the two countries. The field was shut down in October 2014 for environmental and probably political reasons but is likely to be restarted in the first or second quarter of 2017. It is operated by Al-Khafji Joint Operations Co, a joint venture between
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ran will be a key focus area in 2017 as energy companies begin to sign contracts and explore offshore developments. Some of the largest offshore investments in the Middle East will be focused on Iranian projects, although there will also be plenty of expenditure in Saudi Arabia. Royal Dutch Shell was the latest oil major to return to Iran in 2016. It signed agreements to consider developing the Kish gas field in the Persian Gulf and the Azadegan and Yadavaran onshore oil. It will be working with the National Iranian Oil Co (NIOC) on these projects if the existing memorandum of understanding turns into contracts. Iran is focusing on increasing production of offshore gas by attracting foreign investment. Another of these offshore gas opportunities was gobbled up by Total and Chinese National Petroleum Co (CNPC), which recently reached a non-binding US$4.8 billion agreement to develop another section of the South Pars gas field. Together, they will be investing in offshore platforms, wells and pipelines in the South Pars 11 project in the coming years. Total will have a 50 per cent stake in this project, while NIOC subsidiary Petropars will have 20 per cent and CNPC will have 30 per cent. In 2017, the project partners will negotiate a 20-year contract while Total will begin engineering studies and commence the tendering process so that construction contracts can be awarded immediately upon signature of the final agreement. Total expects the project will be developed in two phases. The first US$2 billion phase is expected to consist of 30 wells and two wellhead platforms connected to existing onshore treatment facilities by two subsea
UAE
Iran expects to produce gas from the Kish field and South Pars 11 project
Offshore Support Journal | January/February 2017
22 | AREA REPORT West Africa
FPSOS AND FIELD DEVELOPMENT PROJECTS CREATE MUCH-NEEDED WORK OFFSHORE WEST AFRICA Like most other markets in 2016, the market offshore West Africa was a shadow of its former, busier self, but was not without activity for vessel owners. Even so, the low level of activity saw well known names depart the scene by Johannes Sjostrand*
A
ny antidote to the collective depression in the offshore vessel market in 2016 did not have a commercial flavour but rather
a hint of acceptable utilisation. With rates having continued south during the year, ‘market rock bottom’ quickly became an elastic concept not based on an accepted
Skandi Skansen mobilised from the North Sea late in 2016 to commence mooring pre-lay for an FPSO hook-up
Offshore Support Journal | January/February 2017
base level for each vessel segment but on how small the margins were that each owner could accept, or worse, how large the negative margins were that each owner could absorb. As such, rate guidance sometimes felt like a somewhat meaningless exercise for brokers. The real answers were not found in the ubiquitous market haze but in each owner’s books and boardrooms. Charterers could comfortably secure superb deals in a sea of plenty. In fact, an adage summarising the charterers’ 2016 could read, “Plenty of good rates, plenty of owner chagrin.” Other phenomena that were further accentuated during the year were how many shades of available can availability legitimately have and how many constellations of layups there are. “Is the vessel prompt? Yes, prompt upon notice. Is the vessel stacked? No, merely lukewarm stacked.” On a more serious note, one of the questions that has to be asked about the downturn in the West African market is whether Abidjan and Walvis Bay will become graveyards for vessels, rather than a convenient place to put vessels into layup, and not just older tonnage but relatively modern vessels too. After some reflection, a fair summary of the offshore vessel market in West Africa in 2016 should at least contain the following four themes – departure of household name owners, field developments generating long-term contracts, new floating production units entering the region and that unforeseen events can, for owners, create continuous demand. In December, the West African market found itself without Siem and
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West Africa AREA REPORT | 25
ER Offshore. After years of a relatively unbroken streak of support work in the region, these two household names in the platform supply vessel (PSV) market offshore West Africa have departed, at least for now. Siem Offshore’s last three units finished off long-term drilling support work for Anadarko offshore Côte d’Ivoire (the VS470s Siem Sasha and Sophie Siem) and for Total Angola (VS470 Siem Louisa) before heading southwest to Argentina. ER Offshore’s last PSV contracts were with Tullow Ghana and CNR Ivory Coast. The last two UT 755 units ER Aalesund and Stavanger, respectively, sailed north to the Canaries in the autumn and were sold to Caspian Marine Services. Departures like this are symptomatic of the general decline in the rig count and drilling activity in the region, yet on a more positive note, they will assist further in tightening the market of truly available units. West Africa’s major 2016 offshore project – Total’s Kaombo Block 32 development – saw some significant initial term fixtures, which will boost owners’ utilisation and carry their vessels well into the summer of 2017. Bourbon secured the most prestigious vessel slot in Technip’s project fleet – a 275-day firm contract for Explorer 502. Technip’s Kaombo project partner, Heerema Marine Contractors, secured a term PSV from Topaz Marine. The 2014-built KCM75 Topaz Xara began a 200-day contract in November. Anchorhandling tug (AHT) owners Fairplay and Seaways/Britoil filled Heerema’s term tug and barge handling needs. Third, and intrinsically linked to the topic of field development, is the commissioning of floating production units. The West African market saw some newcomers this year in the floating production, storage and offloading (FPSO)/floating production unit (FPU) segment. Front Puff in began work on Folawiyo’s Aje field in Nigeria in the spring; Total Congo’s FPU Likouf was dry-towed by Dockwise from Ulsan, South Korea, to Gabon in November before being positioned on Moho Nord by a five-vessel-strong Boskalis armada; and the FPSO Armada Olombendo arrived in December in Angola for Eni’s East Hub. Again, Boskalis’s 180–200-tonne bollard pull AHT(S) vessels Union Princess, Sovereign, Manta, Bear and Lynx – all of which mobilised from northern Europe prior to FPU Likouf ’s arrival – were employed in the positioning and installation work of Eni Angola’s FPSO.
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After completing assignments offshore West Africa, the UT755s ER Aalesund and Stavanger sailed to the Canaries and were sold to Caspian Marine Services
The year also witnessed initial fieldwork in relation to another new Eni FPSO. Yinson’s FPSO Genesis is set to arrive for the OCTP block in Ghana in the first quarter of 2017. Here, DOF Subsea’s Skandi Skansen mobilised late in the year from the North Sea to commence the mooring pre-lay phase prior to the FPSO arrival and hook-up. Staying in Ghana, Tullow Oil took delivery of Modec’s FPSO Professor John Evans Atta Mills early in the year. Following up from its 2015 stint in the region with the construction support/anchor-handling tug/supply (AHTS) vessel Olympic Zeus, the Norwegian owner Olympic Offshore secured FPSO-related installation support work for its Ulstein-designed units Olympic Hercules and Olympic Pegasus as well as the aforementioned Olympic Zeus. Emas AMC, taking the lead on the FPSO project, mobilised its inhouse AHTS unit from Singapore, 220-tonne Lewek Trogon. Subsequent to the Professor John Evans Atta Mills project termination, the 180-tonne unit Lewek Scarlet from Emas commenced a term contract supporting the TEN fields production operations. Fourth, and still on the Tullow Ghana FPSO 2016 chapter, if Professor John Evans Atta Mills was a high point, its older cousin FPSO Kwame Nkrumah over on the Jubilee field created some engineering and production headaches for the operator in light of the damaged turret bearing on the unit. Yet for large AHTS owners, this became a continuous support operation given the need for heading control of
Kwame Nkrumah from three to four 200tonne bollard pull AHTSs. Swire Pacific Offshore (SPO) and United Offshore Support (UOS) were the beneficiaries against the backdrop of FPSO Kwame Nkrumah’s protracted turret issue. The two 220-tonne AHTSs, SPO sister units Pacific Dolphin and Pacific Dragon, undertook the first month of operations before they both sailed west to BP Trinidad and Tobago contracts. Taking over the reins at the end of March were Pacific Champion and Pacific Duchess, both exiting the North Sea spot market. Germany-based UOS fielded their MOSS 424 units UOS Explorer and Freedom. Initially sharing the vessel slots 2-2, UOS later employed three AHTSs, adding sister ship UOS Navigator in July and upon UOS Explorer’s August return from drydock in Spain. SPO kept one unit, Pacific Duchess, following Pacific Champion’s North Sea return voyage. At the time of writing in early December, the aforementioned AHTS spread from SPO and UOS was still engaged in Ghana. Many of the habitual market conversations across the West Africa OSV industry this year have taken place in an echo chamber of sorts, where lament for our universe has rung loud. Evidently, not all was quiet on the West African front. Fixtures were ticking along, and having stoically endured 2016, owners cautiously await market developments in 2017 in the hope of some improvement. OSJ *Johannes Sjostrand is a shipbroker at Mercers Offshore
Offshore Support Journal | January/February 2017
26 | AREA REPORT East Africa
Far Skimmer was one of a number of vessels Farstad had working offshore Tanzania in 2016
LONG-TERM OUTLOOK
more optimistic offshore East Africa The excitement and activity associated with the East African market in the early part of this decade is now a distant memory, but there has been some activity to report and there is a positive sentiment about the longer term by Peter Döring*
O
pportunities for mainstream offshore support vessels (OSVs) in East Africa have been sporadic at best for the last 24 months. Correspondingly, many of the smaller vessels engaged in associated security roles have also departed the region. The boat market locally is once again limited to a small number of local owners with, typically, older tonnage. More sophisticated vessels need to mobilise from far afield, a fact that has often hampered short-term projects. In 2016, drilling was limited to the short campaign conducted by Shell/BG in Tanzania in the fourth quarter consisting of two wells in the Mafia Deep basin. Farstad was awarded the work for three of its PSV 08 series vessels, Far Skimmer, Far Sitella and Far Starling. They are supporting the drillship Noble Globetrotter II operating in blocks 1 and 4 delivering part of the Tanzania LNG project. In terms of upcoming drilling, Total is reportedly planning a one-well campaign off Mozambique around May 2017. This will likely require the support of two dynamic positioning class 2 (DP2) platform supply vessels (PSVs) for a period of around 45 days. Eni are also rumoured to be preparing for a drilling campaign, but details are scant. Along with Anadarko, these operators are all indicating that there will be an uptick in activity in Mozambique, but the timeframe in which we will see genuine momentum remains unclear. Other vessel and tendering activity remains limited for now. CGG has been awarded several seismic campaigns in Mozambique’s Rovuma basin. Saipem is seeking various tugs and multicats for liquefied natural gas (LNG) field development in 2018. There has
Offshore Support Journal | January/February 2017
been some metocean activity. Shell appointed Metocean Services International (MSI) to deploy and service a large mooring array to study wave and current conditions. The campaign used the anchorhandling tug/supply vessel Greta K, which mobilised from Cape Town and subsequently the multipurpose diving and survey vessel Adams Nomad, which had to mobilise from Bahrain (avoiding the high risk area off Somalia). Duration onsite was short (two to three weeks), so preparation time to get vessels modified, hardened and mobilised was longer than the actual projects. This highlights the high cost and risk of delays for projects in the region. Results from the MSI work will help to design infrastructure needed to develop the deepwater gas discoveries identified originally by BG. Also in June, Aminex commenced commissioning on a subsea pipeline and gas plant for its Kiliwani North development plant 15 kilometres off the Tanzanian coast. The energies of vessel owners are largely focused on creating solid foundations for future work, and in turn, these are largely focused on Mozambique. Several owners have set about establishing local entities to take advantage of tendering opportunities that are starting to trickle in, albeit for projects commencing in 2019 and 2020. Vroon, for example, via its recently established Mozambique entity Vroon Offshore Services Limitada, aims to locate an OSV in Pemba, both as part of building a longterm presence and to take advantage of interim local requirements in an area that has no spot market. Its vessels are well suited to field operations. Likewise, Miclyn Express Offshore has established an entity in Mozambique, initially to service its project clients via its Express Offshore Solutions subsidiary but also in due course to widen its fleet footprint in the region. Miclyn currently has a tug and barge combination there from the Middle East. Meantime on the terminal side, another Dutch owner, Kotug, entered the market in 2016 with two 6,300 bhp Rotortugs, RT Spirit and RT Magic. They are carrying out port and terminal towage services in the port of Nacala, located to the south of Pemba. OSJ *Peter Döring is a shipbroker at Mercers Offshore www.mercersoffshore.com
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Southeast Asia AREA REPORT | 29
POSH ISSUES UPDATE ON LEGAL ACTION BY SAUDI OFFSHORE COMPANY DECEMBER 2016 SAW POSH HOLDINGS IN SINGAPORE ISSUE AN UPDATE ON LEGAL ACTION AGAINST IT BY MAKAMIN OFFSHORE SAUDI LTD
POSH said it intends to vigorously contest and defend allegations made against PSC by Makamin
P
OSH Semco Pte Ltd (PSPL) commenced action against Makamin in March 2016 to recover sums due and owing by Makamin to it and to counter Makamin’s claim in Saudi Arabia against PSPL in relation to a time charter party. POSH said that, on 10 December 2016, the group’s Saudi Arabian legal counsel clarified the scope of the legal action commenced by Makamin against a subsidiary of the company, POSH Saudi Company (PSC). The group had sought clarification following consultation with its counsel after court papers were served on PSC on 27 October 2016. Pursuant to the legal action commenced by Makamin against PSC, Makamin has applied for a court order in Saudi Arabia to forbid PSC from substituting Makamin in Makamin’s charter contracts with Saudi Aramco, whether directly or indirectly; restrain PSC from inciting its staff to stop working or co-operating with Makamin and to deliver to Makamin all documents necessary for Makamin’s relationship with Aramco; forbid PSC from causing damage to Makamin in the context of Makamin’s relationships
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with Aramco, its banks and its clients; compensate Makamin for all damages allegedly caused by PSC, comprising SAR100 million (approximately US$26.7 million) as compensation for the loss of Makamin’s charter contracts with Aramco, approximately US$8.0 million for the expenses paid by Makamin to bring and operate three vessels and approximately US$24.0 million to compensate for Makamin’s loss of profit arising from Makamin’s ban from working with Aramco for the next two years at a minimum; and prevent PSC from tendering for Aramco’s charter contracts for the same period of time for which Makamin is prevented from doing so and to substitute any of the group’s entities in any contract Makamin enters into with Aramco. POSH said it intends to vigorously contest and defend against any charge or allegation made against PSC by Makamin and will take all steps necessary to protect its reputation, its interests and the interests of its shareholders. The group is in the process of seeking advice from its Saudi Arabian counsel as to whether any other entity in the group is being joined under the same legal action and, if so, what the extent of any claims by Makamin would be. OSJ
Offshore Support Journal | January/February 2017
30 | AREA REPORT Mediterranean/Black Sea
SUBSEA PROJECTS
dominate regional investment
W
ith significant investment going into the Black Sea, the region will be a main focus area for subsea operations in 2017. So will the Eastern Mediterranean after partners in the Leviathan gas field offshore Israel approved a development plan for a huge production and export project. Offshore construction vessel owner Allseas has won a contract from South Stream Transport, an affiliate of Russian state-run gas giant Gazprom, to lay the first pipeline of the TurkStream offshore project in the Black Sea. This is a revision of the earlier failed South Stream project, which was planned to send Russian gas to Europe. TurkStream will have a similar route and objective but with a Turkish terminal. Allseas said it would use the world’s largest construction vessel, the dynamic positioning Pioneering Spirit, to lay more than 900km of pipe on the seabed. It has an S-lay tension
Pioneering Spirit will be laying gas pipelines across the Black Sea from the second half of 2017
Allseas will install 900km of pipeline for the TurkStream project in the Black Sea, while Subsea 7 and Saipem will deploy subsea systems in Egypt by Martyn Wingrove
capacity of 2,000 tonnes, which means it can lay the heaviest pipelines in shallow to ultradeep waters. The vessel is also equipped with a double-joint factory, six welding stations for double joints and six coating stations. Allseas said offshore construction work is due to commence in the second half of 2017. This means it will be searching for vessels for pipe-haul work and to support Pioneering Spirit. In the Mediterranean, the Israeli partners in the Leviathan gas field approved a development plan that would involve installing subsea systems in 2017 and 2018. Leviathan is one of the world’s
biggest offshore gas discoveries this decade and should supply Israel, Jordan and possibly Egypt and Turkey. At the time of writing, the field operator, Noble Energy, was yet to formally make the final investment decision, but the Israeli partners had secured US$1.75 billion of financing from HSBC and JP Morgan. Delek Drilling and Avner Oil Exploration had secured the funding for their part of the first phase of development. The plan involves subsea structures and pipelines that link multiple gas wells, located in deep waters, to a fixed offshore processing platform that would be installed in shallow waters. There will
be other pipelines linking the platform to an onshore terminal in northern Israel. Other subsea projects will be progressed in Egypt in 2017, including Eni’s Zohr development and BP’s Atoll field. Saipem is working on engineering and offshore construction for Zohr. In December 2016, Saipem contracted Farstad’s platform supply vessels (PSVs) Far Service and Far Supporter for six months’ work on the Zohr development. These will be supporting Saipem’s own fleet of subsea construction vessels, including deepwater pipelayer Castorone, semi-submersible pipelayer Castoro Sei and trenching/pipelay barge Castoro 10. They will be deploying subsea flowlines, pipelines and umbilicals throughout 2017. Subsea 7 will be working on the Atoll project from the second half of 2017. The offshore installation and commissioning work will continue until nearly the end of the first quarter of 2018. Subsea 7 said it will use subsea construction and pipelay vessels Seven Borealis, Seven Eagle and Seven Arctic for the project. In Italy, vessel owner Marnavi has taken delivery of newbuild PSV Ievoli Cobalt, which was constructed by Selah Shipyard in Turkey. The 84m, 4,000 dwt vessel was built to an MMC 879L CD design. It has a deck area of 722m² and a moulded depth of 7.4m. Marnavi has a sister vessel on order from the Selah Shipyard. Ievoli Amber is scheduled to be delivered later in 2017. OSJ
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OIL SPILL RESPONSE | 33
Oil spill responders expect growing role for unmanned aerial vehicles Unmanned aerial vehicles – commonly known as drones – are beginning to be used in a wide range of industries and have many other potential applications, not least the offshore oil and gas industry, responding to oil spills, as delegates at the Clean Gulf conference at the end of 2016 heard
U
nmanned aerial vehicles (UAVs) could provide an effective, low cost way to conduct surveillance of oil spills, delegates at the Clean Gulf conference in Houston were told. David Palandro, a research associate at ExxonMobil Upstream Research Company, told delegates at the conference that UAVs provide a versatile platform that could be “ideally suited” for the remote detection and monitoring of an oil spill. He noted that a rotary UAV could replace the requirement for manned helicopter flights to provide an aerial view of a response. “Although smaller, battery-powered UAVs may be limited in endurance and range, they are easily deployed from a variety of different platforms that are closer to the target, including offshore vessels and platforms,” he explained. However, the use of UAVs during a response extends further than oil detection. When combined with an appropriate sensor, UAVs can provide essential information to the shoreline clean-up assessment technique (SCAT) process. “This is especially valid for areas that are remote or pose a safety risk to a SCAT team or where assessment may cause further damage to the environment,” Mr Palandro said, noting that a UAV could also be used to augment SCAT data by providing an alternate view. He explained that the use of small UAVs could also allow for detection and monitoring of marine animals affected by a spill in a nonobtrusive manner. The potential application of UAVs doesn’t stop there, however. He told delegates at the conference that the use of UAVs extends beyond detection to becoming a response tool. “The deployment of herders to thicken surface oil on water and subsequently
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burn it has been tested using manned aircraft,” he explained. “The follow-on step of deploying this kind of herder/ burner system for in situ burning is being considered for UAV deployment,” he said. Lt Jesse Harms, NSF programme manager at the US Coast Guard National Strike Force (NSF), told delegates that introducing a UAV capability to the NSF inventory could dramatically improve oil spill response operations in remote areas, such as the Arctic. He explained that the NSF has a 40-year history of assisting on-scene co-ordinators with resources. “Recently, UAV technology has become affordable, readily available and manageable,” he said. “It is essential that we consider adding it to the NSF inventory to improve situational awareness for oil spill response operations. Industry and government are already embracing unmanned systems. Traditional manned aircraft are resource intensive and have endurance limitations and monitoring systems that aren’t always compatible with common operating pictures.” He explained that unmanned technology has become widely available, is cost effective, requires limited overheads and delivers high quality, realtime data. “It is challenging the assumption that traditional overflights, manual shoreline assessments and on-water surveys are the best way to assess impacted areas and measure clean-up effectiveness,” he told the conference.
Jeff Williams, a technical consultant specialising in oil spill operations at W6 Emergency Response Tech Services, also provided an update on unmanned aircraft and their potential application in oil spill response. He told delegates that testing had been underway for some time, and it had quickly become apparent that there were “multiple credible examples” where unmanned systems could complement manned aircraft, such as oil spill surveillance. Testing was interrupted when the US Federal Aviation Administration (FAA) changed the rules for the commercial use of unmanned air systems but had resumed in 2013 after the US Congress mandated that the FAA finalise operating rules for unmanned systems for commercial use. Exercises quickly validated the effectiveness of unmanned systems for spill observation and demonstrated that properly equipped UAVs could provide results equal to those obtained from manned aircraft flights. “Today, there is a much wider range of UAVs,” he explained, complemented by increasingly capable sensors that can be utilised to create detailed maps of the extent of a slick or collect data for geographic information systems. At the same time, advances in communications have improved the ability to transfer video/data over greater distances and at faster speeds than were possible hitherto. Mobile ad hoc networks of multiple radios can transfer data beyond the line of sight and connect with the internet for even broader distribution. Networks can also be used by responders in the field to exchange video, voice and location data and be linked in real time with command posts, creating a common operating picture across the entire response effort. OSJ
Unmanned aerial vehicles or ‘unmanned aerial systems’ could have multiple applications offshore, conducting surveillance and even providing an oil spill response capability
34 | COMMUNICATIONS
SATCOM GLOBAL LAUNCHES AURA VSAT SATCOM GLOBAL HAS BEGUN A KU-BAND SERVICE, NSSLGLOBAL HAS ACQUIRED MEDIA CONTENT SPECIALIST SNAPTV AND SPEEDCAST HAS INTRODUCED SIGMA NET FOR VESSEL COMMUNICATIONS AND NETWORK MANAGEMENT BY MARTYN WINGROVE
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ffshore support vessel operators will have more choice for satellite communications and crew entertainment systems in 2017. More service providers are introducing very small aperture terminal (VSAT) technology and on-demand video content. Satcom Global was the latest to introduce a global VSAT service for offshore vessel operators. It launched the Aura service in November 2016 to offer flexible global communications using Ku-band, with L-Band back-up options from Inmarsat and Iridium. Satcom Global chief executive Ian Robinson said the service is needed to enable vessel operators to meet rising demand for bandwidth for high speed streaming of data. It has been successfully tested with VSAT hardware on a variety of vessels. He added, “Building and managing our own global Ku-band network gives us the flexibility and capacity to deliver a
Ian Robinson: “Satcom Global will add C-band to the Aura Ku-band soon”
Offshore Support Journal | January/February 2017
customisable solution, which will continually evolve. We decided to commit to Ku-band airtime by working with five satellite operators, including SES, Eutelsat, Intelsat and JSat for the main coverage.” More bands will be deployed on Aura in 2017 and 2018. “We will also have C-band capacity soon and could change VSAT out to Ka-band,” said Mr Robinson. “We will be able to include high throughput VSAT through SES coverage as three satellites are added to the network.” Aura is scalable and comes with a variety of packages catering for different communications requirements. Satcom Global can increase bandwidth capacity if vessel owners require more real-time data streaming, and hardware can be leased to spread the costs. Vessel operators changing to Aura will need to install Intellian antennas and below-deck units. Mr Robinson said, “We offer 1m, 80cm and 60cm [diameter] antennas with Ku-band coverage that will improve when the high throughput satellites are launched.” Intellian introduced a new generation of L-band terminals for vessels in November. It began manufacturing the FB250R and FB500R FleetBroadband terminals after gaining final approval from Inmarsat for their use over the Fleet Xpress service. These terminals can also be used with other associated network service devices. UK-based NSSLGlobal has acquired Norwegian online television specialist SnapTV to launch IP-based entertainment services for offshore vessels and rigs. The companies will collaborate to promote TV and media distribution through NSSLGlobal’s VSAT IP@Sea service.
SnapTV provides a range of infotainment software, hardware and services. The infotainment software service uses graphical user interfaces to provide TV, film and radio programmes. This service will be in competition with KVH Industries’ existing IP-MobileCast content delivery and miniVSAT Broadband services and Inmarsat’s Fleet Media service. SpeedCast International introduced Sigma Net for vessel communications and network management over satellite constellations in November 2016. Sigma Net is a cloud-based system that provides automated management of multiple wide area network links and satellite communications over VSAT and L-band. It has an integrated voice over IP server that enables digital crew calling services. SpeedCast explained that Sigma Net provides managed network segmentation between business critical, crew or machineto-machine networks on vessels. It incorporates firewalls and virtual private networking on the vessel and cyber security for the internet. There is a cloud-based secure portal for linking vessels to IT engineers for network management. SpeedCast also signed a global framework agreement with Cobham Satcom for offering broadband connectivity to ships. Cobham Satcom will supply maritime stabilised antennas for SpeedCast’s Ku-band and Ka-band VSAT services. This will help it offer Ka-band connectivity using Fleet Xpress service with Cobham’s Sailor 60 GX antennas. Marlink can offer high throughput VSAT using Intelsat’s EpicNG satellites. It has taken Ku-band spot beam capacity on several satellites. OSJ
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ACCOMMODATION VESSELS | 37
PROSAFE COMPLETES DEALS FOR OFFSHORE ACCOMMODATION UNITS PROSAFE, WHICH RECENTLY SIGNED A LETTER OF INTENT WITH AXIS OFFSHORE PTE LTD FOR THE ACQUISITION OF AXIS NOVA SINGAPORE PTE LTD AND AXIS VEGA SINGAPORE PTE LTD AND 25 PER CENT OF THE SHARES IN DAN SWIFT (SINGAPORE) PTE LTD, HAS COMPLETED THE TRANSACTIONS
Recent weeks have seen Prosafe acquire Axis Nova and Axis Vega
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ecent weeks have seen a number of developments in the market for large offshore accommodation units and interesting developments in the market for smaller units. The most important among the former saw Prosafe acquire two semi-submersible offshore accommodation units from their Singapore-based owner, along with a share in Dan Swift (Singapore) Pte Ltd. The consideration for the transaction of US$70 million was settled by Prosafe in kind through the issuance of 5,868,900 ordinary shares priced at NKr30 (US$3.49) per share and subordinated zero coupon convertible bonds of NKr403,092,000 (US$46,902,590), convertible
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into 13,436,400 shares at a conversion price of NKr30 (US$3.49) per share. As previously reported by OSJ, the transaction represents an important step in Prosafe’s strategy of ‘high grading’ its fleet. Through the transaction, Prosafe has gained control over two new, high spec semisubmersible vessels without reducing its liquidity or increasing leverage. Referring to the earlier announcement concerning execution of the agreements to acquire the single-purpose companies and 25 per cent of the shares in Dan Swift (Singapore) Pte Ltd, early January 2017 saw Prosafe complete the acquisition of the latter. As part of the deal, Prosafe has issued to Axis
Offshore Pte Ltd as in-kind consideration subordinated zero coupon convertible bonds in the total amount of NKr82,737,000, convertible into 2,757,900 shares at a conversion price of NKr30 per share (US$3.49). The bonds were issued by Prosafe’s board based on the approval of and authorisation granted by the company’s extraordinary general meeting on 30 November 2016. Prosafe also recently announced that its semi-submersible offshore accommodation unit Safe Notos has commenced a threeyear contract with Petrobras, a contract that commenced on 7 December 2016. Despite the downturn in the offshore oil and gas sector and competition from
larger units, there continues to be a market for smaller, more manoeuvrable monohull offshore accommodation units. Chevalier Floatels reports that, since it upgraded its vessels in the winter of 2015/16, they have seen a high level of employment and repeat customers for the vessels, even in the autumn period, when weather conditions are less suited to the use of smaller units. Chevalier Floatels says its vessels DP Galyna and DP Gezina benefit from being highly manoeuvrable and having low fuel consumption and costs compared with many units. “Some clients still believe that bigger is better and of course large oil and gas vessels with more horsepower do better in bad weather, but our vessels are more workable, even in bad weather. We have completed as many as 55 individual Ampelmann connections in 24 hours,” the company told OSJ. “This is way, way more than the large vessels can do. It is true that, in rough weather, our vessels have to stop working a bit sooner. However, our vessels work in 2m significant wave height (Hs), sometimes 2.2m Hs. Larger ones can work in about 2.5m, but there is a point at which no-one will be using a gangway, whatever the size of the vessel. In practice, we miss a few hours until larger vessels have to stop working, but on workable days, we get far more work done than the big boys and at up to 25 per cent lower cost. On top of that, our CO2 emissions are also much lower.” OSJ
Offshore Support Journal | January/February 2017
38 | HEAVY LIFT
Shandong sees decommissioning opportunities for heavy lifters In late 2016, Shandong Twin Marine awarded a contract to CIMC Raffles to build three semi-submersible heavy lifters for the decommissioning industry
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he decommissioning market in the North Sea is expected to grow in the coming years, a trend that has prompted a number of companies to invest in highly specialised decommissioning vessels. The latest to do so is Shandong Twin Marine, which has ordered a pair of vessels with a lifting capacity of 34,000 tonnes. In 2014, Shandong Group reached an agreement with Twin Marine Heavylift AS in Norway to establish a joint venture, Shandong Twin Marine, which would own and operate a version of the Twin Marine Lifter (TML) concept originally developed by a predecessor of the Norwegian company. Twin Marine Heavylift was founded in 2010 after acquisition of Twin Marine Lifter technology, IP rights and the design of the TML lift arm system used on the heavy lifters. The TML concept was originally developed by SeaMetric International, which got as far as ordering construction of two heavy-lift/transport vessels in China before the contracts were cancelled in 2009. Well over a decade ago, development of SeaMetric’s Twin Marine Lifter concept was supported by the European Commission in Brussels. An EU-funded development project started in 2002 and involved companies and research institutions in Norway and the UK. At about the same time, members of the then Decommissioning Technology Forum, including TotalFinaElf (as was), Shell, BP and Kerr McGee, awarded SeaMetric International two studies for lifting and
The origin of Shandong Twin Marine’s heavy-lift vessels can be traced back to SeaMetric’s Twin Marine Lifter
Offshore Support Journal | January/February 2017
removal of jackets in the North Sea using the TML system. Allsea’s Pioneering Spirit has now been at work in the North Sea for a few months and has already highlighted the important role that so-called single-lift vessels are likely to play bringing down costs in the North Sea decommissioning market, but the Twin Marine Lifter vessels that Shandong Twin Marine has ordered are a different concept – the vessels work in tandem to lift huge units off offshore oil platforms, and a third unit transports the decommissioned load. SeaMetric was founded way back in 2000 to develop a costeffective marine heavy-lift system. In 2000–2003, it conducted a series of four successful model tests at Marintek in Norway. Between 2000 and 2005, the company commenced development and marketing and funded studies on behalf of a number of oil companies who might make use of the concept. In June 2006, the company secured a private placement of NKr300 million (US$35 million). In November 2006, a new board of directors was appointed at the company, and a decision was taken to acquire dynamic positioning (DP) vessels. Engines and thrusters for the vessels were ordered in November 2006, and in December, a decision was taken to use heavy-lift vessels as the basis of the Twin Marine Lifter. In choosing to use semi-submersible heavy lifters as the basis of its proposal, SeaMetric believed it could ensure the ships could find alternative work in the marine and offshore heavy-lift market if the need should arise. Choosing this type of well known, well understood fully self-propelled vessel as the basis of its proposal also minimised risk. The company spoke of the Twin Marine Lifter having a number of advantages, not least reduced capital expenditure compared with some of the alternatives that were being touted at the time. Sadly for the company, the decommissioning market did not arrive early enough for SeaMetric, and it filed for bankruptcy in 2010. At the time, it had two part-finished heavy-lift/ decommissioning vessels under construction and had long had problems with the Chinese shipyard responsible for building the ships. A press release issued when the vessels were ordered in 2007 described them as DP3 heavy transport vessels with a length of 140m, breadth of 40m and deadweight of 25,000 tonnes. They were designed to be capable of submerging to 20m and of lifting most of the world’s jack-up and semi-submersible drilling rigs, topsides modules and other large loads. The original Twin Marine Lifter concept from SeaMetric had a lifting capacity of around 34,000 tonnes, as do the newbuilds just ordered at CIMC Raffles. OSJ
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PROPULSION | 41
VSP and VIT combination could give SOVs an edge Growth in the offshore wind energy sector is generating a number of new design concepts and technology to serve the unique requirements of the industry
Dr Dominic Dorfner: “we will make a further push into the offshore wind industry where we see opportunities”
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s highlighted previously in OSJ, demand is growing for service operation vessels (SOVs) for the maintenance of turbines on offshore windfarms. They are mostly chartered by turbine manufacturers such as Siemens, Dong, Vestas and others. Speaking in conjunction with Voith Marine Turbo at a recent conference, Roman Grebe, chief executive of broker F3 Offshore, outlined some of the specific challenges posed by the demands on SOVs. In particular, SOVs need to provide substantial, high quality accommodation for technicians who work off the SOVs on wind turbines but are not seafarers. “SOVs require a high level of passenger facilities and comfort for workers. The current benchmark is to have about 40 technicians onboard plus about 20 crew members, but some operators are looking at bigger SOVs. SOVs must meet high operational requirements to work reliably in harsh weather. Other necessary features include DP2 dynamic positioning, walk-towork, workshops and storage for spare parts. Mr Grebe said he expects a requirement for 25–35 SOVs by 2022, with a steady flow of tenders over the next few years. “SOVs need a dedicated design approach, customised for particular applications and windfarms,” he said Voith is working with several designers and shipbuilders to develop an SOV featuring an innovative
Voith propulsion system, which the company believes will enhance performance, comfort and fuel efficiency. Voith Turbo Marine head of research and development Dr Dirk Jürgens said that using a Voith Schneider Propeller (VSP) coupled with the Voith Inline Thruster (VIT) allows 25 per cent more wind turbines to be serviced in the same timeframe compared to azimuth drives. The VSP mechanism enhances DP performance while reducing fuel consumption by about 10 per cent, he said. A VSP-equipped vessel allows for operation in greater wave heights and with higher productivity than conventional propulsion systems. “The normal operating limit currently is about 2.5m wave height, but crew transfers have been carried out in greater wave heights, and the upper limit could be increased to 3.5m,” he said. This can result in up to 15 more operating days per year where transfers can still be carried out. Dr Jürgens added that VSP drives also support improved comfort, which is especially important for the nonseafarer technicians working from SOVs. The danger of seasickness is reduced by the Voith Roll Stabilization system, and the ultra-low noise VIT ensures maximum comfort in terms of noise and vibration. “There will be big advances in the technology and design of SOVs for offshore windfarm maintenance operations,” Dr Jürgens commented. “As windfarms move further
offshore, especially with floating windfarms, the demands will become greater.” Voith Turbo Marine’s managing director Dr Dominic Dorfner said Voith is working with a number of independent institutions to develop its new concept for the offshore wind sector. He added, “We have launched the new linear jet motor for crew transfer vessels, and we will make a further push into the offshore wind industry where we see opportunities for us.” OSJ
in brief ■ Thruster manufacturer Brunvoll in Norway has reached agreement with Incus Investor ASA to acquire all the shares in Scana Propulsion AS. The deal includes subsidiaries of Scana Propulsion including Scana Volda AS and Scana Mar-El AS in Norway and three sales companies in the US, Singapore and China. Brunvoll Holding AS has also signed an option agreement for the acquisition of Scana Volda AS Real Estate, which owns manufacturing and office facilities of Scana Volda AS. The transaction is subject to approval from the Norwegian Competition Authority.
Offshore Support Journal | January/February 2017
42 | REPAIR & CONVERSION
Seawell charts future course following multimillion pound refit One of the most distinctive vessels operating in the North Sea has undergone a multimillion pound refit and upgrade to ensure it remains at the forefront of the oil and gas industry for many years to come
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he light well intervention and diving support vessel Seawell has returned to service after a £60 million investment by its owners, Aberdeen-based Helix Well Ops (UK) Ltd, a UK subsidiary of international offshore energy service company Helix Energy Solutions Group Inc. It marks the beginning of the next chapter in the history of the pioneering monohull vessel. Launched 30 years ago at the Pallion yard in Sunderland by North East Shipbuilders, Seawell was described as the world’s most sophisticated offshore support vessel when it entered service in 1987. The 114m vessel was the first in a series of vessels to feature electrical propulsion and set a benchmark for multifunctional offshore support vessels, certified as a standby and rescue ship and equipped as an anchor handler. Seawell has been at the forefront of the light well intervention market since it undertook its first such project in the Magnus field, northeast of Shetland, in July 1987. In November 1995, it carried out the first subsea tree replacement from a monohull vessel anywhere in the world. The North Sea’s Arkwright field was the location of another historic first for the vessel in October 1998, when the world’s first wireline intervention on a horizontal subsea tree was completed. The range of projects
that Seawell has undertaken has been diverse. Alongside intervention, well maintenance, production enhancement, diving and abandonment work, it has also recovered a ditched Harrier jet from the Bristol Channel. This diversity reflects the vessel’s specification, which includes a 7m x 5m moonpool, a twin bell saturation diving system rated to 300m with a capacity for up to an 18-person diving team and work and observation-class remotely operated vehicles. The vessel’s multimillion pound upgrade was carried out at the Damen yard in Vlissingen in The Netherlands, taking around eight and a half months, and was followed by extensive sea trials. Improving the efficiency and capability of Seawell were set as key outcomes of the project. Six new Rolls-
Seawell has played a leading role in the North Sea well intervention market for many years
Offshore Support Journal | January/February 2017
Royce Bergen C25:33L8ACD generator sets have replaced obsolete Hedemora generators, which had powered the vessel since it was built. The dynamic positioning (DP) thrusters and azimuths have been upgraded to DP3 class. This improves the stationkeeping performance of the popular vessel and the safety of wells being worked on, particularly in challenging weather. Electrically, the vessel is completely new, as all electrical systems and cabling have been replaced and upgraded. Onboard accommodation has been improved, enhancing the work and living spaces for Seawell’s crew members and other onboard personnel. The vessel’s diving system and bells have been refurbished, while its lifeboats have also been upgraded to comply with new North Sea
performance standards. The modifications have changed the distinctive silhouette of the vessel. A new 50-tonne crane with active heave compensation and a multipurpose tower have replaced the existing twin 65-tonne cranes aft and separate derrick that provided its characteristic profile. Designed by Royal IHC, the new tower allows the vessel to deploy Helix Well Ops’ 73/8in subsea intervention lubricator (SIL) in addition to its 51/8in SIL. It can also stack the complete SIL and deploy it to the seabed in a single run. The ability to deploy the 73/8in SIL brings it into line with its sister vessels, Well Enhancer and Skandi Constructor. Steve Nairn, Helix Well Ops (UK) vice president, said, “Seawell has provided an important and invaluable contribution to the North Sea oil and gas industry over the past three decades. It was the first vessel of its kind and has delivered many firsts throughout its career. The light well intervention sector has evolved in line with this reliable and popular vessel. Its specification and capabilities have helped the vessel become respected in the North Sea and more recently further afield. Refitting Seawell has been a major undertaking and one that underlines Helix Well Ops’ commitment to the North Sea market.” OSJ
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IMCA NEWS | 45
2016 was a year of achievement for IMCA – with more to come As Allen Leatt, chief executive of the International Marine Contractors Association explains, 2016 was a busy year for the association, and 2017 is expected to be a busy one too
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lthough ‘new boys’ to IMCA in October 2015, Richard Benzie (technical director) and I quickly hit the road running, and 2016 has been an absorbing and rewarding year of progress for the association,” said Allen Leatt, chief executive at the International Marine Contractors Association (IMCA). “I had previously been senior VP of engineering and project management at Subsea 7, and Richard was global remotely operated vehicle (ROV) services manager at Forum Energy Technologies. Our backgrounds made the transition from being members of IMCA to actually running the association pretty much seamless, as our previous careers had equipped us with a ready understanding of the industry and the technologies and operational practices in daily use. “And running was certainly the word. Learning what our membership expects from us is a challenge, as there are almost a 1,000 of them spread across 60 countries. But between us, we have met many hundreds of members at regional events and seminars in London, Paris, Stavanger, Amsterdam, Aberdeen, Abu Dhabi, Dubai, Mumbai, Singapore, Hong Kong, Rio de Janeiro, Washington DC, New Orleans and, of course, Houston. “In 2016, we changed our seminar strategy by replacing the traditional ‘annual bash’ with a series of highly focused technical seminars, which have proven very successful, and we will build upon this strategy in 2017. We have also actively engaged with regulators, energy clients and other key stakeholders and are pleased to be working ever more closely with organisations such as the International Association of Oil & Gas Producers, Oil Companies International Marine Forum, the US Coast Guard and the Center for Offshore Safety. “Working closely with like-minded bodies is important, and as observers at the International Maritime Organization, we have, during 2016, not only strengthened our policy and regulatory affairs team, but tasked them with raising the profile of regulatory affairs within IMCA and our members. Regulatory notifications and updates are now published, with regulatory guidance documents and regulatory tool kit all on the agenda for 2017. “Meanwhile, our technical advisers have been working with their committees ensuring our extensive library of guidance documents is fully up to date. In January 2016, we started an ambitious project of reviewing every single document. This resulted in a revision process involving refreshing documents where necessary, developing new documents where needed,
“
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archiving older documents if no longer needed and consolidating documents where appropriate. The project will be completed in this first quarter of 2017. “Having determined that printed hard copies are no longer a membership requirement, future revisions, large or small, will be quick and easy to implement. Every document now features a feedback button enabling suggestions or changes to be easily submitted by email. And finally, over 30 safety flashes on 120 incidents have been distributed – safety remains of paramount importance to all of us at IMCA. “We have also completed a task set in motion in April 2015 that culminated in an EGM on 9 November. This is the IMCA governance review programme. The resolutions for change were overwhelmingly approved by the membership, and implementation of the governance enhancements officially started on 1 January. “As the council recognised in early 2015, effective governance of a trade association can help it deliver maximum benefit to its members, so the review was instigated with the assistance of The Compass Partnership, specialists in the association sector. It has been a huge task, which addressed the legal structure, the operational structure and the governance of our committee structure. There are two new core committees, our safety, environment and legislation committee is renamed and we have the facility to form technology committees as necessary. For those wanting more information, our Governance Handbook at www.imcaint.com/about-imca/imca-governance is a quick and easy read. “Although 1 January marked the date for many of the changes, others such as the reshaping of the technical committees and their elections will be implemented during 2017 in a progressive way so as to cause as little disruption as possible.” OSJ
Allen Leatt: “working closely with like-minded bodies is important”
Offshore Support Journal | January/February 2017
46 | BEST OF THE WEB
BEST OF THE WEB
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Decom market growing in size and complexity but providers ‘too fragmented’
Allseas awarded TurkStream deal
The decommissioning of offshore oil and gas platforms, subsea wells and related assets is increasing dramatically, with more than 600 projects expected to be disposed of during the next five years alone. This rapid trend toward decommissioning is causing spending to rise significantly, according to a new study by IHS Markit. IHS Markit expects spending on decommissioning projects to increase from approximately US$2.4 billion in 2015, to US$13 billion-per-year by 2040, an increase of 540 per cent. An additional 2,000 offshore projects will be decommissioned between 2021 and 2040, the report noted, and total expenditure from 2010 to 2040 will amount to US$210 billion. “In terms of decommissioning, the
South Stream Transport has awarded Allseas a contract to lay the first line of the TurkStream offshore gas pipeline in the Black Sea, with an option for laying the second line. Under the contract, Allseas is to lay more than 900km of pipe on the seabed. The company will use the world’s largest construction vessel, the dynamically positioned Pioneering Spirit, for the job. Allseas will start laying the first line in the second half of 2017.
global offshore industry is headed for a perfect storm,” said Bjorn Hem, senior manager of IHS Markit upstream costs and technology service and one of the study’s authors. “We see increasingly stringent decommissioning regulations coming into force at the same time the inventory of structures nearing end-oflife status is getting larger and more complex,” Mr Hem said. “At the same time, the providers of decommissioning services are very fragmented – there are no dominant players, so this makes it even more difficult for offshore E&P companies and offshore service companies to accurately predict decommissioning costs and risks.” http://bit.ly/2fSveFr
Solstad/Rem merger a done deal
http://bit.ly/2gIY77Z
Advent International to acquire majority stake in V.Group
The merger between Norwegian offshore vessel owners Rem Offshore and Solship Invest 1 AS, a wholly-owned subsidiary of Solstad Offshore, was completed on 9 December. In a statement, the companies said the deal “contributes to much needed consolidation” in the offshore support vessel (OSV) industry. In doing so, it creates a modern, high-end fleet of 61 vessels including 26 construction support vessels, 16 anchor handlers and 19 PSVs and will enable cost synergies to be realised, they said.
Advent International has agreed to acquire a majority ownership interest in V.Group Ltd, the marine and offshore vessel management and support services provider. The deal was concluded with OMERS Private Equity (OPE). OPE will reinvest in V.Group, working with Advent and the management team to support the continued growth and development of the business.
http://bit.ly/2gIPFWf
http://bit.ly/2heTrdc
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Editor’s selection:
Predicting performance, promoting
Experience in mooring and hookup helps Farstad bag fishfarm deal
Editor’s selection: transparency, by International PaintEditor’s comment: Intertrac Vision: a new tool to predict the Mitigating maritime cyber risk Cyber security has become a major impact of fouling control coatings on preoccupation in the shipping and ship efficiency. This paper explains why In this white paper, DNV GL focusses offshore industries. Whereas in the the shipping industry needs an improved on bridging the existing gap between past ships – and for that matter other vessel performance prediction tool. information systems (IT) security and offshore units – were offline, nowadays maritime cyber security by establishing an they are very much connected. approach covering the lifecycle of a vessel.
Ocean Farming AS, a subsidiary of the SalMar Group, has awarded Farstad Offshore a contract for the complete mooring installation and hook-up a semisubmersible offshore fishfarm. http://bit.ly/2fZ1DPj
Offshore Support Journal | January/February 2017
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48 | MARKET DATA
Statistics & trends Compiled using data and graphs provided by Seabrokers’ monthly market report Seabreeze
NORTH SEA DEPARTURES AND ARRIVALS
NORTH SEA AVERAGE RATES: NOVEMBER 2016
DEPARTURES: Vessels that have recently left or are due to leave the North Sea spot market
CATEGORY
AVERAGE RATE NOV 2016
AVERAGE RATE NOV 2015
% CHANGE
Skandi Skansen
supply duties PSVs <900m2
£4,870
£5,211
-7%
supply duties PSVs >900m2
£5,520
£5,340
3%
supply duties AHTS <18,000 bhp
£4,600
£6,714
-31%
supply duties AHTS >18,000 bhp
£9,002
£9,983
-10%
Africa
ARRIVALS: Vessels that have recently arrived or are due to arrive on the North Sea spot market FS Aberdour
Ex Central America
Rem Arctic
Ex Russia
Sea Titus
Ex Central America
NORTH SEA SPOT AVERAGE UTILISATION: NOVEMBER 2016 MONTH
MED LARGE PSV PSV
MED AHTS
LARGE AHTS
Nov 2016
58%
86%
34%
50%
Oct 2016
66%
76%
42%
50%
Sep 2016
60%
76%
51%
65%
Aug 2016
68%
85%
68%
71%
Jul 2016
73%
87%
64%
79%
Jun 2016
80%
96%
66%
76%
NORTH SEA AVERAGE RATES: NOVEMBER 2016 CATEGORY
MINIMUM
MAXIMUM
supply duties PSVs <900m2
£2,800
£10,000
supply duties PSVs >900m2
£3,000
£9,000
supply duties AHTS <18,000 bhp
£3,000
£5,900
supply duties AHTS >18,000 bhp
£4,782
£19,130
OSVs RECENTLY DELIVERED VESSEL
DESIGN
OWNER/MANAGER
COMMITMENT
CBO Aliança
Ulstein PX 105 PSV
Grupo CBO
South America
Esnaad 228
De Hoop 65M PSV
Esnaad
Middle East
Ievoli Cobalt
MMC 879L CD PSV
Marnavi
TBC
Paxocean 8,000 BHP AHTS
POSH
Middle East
Siem Thiima
VS 4411 DF PSV
Siem Offshore
Australia
Starnav Scorpius
GPA 688 SC PSV
Starnav Servicos Maritimos LTDA
South America
POSH Raptor
Offshore Support Journal | January/February 2017
www.osjonline.com
MARKET DATA | 49
DAILY AVAILABILITY: NOVEMBER 2016 PSV 2016
PSV 2015
AHTS 2016
AHTS 2015
28
LEFT: PSV avaiilability remains at a high level, mainly due to lack of demand and the winter slowdown BELOW LEFT: Brent crude was in the US$50 range until the recent OPEC deal
26 24 22 20 18 16 14 12 10 8 6 4 2 0
1
2
3 4
5 6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
OIL PRICE VERSUS RIG UTILISATION 100% 90%
$60
84.6%
84.0%
$55 83.2%
83.1%
82.3%
78.6%
80% 70%
75.4%
75.9%
74.2%
72.9%
69.2%
68.2%
77.1% $47.13
75.1%
77.8% 74.3%
$49.73
$48.48 $45.07
$44.42 $42.25
60%
68.0%
66.3%
$46.14
$46.19
76.8%
$50
$47.08
$45
64.6%
$40
60.5%
$39.07
$37.72
78.4%
74.8%
57.4%
57.7%
50%
55.0%
$35
$33.20
40%
44.5%
44.4%
$30
42.5% 39.2%
30%
39.1%
$30.80
39.9%
38.2%
37.2%
Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16
36.4%
35.5%
35.1%
35.2%
35.1%
Jul 16 Aug 16 Sep 16 Oct 16 Nov 16
average Brent Crude US$/Bbl
Northwest Europe rig utilisation
South America rig utilisation
US Gulf rig utilisation
$25
EUROPEAN BUILT SUBSEA DELIVERIES SHIPOWNER
NAME
CHARTERER
SHIPYARD
TYPE
DESIGN
MONTH
Technip
Deep Explorer
-
Vard Langsten
DSV
Vard 3 06
Dec
Technip
Skandi Buzios
Petrobras
Vard Soeviknes
Pipelay
Vard 3 05
Dec
Island Ventures II
Island Venture
Island Offshore
Ulstein Yard
OCV
SX 165
Jan
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Offshore Support Journal | January/February 2017
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MARKET DATA | 51
Offshore vessel values
December 2016 The table on page 48 shows the monthly percentage change in value from 1 to 31 December 2016 for offshore support vessels, by year of build. Values firmed slightly this month due to the rallying of the price of oil, and the lack of sale and purchase activity within the sector.
PSVs
Values firmed this month. The platform supply vessel (PSV) sector witnessed a restructuring deal for World Wide Supply as it sold its fleet to Newco (a company controlled by its bondholders, based in the Cayman Islands). World Sapphire, World Diamond, World Peridot, World Opal, World Emerald and World Pearl (3,300 dwt, December, June, August, December, October, September 2013, Damen Galati) were offloaded en bloc for US$27.5 million.
AHTS & AHT
This market segment saw two sales at undisclosed prices. Scapino (4,800 bhp, October 2005, ABG Shipyard) and Olympic Poseidon (14,410 bhp, June 1998, Hellesoy Verft) were sold by Asaker Marine and Olympic Shipping AS respectively to unknown buyers.
Source: VesselsValue.com
World Sapphire (shown here) and sister vessels World Diamond, World Peridot, World Opal, World Emerald and World Pearl were sold towards the end of 2016
52 | MARKET DATA
OFFSHORE VALUES: DECEMBER 2016 BUILT
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
LARGE PSV
MEDIUM PSV
SMALL PSV
SUPER AHTS
MEDIUM AHTS
SMALL AHTS
1.8%
4.8%
4.9%
1.8%
3.6%
4.0%
5.2k
3.6k
1.7k
24k
8k
5.2k
1.7%
4.7%
4.7%
1.7%
3.8%
4.8%
4.8k
3.6k
1.7k
24k
8k
5.2k
1.6%
4.6%
4.8%
1.7%
3.7%
5.5%
4.8k
3.4k
1.7k
24k
8k
5.2k
1.5%
4.5%
4.5%
1.7%
3.5%
5.4%
4.8k
3.3k
1.7k
24k
8k
5.2k
1.4%
4.4%
4.4%
1.6%
3.3%
5.2%
4.8k
3.3k
1.7k
24k
8k
5.2k
1.3%
4.4%
4.5%
1.6%
3.1%
5.0%
4.8k
3.3k
1.6k
24k
8k
5.2k
1.2%
4.2%
4.4%
1.6%
3.1%
5.0%
4.8k
3.3k
1.6k
24k
8k
5.1k
1.3%
4.2%
4.2%
1.5%
2.6%
5.0%
4.8k
3.3k
1.6k
24k
8k
5.1k
-1.1%
4.1%
4.2%
1.4%
2.9%
4.8%
4.8k
3.3k
1.6k
24k
8k
5.1k
2.0%
4.0%
4.1%
1.4%
2.6%
4.6%
4.8k
3.3k
1.6k
24k
8k
5.1k
2.1%
4.0%
4.0%
1.3%
2.8%
4.7%
4.8k
3.3k
1.6k
24k
8k
5.1k
2.0%
4.2%
4.2%
1.2%
2.9%
4.7%
4.8k
3.3k
1.6k
24k
8k
5k
1.9%
4.0%
4.4%
1.1%
3.3%
4.4%
4.8k
3.3k
1.6k
24k
8k
5k
2.1%
3.7%
3.4%
0.9%
3.6%
4.6%
4.8k
3.3k
1.6k
24k
8k
5k
2.7%
3.6%
4.0%
-0.8%
4.0%
4.7%
4.7k
3.3k
1.6k
24k
8k
5k
2.7%
3.5%
3.9%
0.6%
4.9%
4.6%
4.7k
3.3k
1.6k
19k
8k
5k
Source: VesselsValue.com
Offshore Support Journal | January/February 2017
www.osjonline.com
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