Offshore Support Journal November 2017

November 2017 www.osjonline.com

Construction vessel market has a healthier outlook ahead of it

Risk management approach played role in loss of vessels Revised charter party will have significant impact on owners

“The oil price has stabilised and oil companies have been sanctioning projects based on their capex guidance at the beginning of 2017. Tender activity has increased�

Duncan Eley, CEO, Polarcus, see page 11

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contents

November 2017 volume 20 issue 9

19 06

Regulars

5 COMMENT 47 IMCA NEWS 51 BEST OF THE WEB

News focus 6 A risk management approach commonly used in the offshore industry contributed to the loss of two vessels that were under tow 8 Important changes have been made to Supplytime 2017 to reflect what charterers have for some time been demanding

Seismic vessels 11 Leading players says the seismic market is picking up

08

Area report 15 Saudi Aramco is said to have a requirement for large numbers of OSVs 16 Owners in the Middle East could help lead the industry out of recession

Construction vessels 19 Clarksons Research says the construction vessel market has stabilised and should pick up

New designs 23 Damen’s FCS 7011 is purpose-designed to compete with helicopters in the crew change market

30

Ocean-going towing 24 Demands placed on long-distance anchor-handling and salvage units are growing as the units they tow get larger and more valuable

Dynamic positioning 26 Returning vessels to service after layup is a challenge but could also be an opportunity

Communications 29 Satellite communications providers are preparing for the time when offshore support vessels return to service and markets improve

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Offshore Support Journal | November 2017

contents Well intervention 30 GMS believes a liftboat with well intervention capability should be much more cost-effective than a jack-up

Dive support vessels 33 Numerous vessels are out of work and others ordered before the downturn still at the yards that built them

Offshore access/walk-to-work 34 Zbridge is the latest in a growing number of offshore access systems

Propulsion 37 Taking power from shore when in port or ‘cold ironing’ as it is known, can significantly reduce an offshore vessel’s emissions, as can hybrid propulsion systems with batteries

Unmanned vessels 41 The advantages of remotely-controlled vessels are being highlighted by the supply chain, but there are issues to address

Decommissioning 42 The complexities and challenges associated with decommissioning have dampened M&A activity in the past, but change is coming

Safety flashes 48 PSV collided with legs of jack-up rig

Market data 52 Statistics 55 VesselsValue

Next issue • main area report: Australasia • fire-fighting systems • cranes, A-Frames and winches • offshore vessel designers • green propulsion • ice-class vessels and technology • offshore construction ships and their equipment.

Front cover: The outlook for the construction vessel segment of the offshore vessel industry is beginning to pick up, says Clarksons Research (photo: Statoil)

November 2017 volume 20 issue 9 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 Head of Content: Edwin Lampert 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 | November 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

INTELLIGENT SHIPS

DRIVE DEMAND FOR INTELLIGENT ACQUISITIONS

N David Foxwell, Editor

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ews that Wärtsilä has acquired Guidance Marine, the specialist supplier of position measurement systems for dynamic positioning, came as a surprise but is not that surprising and is unlikely to be the last such acquisition by the company.

Long known as an enginebuilder, thruster manufacturer, designer and provider of related services and products, Wärtsilä has for some time referred to itself as a ‘technology company’.

It was interesting that, in a statement issued about the deal, Wärtsilä said it is “deeply committed to providing technologies needed to enhance intelligent shipping, whereby digital solutions will greatly improve the efficiency, safety and profit-earning capabilities of its maritime customers”.

The company said the acquisition of Guidance Marine will enhance its capabilities in the area of situational awareness and near-field measurement, both of which are essential for more intelligent vessel navigation.

“Guidance Marine’s core competencies are wide ranging and include the development of sophisticated position measurement sensors and systems for high-accuracy control applications,” said Wärtsilä Marine Solutions director, automation, navigation and communication, Maik Stoevhase.

“These competencies complement our own activities in the fields of radar technology, navigation and dynamic positioning. By joining forces, we can certainly accelerate the introduction of solutions that will take shipping into a new era of efficiency.”

For his part, Guidance Marine’s chief executive Jan Grothusen said the deal would provide a “step-change” in developing the future of maritime positioning and navigation where the integration of multimodal sensor technologies is a key factor in the delivery of intelligent vessels.

Providing solutions of this type requires a

skillset well beyond those usually associated with building combustion engines, which is what Wärtsilä had been in the business of doing for decades. Engines will remain a big part of what it does, but there is a far bigger prize to be won.

If you haven’t already read it, take a look at my story about a project that Wärtsilä recently completed with offshore vessel owner GulfMark Offshore that successfully demonstrated remote-controlled operation of a platform supply vessel in the North Sea using a satellite link from California.

The tests, which involved driving the vessel through a sequence of manoeuvres using a combination of dynamic positioning (DP) and manual joystick control, were carried out on 21 August in the North Sea in collaboration with GulfMark, who provided the vessel for the project. Although the test vessel was in the North Sea, it was navigated remotely from a Wärtsilä office in San Diego, California, 8,000km away from the ship.

As Wärtsilä Marine Solutions president Roger Holm said at the time, reiterating what Mr Stoevhase said, “Wärtsilä is committed to developing technology that enables a smart marine future.

"In the age of digitalisation, the future smart marine ecosystem will involve connecting smart vessels with smart ports to enable an even more efficient use of resources. It will also reduce the impact on the climate while enhancing safety.”

With the offshore vessel and other segments of the shipping and offshore industries emerging from recession, there is going to be more consolidation ahead, not just because recession reshapes industries, but because clever companies are positioning themselves to respond to what the market will want once it’s out of recession.

Intelligent ships and intelligent shipping need intelligent companies, and intelligent companies need intelligent acquisitions.

Wärtsilä is an intelligent company. OSJ

Offshore Support Journal | November 2017

6 | NEWS FOCUS

RISK MANAGEMENT APPROACH PLAYED ROLE IN LOSS OF VESSELS UNDER TOW AN INVESTIGATION

BY THE DANISH MARITIME ACCIDENT INVESTIGATION BOARD SAYS A RISK MANAGEMENT APPROACH COMMONLY USED IN THE OFFSHORE INDUSTRY CONTRIBUTED TO THE LOSS OF TWO VESSELS THAT WERE UNDER TOW

M

aersk Supply Service says it has taken a number of measures following a December 2016 incident in which two vessels it was towing were lost. In a statement, the company said it had already conducted its own investigation and agreed with the findings of a marine accident report published by the Danish Maritime Accident Investigation Board (DMAIB) about the incident on 21–22 December 2016.

The incident saw the loss of Maersk Searcher and Maersk Shipper, which were under tow from another of the company’s anchor-handling tug/supply vessels, Maersk Battler, off the Île de Sein on the coast of France.

The decommissioned vessels were unmanned at the time of the incident and were being towed to a scrapyard. Force 3 winds and large swells of 2.4–3.7m were reported at the time of the

The vessels that were lost were under tow from one of the company’s anchor handlers (vessel shown for illustrative purposes only)

sinking. Both ships had been emptied of fuel and lubricants in preparation for scrapping. No injuries were reported.

The purpose of the DMAIB investigation and report was to understand why the accident happened in spite of the efforts made by the parties involved.

Over the past eight months, Maersk Supply Service has been working closely with the French and Danish authorities to mitigate the impact of the incident and determine the causes of the incident.

“The DMAIB investigation shows that the incident emerged from a unique conjunction of events and circumstances – not a single factor,” said Maersk Supply Service’s chief operating officer Claus Bachmann. “The thorough and transparent description of the incident and conclusions in the report are consistent with Maersk Supply Service’s internal investigation.

Offshore Support Journal | November 2017

“As a responsible shipowner, the safety of people, environment and assets is imperative to us. This is why, since the incident, we have taken firm action and implemented several preventive measures to ensure a similar incident will not happen again.

This includes upgrading our risk management system, implementing revised marine procedures and conducting comprehensive training programmes of key personnel.”

The company established an internal investigation team composed of technical experts and experienced onshore and offshore personnel to thoroughly scrutinise all aspects of the event. The investigation team identified the following preventive measures, which have been implemented in Maersk Supply Service’s procedures and operations, most of them during the first half of 2017.

• Clear processes and procedures: a revised process with updated guidelines and defined responsibilities has been implemented for when Maersk Supply Service is handling its own vessels. To ensure a thorough understanding of the new procedures and processes across the organisation, seminars for all captains and key onshore personnel have been completed.

• Management of change training programmes: as a follow-up to the incident, Maersk Supply Service has conducted thorough training programmes of all key personnel onshore and offshore in management of change procedures.

• Improved risk assessment procedures and mitigation actions: Maersk Supply Service decided to upgrade its risk management system and, in addition, implemented

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NEWS FOCUS | 7

improved tools and training for onshore and offshore personnel to better assess risks when they occur in operations.

• Review of operations by third-party experts: in all operations where Maersk Supply Service is handling its own vessels, third-party experts are to validate the planning, processes and procedures.

A verification process will take place later in the year to ensure that the measures are working as intended and uncover whether follow-up actions are needed. In addition, as per the request by French authorities, Maersk Supply Service will inspect the wrecks and monitor any potential environmental impact twice a year until 2019.

In its report, the DMAIB said that, although no lives were at risk during the accident, the total loss of the two ships is considered a very serious accident of special concern to the potential risk of harm to the marine environment due to oil leakage. It also said that it regarded the foundering of Maersk Searcher and Maersk Shipper as a systemic accident, which means that local and technical circumstances unfolding on board Maersk Battler during the voyage cannot be isolated from the preceding organisational events and circumstances taking place months earlier but together constitute a complex system.

“Arguably, it can be questioned why the company chose an unconventional towing method for this type of towage operation and why the crew on Maersk Battler did not realise that they were on the brink of a very serious accident when they saw the extensive damage to the ships,” said the board.

As it explained, the idea behind the side-by-side setup was that Maersk Searcher and Maersk Shipper would be connected to each other so that they would behave as one unit and reduce individual

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movement when being towed with a shared bridle. However, when the towage experienced increased swell in the English Channel, the ships under tow did not behave as one unit.

Instead they behaved as two interacting units, exposing the fenders to forces that they could not withstand.

In the absence of the fenders, the ships under tow made direct contact. The combination of two tightly connected ships in individual movement without a buffer between them led to the ships colliding constantly for at least 36 hours, causing severe structural damage

to both ships. This damage caused uncontrollable water ingress on Maersk Searcher and subsequent loss of stability, which resulted in the ship capsizing. Maersk Shipper also suffered structural damage but capsized as a result of water ingress and/or being dragged heavily to starboard by Maersk Searcher.

The crew on Maersk Battler did not realise that the ships were at risk of being lost due to loss of stability until 10 minutes before the capsizing of Maersk Searcher, even though both ships had suffered significant structural damage. They were of the

The report found that the risk management system used by Maersk tends to facilitate the carrying out of risk prone operations

understanding that structural damage was to be expected with this type of setup but that it did not pose any significant risk as long as the damage was above the waterline. Acceptance of structural damage most likely contributed to the blurring of the line between a manageable situation and an accident.

The DMAIB said the logic of the risk management system used prior to undertaking the tow was to introduce risk-mitigating initiatives for each risk factor so that the risk was assumed to be reduced to an acceptable level.

However, the occurrence of the accident proves that these initiatives were ineffective. The DMAIB concluded that the risk-mitigating strategies were mainly focused on preventing risk factors in isolation and left little or no contingency for acute interaction between the risk factors.

“The risk management system used by Maersk Supply Service is one of the most common in the shipping industry,” the DMAIB said.

“However, there is no control of what is put into the system when it comes to which risk factors are identified. The numeric risk value is based solely on how imaginative the involved persons are, and the system does not provide a structure for how to reflect on what risk-mitigating strategies are applied. This means that the risk management system does not help its user to manage risk and that the assessment of the risk reduction is highly sensitive to one or more individuals’ subjective risk perception, which will be strongly influenced by the desire to make the operation possible. The risk management system will rarely limit activities prone to risk. In fact, the risk management system instead tends to facilitate the carrying out of risk-prone operations.” OSJ

Offshore Support Journal | November 2017

8 | NEWS FOCUS

REVISED CHARTER PARTY

LIKELY TO HAVE A SIGNIFICANT IMPACT ON OWNERS

I

n June 2017, offshore support vessel consultant Ian Perrott provided OSJ with an introduction to BIMCO’s revised and updated version of its Supplytime contract for OSV chartering, Supplytime 2017. Here, CTRL Marine Solutions and Wikborg Rein* and others reflect on the contract and what it means for owners.

As CTRL Marine Solutions noted, most of us know how a knock-for-knock clause is supposed to work: I take care of my property and my people, you take care of yours. If my property gets damaged or my people are injured, I don’t sue you for compensation – my insurers cover it, and we can continue to work together. So far, so good.

But what if your property is damaged or your people are injured in circumstances that are clearly the charterer’s fault? Hang on, says the owner – it surely can’t be right that I should have to deal with claims from crew who have, for example, been injured by dangerous cargo that the charterer has loaded on board my vessel? Nor is it fair that such claims are reflected in my loss record with my insurer.

Enter, Supplytime 2005, which contains a knock-for-knock clause with 16 exceptions to the regime allocating liability for claims arising out of dangerous or explosive cargo, contraband, pollution, ISPS Code compliance and general average to name but a few. Simon Rainey

Offshore Support Journal | November 2017

Important changes have been made to Supplytime 2017 to reflect what charterers have for some time been demanding

ABOVE: Supplytime 2017 has what has been described as a purer form of knockfor-knock

QC, the offshore contract guru, likened it to a piece of Swiss cheese: full of holes.

Supplytime 2017 does away with most of these exceptions to leave a purer form of knock-for-knock. I take care of my property and my people, you take care of yours. The only exceptions remaining are for owners’ and charterers’ towing wires, limitation of liability at law and salvage of charterers’ property.

Owners might foresee problems with this. To return to the dangerous cargo example, an owner of an OSV that is supporting construction work might find their charterer loading explosive materials on board. If an explosion occurs due to the charterer’s negligence and damages the vessel and kills members of the crew, an owner contracting under the Supplytime 2017 terms would find the charterer’s liability to indemnify the owner for such loss and damage excluded.

For owners who feel that this is not the right outcome, bear in mind that the fundamental purpose of the knock-forknock regime is to remove the need to establish fault through expensive litigation and to allow the parties to continue performing the contract while their insurers settle claims.

Wikborg Rein noted that one of the changes that users may see in practice with the new version of Supplytime is that the condition of the vessel will not be covered

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NEWS FOCUS | 9

by an independent surveyor on the on-hire survey at the time of the vessel’s delivery.

“Charterers are instead granted a right to conduct a vessel audit, assessment, survey and inspection in the period before delivery, provided that the same can be conducted without hindering or delaying the vessel and the owner’s consent (which will not be unreasonably withheld) is obtained,” it explained.

Another practical change concerns the exchange of fuel, which was previously dealt with by the charterer’s purchasing fuel remaining on board at the time of delivery and the owner’s purchasing fuel remaining on board at the time of redelivery at the prices prevailing at the port of delivery and redelivery, respectively.

Supplytime 2017 includes alternative mechanisms in clause 10 whereby the parties account for the fuel on board on delivery and redelivery. Further, the charterer’s indemnity for off-spec fuel has been replaced with a right for the chief engineer to stop the loading of fuel if it suspects that it is off spec (which implies that owners should take due care to ensure that such right is indeed exercised when required).

Wikborg Rein also notes that several noteworthy amendments have been made to the liability regime in Supplytime 2017, which are summarised here.

The definitions of a charterers’ group and an owners’ group are important for the liability regime, as they define the scope of persons for which each party is responsible. In this respect, the definition of a charterers’ group is expanded so that the charterers’ clients, co-venturers, contractors and subcontractors are included “in any tier” (and not only where they have “a contractual relationship with the charterers”).

The exclusion of liability clause 13 (off-hire) (b), applicable where the vessel is prevented from working, expressly specifies that it applies irrespective of negligence and whether the vessel is off-hire (the latter having caused some discussion in the past).

In the knock-for-knock regulation in clause 14 (a) and (b), several carve-outs have been removed, and the application of the regime has been made more robust irrespective of cause.

The exclusion of consequential losses in clause 14 (c) has been revised in line with recommended drafting practice for such clauses. Accordingly, the list of excluded losses is extended to include,

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among other things, marine spread costs, while consequential and indirect loss is set out as a separate category.

Regarding physical damage, personal injury and consequential loss, each party’s indemnity obligation for such claims originating within its group has been expanded not only to indemnify the other party but the other party’s group.

The owners’ pollution liability is still confined to pollution due to discharge from the vessel. However, the prerequisite that pollution liability must arise from acts or omission by the owners has been removed, and the owners’ pollution liability applies irrespective of acts or omissions by the charterers.

A new clause 33 has been included regarding layup of the vessel. The main principle is still the same (the charterers may require the owners to lay up the vessel and be credited with any of the owners’ cost savings). However, a more detailed procedure for placing the vessel in layup has been included, similar to variation order mechanisms used in other contracts.

With respect to the automatic extension of the charter period for completion of a voyage or while a voyage is in progress (up to a specified maximum extension), it has been specified that the charterers will not instruct the vessel to commence a voyage unless they reasonably expect it to be completed within the charter period (including the time required for transit to the port or place of redelivery and demobilisation).

A welcome revision has been made to clause 34 regarding termination, which previously caused several uncertainties and discussions. It has been clarified that requisition, confiscation, loss of vessel and force majeure give either party the right to terminate, while bankruptcy and the owners’ failure to take out insurance gives only the non-defaulting party the right to terminate. A party’s repudiatory breach is set out in a separate paragraph, clarifying that no notification period applies for the non-defaulting party’s termination in such an event.

Finally, the uncertain termination right in the previous forms for breakdown (which caused issues for owners and charterers) has been replaced with a separate and clearer termination right linked to prolonged off-hire for a single consecutive period or combined periods. The notification requirements for termination have also been clarified and changed from what previously seemed to be an obligation on both parties to notify to a right (but not an obligation) for the terminating party to give notice of its intention to terminate within specified periods. OSJ *Wikborg Rein’s contribution to this article was first published by International Law Office, an online legal update service for major companies and law firms worldwide *CTRL Marine Solutions Ltd (CTRL) is a bespoke claims, technical, risk and legal service

Among a number of changes to Supplytime, the condition of the vessel will not be covered by an independent surveyor

Offshore Support Journal | November 2017

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SEISMIC VESSELS | 11

Increased tendering and upcoming licensing rounds buoy seismic vessel market

D

epressed demand for marine seismic activity is usually the first sign of a downturn in the offshore oil and gas market. Equally, improved demand for marine seismic projects often signals the beginning of an upturn in the market.

Both companies have described increased levels of tendering activity, and both have significantly reduced their cost base in recent months.

Polarcus said overall marine seismic activity is picking up, and PGS has described an increase in demand for multiclient work of the type in which it specialises and in production seismic projects.

Speaking at the recent Pareto Securities Oil & Offshore Conference, representatives of leading marine seismic firms Polarcus and PGS both had cautiously

Leading marine seismic survey companies Polarcus and PGS have spoken of improved tender activity and greater optimism about the market next year

optimistic things to say.

Polarcus CEO Duncan Eley noted that the oil price has stabilised and oil companies have been sanctioning projects based on their capex guidance at the beginning of 2017. It said tender activity has increased from their previously low levels, and Q3 2017 saw Polarcus receive the greatest number of tenders since Q2 2015.

The company said there has been a 50% increase in square km of surveys tendered to date in 2017 compared to 2016. “Activity is returning to new and dormant basins,” said the company, noting that this year has also seen the most West African tenders issued since 2014, and elsewhere, the Guyana-Suriname Basin continues to draw interest from major oil companies.

Polarcus believes it is well placed to respond to

new tenders having reduced its gross cost of sales to an all-time low level in Q2 2017.

In that quarter, its gross cost of sales fell 10% compared to Q1 2017.

In a presentation at the conference, the company said E&P companies were now consistently cash positive. It also noted that seismic vessel supply has continued to reduce as tender activity increased.

For its part, PGS said its focus on multiclient business had brought greater stability to its performance despite the highly cyclical nature of the market. The proportion of its work that is multi-client will continue to increase going forward, and its revenues are currently dominated by multiclient projects.

The company said it “retains flexibility to leverage a recovery in the marine contract market” as oil companies

PGS says it anticipates that demand for multiclient work and production seismic activity will continue to grow

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Offshore Support Journal | November 2017

12 | SEISMIC VESSELS

invest more in producing fields and fields under development.

It anticipates that the number of production seismic (4D) projects will more than double in 2017 compared to 2016 and is expected to increase further in 2018. PGS said 4D activity is increasing in the North Sea, West Africa and Brazil, and it will conduct more than 50% of global 4D surveys for 2017. PGS is well positioned in the 4D market, and around 35% of 2017 contract revenues are expected to come from 4D. PGS said it was working on a number of encouraging leads for development in 2018 with growing demand for marine seismic being driven by positioning for strategically important licence rounds, seismic commitments in E&P licences, a significant increase in production seismic – especially in the North Sea, West Africa and Brazil – and ongoing growth in multi-client activity, which is expected to continue to increase.

In the introduction to its most recent seismic vessel register, Clarksons Research noted that weak E&P spending continued to negatively impact the seismic survey vessel market, with around 29% of seismic and geophysical survey vessels laid up as of the beginning of June 2017.

However, as it also noted, strategically significant licensing events off Norway and in the Mexican sector of the Gulf of Mexico, among others, are expected to provide some support to the market in advance of more general market recovery.

“After some very strong years during the boom period 2011–14, the slump in oil prices produced two successive years in which oil companies cut E&P spending by in excess of 20% per annum,” said Clarksons. “This caused a severe downturn in the seismic vessel market,

Duncan Eley is chief executive officer at Polarcus. He has more than 15 years of experience in the seismic industry. He worked with WesternGeco for 10 years supporting marine seismic operations.

Holding a bachelor of science and bachelor of engineering (with honours) from Monash University in Australia he completed his MBA at Erasmus University in Holland.

Prior to joining Polarcus in 2009, he worked for several years with strategy consultancy firm LEK Consulting.

Offshore Support Journal | November 2017

which resulted in substantial vessel idling, a number of company restructurings and perhaps some fundamental structural changes to the way the market operates.”

However, it went on to say that, despite the extremely tough period for the segment, there does now seem to be some possibility that the market may be approaching a turning point.

“Oil companies are likely to spend in the region of 7% more on E&P in 2017,” said the research arm of the well-known shipbroker. “The underlying picture is more nuanced than this, since the bulk of the increases in spending will be in onshore shale basins.” Several of the large oil majors are likely to decrease spending on offshore for a further year. However, even given this challenge, there has been a shift offshore from a situation where essentially nothing new was happening to one in which companies are prepared to consider exploration and project sanctioning, if cost reductions and scope redesign has been sufficient to make investment seem viable.

This is important for the seismic industry, since it means that there has been some improvement in sales leads, tendering activity and even slight upticks in companies’ backlogs.

The time horizon for secured backlog at most companies is still relatively short: oil companies, given plenty of available fleet capacity, do not have to plan ahead as much as they might have in the boom. However, the summer season of 2017 offered some positive signs when compared to a year earlier.

“There are several key areas where oil companies have shown interest in contracting seismic work to position themselves for future

licensing rounds,” Clarksons said. “These include surveys connected to Norway’s 24th Licensing Round. This will include 102 blocks, 93 of which are in the Barents Sea, but with other potential promising acreage in the Norwegian Sea. Similarly, there has been interest in the relatively under-explored areas off Newfoundland and Labrador (the majority of seismic data for the region was surveyed more than 30 years ago), which are likely to be included in Canada’s Scheduled Land Tenure licensing process over the next few years.”

Such pre-licensing round survey activity tends to be an example of multi-client survey work – a means of contracting and vessel employment that, as highlighted above, has become increasingly common over the last couple of years, the change in business model having been promoted by the downturn.

Clarksons said that, at the peak of the 2007–2008 offshore boom, around two-thirds of the seismic companies’ business (in revenue terms) was generated by contract seismic work: conventional time charter of a vessel to produce a survey.

However, seismic companies have had to adopt a different model as oil companies have cut back. In 2016, around two-thirds of revenue came from multi-client work. This has helped to support survey activity off Mexico, for example, given the interest in seismic acquisition now that Pemex no longer has a monopoly over field developments.

However, despite the more optimistic signs, seismic vessel owners remain challenged – in June 2017, CGG filed for Chapter 11 and 15 bankruptcy protection. Although these proceedings were planned, the occurrence of further debt restructuring in the sector demonstrates the challenges still faced by market players. OSJ

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Middle East AREA REPORT | 15

SAUDI ARAMCO SAID TO NEED 200 MORE OSVS THERE ARE SIGNIFICANT OPPORTUNITIES FOR OFFSHORE VESSEL OPERATORS IN SAUDI ARABIA AND UAE, BUT RATES REMAIN JUST ABOVE BREAKEVEN LEVELS

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ell placed sources says Saudi Aramco requires as many as 200 more offshore support vessels (OSVs) in the coming years to meet its requirements for developing more of its largest offshore fields. The world’s top oil producer has already handed out US$5Bn worth of project contracts to construction groups and floated tenders for 33 vessels.

Zamil Offshore consultant engineer, business development, international marketing and risk management executive Hassan Abouraya told OSJ that the tenders include requirements for dynamic positioning class accommodation vessels, crewboats, liftboats, utility and supply vessels, anchor handlers, docking tugs and maintenance boats.

“We are tendering for 12 vessels,” he said, adding that “there are a lot of surplus vessels worldwide so we can acquire brand new vessels for a few million dollars.” Some of these are already in the Middle East as are a number of laid-up vessels that could be for sale.

Earlier this year, Zamil acquired Zamil LB2, a liftboat, in China. “It only took three months to prepare it for delivery,” he said, noting that the company took delivery of it on 2 October at Dammam port in Saudi Arabia.

Founded in 1977, Zamil

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“Aramco is encouraging contractors to invest in the country and we have a 100% Saudi crew on board of one of our vessels”

Hassan Abouraya: “Aramco has long-term requirements for accommodation vessels, crewboats, liftboats, utility and supply vessels, anchor handlers and other vessels”

has accumulated a fleet of 79 diversified offshore vessels and four liftboats. “Twentysix vessels were built at our Dammam shipyards. This includes seven Rolls-Royce UT 733 version-2 anchor handlers with 80 tonnes bollard pull and 10 dieselelectric anchor handlers with 65 tonnes bollard pull,” said Mr Abouraya.

The fleet includes dive support, maintenance, construction and supply vessels, utility and crewboats. Most of these vessels are in long-term charter contracts with Aramco, plus one is chartered in Sharjah, another is in Oman and a few are under final negotiations to work for Saipem in the Arabian Gulf region.

Aramco is encouraging contractors to invest in Saudi goods, services and people, a policy for which Zamil is a leading advocate. “Saudisation is happening, and we announced

recently 100% Saudi crew on board of one of our vessels,” said Mr Abouraya. “Over the last six years, we have trained almost 600 Saudis under the Saudisation programme.”

In the UAE, there are ongoing offshore projects that are keeping vessels employed, although rates have plunged to just over breakeven levels and many vessels are laid up.

Stanford Marine is in the market to charter in more vessels to meet increasing requirements.

General manager N V Shamjith said the Stanford fleet has an utilisation rate of 90%.

“We own 40 vessels in the Middle East, chartered in six and have plans to charter in more to cater for requirements,” he told OSJ. “We have term charters, but rates are low as we compete with Southeast Asian owners. This forces us to cut. It is a matter of survival until rates improve.”

Allianz Marine Services has grown its business in the UAE by acquiring vessels when it has fresh requirements. “We have a lot of operations in Abu Dhabi and Kuwait, and there are still requirements for shallowdraught workboats for offshore construction projects,” said director Murali Krishna.

“Since 2016, it has been the right market for picking up vessels and reaching deals.

We have bought crewboats, barges and landing craft to meet logistics and offshore requirements.” He said Allianz was looking at opening operations in India, Egypt and West Africa.

Owners are being pressured to reduce fuel costs by oil companies and charterers in the Middle East, said Miclyn Express Offshore (MEO) operations manager Ravinder Hoonjan. This is why he would recommend that “vessel owners need to monitor and better manage the fuel consumption.”

Fuel costs are of greater importance for vessels that are placing heavy loads on engines, he added. OSJ

Offshore Support Journal | November 2017

16 | AREA REPORT Middle East

Middle East owners could help industry emerge from recession IT’S NOT JUST THE MIDDLE EAST OFFSHORE SUPPORT VESSEL MARKET THAT OFFERS OPPORTUNITIES FOR GROWTH – OWNERS BASED THERE HAVE PLENTY OF POTENTIAL

Topaz Energy and Marine has made the best of a bad market and has an industry-leading backlog

O

pinions differ about whether the offshore support vessel market in the Middle East is holding up better than others elsewhere and about how quickly the Middle East market might return to growth. However, one thing that is certain is that the region has become increasingly important to a growing number of owners and that owners based there could play a role well beyond the region as the market returns to growth.

Home to around 650 offshore support vessels, the region has seen rates take a hit but not to the extent seen in other markets.

As Clarksons Research noted recently, operators in the Middle East are faced with relatively elderly declining fields, with fixed infrastructure in need of redevelopment located in shallow, benign environments. Lower costs for offshore services seem to be encouraging an uptick in redevelopment and maintenance work.

Recently, there have been signs that the market is continuing to improve, although the size of the supply side remains an issue, as it does pretty much everywhere else. Unlike some regions, it’s possible to make money in the Middle East, as Singapore-based but Middle East-owned Vallianz Holdings announced last week.

It must be one of only a very few OSV owners to have posted an increase in net profit recently, something that it attributed largely to new long-term charter contracts with a national oil company in the region.

Although Singapore-based, Vallianz’s business is anchored in the Middle East nowadays. It says it expects more contracts on top

Offshore Support Journal | November 2017

of those it already has with the NOC and, with the strong support of its Middle East-based partner Rawabi Holding, intends to maintain its focus on expanding in the region whilst making inroads into Egypt and Turkmenistan. However, it’s not just the Middle East market that is important to the industry. Owners based there will play a growing role.

Based in Dubai, Topaz Energy and Marine continues to make the best of a bad market. Topaz may have seen its revenue and EBITDA decline in Q2 2017 compared with the same period last year, but it has an industry-leading backlog. It recently refinanced and has a sustainable capital structure that positions it for growth. It has a leading position in the Caspian from which it is unlikely to be dislodged any time soon.

With operating centres in the UAE, Qatar, Kazakhstan, Azerbaijan, Russia, Nigeria, Angola, the Kingdom of Saudi Arabia and Turkmenistan, Topaz is a subsidiary of Renaissance Services SAOG, a publicly traded company listed on the Muscat Securities Market in Oman.

In Renaissance, Topaz has a strong owner. It has a secure position in markets that are outperforming others. Its financial position means it is well placed to structure long-term contracts that offer predictability and value to its clients at low counterparty risk. It has a backlog that most companies would kill for. With an average age of only 7.4 years, its fleet is a modern one.

It has a couple of expensive subsea newbuilds it has yet to find work for and has been criticised for failing to recognise impairment on its vessels, which it has now done, but with experienced management at the helm and an ability to secure long-term contracts in a weak market, Topaz is undoubtedly one to watch and could play a leading role reshaping the OSV industry as it emerges from recession.

Mermaid secures contract extension Mermaid Maritime has secured a contract extension worth approximately US$96M from an unnamed oil major.

The contract was awarded to a joint-venture company formed between Mermaid and a local offshore services operator in

the Middle East. The contract extension duration is for a firm one year plus a one-year option.

The contract is for inspection, maintenance and repair services.

Work is due to get underway under the extended contract in the Q4 2017. OSJ

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CONSTRUCTION VESSELS | 19

SHORT-TERM OUTLOOK STABILISING

AS LONG-TERM OUTLOOK IMPROVES THE CONSTRUCTION VESSEL MARKET HAS PROBABLY BOTTOMED OUT AND HAS A HEALTHIER OUTLOOK AHEAD OF IT THAN IT HAS ENDURED IN THE LAST TWO TO THREE YEARS

M

arket conditions in the construction vessel sector continued to deteriorate throughout 2016 as severely reduced offshore E&P spending bit into project sanctioning and inspection, maintenance and repair (IMR) demand and as work backlogs built up before the offshore downturn continued to erode.

Upstream cost pressures have prompted an uptick in mergers and acquisitions activity affecting the offshore construction sector, especially in regards to subsea engineering, procurement, construction and installation (EPCI) and services contracting.

Figures from Clarksons Research suggest that, as of the start of June 2017, estimated offshore project capex had risen by 23% year on year on an annualised basis – a sign that perhaps things are starting to move in the right direction for the construction vessel fleet, though risks remain.

Vessel oversupply is still a problem though, as even modern subsea support vessels have been put into layup. Rates for a multipurpose vessel with a 100-tonne safe working load crane deployed on North Sea IMR duties were assessed by Clarksons Research at around US$17,000–22,000/day, down from US$35,000–

48,000/day at the start of 2014.

“Any improvement in utilisation and day rates is likely to be spread unevenly across the complex and diverse construction fleet of 2,734 units,” said the research arm of the well-known broker.

“Vessels in the fleet can be notably idiosyncratic: some units are highly specialised; others are more multipurpose.”

One other positive note sounded by the company is that increased decommissioning activity and chartering opportunities in adjacent sectors – such as renewables – have given some (limited) support to construction units.

As the downturn continued, construction backlogs accumulated by construction vessels in the boom years continued to unwind.

For instance, by the start of Q4 2016, the subsea contracts backlog reported by major engineering, procurement and construction (EPC) contractors had fallen to less than US$16Bn, down 60% on the Q2 2014 peak.

As 2016 progressed, increasingly adverse operating conditions piled financial pressure on construction vessel owners and EPC contractors.

This resulted in some high-profile mergers that are intended to yield cost synergies in offshore construction, notably between offshore EPC contractor Technip and offshore fabricator FMC, who formed TechnipFMC, as well as the pending merger of Baker Hughes and GE Oil & Gas. (More recently, it has been suggested that Baker Hughes has held talks with Subsea 7 about a takeover.) A number of owners of construction assets, particularly of subsea support units, saw their financial positions weaken in 2016 and 2017 and were forced into Chapter 11 proceedings and similar measures.

Restructuring and refinancing activity is ongoing in some cases, while owners who are on a more secure financial footing are reportedly eyeing up potential distressed asset opportunities with

Normand Maximus was one of a number of vessels contracted for ExxonMobil’s Liza project offshore Guyana

20 | CONSTRUCTION VESSELS

regards to high-specification pipelayers and MSVs. On the other hand, as highlighted above, there have been some tentatively positive signs for the offshore construction sector in 2017, with project capex increasing and several large EPCI and subsea umbilicals, risers and flowlines (SURF) awards (such as that for the installation of 17 subsea trees at ExxonMobil’s US$3.2Bn Liza Phase 1 project offshore Guyana) having been made.

However, as Clarksons Research also pointed out, energy prices remain volatile, and any improvement in the offshore EPCI markets could be undone if energy prices come under sustained pressure again.

As also highlighted above, much of the offshore construction activity on new field developments and expansion projects is conducted by EPC contractors. Examples of such companies include Aker Solutions, Larsen & Toubro, McDermott, Saipem, Subsea7 and TechnipFMC. As a general rule, EPC companies compete with each other in competitive tender processes for EPC awards from oil companies.

EPC contracts typically involve some element of fabrication work (which may be subcontracted) as well as installation work (the term EPCI contract is sometimes used). SURF contracts also fall within the purview of the contracting process at the EPC stage of a project.

EPC contracts tend to be lump sum awards, so the contractors bear the burden of any cost overruns.

The number of offshore projects in the appraisal, pre-FEED and FEED stages is growing and could feed through into greater vessel demand

In some cases, EPC companies enter into long-term agreements (LTAs) with oil companies to be the ‘go to’ contractor for work at certain fields or clusters of fields. This is quite common in the Middle East, for instance, where Saudi Aramco favours this method of contracting for replacing fixed platforms and pipelines at mature fields such as Safaniya and Berri.

Whether or not an EPC contract is awarded under an LTA or through an open tender process, EPC companies typically deploy a range of large construction assets, including heavy-lift capable crane units, pipelayers, flexlay vessels and subsea support units.

EPC contractors usually own any required higher-specification ‘enabler’ units (resulting in barriers to entry for new players), and hence there is not a very liquid charter market for construction assets, in contrast to rigs and offshore support vessels. However, in some cases, tonnage may be chartered from third parties to supplement the EPC operators’ fleets.

Looking to the longer term, though, a somewhat more encouraging and robust picture is apparent. There are currently 718 offshore projects in the appraisal, pre-FEED and FEED stages of project contracting.

The combined capex of these projects, that is, the investment to be made at the EPC stage of contracting, is an estimated US$1.96 trillion. This capex, which would fuel demand in the construction vessel markets, is likely to be gradually unlocked in an improving energy price environment in which more projects would become commercially viable over time. Clarksons Research says this process is likely to play out well beyond 2020.

It might be expected that the shallow-water segments of the construction vessel fleets will be the first to benefit from any improvement in the oil price, as shallow-water fields tend to have a lower breakeven than deepwater fields. However, so far in 2017, the main change in project sanctioning has been the return of large, deepwater projects where final investment decisions (FIDs) had been delayed since the downturn.

For example, following the FID for the US$3.75Bn Leviathan Phase 1 project off Israel in February 2017, EPCI contracts worth hundreds of millions of dollars covering a large fixed platform, four subsea trees and 234 km of SURF items have been awarded to contractors such as TechnipFMC, Kiewit Offshore Services, Wood Group Mustang and Trendsetter Engineering.

Based on the portfolio of projects on the verge of FID in 2014, this somewhat counter-intuitive trend might continue into 2018 and 2019, creating more opportunities to utilise high-specification construction assets such as the 69 large MSVs (with cranes of 250t SWL or greater) sooner than might otherwise be expected.

Decommissioning could also create work Further good news could come from the decommissioning sector. Before the offshore downturn, decommissioning had been fairly low key – a trend that was going to take off at some undefined point. There were just two offshore decommissioning projects in the EPC/ removal stages of contracting and six in the earlier conceptual/planning stages at the start of 2015, but by the start of June

Offshore Support Journal | November 2017

2017, these numbers had risen to 24 and 28 respectively.

Clarksons Research believes that, if decommissioning demand continues to increase, it could help soak up some of the spare capacity in the construction fleet. Crane vessels, self-elevating platforms and heavy-lift vessels will be needed to remove and transport topsides and jackets. MSVs, dive

support vessels and remotely operated vehicle support vessels can be used to assist throughout decommissioning and will be especially important for removing subsea structures and for site remediation, when dredgers will also have a part to play. That being said, decommissioning is still an emerging market with many uncertainties regarding cost, scope and timing. OSJ

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NEW DESIGNS | 23

INTEGRATED CREW CHANGE SOLUTION WILL BE MORE COST-EFFECTIVE THAN HELICOPTERS A SUPER-SLENDER HULLFORM, MOTION COMPENSATION SYSTEM AND A SPECIALLY DESIGNED OFFSHORE ACCESS SYSTEM HAVE BEEN COMBINED IN A VESSEL INTENDED TO COMPETE WITH HELICOPTERS IN THE CREW TRANSFER SEGMENT

Damen’s FCS 7011 is designed to provide a comfortable ride over long distances and transfer personnel safely

A

s highlighted in the Annual Review issue of OSJ and in earlier issues, a number of large crewboat designs have been brought to market recently that are intended to compete with helicopters as a way of transferring personnel offshore over long distances.

The new design, a highly innovative one from Damen in the Netherlands, was developed based on feedback from a number of offshore oil and gas companies who want to reduce their logistics costs and is part of a broader portfolio of marine access solutions Damen is

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developing for the offshore oil and gas and offshore wind industries. It will integrate an Ampelmann walk-to-work gangway, the Ampelmann S-type, an enhanced gangway designed specifically for large, high-speed vessels such as those involved in crew change operations.

Unlike other examples of the type, which are often catamarans, the new Damen design is a monohull, but a monohull with a difference in as much as it makes use of Damen’s ‘super-slender’ Sea Axe hull shape, a hullform that the company developed in the search for improved seakeeping characteristics for

high-speed vessels.

What it was seeking – and what it achieved – in what became known as the Sea Axe was a design that could maintain high speeds in strong winds and heavy seas and provide those on board with a high level of comfort.

Derived from Damen’s ‘Enlarged Ship Concept’, on which a number of highly successful Stan Patrol vessels are based, the Sea Axe took Damen’s design philosophy even further, significantly reducing resistance, fuel consumption and emissions.

The new design, the FCS 7011, is intended to provide a broad range of marine access

solutions for sea states of up to 3.0 m Hs. It is able to land personnel on platforms and floating production units up to a landing height of 20m whilst providing a fast and comfortable crew change solution.

David Stibbe, a business development manager at Damen responsible for the new design, told OSJ that the starting point for it was that the greater the level of operability the vessel provides – and the more comfortable the ride is for passengers – the greater passenger fitness levels and ability to work will be on arrival offshore.

The FCS 7011 has configurable seating areas for up to 150 passengers, with the accommodation spaces amidships in order to maximise comfort on board and reduce the incidence of seasickness as much as possible.

Complementing the advantages of the Sea Axe hullform whilst underway, a roll reduction system has been fitted, which makes use of a gyroscope, to reduce motions when transfers are taking place.

A ride control system is also integrated into the design of the FCS 7011 for roll and pitch reduction. Steerable skegs ensure that course corrections whilst in transit are optimised.

Several engine layouts are available, depending on client needs. A typical installation could be based on a quartet of MTU 4000 diesel engines, providing 12.5–14.4 MW and a speed of up to 40 knots.

Damen says that detailed cost analysis has shown that among other potential applications the FCS 7011 is ideal for transfers in the Gulf of Mexico, Brazil, Nigeria, Cameroon and other countries offshore West Africa, along with emerging markets such as Guyana, where ExxonMobil needs to put together a logistics solution for its Liza developments. OSJ

Offshore Support Journal | November 2017

24 | OCEAN-GOING TOWING

GROWTH IN PROJECT SIZE AND SCALE PLACES NEW DEMANDS ON LONGDISTANCE TOWAGE SPECIALISTS The age of the worldwide fleet of long-distance towing and salvage vessels, and the growing complexity, scale and value of projects, means that investment in new units may be necessary

The size and scale of many long-distance towage projects has so far led to only limited investment in new-generation anchor-handling and salvage units

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ccording to data provided by Clarksons Research, as of 1 June 2017, the ocean-going tug fleet consisted of 234 vessels.

The larger portion of the fleet is controlled by state players, as typified by China Rescue and Salvage (which owns 49 ocean-going tugs), the agency responsible for reaction to casualties and incidents along the length of the Chinese coast.

Commercial towing and salvage players tend to maintain smaller fleets, across a more diverse range of assets, including ocean-going tugs, but also conventional offshore support vessels, cranes and barges for wreck removal or lightering activities. They also often charter in additional tonnage,

where necessary, including units from the wider offshore construction sectors.

Governmental maritime safety operators, notably in Europe, sometimes also contract out their coastal safety standby operations to third party operators.

Although these government operations are a key part of the safety of the maritime industry, plenty of incidents occur outside territorial waters, or need specific technical skills or operational scale. Here, the commercial salvage operators can be a crucial part of the rapid response to a casualty, which is often needed to give the best chance of avoiding pollution or a total loss.

According to the International Salvage Union,

Offshore Support Journal | November 2017

the number of ‘dry’ salvages (salvage operations of vessels in distress, as opposed to wreck removal, also known as ‘wet’ salvage work) rose in 2016. A total of 306 such salvage operations were recorded, which represents a sizeable increase of 44% yearon-year to the largest figure since at least 1999.

Clarksons Research says it could be argued that is something of an upward trend developing in dry salvage activity over the last half decade, given that 2014 was also a relatively active year.

To some extent, this might well be expected: the fleet has grown substantially over the last decade. It remains to be seen if the next few years confirm this suggestion of a

trend, or if the uptick in 2016 was merely an outlier.

2016 was also a historically active year for wreck removals, with 131 projects recorded, which is the highest figure for a long time bar the aftermath of Hurricane Katrina in 2005.

However, average revenue from salvage operations fell to US$1.3M, down by 79% on 2015. Clearly, the higher volume of work is a positive for the salvage industry, but the average levels of revenue are down after being buoyed by a couple of very large removal projects (principally the Costa Concordia and Rena salvage cases).

The commercial salvage industry is relatively diverse, with a number of smaller, regional outfits, but there are also some players which have relatively larger reach. In terms of open Lloyd’s Open Form cases as of mid-2017, the most commonly employed companies are Tsavliris, Smit Salvage, Five Oceans Salvage, Svitzer and T&T Salvage.

Clarksons Research notes that the average age of the ocean-going tug fleet is quite high (27.1 years) and is an issue that might need tackling. Of course, there is plentiful supply of large anchor-handling tug/ supply (AHTS) vessels in the market which could potentially be chartered into the salvage market if needed, or even acquired. On the other hand, said Clarkson Research, some requirement may exist for specialised vessels equipped to handle the new generation of the largest vessels. There

www.osjonline.com

OCEAN-GOING TOWING | 25

have also been conspicuous examples of investment in anchor-handling and salvage tugs, not least by companies such as ALP Maritime. The last 12-18 months have also seen a number of particularly impressive and recordbreaking long-distance towage operations by established vessel owners such as Singaporebased POSH. After the successful towage and positioning of the INPEX Ichthys central processing facilities in Q2 FY17, the POSH Terasea joint undertook the towage and positioning of the Ichthys floating production, storage and offloading (FPSO) unit and the Shell Prelude floating liquefied natural gas (FLNG) platform, along with work on the Egina FPSO unit, which was scheduled for Q4 FY17.

POSH evidently expects that the liquefied natural gas market will provide operators like it with more work in the future, and says it is witnessing “a changing energy landscape” with gas as the fuel of choice to power global economies in the future. As it noted recently, massive offshore gas fields have been found offshore Canada, Australia, Mozambique and Israel, projects that will make use of

FLNG solutions that could generate more long distance towage work in due course.

It cites the example of Petronas’ Satu FLNG project, which offloaded its first cargo of LNG in April 2017. POSH Terasea was responsible for towing the Satu FLNG unit to the Kanowit Field offshore Bintulu, using two oceangoing tugs of in excess of 400 tonnes bollard pull to position the massive vessel at offshore location. With a length of 365 m and breadth of 60 m, with a storage capacity of 177,000 m3 and a production capacity of 1.2 million tonnes per annum of LNG, the project was a particularly important one for POSH and its joint venture.

Shell’s Prelude unit is also now in place offshore northeast Australia, having been towed from Geoje Shipyard in South Korea by three ocean-going tugs operated by POSH. Prior to project, Shell and POSH used simulators operated by HR Wallingford to plan and practice the complex towage operation.

As highlighted above, among those to have invested heavily in newbuild anchorhandling and salvage units capable of long distance towing is ALP Maritime, whose 305 tonne bollard pull newbuilds have already been

put to good use on a number of projects.

One of these high spec units, ALP Defender, recently completed the tow of the Randgrid floating storage unit (FSO) from Singapore to Stavanger, Norway, having been delivered as recently as 30 June 2017. Days after being delivered, ALP Defender departed for South Korea to be outfitted and spool towing wires on board. There was some time pressure, as the vessel had been chartered to Teekay to tow the Randgrid FSO on its mobilization voyage from Singapore to the Gina Krog oil field in the North Sea as soon as the new ship was ready.

The 12,500 nautical mile tow commenced in July 2017, departing from Singapore with a route around Cape of Good Hope. Bollard pull and speed calculations made for the project showed that the voyage would take 58 days. On 26 August the convoy entered the English Channel for a rendezvous with steering tug Multratug 3, which connected to the stern of the FSO to guide it. The convoy arrived in Stavanger on 30 August, three days ahead of schedule, having maintained an average towing speed of in excess of 10 knots.

The company notes that, in a market where the objects

that are being towed are getting larger and larger and the potential environmental and financial exposure associated with them is growing, the need for more powerful, more sophisticated long-distance towage units is increasing, hence its investment in the 305 tonne bollard pull, dynamic positioning class 2 (DP2) towing vessels. In keeping with the growing demands on longdistance towage and salvage operators, the DP2, ice-class 1B vessels have a high level of redundancy, significant anchor and chain handling capacity – thus eliminating the need for additional vessels during mooring operations – excellent fuel economy and particularly large bunkering capacity, reducing and in some cases eliminating fuel stops during long-distance projects.

As an example of just such a long distance tow that did not require bunkering stops it cites the example of Bumi Armada’s Kraken FPSO project, a milestone project for ALP Maritime that saw the company contracted to project manage, tow and install the Kraken FPSO, towing the massive unit from Singapore to the Kraken field in the North Sea over a distance of approximately 8,800 nautical miles. OSJ

New-generation long-distance towage vessels have sufficient bunkering capacity to make fuel stops unnecessary

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Offshore Support Journal | November 2017

26 | DYNAMIC POSITIONING

REACTIVATION –

AN OPPORTUNITY TO MAKE DP OPERATIONS EVEN SAFER Concern has sometimes been expressed about the particular requirements of DP vessels in layup and issues involved in reactivating them, but reactivation could be an opportunity, not just a challenge

R

eactivation of a dynamic positioning (DP) vessel is different to other vessels, M3 Marine’s managing director Joey Fisher told the Asian Offshore Support Journal Conference in September.

Mr Fisher, who is also on the International Marine Contractors Association’s DP Committee, said he sees reactivation of a DP vessel as an opportunity to enhance a ship’s DP capability. Much of what is ‘different’ about reactivation of a DP vessel relates to mission-specific equipment. “What does – or should – a reactivated DP vessel look like?” Mr Fisher asked delegates.

Essentially, said Mr Fisher, reactivation of a DP vessel, should return the DP equipment on board to the same condition it was in when it entered layup, in accordance with flag state and class requirements. Systems need to be checked to ensure each redundant group is single-fault tolerant. Ideally, on completion of the process, the DP system on a reactivated vessel would be in a better condition than when it entered layup.

Layup places a number of stresses on a vessel. These include chemical stresses from moisture and humidity and the potential for damage to batteries. Depending on where a vessel was laid up, security and – potentially – theft could be an issue. The hull could also experience problems due to corrosion and marine growth. Thermal mechanical stress can lead to loose wires, and it is essential to carefully assess the state of electrical contacts, circuit breakers and protective functions.

DP vessels have specific requirements at reactivation but the process is also an opportunity to enhance systems and improve familiarity

Offshore Support Journal | November 2017

“Management of change is an issue,” Mr Fisher suggested.

Moreover, whilst a vessel has been in layup, skills fade, costs increase and revenue “disappears” – all of which have the potential to adversely affect a DP system and its operators if management of change isn’t prioritised. “The negatives of layup may well lead to premature component/equipment failure,” Mr Fisher said. Mean time between failures could be adversely affected, as could the expected time to failure of a nonrepairable system/component.

One way of ensuring that vessels and their DP systems remained in good condition would be to rotate them in and out of service, although this would add to costs. Another is to replace suspect/obsolete equipment as required, but should one use new or used equipment as a replacement? Is it sufficient to use other laid-up vessels as ‘live stock’? “The standard approach would be to follow the layup plan, conduct an initial layup survey and establish preservation and maintenance routines to avoid deterioration, then conduct annual layup surveys,” Mr Fisher said. When reactivation is warranted, an owner should carefully follow a reactivation plan, complete planned maintenance, check equipment change report, prove that the system is fully operational using a DP audit and trials and have statutory certificates reissued.

Reactivation, he suggests, should also be used as an opportunity to consider reliability, availability, maintainability and safety, introduce more advanced maintenance techniques and improve the design of systems whilst keeping failure modes and effects analysis and other DP-related documentation updated. It is also an opportunity to introduce additional standby redundancy (using capital spares), assess and improve reliability and improve management of change.

“Getting the manning aspect correct is vital,” Mr Fisher told the conference. “Questions that need to be asked include is the crew the same as the one that put the vessel into layup? Is this a new crew for the shipmanager? Are crew members familiar with company procedures? Is a crew competency assessment required?

Is additional familiarisation training needed, and should DP trials/ drills and simulation be used as learning tools too?

Overall, Mr Fisher continued, the reactivation process should be used as an opportunity to re-educate crew on company management structure and procedures and allow them to refamiliarise themselves with equipment and systems, improve skills and implement and validate an improved redundancy concept. If looking for guidance on how to manage the process, sources are classification societies, the vessel’s flag administration, original equipment suppliers, internal procedures and experience and trade associations, he concluded. OSJ

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The ALP Fleet is designed for world-wide long distance towage of the largest floating objects, with the ability to offer additional services such as salvage, anchor handling, (long term) positioning/heading control and mooring/survey works. tel +31 10 290 65 50 | alpsales@alpmaritime.com | www.alpmaritime.com

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COMMUNICATIONS | 29

COMMUNICATIONS PROVIDERS PREPARE TO DELIVER HIGHER BANDWIDTH SATELLITE COMMUNICATIONS PROVIDERS ARE PREPARING FOR THE TIME WHEN OFFSHORE SUPPORT VESSELS RETURN TO SERVICE AND MARKETS IMPROVE, WRITES MARTYN WINGROVE

W

hen offshore support vessel (OSV) markets begin to recover, providers of satellite communications will be ready to rapidly expand their solutions.

Owners bringing vessels out of layup will be able to increase their broadband capacities to deliver more for their clients.

Vessel operators will need extra broadband for crew and client communications, access to online services, data transmissions from ship to shore, remote system monitoring and video streaming, said ITC Global chief executive Ian Dawkins. He told OSJ that video streaming will be one of the most important and broadband-hungry requirements of VSAT capacity.

“We have seen demand for remote video streaming to support subsea monitoring,” he explained. “Being able to deploy these services quickly and effectively to deliver 24/7 live video is going to be key.”

Remote system monitoring is also a key reason for vessel operators to use ITC Global VSAT. Mr Dawkins thinks there are many benefits that come from these applications.

“When equipment is linked for remote monitoring in real time, then vessel owners can optimise maintenance, reduce expensive downtime and handle upkeep and support before equipment failure,” he explained.

Vessel operators can monitor key parameters and investigate issues that are identified, for example, “vibration alerts can indicate issues with equipment performance and provide an early warning of failures”. They can also analyse performance trends and the ability of crew to operate vessels effectively. “Data can be fed back to shore managers to reduce the risk of costly incidents and can also be used for training,” Mr Dawkins said.

ITC Global, which is a subsidiary of Panasonic, is preparing for higher

www.osjonline.com

bandwidth requirements by taking capacity on the new generation of high-throughput satellites and preparing to introduce the Newtec satellite modem platform.

Marlink is also preparing for a recovery in offshore communications needs by upgrading its C-band packages, which are popular on seismic survey ships, accommodation units and subsea construction vessels. It has introduced new prices and service plans to Sealink C-band services that make it easier for vessel operators to integrate this technology with future high-throughput Ka-band and Kuband VSAT. The majority of VSAT services that Marlink offers in Ku-band and C-band coverage comes from Intelsat and SES

Ian Dawkins: “We have seen demand for remote video streaming to support subsea monitoring”

satellites. A Marlink spokesperson said the relaunch of C-band does not include new hardware or dual-band antennas, so vessel operators can use their existing hardware, including 2m antennas, for the upgrade in service.

Satellite operators are also prepared for an upswing in broadband demand.

Intelsat is commissioning its fifth unit of the EpicNG constellation, which includes high-throughput Ka-band and C-band spot beams. The latest of these was launched by Arianespace’s Ariane 5 rocket on 29 September to bring more capacity to key offshore regions of West Africa, Brazil and the Mediterranean. SES revealed its investment plans for a new generation of medium Earth orbit satellites to deliver more Ka-band coverage in these regions to augment existing coverage from 2021.

OSV operators are upgrading fleet VSAT ready for an upturn in the market. Topaz Energy and Marine is integrating its vessels’ IT and onshore operations with a new hybrid communications platform. Under a threeyear deal, a fleet of up to 110 vessels will be connected with Orange Business Services’ Maritime Connect solution, which includes VSAT, L-band backup, onboard wifi and links to coastal cellular networks.

Topaz Energy and Marine chief executive René Kofod-Olsen told OSJ that it has the right platform in place for further digitalisation of fleet operations. “Now we have captains and chief executives using this platform, and it is really working as we deliver on our technology adoption,” he explained.

Seacor Marine is installing VSAT and a back-up L-band service on a fleet of 30 vessels that operate in the North Sea and off West Africa. Also in West Africa, Total Exploration & Production is using satellite communications and Opsealog’s software to improve fuel efficiency for a fleet of 15 vessels. OSJ

Offshore Support Journal | November 2017

30 | WELL INTERVENTION

SELF-PROPELLED UNIT

BRINGS COST REDUCTION AND EFFICIENCY TO WELL SERVICES MARKET A liftboat with well intervention capability should be much more cost-effective than a jack-up and associated assets that are required to operate with it, Gulf Marine Services and workover specialist Dwellop believe

A

bu Dhabi-based GMS has secured approval from classification society ABS for an innovative concept it has developed with Dwellop for vessel-based well intervention services.

The innovative cantilever system it has introduced has been installed on the self-elevating support vessel (a four-legged liftboat) GMS Evolution.

Said to be an industry first, GMS Evolution is fitted with are movable skidding cantilever system, installed with a well workover unit designed in partnership with Dwellop AS. The novel removable cantilever system provides an efficient and versatile vessel for well services, according to GMS. The innovative combination of a self-propelled jack-up with a removable cantilever and workover unit is not only the first selfelevating unit to secure ABS certification but also the first mobile offshore drilling unit of its kind in the industry.

In addition to the workover unit, which can be skidded over a platform or subsea well, GMS Evolution has a speed of more than 8 knots, DP2 dynamic positioning system, accommodation for 150 personnel and cranes including one of 200-tonnes capacity.

The company says installing the cantilever unit on the selfelevating vessel gives it the well intervention capability of a rig and the marine efficiency of a vessel. The new unit is capable of undertaking ESP replacement, workover, well recompletion, change of use, slot recovery, slide recovery and plug and abandonment. The system can provide fast, accurate cantilever action 15m and up to 8m in the transverse direction , skidding at 1m per minute. This means that the drill floor can be centred over the furthest slot within 30 minutes.

The high level of automation built in to the cantilever starts with the pipe-handling crane, which smoothly picks up drillpipe or tubulars from the well deck. A spacious drill operator’s cabin provides an unobstructed view of the drill floor and pipe deck. An automated catwalk machine smoothly conveys pipe and feeds it safely and accurately to the travelling assembly.

The automated topdrive system can hoist and arrange pipe, and an automated pipe handler safely positions pipe for connection. The robust roughneck has a torque capacity of 100,000 foot-pounds (ft lb) and is remotely operated from a safe location. The same level of automation

Offshore Support Journal | November 2017

GMS Evolution can provide the kind of well intervention services that usually require a rig

and hands-free operation drives the casing tongues and air-operated slips, removing the need for any personnel on the drill floor. The derrick has a rack and pinion drive system to ensure high levels of reliability and delivers 250 tonnes pulling force and 140 tonnes pushing force. The topdrive engages pipe, delivering 32,000 ft lb at 200 rpm, with full mud circulation. Secondary well control is provided by a 5,000 psi blowout prevention system that transits with the cantilever and 3.5 inch, 5,000 psi choke and kill manifold. The mud system, which is neatly housed beneath the cantilever, has a capacity of 1,500 barrels.

“Our new cantilever system will give clients a range of options in the way they use our barges to service their offshore assets. This system offers cost-effective solutions for work that has traditionally been performed by more expensive non-propelled drilling rigs,” said GMS chief executive Duncan Anderson.

Mr Anderson said it has “opened up a new area of the market that had previously been predominantly served by drilling rigs" and at a greater cost to operators. The new cantilever system will, he said, be able to replace them. OSJ

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DIVE SUPPORT VESSELS | 33

DSVS:

OVERSUPPLIED OVERBUILT AND UNDER-UTILISED

With numerous vessels out of work and others ordered before the downturn – and even since the downturn – still at the yards that built them, the dive support vessel market is, a leading analyst and consultant told OSJ, “brutal”

W

ith large construction vessels owned by tier one owners such as Subsea 7 and Technip competing for inspection, maintenance and repair (IMR) work until such time as the market improves, second tier owners of dive support vessels have an uphill task finding work for their boats.

According to the Clarksons Research Construction Vessel Register, the subsea construction and support vessel fleet consisted of 474 units as at the end of June 2017 – 325 multipurpose vessels and 149 dive support/remotely operated vehicle (DSV/ROV) support vessels.

As Clarksons Research noted, the subsea support sector was initially insulated from the worst of the downturn due to the backlog of subsea project and IMR work accumulated before the fall in the oil price. However, the leading indicators of pending subsea demand deteriorated throughout 2016 and, in spite of increased offshore project sanctioning so far in 2017, remain a cause for concern.

Of the two main segments of the subsea support vessel fleet, multipurpose vessels and DSV/ROV support vessels, utilisation and day rates for multipurpose vessels have come under the greater pressure, Clarksons Research says, but the market for DSVs in the North Sea and Asia is bleak.

In the North Sea, the situation at Bibby Offshore continues to arouse speculation. Recent weeks saw Bibby Line Group obtain an extension to publishing its 2016 accounts until 30 November 2017.

Bibby Offshore Holdings Ltd has filed its 2016 accounts, but at the time of writing, Bibby Offshore Ltd (the UK business) hadn’t.

Seasoned observers of the industry suggest that Bibby Line Group is expected to report a substantial loss for the 2016 year, and the Bibby Offshore situation could be related to their late filing of accounts.

Subsea 7 says “no comment” after Baker Hughes reports Subsea vessel owner Subsea 7 has refused to comment after its shares were briefly suspended on 11 October 2017 following reports that Baker Hughes had held talks to discuss acquiring the company.

The company said only that it was aware of press speculation and the subsequent share price movement.

“The company has a policy not to comment on speculation or rumours. As a listed company, Subsea 7 is subject to and complies with disclosure obligations,” it said.

www.osjonline.com

Buyers have yet to be found for vessels such as the former Harkand Haldane, which was ordered before the downturn

It has several times been suggested that Bibby Line Group was to mount a rescue of Bibby Offshore.* Elsewhere, there has also been speculation about whether New Orient Marine Pte Ltd, a subsidiary of Marine Construction Services Ltd (Luxembourg), has a financing issue with the new iceclass DSV it has on order. The vessel is due to be delivered by Keppel later this year. At the time the contract was signed in 2015 (when the market was cooling significantly), Keppel issued a press release in which Maritime Construction Services director Knut Reinertz said that “there is a demand for modern ice-class multipurpose vessels in the market.” Mr Reinertz said the company believed that the new vessel it was building at Keppel Singmarine “was ideally suited to meet this need.”

Interestingly, the vessel is classed by Bureau Veritas, a class society not well known for classing dive support ships. Another potential problem facing the owner of this vessel is that the chambers and other equipment are not NORSOK compliant.

“The number of people needing a US$200M DSV at the moment is zero,” said Jeremy Punnett, an experienced consultant with an in-depth background in the DSV market. “The largest owner of high-class DSVs is rapidly becoming Yard Inc,” he said, not owners, noting that Vard group has the as yet undelivered Haldane. Then there is Ultra Deep Solutions, which is believed to have secured a contract with Petronas for one of the numerous DSVs it has ordered/ taken over in the last couple of years but has not announced work for the others. OSJ *In mid-October news emerged of a potential bondholder-led restructuring at Bibby Offshore.

Offshore Support Journal | November 2017

34 | OFFSHORE ACCESS/WALK-TO-WORK

Walk-to-work concept provides continuous connection with minimal power consumption A new type of highly capable, energy-efficient walk-to-work gangway has entered service in UK waters as established player Ampelmann unveils a new unit

D

utch company Ztechnologies and its offshoot Zbridge have developed a new offshore access system that has been contracted to provide walk-to-work services on Østensjø Rederi’s construction support vessel Sun Enabler.

The Zbridge system was mobilised in August and is currently operational on Dong Energy’s Race Bank offshore windfarm.

Developed by Ztechnologies together with a specialist manufacturer of hydraulics and control systems, the Zbridge is a Bureau Veritas-certified walk-to-work system and uses a patented system to compensate for the movement of vessel pitch, roll and heave.

The company says the Zbridge provides direct access with an elevator for personnel and cargo to the 18 m plus level. It allows for continuous access for personnel and cargo of up to 500 kg without undocking. It has been proven to work in 3.5 m waves and wind force 8. According to the company’s website, Zbridge was designed to operate in waves of up to 4.5 m Hs.

The Zbridge installed on Østensjø Rederi’s construction support vessel Sun Enabler is being used on Dong Energy’s Race Bank offshore windfarm

Offshore Support Journal | November 2017

“Integrating balanced heave compensation technology into the S-type will offer a huge energy saving of up to 50%”

Ztechnologies has established Zbridge BV as an independent company to further develop the Zbridge concept. Planning for construction of Zbridge systems for sale or rental is now underway, said Zbridge general manager, Baastian Spruit.

Mr Spruit told OSJ that, apart from its ability to transfer personnel and equipment in challenging conditions, the design of the system means that it will use significantly less energy than competing systems.

Ampelmann has teamed up with Seaqualize, a Dutch marine motion technology specialist, to develop a new version of its offshore access system for smaller vessels, such as crewboats.

The Ampelmann S-type motion compensated offshore access system is designed specifically for integration into large, highspeed vessels such as those involved in crew change operations.

It is designed to compensate for the sometimes challenging motion characteristics of these vessels when in dynamic positioning (DP) mode alongside a platform. This is combined with a significant reduction in power requirement and weight of the gangway, which has made it possible to install it on small vessels.

The solution Ampelmann has developed incorporates heave compensation technology from Seaqualize. This patented technology engages the non-linear force of a gas spring to create an easily adjustable counterbalance, enabling balanced heave compensation. Numerical and scale models have demonstrated the energy efficiency of luffing can be increased to more than 90%.

A full-scale prototype of the S-type was funded by a subsidy of the Dutch Ministry of Economic Affairs. While primarily targeting the crew change market, the offshore wind market will also hold opportunity for this new generation of gangway, due to the reduction in power requirements and weight.

Ampelmann’s commercial manager Wiebe Jan Emsbroek said “The crew change market requires a lightweight transfer system that enables safe and cost-effective alternative to other crew change methods, such as helicopters.

“Integrating balanced heave compensation technology into the S-type will offer a huge energy saving of up to 50% compared to our current gangways. It utilises electric actuators opposed to conventional hydraulics, which results in reduced fuel consumption for the vessel and significant overall project savings.”

Production is due to start on the S-type in early 2018. In total, claims Ampelmann, the cost of operators using the system on a crewboat will be around 30% cheaper than helicopters. OSJ

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PROPULSION | 37

SHORE POWER AND NEW ENERGY SOURCES

WILL FURTHER REDUCE OSV’S FUEL CONSUMPTION AND EMISSIONS

KL Sandefjord is the first offshore vessel with the DNV GL class notation Shore Power

TAKING POWER FROM SHORE WHEN IN PORT, OR ‘COLD IRONING’ AS IT IS KNOWN, CAN SIGNIFICANTLY REDUCE AN OFFSHORE VESSEL’S EMISSIONS, AS CAN HYBRID PROPULSION SYSTEMS WITH BATTERIES

A

s highlighted on a number of occasions by OSJ, hybrid battery-based energy storage systems (ESSs) are being installed on a growing number of offshore vessels.

Installing an ESS can reduce fuel consumption and emissions when a vessel is at sea, but there are other ways that a ship’s emissions can be reduced – not least when in port, an example being the offshore vessel KL Sandefjord, owned by K Line Offshore AS, a wholly owned subsidiary of Kawasaki Kisen Kaisha Ltd (‘K’ Line),

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which has become the first offshore vessel with the DNV GL class notation Shore Power.

The Shore Power notation verifies the design and installation of a vessel’s onboard electrical shore connection. When in port, the vessel can shut down its engines and rely on a shore-based electrical supply for its needs at berth.

“We are very pleased to receive this notation for our anchor handler, which reflects our commitment to ensure a cleaner port environment,” said K Line Offshore AS senior vice president, operation and technical, Espen Sørensen.

“With an onboard shore power installation tested and verified

by DNV GL, we have an offshore vessel equipped for the future.

And as a result of the good co-operation we have enjoyed with the Bergen Port Authority and DNV GL during this process, we have also decided to apply for the Shore Power class notation for a sister vessel, KL Saltfjord.”

By tapping into an onshore electrical supply, vessels not only reduce their fuel consumption, they also eliminate associated emissions. This will have a marked improvement on the air quality

Offshore Support Journal | November 2017

38 | PROPULSION

in the port and surrounding environment, reducing particulates, NOx and SOx and reducing CO2 by using more efficient shorebased electricity.

DNV GL says it anticipates that, in combination with the use of renewable energy sources, shore-based electrical supply to a vessel can even result in zero-emission operation for the duration of a vessel’s stay in port. In addition, it can free the engines for maintenance, reduce wear and tear and limit noise.

“There is an increasing awareness of the impact of shipping emissions in ports, and this is driving investments in cold ironing,” said DNV GL’s senior vice president and regional manager North Europe Jon Rysst.

“This is leading to ports requiring and incentivising the use of alternative maritime power. As access expands, alongside the rise of fully electric and hybrid vessels, cold ironing could soon become standard procedure in many ports around the world – with a noticeable positive impact on air quality. With the Shore Power notation, shipowners can easily document a safe interface between shore facilities and the ship, based on IEC standards.”

DNV GL’s shore connection class rules cover safety requirements for a vessel’s onboard electrical shore connection.

The notation ensures a safe and efficient way of undertaking connection and disconnection of shore power. DNV GL also verifies compatibility between ship and port and provides recommendations for a well defined future proof technical solution.

The technical requirements are based on the international standard for high voltage shore connections established by IEC, ISO and IEEE in the IEC/ISO/IEEE publication 80005-1 Utility connections in Port – Part 1: High Voltage Shore Connection (HVSC) Systems. Part 3 of this standard is currently under development and will deal with low voltage shore connections.

DNV GL is actively involved in this work as a member of the IEC working group.

As hybrid propulsion systems with battery energy storage

Juanita is one of a number of vessels that are to be fitted with batteries to meet the terms of a Statoil charter

Offshore Support Journal | November 2017

systems take off in the offshore vessel sector, two classification societies, DNV GL and Bureau Veritas, have issued rules for energy storage.

With the offshore vessel industry emerging from recession, it is tempting to think that technical advances have ground to a halt for the time being. They haven’t. As highlighted recently

by OSJ, recent weeks have seen Statoil fix term charters for several offshore vessels that will be upgraded with hybrid battery propulsion as a condition of the contract.

All of the vessels in question will be equipped with hybrid battery operation with the possibility for shore power connection.

This will allow them to reduce fuel consumption while working in dynamic positioning mode. Four vessels were awarded five-year firm contracts with five further one-year options: Sjoborg (Skansi Offshore), Far Searcher (Solstad Farstad), Skandi Flora and Skandi Mongstad (DOF). Three vessels were awarded three-year firm contracts with three further one-year options: Juanita (Ugland), Havila Charisma and Foresight (Havila Shipping).

Back in 2015 in a special supplement on marine propulsion, OSJ highlighted the fact that batteries in a hybrid arrangement benefits vessels in a number of ways. Hybrid propulsion that combines electric drives, diesel generators and batteries can make offshore vessels more fuel efficient, reducing fuel consumption and CO2 emissions and enhancing the level of redundancy on board. The overall power-generation requirement on a vessel can be reduced by removing a genset, and other gensets can work at their optimum load, reducing wear and tear on them. Batteries also smooth the load by compensating for peaks and troughs, as well as enhancing safety and reliability by providing backup in the event of blackouts.

Now, as the Maritime Battery Forum recently noted, two class societies in the Maritime Battery Forum have rules for energy storage on ships. DNV GL has had energy storage in the rules for some time, and now Bureau Veritas (BV) has released theirs. We shouldn’t forget that Lloyd’s Register has also issued guidance on large battery installations.

“With a growing number of hybrid vessels entering service, Bureau Veritas has recently released a new series of notations and rules addressing the requirements of energy storage systems to support ship operators in reducing emissions,” said BV. The new class notation includes power management, power backup and zero emission standards. It is expected that the notations will encourage wider uptake of energy storage systems.”

As Martial Claudepierre, a business development manager at Bureau Veritas, said “Industry uptake of hybrid and battery technology has been driven by environmental regulation. But owners are also finding performance benefits, and for some operations, significant financial benefits seem likely – particularly as the availability of renewable energy increases.”

OSJ also recently reported on a new service operation vessel for Louis Dreyfus Armateurs with a DC distribution grid from ABB that can incorporate batteries. BV also highlighted the ability of battery-based energy storage systems to provide peak shaving, power smoothing and power for dynamic positioning operations, features especially applicable to OSVs. The case for batteries has also been made in a lifecycle analysis (LCA) of battery technology completed by the Maritime Battery Forum in co-operation with Grenland Energy and ABB, supported by the Norwegian Business Sector’s NOx Fund. The LCA looked at batteries on a ferry and on an OSV. “The results show a great case for maritime batteries,” said the forum. OSJ

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UNMANNED VESSELS | 41

DP DEMO

HINTS AT REMOTE-CONTROLLED POSSIBILITIES THE ADVANTAGES OF REMOTE-CONTROLLED VESSELS AND WHOLLY AUTONOMOUS VESSELS ARE BEING HIGHLIGHTED

BY THE SUPPLY CHAIN, BUT THERE ARE MANY ISSUES TO ADDRESS BEFORE THEY BECOME COMMONPLACE

W

ärtsilä recently tested remote-controlled operation of a platform supply vessel in the North Sea using a satellite link from California.

The tests, which involved driving the vessel through a sequence of manoeuvres using a combination of dynamic positioning (DP) and manual joystick control, were carried out on 21 August in the North Sea in collaboration with GulfMark Offshore, the US-based operator who provided the vessel for the project. Although the test vessel was in the North Sea, it was navigated remotely from a Wärtsilä office in San Diego, California, which was 8,000 km away from the ship.

Wärtsilä developed a remote-control capability for its DP systems early in 2016, but this was the first test carried out on an offshore vessel. The vessel, Highland Chieftain, is an 80 m platform supply vessel fitted with

a Wärtsilä Nacos Platinum package for navigation, automation and DP, as well as a Wärtsilä drives package. Additional software was temporarily added to the DP system to route data over the vessel’s satellite link to the workstation in California.

The tests were carried out using the bandwidth available with a conventional satellite communications system. No land-based technology was used for communication between the vessel and the remote workstation. Retrofitting of the DP software was completed in 30 hours. The test was conducted over a four-hour period, during which the vessel was driven through a series of manoeuvres at high and low speed.

All of the test procedures went as planned.

“Wärtsilä is committed to developing technology that enables a smart marine future. In the age of digitalisation, the future smart marine ecosystem will involve connecting ‘smart’ vessels with ‘smart’

GulfMark’s Highland Chieftain platform supply vessel was remotely controlled from California whilst the vessel was in the North Sea

www.osjonline.com

ports to enable an even more efficient use of resources. It will also reduce the impact on the climate while enhancing safety,” claimed Wärtsilä Marine Solutions president Roger Holm.

Wärtsilä Marine Solutions head of digital Andrea Morgante said “One of the most critical hurdles to overcome along the path to the enablement of intelligent shipping is to develop efficient and reliable remote-control and monitoring capabilities, taking factors such as bandwidth limitations and cyber security into consideration. This test provides a clear indication that we are well on the way to achieving this.” He also noted that the ship was enabled for remote operation in only a few hours.

It is anticipated that Wärtsilä’s development of remote access to ships will also enable virtual service solutions for customers needing tuning or testing of their DP systems. The concept could also be used for other technology demonstrations, such as automated docking, the company believes.

Growing cyber threat needs consideration September 2017 saw the UK Department for Transport publish its Code of Practice for Cyber Security for Ships. It also saw partners at law firm HFW highlight the potential risks involved in remote-controlled and autonomous vessel operation.

As HFW noted, cyber attacks can harm crew, vessels and cargo and cause business disruption, loss of sensitive information and damage to a company’s image. In the offshore oil and gas sector, the risks are, if anything, even greater than other parts of the shipping industry.

IT systems have become increasingly interconnected, as has the shipping industry – a process that is set to accelerate in future as the industry looks to autonomous and semi-autonomous vessels that will require propulsion and machinery system management from shore, creating new opportunities for exploitation.

The motivation for cyber attack can be wide ranging, from low-level cyber vandalism and hacktivism to espionage, terrorism and warfare, but whatever the motivation, the shipping industry must be ready to deal with this broad range of threats – and so should offshore shipowners. OSJ

Offshore Support Journal | November 2017

42 | DECOMMISSIONING

NORTH SEA DECOMMISSIONING: PRIMED FOR A BOOM?

H

istorically, the attitude towards decommissioning offshore oil and gas platforms has been largely negative, with companies viewing mature installations as a burden rather than an opportunity for a new source of revenue. However, as lawyers at White & Case argued recently in an interesting analysis of the market,* the mood has changed.

Following the sharp drop in oil prices in 2014, incumbent owners, keen to repair their balance sheets, started to view their ageing assets as an opportunity to pass on these operations to smaller, more nimble players whose business is better suited to carrying out smaller works and who are likely to enhance overall recoveries.

With an estimated 20 billion barrels of oil remaining in the UK Continental Shelf

THE COMPLEXITIES AND CHALLENGES ASSOCIATED WITH DECOMMISSIONING OFFSHORE OIL AND GAS ASSETS HAVE DAMPENED M&A ACTIVITY IN THE PAST, BUT CHANGE IS COMING

(UKCS) and prices starting to stabilise at a level at which both buyers and sellers are willing to transact, White & Case says deal activity in the UK North Sea is seeing something of a revival.

According to the UK Oil and Gas Authority (OGA), 680–690 million barrels of oil are expected to come on stream from approved projects in 2017 alone. There are also many fully functioning late-life assets that, in the right hands, should continue to be operational for years to come.

The UK Government, which has ultimate responsibility for decommissioning on the UKCS, is actively encouraging new investment. However, investors need to get comfortable with a legislative regime developed by the UK Government that assigns liability to parties deriving financial benefit from petroleum

The first offshore structure arrives at new Veolia and Peterson Dales Voe decommissioning facility

Offshore Support Journal | November 2017

www.osjonline.com

DECOMMISSIONING | 43

assets – whether presently or in the past.

The costs are broadly intended to fall on companies that hold licences for such assets, those who own the facilities and those who operate them and benefit from the exploitation of related petroleum.

White & Case argues that allocation of decommissioning liabilities has always been a difficult issue in mergers and acquisitions (M&A) deals, as sellers have traditionally sought a ‘clean break’ from these liabilities, while buyers have had to factor in the costs of decommissioning security and be comfortable with the fact that they can be liable even once they have sold on the asset. However, they note, the boom times of high oil prices meant that deals were still getting done.

Once the oil price dropped significantly, there was a period where very few deals happened, as concerns about decommissioning were coupled with a difficult pricing environment. “Although US$30 a barrel created potential upside for buyers, sellers were not willing to engage at that level,” they said. “Now that the price appears to be stabilising at around US$50, there is still potential profit for buyers while giving sellers comfort that they are getting meaningful value for their assets.

This stability is prompting interest among producers and the supply chain and service sector, where new business models and innovative deal structures thrive on the opportunity of decommissioning.

There is also a growing appetite among infrastructure investors for pipelines and processing plants, such as CATS, FUKA, SIRGES and SAGE, which have been acquired by infrastructure or private equity investors for their stable long-term revenue streams.

The mix of independents and smaller, private equity-backed companies now active in oil and gas facilities is boosting interest in the North Sea. Larger private equity players may bring capital, but they are keen to ensure that they are backing the right teams.

In short, White & Case argues that “new business models and innovative deal structures thrive on the opportunity of decommissioning”.

The recent increase in North Sea M&A activity has encouraged investors to follow suit, but decommissioning remains a big issue under the UKregulatory regime; previous interest holders can be liable for any default by current or future interest holders if there is a shortfall in security.

www.osjonline.com

Examples of assets changing hands (source: UK OGA/White & Case)

Residual liability is a particular concern for private equity players.

More recently, there has been a focus on facilitating the use of specific decommissioning security arrangements (DSAs), the broad purpose of which is to create, during a field’s operations, a fund sufficient to meet the expected decommissioning liabilities after cessation of production.

The joint-venture partners responsible for oil and gas facilities will typically make periodic contributions towards a fund to ensure that sufficient money is available when the use of those facilities ceases to meet the costs of decommissioning.

The value of the fund is based on the operator’s estimates of decommissioning costs multiplied by a risk factor. The amount

and form of security for the ultimate costs of decommissioning is subject to periodic recalculation. Under traditional deal structures, a DSA should help to ensure that a seller receives a ‘clean break’ from any decommissioning liabilities.

As White & Case also argues, the liability in respect of the eventual costs of decommissioning is an important aspect of any M&A transaction in the sector. New entrants and incumbents are increasingly looking for effective – and indeed novel – ways to apportion decommissioning liability.

Recent transactions – such as BP’s sale of Magnus to EnQuest and Shell’s sale of its North Sea portfolio to Chrysaor – show a number of innovative approaches to dealing with decommissioning liabilities, they note.

A good example of a contract with

Offshore Support Journal | November 2017

44 | DECOMMISSIONING

retained liability is BP’s sale of its stake in the Erskine oil field to Serica Energy.

Among the terms of the agreement was BP’s acquisition of a 5% shareholding in Serica Energy and a partial retention

by BP of the field’s decommissioning liabilities. The agreement holds BP responsible for any decommissioning liabilities up to an agreed maximum, with Serica Energy liable for any excess above that amount.

“Several factors are combining to make late-life assets attractive to new investors,” said the law firm. “These include tax incentives, insurance products, specialist operating companies, deferred dismantling and advanced technology. These factors may lead to significant savings for major oil and gas companies while offering plenty of opportunity to the savvy independent or investor in the meantime.”

As they also noted, decommissioning costs are set to decline as more specialist contractors enter this market with advanced technology and compete for contracts. They highlighted oil field services companies that are already investing in top-of-the-line equipment to cater to these projects, with Heerema Marine Contractors serving as a prime example. Allseas with its single-lift vessel Pioneering Spirit is another. “This new equipment is important not only from a cost perspective but also for project timelines, as there are only a few vessels equipped to handle such heavy-lift work,” said White & Case.

“The UK North Sea will see significant change in the coming years as the decommissioning market develops, not just in terms of technologies and players but also with regard to insight

about costs and risk,” said the law firm.

“Increased collaboration is likely to lead to standardisation of costs and create a knowledge pool that will lower the barrier of entry for new players and make complex projects more manageable. Meanwhile, the insurance market will continue to widen its product base in response to demand, and the advent of fixed-price decommissioning may well set a precedent for contract standardisation. All of these developments point to more favourable conditions and growth opportunities for the market and the further removal of what has historically been one of the main barriers to North Sea M&A.” *The full text of White & Case’s comprehensive analysis of the decommissioning market is at http://bit.ly/2xs8idF

Pace of decommissioning picking up As highlighted elsewhere in this article, the number of decommissioning projects in the North Sea is growing, with the arrival of Repsol Sinopec Resources UK’s Buchan Alpha production unit at Lerwick over the weekend of 12 August.

Decommissioning of the facility is being managed by Veolia and Peterson and it is believed to be the first major North Sea floating production vessel to be disposed of in Scotland. The work will be carried out at the Dales Voe site in Lerwick.

A semi-submersible moored floating production vessel, Buchan Alpha was built in 1973 as a drilling rig and converted for production.

The unit commenced production in 1981 from the Buchan field, which is in blocks 21/1A and 20/5A, and has subsequently also produced the nearby Hannay field. Production ceased as planned on 12 May 2017, with the unit having produced around 148M barrels of oil.

Off-station work on Buchan Alpha has been ongoing over the past several months, with the primary objectives of cleaning and reducing topsides weight in preparation for the tow. It will initially be moored offshore Lerwick in deeper water where the thrusters will be removed to reduce its draught, allowing it to be moved to the quayside within the next few weeks. Veolia will then begin dismantling the steel

structure to maximise the recycling rate with the aim of achieving 98% recycling rates.

Veolia UK & Ireland senior executive vice president Estelle Brachlianoff said: “We are expecting a growth in the decommissioning market and the Buchan Alpha contract is a significant example of the potential expansion of this sector in Scotland. These offshore assets will now be recycled to give them a second, third or even fourth life creating jobs and investment in the local economy.”

Veolia also recently accepted the first offshore structure into the decommissioning facility it operates with Peterson in Great Yarmouth.

The Shell Leman BH topside arrived in the harbour on 11 July 2017.

The 50m high steel jacket structure that supported the topside is due to follow later in July.

The topside, which was previously used as living quarters for personnel working on the Leman BT and Leman BK platforms, will now be recycled.

The purpose-built Great Yarmouth decommissioning facility will manage the deconstruction and recycling of both topsides and jacket structures that comprise around 1,600 tonnes of materials and assets.

Forth Ports links up with AF Decom Forth Ports Limited and AF Offshore Decom UK have signed a heads of agreement to establish a joint venture, AF Dundee, which would form the basis of a decommissioning hub in the city. AF Offshore Decom UK, a subsidiary of AF Gruppen, is one of the North Sea’s best known decommissioning contractors and operates AF VATS Environmental Base in Norway.

The joint venture partners believe that Port of Dundee is well placed to accommodate a significant share of North Sea decommissioning work due to its proximity to many UK North Sea

Offshore Support Journal | November 2017

oil and gas assets, rail and road links, port facilities, its onsite supply chain and the city’s skilled workforce.

As previously reported, earlier this year Port of Dundee appointed a contractor to construct a new quayside at the port specifically designed to handle decommissioning work.

Owned by Forth Ports, the port is spending £10M (US$13M) on the quay extension which, it claims, will be the UK's strongest quayside, specifically designed to equip the port to handle the largescale loads demanded during decommissioning operations. OSJ

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IMCA NEWS | 47

CYBER ATTACKS: NOT SO MUCH A QUESTION OF ‘IF’ BUT ‘WHEN’ CYBER WARFARE HAS AFFECTED WELL KNOWN COMPANIES SUCH AS DELOITTE AND MAERSK, AND THE MESSAGE FROM THE INTERNATIONAL MARINE CONTRACTORS ASSOCIATION IS THAT OFFSHORE COMPANIES COULD BE NEXT

N

ot surprisingly, many of the speakers at the International Marine Contractors Association (IMCA)/Oil Companies International Marine Forum (OCIMF) cyber security seminar during London International Shipping Week warned of the importance of understanding that cyber attacks will happen.

It’s not a case of ‘if ’ but ‘when’, and countermeasures have to be in place to isolate the damage.

Opening the seminar, IMCA CEO Allen Leatt said hacking is big business, and hackers are often able to stay one step ahead by continuously investing in R&D. Touching on various threat aspects, he noted that industry would defend itself in a variety of ways.

Industry experts discussed some of those ways. Aristos Partnership’s director, cyber security Mike Hawthorne gave a presentation entitled ‘The threat posed by unauthorised access to vessel systems’.

Kongsberg’s VP cyber security and data management spoke on ‘Cyber security in the maritime industrial revolution’. RollsRoyce’s product cyber security specialist Jonathan Roberts gave a talk on ‘Cyber security issues of highly connected vessels and autonomous infrastructures’, and TechnipFMC’s portfolio manager for strategic IT systems development, Ian

www.osjonline.com

BELOW: Allen Leatt: “it’s just a question of time before an offshore company or organization is targeted”

Hindmarsh, talked about ‘The contractor’s perspective on remote access and cyber security’. Alex Ferrant, a senior consultant at Context Information Security, gave a brief and very interesting video demonstration of hacking into and taking control of certain common electronic devices including internet-connected cameras and smartphones.

DNV GL’s principal specialist Mate Csorba spoke about ‘Safe and secure remotely connected vessels’, and OCIMF director Andrew Cassels gave a round-up of the presentations.

He noted that, whilst it was important to do everything possible for cyber protection, attacks would get through.

Common themes ran through the presentations, such as the importance of securing technology systems. “Insecure vessel systems or services are inherently unsafe,” said Mr Roberts. Attention to cyber hygiene is vital, explained Mr Hawthorne. This encompasses weak passwords or open administrator rights. Mr Csorba said the safety of vessels and personnel at sea is increasingly dependent on networked systems. He stressed that threats are evolving and becoming a part of our daily business. Mr Hawthorne showed just how easy it is to break into vessel control systems if not properly protected.

The supply chain came in

for particular comment. Mr Hawthorne stressed that supply chain cyber security should have the same priority as ship owner/ operator cyber security, with Ian Hindmarsh explaining that owners need to become more intelligent buyers of operational systems, with security built into the equipment. Data transfer was highlighted. Mr Jensen remarked that increased digitisation across the world’s 80,000 vessels had increased communication paths – and hence risk. The security of rapidly expanding ship-to-shore data transfer was important.

Operational technology and information technology are converging and increasingly connected, so cyber security should be planned in for people, processes and technology.

Mr Hindmarsh observed that remote access was important and there was a good business case for its increasing use, yet the significant risks it posed to members’ operations need to be addressed.Personnel can be the greatest asset and the most significant risk.He advocated training, awareness and full understanding of how to manage change. Mr Roberts stressed that cyber security was everyone’s responsibility. Mr Csorba commented that costs were often perceived as a cyber security barrier but considered that recent events might act as a wake-up call.

Summing up, Mr Hawthorne explained that cyber security was starting to be seen as a serious threat by some CEOs. He expressed the view that industry needs to work together to address the threat and effectively communicate it at board level. Mr Cassels said he sees good contingency planning as imperative, along with educating and informing personnel. Managing and addressing cyber security should, he believes, be treated in the same way with the same level of attention as any other risk. OSJ

Offshore Support Journal | November 2017

48 | SAFETY FLASHES

PSV COLLIDED WITH LEGS OF JACK-UP RIG THE INTERNATIONAL MARINE CONTRACTORS ASSOCIATION (IMCA) REGULARLY PUBLISHES SAFETY FLASHES SUMMARISING SAFETY MATTERS AND INCIDENTS, ALLOWING WIDER DISSEMINATION OF LESSONS LEARNED FROM THEM, RECENT EXAMPLES OF WHICH ARE REPRODUCED HERE PSV COLLIDED WITH LEGS OF JACK-UP RIG

The International Marine Contractors Association has issued a safety flash about an incident in which a platform supply vessel (PSV) collided with a jack-up rig, causing damage to the PSV. The incident occurred after transfer of water to the rig.

The PSV had been ready to disconnect the hose, but the rig informed the ship that there would be a delay. The PSV was to the windward (weather) side of the rig, and the weather was rough, with the wind approximately 22 knots.

A little under an hour after completing transfer of cargo but while the hose was still connected, the PSV starboard engine and thrusters tripped.

As a result, the PSV started to move astern and to starboard. Dynamic positioning control was immediately transferred to manual mode.

The hose was dropped in the water. While pulling away to safety, the PSV made contact with the forward leg of the drilling rig.

What went wrong?

What were the causes?

Procedures were not followed.

The vessel was working on the weather side as the jack-up rig was not geared up to receive water on the lee side.

A mechanical seal of a fuel oil pump was damaged suddenly, indicating material failure.

What lessons were learned?

What actions were taken?

Better management and assessment of risk during simultaneous operations – if required, the vessel should come off and get out of the safety zone.

While material failure of items can be unpredictable, planned maintenance schedules and manufacturers' instructions should be followed for critical equipment.

NEAR MISS AFTER BUNKERING HOSE FELL TO DECK

IMCA also recently issued a safety flash about an incident where a bunkering hose dropped to the deck of a vessel from a height of 11 m.

The vessel had just completed cargo operations with an offshore supply vessel.

The operation had included the transfer onto the vessel of a fuel bunker hose.

In preparation for fuel bunkering operations, the vessel’s rigging crew lifted the hose using pre-installed hose saddles and lifting slings that were attached.

When the hose was approximately 11 m in the air, one end of it dropped to the deck.

Offshore Support Journal | November 2017

Fortunately, no one was harmed.

What went wrong?

What were the causes?

On inspection, it was identified that the lifting sling had been incorrectly installed on the hose saddle. The sling should have been choked around the saddle and fuel hose but instead was found choked around the non-loadbearing urethane sling guide.

Although no one was harmed and no one was standing directly under the load, closed-circuit television footage showed deck crew in at-risk positions during the lifting operation and handling the load for no apparent reason.

What lessons were learned?

What actions were taken?

Safe positioning of lifting crew during crane operations – active supervision at all times.

Thorough inspection – before use – of all pre-rigged lifting equipment coming from external parties.

Reiteration of the importance and the correct use of lift plans.

Stop the job when exposed to unfamiliar equipment.

DROPPED OBJECT HAD POTENTIAL TO CAUSE FATALITY

A rig’s starboard crane was repositioning a tank on the aft

deck of a vessel so it could be secured more effectively prior to the vessel's departure for port. This was done at the request of the master of the vessel involved in the incident.

While manoeuvring the lift, a piece of grating from the top of the tank fell from a height of approximately 6-7 m onto the vessel’s deck.

Two deck personnel were around 15 m away from the dropped object, which weighed 17 kg. The potential consequence of a 17 kg object falling 6 m was a fatality.

The alert should act as a warning to suppliers, vendors, logistics service providers, road transport companies, vessel and installation crews of the dangers of unsecured loose objects on cargo units and the potential for dropped objects.

Loading and discharging cargo in an offshore environment is a very dynamic operation, often with significant vessel and crane hook motion, which may sometimes lead to a cargo unit impacting other containers or structures with associated accelerations that can potentially dislodge loose items.

This incident aptly demonstrates the importance of vessel and installation crews staying well clear of suspended crane lifts at all times where there is a potential for falling objects. OSJ

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Conference | Awards | Exhibition 7-8 February 2018, London

Nominations are now open for the 2018 Annual Offshore Support Journal Awards Support Vessel of the Year Award

Awarded to the owner, designer and builder of an offshore support vessel considered to have set an industry benchmark through innovative design and efficient operation.

Shipowner of the Year Award

Awarded to a company which has shown excellence in the operation of its ship(s) and has demonstrated an exemplary record of achievement in the management of one or more of business development and growth, of safety, quality, efficiency and environmental sustainability.

Innovation of the Year Award

Awarded to an innovative product, system or service which is considered to have made significant impact on the design, build and/ or operational aspects of offshore support vessels.

Subsea Innovation Award Awarded to the owner of an innovative subsea vessel, the developer of innovative subsea equipment, or contractor responsible for an especially innovative subsea project.

Offshore Renewables Award

Awarded to a company, project or product that has made a significant contribution to the development of the offshore renewables market.

Dynamic Positioning Award

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Gold sponsors

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Environmental Award

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Safety Award

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BEST OF THE WEB | 51

BEST OF THE WEB GulfMark exits Chapter 11 proceedings GulfMark Offshore was due to exit bankruptcy by the end of October 2017, after a Chapter 11 process that has taken somewhat longer than originally anticipated.

Speaking exclusively to OSJ, GulfMark’s

president and chief executive officer Quintin Kneen said one aspect of the plan that was critical to the process was confirmation that the company would have adequate liquidity for the next three years,

Shareholder seeks shake-up at MMA Offshore

Pte Ltd giving notice that it intends to move resolutions at the company’s next general meeting that seek to have Howarth and Webber ousted. Halom holds approximately 18.09% of the company’s shares. At the end of August, MMA Offshore reported a significant loss for the year to 30 June 2017 but said it believed the market had bottomed out and it expects it to recover.

The company said its board “is of the strong and collective view that stability and unity of purpose is critical to the ongoing success of the company’s

One of the major shareholders in MMA Offshore says it wants to remove independent non-executive chairman Anthony Howarth and the company’s managing director and CEO, Jeffrey Weber.

MMA Offshore said it has received correspondence from Halom Investments

Wärtsilä acquires dynamic positioning specialist Guidance Marine Ltd Wärtsilä has acquired Guidance Marine Ltd, the privately owned company that specialises in sensor solutions for dynamic positioning and other vessel control systems, such as collision avoidance and remote control operations.

In a statement, Wärtsilä said it is “deeply committed to providing technologies needed to enhance intelligent shipping, whereby digital solutions will greatly improve the efficiency, safety and profit-earning capabilities of its maritime customers”.

The company said the acquisition of Guidance Marine will enhance Wärtsilä’s capabilities in the area of situational awareness and near-field measurement, both essential for more intelligent vessel navigation.

osjonline.com

“which we will easily have.”

GulfMark filed in the same court on the same day, 17 May 2017, as Tidewater, another offshore vessel major in the US. Tidewater exited the Chapter 11 process much more quickly, at the end of July. http://bit.ly/2ysS44e

turnaround and optimisation of its longerterm funding arrangements.”

MMA Offshore subsequently confirmed that Mr Howarth will retire at the conclusion of the company’s 2017 AGM. Non-executive director Andrew Edwards has been designated as chairman-elect.

“MMA is on the pathway to recovery,” said Mr Howarth. “If the acceleration of this board renewal assists with the company’s dealings with Halom, it will have an added benefit for the company.” http://bit.ly/2a707J1

Viking Supply Ships plans rights issue Viking Supply Ships AB said it plans to undertake a rights issue to obtain sufficient liquidity for its subsidiary, Viking Supply Ships A/S. Viking Supply Ships A/S is in breach of its covenants under the loan agreements with its banks. Due to the weak market

conditions, it has registered a breach on its 12-month rolling EBITDA ratio, which ought to be positive, as well as its minimum liquidity covenant, which should be above US$7M at all times. http://bit.ly/2jYXy0b

To view more whitepapers visit the Knowledge Bank at www.osjonline.com

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To upload a whitepaper to the Knowledge Bank, please email Steve Edwards at steve.edwards@rivieramm.com

Editor’s selection:

Editor’s comment:

Why Polar Code operations need a second line of defence

LNG is an attractively priced and sustainable fuel that reduces environmental risks and harmful emissions. Using LNG engines decreases fuel costs while ensuring compliance with increasingly stringent regulations. These market trends and the increasingly stringent regulations require even more advanced technology, driving a need for new, innovative approaches to maintenance.

The choice of fuel is an increasingly important decision for ship operators, affecting both profitability and environmental compliance.

http://bit.ly/2wMdWmA

www.osjonline.com

Offshore Support Journal | November 2017

52 | 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: AUGUST 2017

DEPARTURES: Vessels that have recently left or are due to leave the North Sea spot market

CATEGORY

AVERAGE RATE AUG 2017

AVERAGE RATE AUG 2016

% CHANGE

A.H. Varazze

Black Sea

£13,107

£4,533

189%

Atlantic Kestrel

Black Sea

supply duties PSVs <900m2

Ben Nevis

Black Sea

supply duties PSVs >900m2

£12,431

£5,543

124%

AHTS duties AHTS <22,000 bhp

£26,819

£14,538

84%

AHTS duties AHTS >22,000 bhp

£24,182

£18,899

28%

Far Scotsman

South America

ARRIVALS: Vessels that have recently arrived or are due to arrive on the North Sea spot market Bourbon Topaz

Ex West Africa

NORTH SEA SPOT AVERAGE UTILISATION: AUGUST 2017 MONTH

MED LARGE PSV PSV

NORTH SEA AVERAGE RATES: AUGUST 2017

MED AHTS

LARGE AHTS

Aug 2017

78%

90%

57%

68%

Jul 2017

83%

86%

63%

71%

Jun 2017

69%

77%

49%

61%

May 2017

67%

75%

50%

47%

Apr 2017

67%

86%

54%

52%

Mar 2017

69%

87%

65%

78%

CATEGORY

MINIMUM

MAXIMUM

supply duties PSVs <900m2

£7,000

£22,000

supply duties PSVs >900m2

£6,500

£18,000

AHTS duties AHTS <22,000 bhp

£6,000

£65,000

AHTS duties AHTS >22,000 bhp

£7,000

£74,552

OSVs RECENTLY DELIVERED VESSEL Ievoli Amber

DESIGN

COMMITMENT

MMC 879L CD PSV

Marnavi

TBC

IMT 984 PSV

Swire Pacific Offshore

Africa

GPS 688 SC PSV

Starnav

South America

Pacific Grebe Starnav Circinus

OWNER/MANAGER

Offshore Support Journal | November 2017

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MARKET DATA | 53

DAILY AVAILABILITY: AUGUST 2017 PSV 2017

26

PSV 2016

AHTS 2017

AHTS 2016

24

LEFT: Availability of anchor handlers and PSVs both declined towards the end of August, but rates remain very low BELOW LEFT: Unrest in oil producing regions has seen the oil price increase to around US$58/barrel in mid-October

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 31

OIL PRICE VERSUS RIG UTILISATION $60

100% 90% $54.07

80%

74.8%

77.6%

78.4% $49.73

70%

$46.14 60.5%

60%

$46.19 57.4%

57.7%

76.8%

76.0%

$54.89

$55

$55.49 $51.97

74.4%

75.6%

74.3%

$53.06 74.2%

$50.87 73.2%

$46.44

$51.98 73.5%

73.6%

$46.89

$49.11

57.9%

55.0% 51.6%

52.3%

53.3%

53.0%

51.5%

52.7%

73.6%

$45 59.4%

54.5%

30%

$40 $35

50% 40%

$50

35.1%

34.8%

34.8%

34.8%

33.1%

32.4%

33.0%

31.4%

33.5%

34.3%

34.2%

34.7%

$30

30.3%

Aug16 Sep16 Oct16 Nov16 Dec16 Jan17 Feb17 Mar17 Apr17 May17 Jun17 Jul17 Aug17 average Brent Crude US$/Bbl

Northwest Europe rig utilisation

South America rig utilisation

US Gulf rig utilisation

$25

NORTH SEA AVERAGE ANNUAL SPOT RATES: AUGUST 2017 £25,000

2017

£24,931

2016 £20,000

£22,012 £22,078

£20,830

£15,000

£10,000 £7,679

£5,000

£5,882

£0

www.osjonline.com

PSVs <900m2

£7,305 £5,610

PSVs >900m2

AHTS <22,000 bhp

AHTS >22,000 bhp

Offshore Support Journal | November 2017

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Balanced Head Fairleads

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MARKET DATA | 55

Offshore vessel values

September 2017 The table on page 56 shows the monthly percentage change in value for offshore support vessels, by year of build, from 1 September to 30 September 2017.

Values have remained stable in the anchor-handling tug supply (AHTS)/anchor-handling tug (AHT) and platform supply vessel (PSV) sector this month.

PSVs

Values have remained stable with some softening in older tonnage.

No sales have occurred sales this month.

AHTS

Values have remained stable this month.

Hilde K, Tricia K and Mari K (6,000 bhp, December 2008/

January 2009/March 2009, Batamec) were sold for an undisclosed price to BUE Caspian Ltd. Sea Fox, Sea Vixen and Sea Stoat (6,800 bhp, January/ September/December 2011, ABG Shipyard) sold en bloc at auction for US$24M to the Brazilian Government for search and rescue services and ocean towing work.

Source: VesselsValue.com

TOTAL VALUE OF SECONDHAND SALES IN SEPTEMBER 2017 VS 2016

NUMBER OF SECONDHAND SALES IN SEPTEMBER 2017 VS 2016

S&P US$M

S&P US$M

US$212

US$253

Gas

Gas

US$186 US$18

September 2017 September 2016

US$11

600

800

1,000

Value (US$M)

• Total value of sales is up 29% from September 2017 compared to September 2016.

• Bulker, tanker, gas and OSV sale values are considerably higher for September 2017.

• Container sale prices are down 82% for September 2017 compared to September 2016.

• A large LNG vessel Solaris (155,000 CBM, Jun 2014, Samsung) has been sold for US$186M.

www.osjonline.com

OSV

OSV

US$24

400

19 12

Cont ainer

Cont ainer

US$253

200

63 18

Tanker

Tanker

US$467

0

59

Bulker

Bulker

US$842 US$562

0

18 2 2

September 2017

6

September 2016

15

10

20

30

40

50

60

70

80

No. of Vessels

• Total sales by number count are 20% lower for September 2017 at a total of 97 compared to a total of 117 sales for September 2016.

• Bulker sales are down by only four sales for September 2017 compared to September 2016.

• Container sales are down 50% for September 2017 compared to September 2016, with the majority of tonnage sold having a similar TEU. • Overall, the number of sales this September for all ship types are lower than last September.

Offshore Support Journal | November 2017

56 | MARKET DATA

OFFSHORE VALUES PERCENTAGE CHANGE/1,000s OF DOLLARS: SEPTEMBER 2017 BUILT

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

LARGE PSV

MEDIUM PSV

SMALL PSV

SUPER AHTS

MEDIUM AHTS

SMALL AHTS

5.8%

2.2%

-1.8%

2.8%

3.7%

4.2%

5.2k

3.6k

1.7k

24k

8.2k

5.5k

5.5%

1.9%

-2.0%

2.8%

3.3%

4.0%

5.2k

3.6k

1.7k

24k

8k

5.2k

5.1%

1.5%

-2.3%

2.8%

2.8%

3.3%

5.2k

3.6k

1.7k

24k

8k

5.2k

4.4%

0.5%

-3.0%

2.8%

2.2%

2.8%

5.2k

3.4k

1.7k

24k

8k

5.2k

3.4%

-0.5%

-3.7%

2.8%

1.9%

2.5%

5.1k

3.3k

1.7k

24k

8k

5.2k

1.8%

-1.4%

-4.7%

2.7%

1.7%

2.2%

4.8k

3.3k

1.7k

24k

8k

5.2k

0.9%

-2.3%

-5.8%

2.7%

1.5%

2.0%

4.8k

3.3k

1.6k

24k

8k

5.2k

-0.2%

-3.3%

-6.5%

2.7%

1.6%

2.1%

4.8k

3.3k

1.6k

24k

8k

5.1k

-1.1%

-4.3%

-7.6%

2.6%

1.5%

1.9%

4.8k

3.3k

1.6k

24k

8k

5.1k

-2.1%

-5.2%

-8.7%

2.7%

1.1%

1.4%

4.8k

3.3k

1.6k

24k

8k

5.1k

-2.9%

-6.1%

-9.1%

2.6%

1.5%

1.9%

4.8k

3.3k

1.6k

24k

8k

5.1k

-3.8%

-6.8%

-10.0%

2.7%

2.1%

2.7%

4.8k

3.3k

1.6k

24k

8k

5.1k

-4.4%

-7.4%

-10.4%

2.6%

0.0%

3.7%

4.8k

3.3k

1.6k

24k

8k

5k

-5.1%

-8.0%

-11.4%

2.6%

0.9%

0.0%

4.8k

3.3k

1.6k

24k

8k

5k

-5.6%

-8.3%

-11.0%

2.7%

0.0%

0.0%

4.8k

3.3k

1.6k

24k

8k

5k

-5.9%

-8.9%

-11.1%

2.6%

0.0%

0.0%

4.7k

3.3k

1.6k

24k

8k

5k

Offshore Support Journal | November 2017

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WHERE RELIABILITY AND SAFETY ARE PARAMOUNT.

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GPS – GLONASS – BEIDOU – GALILEO – QZSS

VROON OFFSHORE SERVICES CONNECTING MARKETS

VROON OFFSHORE SERVICES excels in the provision of diverse services and solutions for key offshore-support needs, including platform supply, emergency response and rescue, anchor handling tug supply, walk to work and subsea support.

With a versatile fleet of approximately 100 vessels and 2,400 highly qualified and experienced colleagues, we are committed to providing safe, reliable and cost-effective services.

Vroon Offshore Services is an international operator with a strong geographical presence in North Europe, the Mediterranean, North Africa, the Indian Ocean and Asian regions.

ABERDEEN | DEN HELDER | GENOA | SINGAPORE

Find us on:

WWW.VROONOFFSHORE.COM