Offshore Support Journal April 2016 by rivieramaritimemedia

April 2016 www.osjonline.com

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contents

April 2016

volume 19 issue 3

51 13

Regulars 5 COMMENT 7 BEST OF THE WEB 10 VESSEL NEWS 70 ROV/AUV 73 PEOPLE NEWS 74 IMCA NEWS 77 COMPANY NEWS

Area reports

13 Gulf of Mexico: stacking vessels or putting them into layup is relatively straightforward – but reintroducing them back into service will be costly 17 North Sea: owners in the region continue to be hit by impairments and write-downs 21 Caspian/Mediterranean: restrictions will affect Adriatic operations, but there is positive news for Greek and Turkish offshore oil and gas activity 22 Australasia: recent weeks have seen Australian companies complete acquisitions and secure important long-term deals 25 Brazil: a long-time leader in the OSV sector says it’s time to get out 28 Middle East: Triangle Shipyard has delivered a fast offshore support vessel, and Gulf Drilling International has received its first liftboat from N-KOM 31 Southeast Asia: the market for offshore vessel operators in the region is tough, but some owner/operators are managing to remain profitable 34 West Africa: a huge amount of capital expenditure is expected in Angola and Nigeria

Subsea 36 Fearnley Offshore Supply says the subsea sector is likely to continue to struggle for some time

Dynamic positioning 43 A number of issues facing the dynamic positioning sector were addressed at Riviera Maritime Media’s 2016 European Dynamic Positioning Conference in London in February

Cranes 47 New-generation fibre rope cranes can lower heavier loads to greater depths than cranes using steel wire

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Offshore Support Journal | April 2016

contents Bridge systems 51 Bridge systems are evolving and becoming more intuitive to use

Dive support vessels & equipment 54 JFD believes a business model it has pioneered for submarine rescue is suitable for hyperbaric rescue too 56 Thrust Maritime in Australia is supplying A-frames for recovery of hyperbaric lifeboats to SapuraAcergy 59 Much progress has been made in making diving operations safer – but much remains to be done

Software & IT 62 Pacific Radiance expects Unisea software to improve safety, enhance the quality of its services and reduce the administration burden on seafarers

Contractor profile 65 Boskalis has a growing footprint offshore, but does not expect that sector of the market to be straightforward in the short term

Italian shipbuilding 66 Italian shipbuilders such as Rosetti Marino are adjusting to the new reality and a dearth of orders for OSVs

Legal/finance 69 Cassie Forman at Moore Stephens LLP reflects on new accounting rules

Safety flashes 78 Fatality during loading operations

Market data 81 Orderbook 82 Statistics 84 Orderbook commentary

Next issue Main area reports: Brazil, Southeast Asia, Australasia & China; safety; propulsion: fast crewboats; crewing; deck machinery, incorporating winches; crewboats; daughter craft and rescue boats

Front cover photo: Rolls-Royce has delivered a number of examples of its new bridge concept for vessels operating in the North Sea (photo: Rolls-Royce)

April 2016 volume 19 issue 3 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 James Bentley t: +44 20 8370 7791 e: james.bentley@rivieramm.com Colin Deed t: +44 1239 612384 e: colin.deed@rivieramm.com Head of Sales – Asia & Singapore: 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 Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Editorial Director: Steve Matthews Executive Editor: Paul Gunton Head of Production: Hamish Dickie Subscriptions: Sally Church Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

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Offshore Support Journal | April 2016

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

BOND-FUNDED OWNERS FACING ‘MATURITY WALL’

David Foxwell, Editor

“THE BOND MARKET IS NO LONGER THERE”

s a number of offshore support vessel owners in Norway have found out recently, trying to get agreement from bondholders for the restructuring of a company is a bit like herding cats. Unfortunately, there are a lot of them that need to do so this year and next, and the experience of owners who have tried to do so recently is not good. Looking further ahead, even if owners manage to get banks and secured and unsecured bondholders to agree to a deal now, many are still relying on the market picking up strongly in the next couple of years. Without a pretty spectacular recovery in the market, they could find themselves going through the same process further down the road. The latest company to run into problems with its bondholders is Atlantic Offshore, which has been working on a proposal to revise the capital structure for the group. The company issued a summons to bondholders on 19 February 2016 for a meeting to discuss the plan, having first reached a master agreement with its banks and other secured lenders. Unfortunately, the company’s bondholders wanted none of it: 91.3 per cent of them voted against the recapitalisation proposal. Unfortunately for Atlantic Offshore, the deal required the support of unsecured bondholders. It is already in breach of their respective financing agreements. Like a lot of other Norwegian owners who have been knocked back by their bondholders, Atlantic Offshore is hoping to find a solution. In the first instance, this would take the form of a standstill agreement, enabling the group to continue operations in the short term. The company has already decided to halt payments of interest and amortisation to all of its finance providers. Not long ago, in the aftermath of the 2008 financial crisis, bondholders were seen as a solution to companies’ difficulties raising the money they needed. Now, to quote Tom Elvoy, senior vice president, offshore finance at DVB Bank, speaking at the 2016 Annual Offhore Support Journal Conference, Awards & Exhibition, “the bond market is no longer there”. Norway had experienced

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strong growth in the bond market as a way to finance companies, especially in the offshore oil and gas and shipping sectors. The high yield bond market has become an important source of capital for shipping and offshore projects but has been more or less closed to these same sectors for the last 18 months. Since the financial crisis in 2008, the cost of borrowing money from financial institutions has gone up steeply, with the spread between bank borrowing costs and corporate customers peaking in 2011 following instability in Eurozone financial institutions. Since then, the spread between bank and corporate lending costs has reduced, but banks need a net lending margin in order to remain profitable. US corporations have been funding their businesses in the bond market for a long time, while European companies relied more on the banks, but that has changed. Bonds came to be seen as providing increased cash flow and flexibility and an opportunity to diversify corporate structure. Ideally, it was suggested, tapping both sources of capital was the key to successful funding in the new era. Now, that plunge into the bond market is coming back to haunt companies like Atlantic Offshore and Havila Shipping. The latter’s reorganisation plan is complex and involves individual banks, credit agencies and a trio of bondholder communities. The proposal is based on the principle of equal treatment of creditor positions, with no distinction made between bank facilities and bonds, but at the time of writing, the bondholders had not bought into the deal. So far, the banks have been relatively pragmatic and tried to help find solutions. They are, after all, knowledgeable and experienced in what is known to be a highly cyclical industry, and they have tried to avoid fire sales wherever possible. Many OSV owners have a long relationship with their banks, and negotiations with them have been fruitful. Cutting a deal with bondholders is a very much more complex process: their reactions have proved to be more difficult to predict. OSJ

Offshore Support Journal | April 2016

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BEST OF THE WEB | 7

BEST OF THE WEB

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Maersk Supply Service hit by downturn Maersk Group says its results have been adversely affected by the downturn in the offshore oil and gas industry. Maersk Supply Service has had to lay up nine ships, lay off 300 crew and make cuts in the headcount at its headquarters. The company said that, after a satisfactory result in the first half of the year, Maersk Group was severely impacted by a widening supplydemand gap across most of its businesses, leading to significant oil price and freight rate reductions. The group’s oil-related businesses were affected by the increasing oil supplydemand gap combined with a significant increase in oil supply from US shale and OPEC production. This resulted in a continued

oil price decline in the second half of 2015, leading to significant layoffs and reduction of activities across the global oil industry. “The group reacted to the unexpected challenges by trimming our businesses through accelerating and initiating further cost-reduction initiatives across all our businesses, cancelling sailings and laying up vessels in our shipping businesses, reducing our oil exploration activities as well as reviewing, postponing and cancelling investments across our businesses,” said Maersk. “We further strengthened our focus on delivering value to our customers and ensuring our fair share of activities.” http://tinyurl.com/zunv9qc

Maersk Supply Service says its results have been adversely affected by the downturn

Volstad fails to make bondholder payment Norwegian offshore vessel owner Volstad Shipping failed to make a coupon payment due on 29 February 2016 on its bond ISIN NO 001068006.9, ticker VOLS01 PRO. Torstein Heggstad, the company’s chief financial officer, said Volstad Shipping is in dialogue with a majority of bondholders regarding amended terms and conditions for the bond. “The company expects to conclude these discussions in a short time,” he said. The company is also in a dialogue with Tersan Shipyard regarding a newbuilding, an ST-259 design, with an agreed delivery date at the end of March. Volstad Shipping said it hopes to reach agreement about the vessel shortly. It is presumably seeking to delay delivery. Last month, Volstad Shipping received notice of the termination of a charter party for the vessel Volstad Surveyor. The vessel was chartered by DeepOcean and was due to be under contract until 30 September 2016. http://tinyurl.com/jq9wy7f

Eidesvik is latest OSV owner to enter offshore wind market Eidesvik Offshore in Norway has confirmed that the vessel Acergy Viking has been chartered to Siemens Wind Power for nine months as an accommodation and service vessel in the

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German sector of the North Sea. In a statement, Eidesvik said it had been looking at the offshore wind sector as a “strategic ›››

Offshore Support Journal | April 2016

8 | BEST OF THE WEB

››› business segment.” The vessel will undertake a short mobilisation prior to commencement, which includes installing an offshore gangway system. “I am pleased with our ability to adapt to a new market and that we will enter a new business segment with one of our existing subsea vessels,” Eidesvik’s president and CEO Jan Fredrik Meling said. “Acergy Viking has been in layup for a short period, and we are glad that she will be in operation again.” The vessel will start work for Siemens in August. http://tinyurl.com/j6stl77

Viking Supply Ships breaches covenants Viking Supply Ships, which specialises in operating ice-class offshore vessels, says market conditions have continued to negatively affect its earnings and the financial position of the group. The company says its liquidity position is “strained”, and in the current market, the group is unable to fulfil existing covenant undertakings in its loan agreements. “A solution with the group’s lenders is necessary, and accordingly, in the fourth quarter of 2015, the group initiated a dialogue with its lenders with the aim of securing a long-term stable financing solution by the end of the first quarter of 2016,”

said the company. “The group remains in constructive dialogue with its lenders to find a viable long-term financing solution. As part of this dialogue, Viking Supply Ships’ majority shareholder, Kistefos AS, has informed the banks of its intention to support an equity issue of US$15 million. As the company is in breach with loan to value clauses and contract coverage clauses, all borrowings are classified as short term even though the company has entered into a standstill agreement with the banks.” http://tinyurl.com/jhpxrvm

Forth Ports invests in facilities for decommissioning Forth Ports Ltd has announced it plans to make the largest investment in the history of the Port of Dundee. The port owner is to invest more than £10 million to create a new quayside with heavy-lift capability, coupled with a significant onshore operational area. The company said it hopes doing so will position the Port of Dundee at the forefront of the North Sea oil and gas decommissioning and offshore wind sectors. The privately funded investment will result in the development of the quayside at the east end of the port, connecting to the existing Prince Charles Wharf. The quayside will offer heavy-lift capability over

its entire 200m length with an ultra-heavy-lift pad at one end. This capability, coupled with a deepwater berth and significant land area of around 24 hectares, will facilitate the handling of the largest cargoes, as demanded by these emerging North Sea industry sectors. Forth Ports chief executive Charles Hammond said, “This is an important, privately funded investment for the Port of Dundee, which is ideally placed to service the needs of North Sea oil and gas, decommissioning and Scotland’s offshore wind sector over the coming years.” http://tinyurl.com/h9r4odn

Havila misses payment Troubled offshore vessel owner Havila Shipping, which has reached an agreement with lenders to restructure but has failed to reach agreement with its bondholders, has missed an interest payment it was due to make. Nordic Trustee, which acts as the trustee for Havila’s bondholders, says an interest payment due to bondholders on HAVI08 on 29 February 2016 did not take place and that, as a result, the company is in default. http://tinyurl.com/zfubukh

Consortium launches seabed mining effort On 1 February, a European consortium launched a new Horizon 2020 project: Blue Nodules. The project addresses the challenge of creating a viable and sustainable value chain to retrieve polymetallic nodules from the ocean floor. It will develop and test new highly automated and sustainable technologies for deepsea mining with minimal environmental pressures. The technical side of the

project is dedicated to subsea harvesting equipment in addition to the in situ seafloor and sea surface processing of polymetallic nodules. The operational aspect focuses on sea operations and logistics, including compliance with and development of rules and regulations, and the business case. The independent, environmental part will focus on environmental pressures and on an environmental

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impact assessment. In all areas, Blue Nodules will build on the results of the European FP7 projects MIDAS and Blue Mining and the EcoMining pilot action funded by the JPI Oceans initiative of the European science foundations. Rodney Norman, director at IHC Mining, which is co-ordinating the project, explains that Blue Nodules is significant because it allows the European consortium

to expand technological development beyond the vertical transportation system of Blue Mining to the seafloor mining vehicle and other components of the system. On 9 and 10 February, the co-ordinator of the project, IHC Mining, part of Royal IHC in The Netherlands, will host the Blue Nodules kick-off meeting at its premises in Kinderdijk. OSJ http://tinyurl.com/j78guys

Offshore Support Journal | April 2016

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10 | VESSEL NEWS

Wärtsilä design for deepwater diving support vessel Wärtsilä has signed a contract with Shanghai Bestway Marine Engineering Design Co Ltd to design a new type of deepwater diving support vessel. The ship is to be built for China state-owned Shanghai Salvage Bureau (SSB), one of the largest salvage companies in China. The contract with Wärtsilä was signed in January. The design combines the capabilities of

a diving support vessel, multilay vessel and construction vessel, including the ability to conduct deepwater salvage operations, deepwater pipelaying and construction work and saturation (SAT) diving operations for 24 divers using two diving bells. When built, the ship will be the world’s first SAT diving support vessel with multilay and ultra-deepwater construction capabilities.

Shanghai Salvage Bureau’s new vessel combines the capabilities of a diving support ship, multilay vessel and construction vessel

ABB power and propulsion for newbuilds ABB has been selected to supply power, propulsion and energy storage solutions for two as yet undisclosed vessels due to operate in the offshore oil and gas sector. The specialised vessels will have an advanced propulsion and power generation system and will be fitted with ABB’s new Azipod D, its latest podded electric propulsion system. This is the first order for the D version of the Azipod. The new vessels will each have two 4.2MW Azipod D units, along with a hybrid cooling system using a combination of direct seawater cooling and internal air cooling, which the company says will increase electric motor

performance by up to 45 per cent. “Overall, the Azipod units will have a substantial impact on the ships’ fuel efficiency,” said ABB. “Manoeuvrability and stationkeeping are key for the vessels, and the Azipod propulsor’s 360 degree steerable propeller makes it ideal for their requirements.” The vessels will also have ABB’s Onboard DC Grid, which the company claims will cut fuel consumption by up to 27 per cent compared with a conventional solution. It will allow the ships’ quartet of 3,600kW generators, also supplied by ABB, to operate at variable speed. The vessels will also be equipped with batteries, which will further

Offshore Support Journal | April 2016

optimise use of the power and reduce energy consumption. “The solutions we are providing will make these ships incredibly flexible and efficient to operate,” said Juha Koskela, managing director of ABB’s marine and ports business unit. The ships will be equipped with ABB’s remote diagnostic service, which will connect the vessels to technical support centres where technicians can monitor the performance of the vessel and ensure necessary support. The vessels will be 90m in length with a breadth of 20m and are designed by Arendal, Norwaybased Cefront Technology. They will be built by COSCO.

McDermott names newbuild McDermott International was due to hold a naming ceremony for its new flagship derrick/lay vessel DLV 2000 at Keppel’s Singmarine Shipyard in Singapore on 14 April 2016. DLV 2000 is a class 3 dynamic positioning vessel combining a 2,200-tonne revolving crane with a deepwater S-lay pipelay system configured to install pipelines with diameters ranging from 4.5 to 60 inches in water depths up to 3,000m. The vessel can accommodate up to 400 personnel to facilitate large hook-up and commissioning projects and incorporates a large, 4,000m2 open deck to allow the transportation and assembly of large subsea structures, enabling safe and efficient stand-alone operations in remote areas. It was designed and constructed to accommodate a deepwater, 500-tonne flexlay system that can be installed at a future date in response to specific market needs. The vessel has a transit speed of 13.5 knots.

MES says long-distance tugs are loss making Mitsui Engineering & Shipbuilding Co Ltd (MES) has confirmed it has recognised losses in consolidated and non-consolidated financial results for the third quarter ending 31 December 2015 as a result of construction of four DP2 anchor-handling tug/long distance towing vessels for ›››

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VESSEL NEWS | 11

››› Teekay-owned ALP Maritime. The company says a subsidiary – believed to be Niigata Shipyard, which is building the Ulstein SX157 design ships – recognised losses of ¥3.8 billion (US$33.5 million) on construction of the vessels during the second quarter, primarily because of “repeated design changes and problems”. Additional losses of ¥7.2 billion (US$63.5 million) have been anticipated, including a provision for losses during the third quarter due to unforeseen increases in materials and man hours. “The subsidiary has made significant revisions in the construction process

during the third quarter. MES has increased dispatch of technical engineers and skilled technicians to support as a parent company to complete the construction of this project,” said MES. Based on the above losses, MES has recognised a ¥0.9 billion (US$7.9 million) loss on valuation of shares of subsidiaries and has posted a ¥6.3 billion (US$55.5 million) provision for loss on business of subsidiaries as extraordinary losses. This will not affect the consolidated financial results, as these accounts are set off in the consolidated adjustment.

Fast suppliers delivered to Middle East owner Marine Core & Charter LLC (MC2) in Dubai has taken delivery of newbuild Petra-1, the first of two 45m fast offshore support vessels. Built by UAE-based Triangle Shipyard, the 45m fast offshore support vessel was designed by UK designer Camarc. The hull is designed to optimise the power required to exceed speeds of 30 knots, combined with excellent seakeeping and a wide operational envelope. The design features a spacious deck area of 140m2 and large fuel cargo capacity of 100 tonnes. A full-width main deck cabin maximises space for up to 100 personnel with a 12-person VIP lounge and a high quality interior finish. The full-width superstructure has been carefully designed for roll angle tolerance, and fendering and recessed windows further improve the protection when alongside. The vessel will be utilised for transportation of offshore personnel and cargo and supply of fuel and fresh water.

Magne Viking is first ship to comply with Polar Code

Viking Supply Ships’ anchor handler Magne Viking is the first vessel certified to comply with the Polar Code

After a successful survey, DNV GL and the Danish Maritime Authority have confirmed that the AHTS Magne Viking, owned by Viking Supply Ships, is in compliance with the new IMO Polar Code. “Having followed the development of the Polar Code for some years, it is a great achievement to finally survey the first vessel to comply with the Code,” said Morten Mejlænder-Larsen, who is responsible for Arctic and Polar activities at DNV GL Maritime. Based on long experience from Arctic operations in low

temperatures and ice-covered waters, Viking Supply Ships saw the value in the IMO Polar Code and decided to implement it early on. The process has included updates of vessel and equipment, as well as providing the required documentation. “As this vessel was already winterised and built for operation in cold climates, most of the additional requirements in the Polar Code were already fulfilled before we started the implementation process,” said Andreas Kjøl, project director at Viking Supply Ships.

Maersk cablelayer delivered JFO and Aquatic collaborate on back-deck solutions

On 4 February 2016, DP2-cable installation vessel Maersk Connector was handed over by Damen Shipyards Group to Maersk Supply Service. The vessel is going directly into a longterm charter with subsea services provider DeepOcean. OSJ

James Fisher Offshore (JFO), part of James Fisher and Sons plc, has signed a co-operation agreement with Aquatic Engineering & Construction Ltd. The companies say their combined capabilities and expertise allows them to deliver fully integrated back-deck solutions. The agreement enables JFO and Aquatic, who specialise in offshore equipment and flexlay solutions, to package an integrated service and equipment offering as a single-source supplier for customers and realise significant cost reductions and operational efficiencies. Both companies operate a global network of regional offices, allowing the delivery of a customer-focused, quality service worldwide.

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Gulf of Mexico AREA REPORT | 13

HORNBECK FOCUSES ON PREPARING TO RE-ENTER THE MARKET The offshore vessel market in the Gulf of Mexico is in a dire situation, but clever owners are already focusing on what the market will look like when it finally picks up

peaking at a conference call relating to the company’s most recent set of results, Todd Hornbeck, chairman, president and CEO of Hornbeck Offshore, said his company was reporting a net loss for the fourth quarter of 2015 that reflected a continuation of what he described as “the severe market slow-down that we have experienced along with the rest of the oil service industry on account of the collapse in oil prices that has persisted for about 15 months now. “There’s no way to sugar coat this,” said Mr Hornbeck. “We are in an extremely difficult period in our industry. For our company, the combined effect of depressed drilling activity by oil companies globally and the oversupply of vessels in our principal markets will make 2016, and quite possibly beyond, very trying. “Competition for each job that comes available in the Gulf of Mexico is intense,” Mr Hornbeck said. “Some companies are agreeing to below cash breakeven rates, placing themselves in a precarious position, which can only accelerate their financial difficulties. While that may result in an improved market

dynamic down the road, it makes it very difficult for disciplined companies like us to win jobs on the basis of rates. “In Mexico and Brazil, there are equal, if not worse, forces at play,” Mr Hornbeck said. “Brazil remains gripped in a national corruption crisis in which Petrobras is at the centre of the storm. The country – and Petrobras, in particular – is nearly paralysed. The silver lining is a possible opening for other E&P players in the Brazilian pre-salt arena, which would be a welcome

development. In Mexico, while the country is transforming its energy economy, Pemex is beleaguered by a liquidity crisis that has forced it to rely on trade credit as a major source of working capital. So things are very, very bad.” Mr Hornbeck said he believes that 2016 will be very different than 2015 from the point of view of how the company focuses its efforts, even though market conditions won’t be any better and, quite possibly, worse. “In 2015, we focused our efforts

on shrinking our operating footprint as quickly and as aggressively as possible to mitigate any unnecessary cash burn. We also focused on cost cutting throughout the business. While we may have to stack some more vessels in 2016, we think the lion’s share of stacking is behind us, and we will continue to make every effort to eliminate costs that may become unnecessary and, perhaps more importantly, continue to find ways to permanently lower our cost structure,” Mr Hornbeck said. Mr Hornbeck said that the company has stacked 33 of its new generation offshore support vessels. “Doing so saves us cash that would otherwise be spent on idle vessels waiting for jobs that won’t materialise any time soon,” he said, noting that, in 2016, the company’s efforts would, in contrast, be focused on “preparing for market reentry” whenever that occurs. “Stacking vessels, whilst not desirable, is relatively easy. Bringing vessels out of stack into what will certainly be an altered playing field will be very challenging. There will be significant barriers to re-entry when

Hornbeck Offshore has in excess of 30 vessels laid up or stacked but is already preparing for when they are needed again

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Offshore Support Journal | April 2016

14 | AREA REPORT Gulf of Mexico

the market improves. Chief among them will be cash availability for everyone in the industry. It costs money to bring a vessel back online. While stacking vessels temporarily defers maintenance cost, that obligation, which is regulatory in nature, does not go away and must be met prior to reactivation. “Most vessels will require regulatory inspection and, in some cases, drydocking, the cost of which may be prohibitive for certain players. We believe that companies that have maintained financial flexibility balance sheets and have retained available excess cash will be available to move first and most quickly. So cash availability will be a key to having a first to re-entry advantage.” Another well known vessel operator, GulfMark Offshore, says it is continuing to reduce costs, generate positive cash flow and sell older vessels in order to pay down its revolving credit facility. In a statement about the company’s fourth quarter operating results, GulfMark president and

chief executive Quintin Kneen said, “Our company continues to generate positive cash flow, sell older assets and reduce debt in a tough market. We again generated substantial cash flow during the quarter and used that cash to fully repay our revolving credit facilities. “We continued to high grade our fleet with the sale of our last vessel that was more than 20 years old, and we used the proceeds to repurchase some of our bonds at a substantial discount, which further reduced our debt. Since the beginning of the downturn, we have been proactive in reducing costs to provide us with sufficient liquidity while decreasing our overall debt. With the recent amendments to our revolving credit facilities, we project strong liquidity for the foreseeable future. We will continue to be innovative and forward looking in our cost and liability management as we lead the company through this downturn. “We continue to benefit from managing our capital expenditure requirements

Tidewater free to enforce arbitration award As this issue of OSJ was due to go to press, Tidewater announced that the annulment committee formed by the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) had ruled that subsidiaries of the company are free to pursue the enforcement of a portion of an arbitration award against the Government of Venezuela. The portion of the award in question amounts to US$37.2 million after including interest from the date of the expropriation by Venezuela. Enforcement on the remaining balance of the award (US$28.2 million after including interest from the date of expropriation and reimbursement of legal and other costs) will remain stayed until the conclusion of the annulment proceeding, which the company anticipates will occur this calendar year. Tidewater said it intends to take steps to vigorously enforce and collect the award.

Offshore Support Journal | April 2016

Todd Hornbeck: “well run companies are preparing for the upturn, not bidding below breakeven levels”

and high grading our fleet. We successfully deferred approximately US$22 million of committed capital expenditures into early 2017. We sold three of our older vessels during the year, which decreased the average age of our fleet by about a year. We are optimistic that we can sell as many vessels in 2016 as we did in 2015 by continuing our successful vessel disposition programme. “Our franchise position in the North Sea continues to outperform in this environment. As expected, our overall utilisation fell during the fourth quarter due to normal seasonality. Importantly, our marketed utilisation improved to 97 per cent from 94 per cent in the previous quarter, and our fourth-quarter day rate increased due to occasional tightening in the spot market caused by fewer overall active vessels. In addition, we reactivated two stacked vessels subsequent to year end, which is a sign that the market is finding a bottom

and allocating existing work to higher quality tonnage and companies. “Overall, consolidated revenue was on the high end of our guidance, and our operating costs came in at the low end of our guidance, which demonstrates our continuing ability to reduce operating costs. In 2015, we reduced our full-year direct operating expenses by approximately US$70 million while improving safety metrics, and we should further reduce direct operating expenses by about the same amount in 2016. We continue to accomplish this while maintaining our overall commitment to our customers, safety and reliability.” In the fourth quarter, the company generated cash from operations of US$18.1 million. It reduced direct operating expenses by 28 per cent compared with the previous quarter. It is forecasting an additional decrease in direct operating expenses of approximately 20 per cent from the fourth quarter of 2015 to the first quarter of 2016. The company reduced general and administrative expenses by 7 per cent compared to the previous quarter and amended its revolving credit facilities, providing what it described as “substantial covenant relief” through mid2017 and continuing covenant relief thereafter. GulfMark said it will have fully repaid revolving credit facilities by the end of 2016. Its current liquidity is approximately US$200 million. The company has also deferred capital expenditures of approximately US$22 million until 2017 by postponing the delivery of one of three remaining vessels it has under construction and plans to significantly curtail unprofitable operations in Brazil. OSJ

For more articles visit: www.osjonline.com

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North Sea AREA REPORT | 17

Impairment write-downs are having a devastating effect on Norwegian vessel owners

WRITE-DOWNS AND IMPAIRMENTS MAKE FOR TESTING TIMES FOR NORWEGIAN OSV PLAYERS The latest set of financial results and market outlooks provided by offshore support vessel companies confirm one thing that most already knew – the industry they operate in is going through one of its worst downturns in history

orwegian players have been especially hard hit by the downturn, with impairment write-downs caused by the increasingly challenging market resulting in a major headache for them. In the commentary accompanying

recently released end of year financial results, every offshore support vessel (OSV) company has expressed major concerns for the future. While most still believe that the oil price will gradually move away from the lows seen in 2015 and so far in 2016, just when that recovery

For more articles visit: www.osjonline.com

will show signs of appearing seems to be anyone’s guess. Havila Shipping is a Norway-based vessel owner currently in the midst of a very public financial struggle. Despite having a modern, sophisticated and well utilised fleet of platform supply vessels

(PSVs), anchor-handling tug/ supply (AHTS) vessels and subsea vessels, Fosnavagbased Havila fell into financial difficulty during the first quarter of 2016. After failing to garner sufficient support for plans to restructure the company’s

Offshore Support Journal | April 2016

18 | AREA REPORT North Sea

finances, Havila has essentially been left in the hands of its creditors. At the time of writing, Oslo-Bors-listed Havila has a current share price of NKr1.81 (US$0.21), which is down around 85 per cent from one year earlier. In the month of January alone, when Havila revealed its financial restructuring need, the share price dropped by 40 per cent. Meanwhile, fellow Norwaybased OSV player Rem Offshore saw its share price drop by 50 per cent in January, the same month that industry stalwart Åge Remøy, the CEO and founder of Rem Offshore, announced that he was going to be retiring from the company. Island Offshore, Viking Supply Ships and Atlantic Offshore – fellow players in the Norwegian OSV sector – have also been involved in financial restructuring proposals during the first quarter of 2016. Of the many OSV companies listed on the Norwegian Stock Exchange, nearly all of them recorded a net loss for the final quarter of 2015. A lack of demand for OSVs has seen over 100 ships laid up in the North Sea alone, with hundreds more cold stacked internationally. This drop in demand has had a direct effect on finances; however, it is impairment write-downs, caused by the lowering value of fleets and other assets, that is currently proving to be a major concern for vessel owners. While announcing a fourthquarter loss of NKr1.3 billion (US$155 million), established Norwegian player Solstad Offshore revealed that it had been forced to write down the value of its fleet (PSVs and AHTS vessels are mainly affected) by a huge US$140 million. Operating income reduced by over US$30 million in the final quarter of 2015 compared to one year earlier, with currency losses also proving to be an issue. Giving its views on the

market, Solstad said in a statement, “The spot market in the North Sea for PSVs and AHTSs is still characterised by overcapacity. The expectation from the previous quarter that the demand for this type of vessels would weaken further, with even more vessels in layup, has proven to be correct. The company expects that the market for offshore vessels will remain weak for a longer period.” Siem Offshore – another familiar name in the international OSV market – suffered a similarly depressing fourth quarter. Siem also dropped to a fourth-quarter loss in excess of US$100 million (a US$116 million loss compared to a US$15 million gain for the same period in 2014), with a writedown of vessel values also taking place. Ominously, Siem said that it expects more vessels to be placed into layup during the rest of 2016, grimly commenting, “The outlook for the OSV market is expected to remain challenging for several years.” Island Offshore, subject to a proposed US$80 million financial restructuring at the time of writing, also took a big hit at the end of 2015. Revenue for Island Offshore dropped to US$55 million in the final quarter of 2015, from US$72 million over the same period one year earlier. Overall, a net

Offshore Support Journal | April 2016

loss of NKr453 million (US$52 million) was recorded by Island for the final three months of 2015. It has also been forced to write down the value of its fleet by NKr268 million (US$31 million), while three of its four newbuildings under construction at a Norwegian shipyard will now be financed and owned by an external company. Island commented, “The PSV market is still characterised by continued oversupply despite the increasing number of vessels in layup. We do not see any signs of a restored market balance and expect this market to be poor in the next coming years.” World Wide Supply (WWS) has been forced to write down the value of its assets by NKr735 million (US$85 million), with vessel values being knocked down to an average of US$10 million per vessel from US$16–24 million. It conceded that its assets may have to be sold off in a short timeframe, with WWS now controlled by its bondholders following severe financial issues in late 2015 and early 2016. Viking Supply Ships has also fallen foul of the challenging market, seeing a profit of NKr113 million (US$13 million) in the fourth quarter of 2014 become a loss of NKr98 million (US$11 million) for the corresponding period in 2015.

Viking Supply Ships is discussing a new long-term financing solution and also had to write down the value of its fleet

In releasing its quarterly results, Viking Supply Ships stated that it was already discussing a new long-term financing solution, which it hoped would be sorted out by the end of the first quarter. It also wrote down the value of its PSV fleet by NKr80 million (US$9 million) at the end of 2015. In recording a net loss of NKr161 million (US$18 million) for the final quarter of 2015, Rem Offshore wrote down the value of its fleet by NKr143.5 million (US$16.6 million) at the year end. Revealing its thoughts on the challenging market, the company said in a statement, “The market for offshore support vessels is challenging worldwide, with considerable excess capacity in all segments. Numerous vessels were laid up in all segments at the end of 2015, and there was fierce competition for contracts. The company expects low utilisation, weak rates and limited refinancing opportunities in the offshore market in the coming years. This will necessitate close and constructive collaboration with the company’s key stakeholders.” It is fair to say, therefore, that a rather bleak picture is currently being painted. Norwegian OSV companies are not the only ones struggling; the situation is replicated by vessel owners throughout the world. However, the low overall utilisation (62 per cent according to IHS) of vessels in the North Sea at present along with the ever-growing number of vessels laid up in the region (120) show that the market here is as challenging as any. At the time of writing, only 45 per cent of the 380 or so PSVs and AHTS vessels in the North Sea are working on a term contract (lasting at least 30 days firm), and that percentage appears to be slipping all of the time. Little can be done in the current situation, however, other than attempt to cut costs and minimise losses while all the time hoping that the expected oil price recovery comes sooner rather than later. OSJ

For more articles visit: www.osjonline.com

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Caspian/Mediterranean AREA REPORT | 21

Italy reintroduces offshore activity restrictions Restrictions will affect Adriatic operations, but there is positive news for Greek and Turkish offshore oil and gas activity by Martyn Wingrove

RIGHT: Energean Force supports construction and drilling operations on the Prinos field offshore Greece

taly has reintroduced restrictions on offshore oil and gas activity that will affect investment in the country. The Italian Parliament has approved restrictions on exploration and production activity within 12 nautical miles of the coast. This is similar to restrictions that were originally introduced in 2010 and repealed in 2012. There is concern from energy companies that this would affect their operations close to the Italian coast in the Adriatic Sea. Rockhopper Exploration has cancelled its plans to develop the Ombrina Mare oil field, which is in the Adriatic Sea, within the 12 mile limit because the Italian Ministry of Economic Development said it would not grant a production concession. It has scrapped plans to drill wells using a jack-up rig and produce oil through a floating production and storage system. Rockhopper said it would consider seeking compensation from the Italian authorities under international treaties for the protection of foreign investments. This shows that government intervention will have an impact on demand for offshore vessels in Italy in the short- and long-term. It is a different approach in Greece, which has only one offshore production area â&#x20AC;&#x201C; in the Gulf of Kavala. Here, Energean Oil & Gas has been redeveloping the Prinos oil field and adjacent prospects. It has been using offshore construction vessel Energean Force (formerly Glen Esk) to install new platforms and support drilling operations. It acquired the vessel, which is also a self-erecting drilling tender rig, from KCA Deutag in August 2014. The vessel has two cranes, with capacities of 100 tonnes and 20 tonnes, accommodation for 116 people and an eight-anchor mooring spread. Energean added new platform facilities, drilled new wells and started a US$200 million reinvestment programme in Prinos in 2015. It brought the first of its new wells onstream in December

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2015. It expects to continue investing in the field this year and 2017. The investment plan consists of workovers to existing wells and drilling of seven new producing wells at Prinos, as well as extended reach drilling into the Prinos North field from the new Lamda platform. Energean also intends to lay new subsea pipelines and drill wells into the Epsilon area, as well as converting the depleted South Kavala field for gas storage. It also plans to conduct more seismic surveys and drill new exploration wells in the area around these fields. Turkey is keen to explore and develop hydrocarbon reserves in the Black Sea and in the Aegean and Mediterranean. To achieve this, state-run Turkish Petroleum has given vessel owner Polarcus a two-year extension to a support services agreement for surveys. Through the extension, Polarcus will continue to support seismic operations onboard seismic vessel Barbaros Hayreddin Pasa. This includes maritime management and crewing as well as managing the seismic data acquisition process. The two companies have worked together for three years, since Turkish Petroleum acquired the 84m vessel, formerly named Polarcus Samur, from Polarcus. In the Caspian, support contractors have gained contracts from the consortia, which are led by BP, that operate the Azeri-ChiragDeepwater Guneshli (ACG) and Shah Deniz projects in Azerbaijan. Service company Socar Cape gained a US$90 million two-year contract from BP to provide maintenance services on the offshore platforms of ACG and Shah Deniz as well as the onshore facilities. In another deal, engineering information management company Datum360 gained a contract to deploy software on the ACG platforms that BP can use to optimise maintenance. The software enables BP to adopt a centralised approach to collecting data and conduct operational analysis. OSJ

Offshore Support Journal | April 2016

22 | AREA REPORT Australasia

Busy time for Aussie companies despite downturn

hagwan Marine recently announced that it had completed a transaction to acquire Perth, Australia-based Delta Subsea. Delta Subsea is an experienced subsea engineering consultancy. Delta’s managing director, David Husband, will join Bhagwan Marine as the company’s subsea engineering manager, bringing with him a wealth of knowledge from his 30 years of experience. The company’s subsea division operates out of Bhagwan Marine’s Belmont facility in Perth, Western Australia. “I am excited to embark on this new path with Bhagwan Marine,” said Mr Husband. “I have worked with many of the guys at Bhagwan over a number of years and truly believe that, with their experienced Subsea personnel and assets coupled with the largest fleet of vessels in the country, they have the right formula to provide clients with the most streamlined high quality service.” “The Delta acquisition greatly strengthens Bhagwan Marine’s subsea engineering capability and effectively enhances our capability as an emerging leader in shallowwater subsea IMR services in Australia. I have worked with Dave and his team for many years, and I am very excited about the future with what his team brings to the table,” said the company’s business manager, subsea, Paul Guilfoyle.

Recent weeks have seen Australian companies and Australian subsidiaries of well known international entities complete acquisitions and secure important long-term deals

The Australian marine services provider also recently signed a multi-year, multivessel contract to provide marine support to American company Foss Teras Marine on an oil and gas project in Russia’s Far East. Work was due to commence in the second quarter of 2016, which is good timing for the company, which has a number of vessels coming off charter in the North West Shelf region of Western Australia. “The recent downturn in the Australian offshore oil and gas industry has created significant opportunities and motivation for companies like us who are willing to explore other markets and regions,” said Bhagwan Marine’s COO Darren Kolln. “This contract is an important part of Bhagwan’s strategic expansion plans internationally.” Otto Marine Ltd says its wholly owned

DLV 2000’s first project will be in Australian waters

Offshore Support Journal | April 2016

subsidiary GO Offshore Pty Ltd has been awarded a charter contract worth up to A$94.8 million (US$69.6 million). The vessel under the charter will be a 100-tonne bollard pull offshore vessel that will provide FPSO infield support in a gas field offshore Australia. The contract is for five years from May 2017 with the option of an additional five-year extension. The contract value for the confirmed period is A$47.4 million (US$34.8 million), and with the option, the total contract value is A$94.8 million (US$69.6 million). McDermott International has confirmed that its new flagship derrick/lay vessel, DLV 2000, is to start work as part of the current McDermott work schedule for the INPEX Ichthys LNG project offshore Western Australia. DLV 2000 is expected to join the project as part of McDermott’s 2016 current project schedule by installing large subsea spools, laying infield umbilicals and lifting several subsea distribution units that will provide the hydraulic, chemical and electrical distribution from the umbilicals to the subsea drill centres. Fugro has been awarded a contract by BHP Billiton Petroleum Pty Ltd for the Pyrenees Phase 3 Installation Project. The Pyrenees development is offshore Western Australia in approximately 200m of water, 45km northwest of Exmouth, and comprises six separate fields: Stickle, Crosby, Tanglehead, Moondyne, Wild Bull and Ravensworth. The project includes the tie back of the Stickle 9 well to the existing Tanglehead manifold. Fugro’s scope of work includes suspension of existing infrastructure and installation and pre-commissioning of the new flexibles and flying leads. Remotely operated vehicle (ROV) intervention and well commissioning support will be provided, and the scope also includes the supply and fabrication of crossings, stabilisation and installation aids, along with mobilisation and transportation of equipment to the field. All offshore activities will take place from Fugro’s multi-role construction vessel Southern Ocean. Fugro has also been awarded a combined geophysical and geotechnical project by Hess Exploration Australia Pty Ltd (Hess) to assist in Hess’s activities in the Northern Carnarvon Basin offshore Northwest Australia. OSJ

For more articles visit: www.osjonline.com

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Brazil AREA REPORT | 25

Industry leader looks outside OSV market for next venture After many years in the offshore vessel business, one of its longest-serving and best known figures is leaving it to invest in other opportunities by Rob Ward

sad indictment of the sorry state of the Brazilian offshore support vessel (OSV) market is that one of the longest-established stalwarts of the industry, who should this year be celebrating 40 years in the sector, will instead be taking time out from it because he is so disillusioned and is looking now to set up a new business in the dry bulk market in the Amazon region. Dalton Schmitt was one of the pioneers of the Brazilian OSV sector, and he was a founding member of ABEAM, the Brazilian association for OSV operators, back in 1977. “Yes, I had formed my own OSV company, Seamar, back in 1976, and I was one of the first to sign up as a member of ABEAM,” Mr Schmitt told OSJ.

He has worked for a number of OSV operators since then. “There were only six members back then, and I was one of the first, and now ABEAM has 42 members and continues to grow despite the sharp reduction in vessels operating.” Since starting the ball rolling with Seamar, Mr Schmitt – one of the most charismatic and energetic characters in the Brazilian offshore sector – has worked for Montreal Engenharia, Astromaritima Navegação, Apex Marine, Astro Internacional, Asgaard Navegação and Farol Apoio Maritima Ltda. It was while he was working with Astromaritima, which he joined in 1997, and its sister company Astro Internacional that Mr Schmitt – who has been

on the board of ABEAM for eight years and was vice president for shipowners’ association Syndarma for many of the past 30 years – really made a big impression in the OSV market. When OSJ caught up with him at the end of last year, he was in his Ipanema office, working as a consultant with Farol, which had been set up – back in 2011 – specifically to act as an Empresa Brasileira de Navegação (EBN, or National Brazilian Company) for Otto Candies vessels. At the beginning of last year, Otto Candies was operating eight OSVs in Brazil – four PSV 1500s, two AHTS 10000s and two diving support vessels – but now that has diminished to five, a sign of the depressed state of the Brazilian market today. Soon

after they formed in 2012, Farol was jointly operating (with Otto Candies) 10 OSVs. Mr Schmitt confided that he was “somewhat disillusioned” with the market at that point but that he still fancied one more challenge. Unfortunately for the OSV industry, it will be in the dry bulk sector up in Manaus and the Amazonas region where he is currently setting up a new navigation company – with barges and pushers to begin with – along with a local business partner. The veteran shipping executive said, “I am now working with a business partner to buy a company in the Amazonas region to transport dry bulk cargoes – mostly grains – for the export market, using various barge

Astro Barracuda is a PSV 3000 built in 2000 at the Atlantic Shipyard in the US and imported to Brazil by Dalton Schmitt when he was commercial manager at Astromaritima

For more articles visit: www.osjonline.com

Offshore Support Journal | April 2016

26 | AREA REPORT Brazil

systems. Part of the reason for diversifying is that I think it will take some time for the offshore business in Brazil to come back into profit. I think it will be late 2017 before things improve, although we have recently had some good news from Petrobras regarding minimum stakes in new oil exploration.” Mr Schmitt was referring to the fact that new legislation means it will not always be mandatory for Petrobras to have a 30 per cent minimum stake in all oil fields. Petrobras will have the priority but will not be guaranteed to have the controlling stake in particular oil fields. According to Mr Schmitt, the Senate has approved the new law, and now it goes to Congress for approval. He added that the progress of the bill has already caused shares in Petrobras and in the Bovespa

in general to rise. However, he admits that a significant increase in the oil price is necessary for even a partial recovery of the OSV market. “The economic situation in Brazil is bad now, and in many ways, it is worse than in the period from 1980 to 1988 when a number of banks went broke and there was a lot of consolidation of companies,” Mr Schmitt told OSJ. “Petrobras has been extremely difficult to work with in recent years, and I didn’t realise at first how serious the fall in oil prices was going to be. About five to eight years ago, the offshore business in Brazil was an enjoyable and sometimes lucrative business to be in. You could make money, and you could talk to Petrobras back then. You could discuss issues with them. When we were involved in bids, we

Dalton Schmitt worked at Seamar, Montreal Engenharia, Astromaritima Navegação, Apex Marine, Astro Internacional, Asgaard Navegação and Farol Apoio Maritima Ltda

were always very open with each other. Various bidders would open envelopes on all the technical qualifications, and we would all look at them with each other and check the specs. There was a constructive atmosphere in the business back then. On the Lava Jato (Car Wash) scandal, Mr Schmitt is perplexed. “I can honestly say that, since I started in 1976, I have never been approached by anyone in Petrobras. I had no idea all that monkey business was going on.” Worse than the corruption and even more costly were the political decisions to build new refineries, like the one in the northeast, which, says Mr Schmitt, was built purely to win votes in the region for the PT Workers’ Party and to keep Hugo Chavez, whose Venezuelan PDVSA oil company was supposed to be a partner. It

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Brazil AREA REPORT | 27

ended up costing Petrobras and Brazil billions of dollars and still hasn’t materialised. However, the history of the OSV sector in Brazil runs parallel to the biography and career of Dalton Schmitt. And what a career he has had. The peak of his career in the OSV sector was probably during his time with Astromaritima Navegação, which for a time was operating more foreignflagged OSVs than any other company in Brazil. He started there as a commercial manager, then took on roles of CEO and operations manager and sometimes held all three posts at the same time. Mr Schmitt, who is a spritely 71 and a jetski enthusiast, recalls those halcyon days, which now seem a distant memory to many in the Brazilian offshore industry. “We were so busy for a time that Astromaritima Navegação could not cope with the workload as we grew the business, so I set up Astro Internacional and spent most of my time developing that,” he explained. He also explained that, at one point in the early 2000s, Astro Internacional was operating more foreignflagged vessels than any other company in Brazil, and even as late as early 2012, it was operating 29 foreign-flagged vessels. Soon after that, Petrobras started to curtail some of its expansion plans in the offshore sector, the Lava Jato corruption scandals kicked in and this translated into fewer OSV charters. “There was a period when the OSV business was a very good business, and we couldn’t go wrong,” he reminisced, “but then it all changed when political interference started to impinge significantly on the day-to-day activities of Petrobras.” On a slightly brighter note, he told OSJ that “things will eventually turn again for the better, but I think it will be late 2017 before things improve that much”.

Leaving a legacy One legacy that Dalton Schmitt has left in the OSV sector is a number of successful young executives now working at senior levels in Brazil. At one time or other during his period at Astomaritima and Astro Internacional (1978 to 2012), the following people worked with him: Dante Carvalho, who is now CEO at

Deep Sea Supply in Brazil; Daniel Lino, at Brazil Supply; Gustavo Schneider, who was managing Seabrokers and now has his own broking company in Rio de Janeiro; Elias Habbi at DOF; Renato Cabral, now a director at Astromaritima; Mateus Vilela, the manager of Wilson, Sons Guaruja Shipyard; Hensel Goncalves, CEO at Farol, and several others. OSJ

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28 | AREA REPORT Middle East

SHIPYARDS BUCK TREND WITH NEW DELIVERIES Triangle Shipyard has delivered a fast offshore support vessel to Marine Core & Charter, and Qatar’s Gulf Drilling International has received its first liftboat from the N-KOM shipyard by Martyn Wingrove

LEFT: Petra I was designed by UK-based Camarc for fast crew transits in the Middle East

riangle Shipyard has delivered the first of a new class of 45m, fast offshore support vessels to Dubai-based Marine Core & Charter. Petra-1 is the first of two 160 dwt aluminium vessels that the shipyard was contracted to build in its facility in Dubai Maritime City. The sister vessels were designed by UK-based Camarc to provide rapid crewing services to offshore platforms and rigs in the Middle East. The hull was optimised and tank tested in the UK to improve its fuel efficiency at high speeds – the vessels have a maximum speed of more than 30 knots and an efficient cruise speed of 28.5 knots in a light payload condition. Petra-1 has capacity to transport up to 100 people and 140m2 deck area for cargo. Its hull was designed with roll angle tolerance and crew comfort in mind. The Bureau Veritas-classed vessel can carry 100,000 litres of cargo fuel and 24,000 litres of water. Petra-1 features a triple screw installation of three Cat C32 diesel engines, each rated at 1,450hp, and three Cat C4.4 generators. It also has twin bow thrusters and twin anchors for improved redundancy purposes. On the bridge, there is an integrated navigation system with large displays for improved control and monitoring of ship systems. Nakilat-Keppel Offshore & Marine (N-KOM) delivered its first liftboat to Qatari rig operator Gulf Drilling International (GDI) in February. The Erhama Bin Jaber Al Jalahma shipyard was constructed and operated by a joint venture between Qatar’s Nakilat and Keppel Offshore & Marine. It delivered Al Safliya to GDI in Ras Laffan as part of a long-term strategic partnership N-KOM has with the vessel and rig owner. Al Safliya is a self-propelled and elevating vessel that was

Offshore Support Journal | April 2016

designed to operate in water depths up to 65m in the Middle East. The liftboat is equipped with four tubular legs, a 200-tonne leg-encircling crane and a 50-tonne pedestal crane. It also has open deck space of around 800m2, a helideck and accommodation capacity for 130 people. GDI expects the vessel will conduct a wide range of offshore oil field services in the region, including well intervention, as well as commissioning, maintenance and decommissioning of offshore platforms. It has a gangway bridge that can be used for emergency and other safety purposes. GDI chief executive and managing director Mubarak Al Hajri said Al Safliya would commence a contract with Dolphin Energy to provide maintenance support services in Qatar. Dolphin operates offshore gas production facilities on the North field and pipelines to supply gas to the UAE and Oman. GDI expects to expand its liftboat services in the future. “We are determined to continue this success in order to support the expansion of our business,” said Mr Al Hajri. “We have been seeking to develop the liftboat segment of the business for several years, and it is exciting to finally achieve this breakthrough.” This comes at a time when GDI is facing a reduction in demand for its drilling rig business. UAE-based liftboat and rig builder Lamprell has signed a memorandum of understanding with Saudi Aramco, state shipping company Bahri and South Korea’s Hyundai Heavy Industries to construct and operate a new vessel and rig repair facility in Saudi Arabia. Lamprell expects negotiations and due diligence on a formal deal could take at least three months. The facility would add competition to the facilities that the Zamil Group already operates in the country. OSJ

For more articles visit: www.osjonline.com

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Southeast Asia AREA REPORT| 31

Some owners loss making, but others turn a profit The market for offshore vessel operators based in Southeast Asia is tough, but some owner/operators are managing to remain profitable

ffshore vessel operator Pacific Radiance Ltd remained profitable for the full year ended 31 December 2015, despite depressed market conditions in the offshore oil and gas sector. The group reported a net attributable profit of US$3.8 million, even though it incurred a net loss of US$2.6 million for the fourth quarter of 2015. Group revenue for FY15 fell by 29 per cent to US$121.8 million as a result of lower fleet utilisation for both offshore support services and subsea businesses, particularly in the fourth quarter, where they hit a seasonal low. During the year, swiftly implemented cost-reduction measures cut general and administrative expenses by 21 per cent, partly alleviating the impact of lower revenue and margins. Mr Pang Yoke Min, executive chairman of Pacific Radiance, said, “The downturn in the oil and gas sector has affected every player, including Pacific Radiance. We expect market conditions to remain difficult and volatile and put pressure on our results in the next 12 months. The group is strategically poised to ride through the current downturn as we continue with our prudent cost and capital management as well as targeted marketing efforts to grow our presence in existing and emerging markets.” Pacific Radiance says it has tried to carve out a presence in strategic market segments and oil-producing regions by entering

into key local partnerships in cabotage-protected markets such as Indonesia and Malaysia. “Having better control over our supply chain, we are always improving our processes and resource management systems in order to further enhance our competitiveness and maximise cost-effectiveness. As part of continued efforts to upgrade our offerings and provide valueadded solutions, we will launch our shiprepair yard in mid-2016,” said the company, noting that this will provide it with greater control over fleet maintenance. The company said that rejuvenation of its fleet will also enable it to stay relevant to the market and expand its services in tandem with clients’ needs. Singapore-based offshore vessel operator Swiber Holdings says it believes the shallow-water market in which it operates is less badly affected by the slowdown in the market than the deepwater sector. The company has also managed to grow its business in some parts of the world, including Latin America and South Asia. Swiber chief executive officer and president Francis Wong said, “The oil and gas industry remains very cautious due to the weak oil prices, with major oil companies aggressively cutting costs and delaying their projects. However, we believe the impact on shallow-water activities will be lower. The Swiber team is working very hard as we face challenging market conditions to

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Pang Yoke Min: “we expect market conditions to remain difficult and volatile and put pressure on our results in the next 12 months”

Gerald Seow: “we will continue to take proactive action to streamline operations”

continue to expand our pipeline of projects and fill up our orderbook. We believe that our track record of executing projects in a timely, cost-efficient manner will put us in good stead.” Swiber’s orderbook stood at US$1.35 billion as of 29 February 2016. The group continues to make headway in strengthening its capabilities in higher value engineering, procurement, installation and commissioning (EPIC) services and improving its operational performance while maximising cost efficiencies. The group has also put in place stringent controls on costs to protect its bottom line. Swiber Holdings Ltd has reported a net loss of US$18.7 million for the financial year ended 31 December 2015 against a profit of US$31.2 million previously, mainly due to impairment charges and absence of one-time gains. The core business of the group continued to see growth particularly in Latin America and South Asia despite depressed market conditions. Group revenue rose 14.7 per cent to US$833 million in FY15 on higher contributions recognised from Latin America and new projects in South Asia. Latin America contributed 53.6 per cent or US$446.8 million to group revenue, South Asia US$244.1 million, while Southeast Asia and other markets added US$117.1 million and US$24.9 million, respectively. Other operating income fell

Offshore Support Journal | April 2016

32 | AREA REPORT Southeast Asia

91.4 per cent to US$8.9 million due mainly to the presence of a one-time gain in FY14 on disposal of a group of subsidiaries and associates amounting to US$101.8 million as well as lower foreign exchange gains of US$7.9 million and the absence of write-back receivables in FY15. Impairment loss of trade receivables amounting to US$8.6 million raised other operating expenses by 100.9 per cent from US$5.9 million to US$11.9 million. Share of profit from associates and joint ventures dropped 32.8 per cent to US$27.8 million as a result of lower contributions from certain associates. Impairment loss of investment in an associate of US$24.6 million has further hurt the bottom line considerably. The group’s gross profit stands at US$99.3 million. Gross profit margin improved to 11.9 per cent in FY15 from 2.4

per cent in FY14 due mainly to stringent control over operating costs. Administrative expenses fell 48 per cent to US$28.8 million, reflecting Swiber’s cost optimisation programme. Finance expenses decreased 7.9 per cent to US$60.4 million. Offshore marine services provider PACC Offshore Services Holdings (POSH) says its offshore accommodation business unit is making a significant contribution to its results. The company, which recently announced operating results for the financial year ended 31 December 2015, says it is also looking at new areas in which to operate. Captain Gerald Seow, chief executive officer at POSH, said, “We are pleased to report operating profit of US$13.6 million in FY2015 before impairments, write-offs and gains from disposals amidst the

challenging business conditions in the year. Market conditions for 2016 are expected to remain difficult, and we will continue to take proactive action to streamline operations while further sharpening our business strategy to capture new opportunities and markets, particularly in the Middle East. Our prudent capital management reinforces our ability to deal with uncertainties in the market and seize opportunities that may arise.” For the three months ended 31 December 2015, the group reported a year-on-year revenue increase of 29 per cent to US$71.8 million primarily due to strong growth in its accommodation business. The strong performance in offshore accommodation came from a charter for the 750-person unit POSH Xanadu, a semisubmersible accommodation vessel, and a charter for three 238-person light construction

vessels – POSH Endurance, POSH Enterprise and POSH Endeavour. The company’s gross profit grew 166 per cent year on year to US$17.2 million in the quarter. Share of joint ventures results saw a loss of US$12.4 million compared to a loss of US$5 million in the previous corresponding period. This was mainly due to lower charter rates and utilisation in some of the group’s joint ventures and impairments of joint venture assets. The group reduced general and administrative expenses year on year to US$6.1 million as a result of its proactive cost-management initiatives. It remained in a strong financial position as at the end of FY15. It generated net operating cash flow of US$69.6 million with net gearing at 0.51 times. Subsequent to the financial year end, the group has also secured financing facilities of US$1 billion, part of

Southeast Asia AREA REPORT | 33

which will be used to refinance existing loans. Offshore support vessel revenue was marginally lower at US$33.9 million (Q4 FY14: US$34.4 million). Gross profit grew by 73 per cent year on year to US$4.6 million mainly due to lower operating costs following effective cost-reduction initiatives. The offshore accommodation division recorded a nearly three-fold increase in revenue to US$26.8 million (Q4 FY14: US$6.8 million) on the back of contribution from POSH Xanadu and the three vessels mentioned above. As this issue of OSJ was about to go to press, POSH confirmed that it had secured long-term charters for five vessels in the Middle East. The contracts have a combined contract value of approximately US$85 million. The first contract is for the group to supply four new utility vessels to the specific requirements of a Saudi Arabian national oil and gas major, primarily to support its offshore maintenance work in the Persian Gulf. The four newbuild vessels will be chartered for a firm period of five years, with options to extend. The charters will commence progressively from the first quarter of 2017, with the first three vessels to be delivered over the first half of 2017 and the fourth vessel to be delivered in June the same year. The second contract is for one of the group’s anchor handlers for a Qatari client. Under the contract, the vessel will be chartered for a firm period of five years from the first quarter of 2016. Captain Seow said the contracts “validate our strategy to diversify into key growth markets and business segments amid ongoing challenges in the industry”. As previously highlighted in OSJ, another well known offshore company based in Singapore, Ezion Holdings, has been expanding into new regions and new markets, including offshore wind. In February, it announced that

it had formalised a second agreement with an as yet unnamed Chinese state-owned enterprise for the deployment of service rigs to support the offshore windfarm market. The Chinese company is a stateowned enterprise operating under the direct administration of the assets supervision and

administration commission of the state council. The Chinese company will be responsible for the integration of domestic requirements for the operations of service rigs in the offshore windfarm market in China. Ezion will be responsible for the technical, operational

management and commercial aspects of the service rigs that will be chartered by the joint venture company. The joint venture will be complementary to a co-operation agreement with another Chinese stateowned enterprise to support offshore wind power installation projects in China. OSJ

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34 | AREA REPORT West Africa

INVESTMENT T EXPECTED TO SHIFT FROM OIL TO GAS A huge amount of capital expenditure is expected in Angola and Nigeria, but the market is still challenging for OSV owners by Martyn Wingrove

WEST AFRICA CAPEX (%) IN 2016-2020 BY COUNTRY

3% 4%

11%

47%

22%

Angola

Equatorial Guinea

Senegal

Nigeria

Congo (Brazzaville)

Cameroon

Ghana

Côte d’Ivoire

Others

Offshore Support Journal | April 2016

here will be a shift in investment focus towards natural gas in West Africa if oil prices remain at levels of below US$40 per barrel. Energy companies are completing existing oil projects, but future developments and demand for offshore vessels will increasingly be on gas projects. As the region’s economies and population grow, there could be more demand for locally produced gas resources. This should lead to greater political focus on producing offshore gas fields, partially sustaining support vessel demand, said Tidewater director of international sales and marketing Frank Gibone. “We could see a shift from oil to gas over the next few years, as African nations would like to consume their own energy, especially with gas resources in Nigeria,” he said at the 2016 Annual Offshore Support Journal Conference in London in February. Most offshore projects started before the oil price slump are continuing, albeit with lower capital expenditure, but any new oil developments have been postponed. Because the large oil projects still underway are in deep water in Angola and Nigeria, these two nations represent almost 70 per cent of the expected capital investment in the region over the next four years. According to Tidewater, 47 per cent of total West Africa offshore capital investment from 2016 to 2020 will be in Angola and 22 per cent in Nigeria. Another 11 per cent will be in Equatorial Guinea and 9 per cent in Ghana. Mr Gibone said many of the deferred developments are in the hands of major oil companies and independent companies, so when there is an upturn in the oil price, they could be reactivated. “The independents and international oil companies can make decisions quickly,” he explained. “They were quick to renegotiate contracts and take advantage of the lower costs by going back to tender and continuing some operations at reduced costs.” He said there were still multiple challenges in operating in the Gulf of Guinea, including security, political instability, taxation and local content requirements. The recent influx of offshore support vessels from other regions has increased the commercial risks. “In the last 18 months, the commercial appeal has been reducing due to reactive arrivals of more assets from other regions, causing an excess in supply,” he said. As the region’s largest fleet operator, Tidewater has had to manage these risks. It operates 93 vessels in West Africa and invested in local partnerships and joint ventures in the majority of states. Oceaneering International has felt the commercial challenges of operating in the region. In February, it announced that BP would terminate a field support vessel services contract prematurely for Angolan deepwater operations. Oceaneering said operations with subsea support vessel Bourbon Oceanteam 101 are expected to be completed in May instead of January 2017 as previously expected. This means the vessel will be redelivered to owner Bourbon Offshore. The costs incurred by Oceaneering associated with the early release and demobilisation of the vessel are expected to be reimbursed by BP. It was not all bad news, as vessel services with a second chartered vessel, Ocean Intervention III, are expected to continue with BP through to January 2017. Brokers reported that Topaz Marine had cut its operations in the region by sailing three vessels to Turkey, where they would be ready for mobilisation to the Middle East or Caspian Sea. Chart Shipping reported that 3,300 dwt platform supply vessels Topaz Megan and Topaz Faye as well as 5,150 bhp anchor handler Topaz Jurong left the Gulf of Guinea in December and were moored in Tuzla. OSJ

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36 | SUBSEA

BROKER SEES OVERSUPPLY AS A LONG-TERM ISSUE

Fearnley Offshore Supply says the subsea sector is likely to continue to struggle for some time. Many vessels that were ordered when the market was booming are struggling to find work now it has crashed, and there are still 80–90 newbuilds to be delivered

he Fearnley Offshore Supply AS (FOSAS) subsea market report has long been required reading for those active in the sector, but its latest report does not make happy reading and predicts that we will see oversupply “for the foreseeable future”. The broker said that, following what it called a reasonably fair balance between supply and demand last year, the future is likely to see many years of imbalance. The subsea vessel orderbook corresponds to about 18 per cent of the

Offshore Support Journal | April 2016

ABOVE: With few incentives for oil companies to sanction projects, demand for subsea vessels looks likely to continue to decline

existing fleet, meaning that the fleet will grow by 80–90 vessels over the next couple of years. At the same time, the subsea project orderbook has already fallen by 30 per cent over the last year, with few new large projects likely to commence before 2018. Hence, it is feeling that the period between now and when the market recovers and oil companies are ready to start investing in new developments will be a particularly testing one for the subsea vessel segment.

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SUBSEA | 37

“Contractors are busy slimming their fleet to match the new reality at the same time as they are renegotiating terms on all existing contracts and hence transferring some of the pain on to the vessel owners,” said FOSAS. “Contract counterparty risk will continue to increase. We have already seen some charterers going belly up. Vessel owners seem increasingly aware of their counterparties’ troubles and are showing increasing willingness to reduce charterers’ exposure and aim to navigate through the downturn together. This is because the options are few, and unity is the only viable solution.” Ironically, 2015 was a busy year with a high level of activity. Subsea work such as survey, remotely operated vehicles, transportation and installation kept most specialised subsea vessels busy, and large contractors such as Technip and Subsea 7 had record levels of activity and still have a healthy forward orderbook for the year ahead. However, at the same time, the same companies are downsizing their workforce, preparing for tougher times ahead. As FOSAS notes, the lack of longterm charter opportunities for subsea vessel owners has forced many into the spot market and into segments such as accommodation services where they can at least find utilisation. 2015 saw oil companies undertake extensive maintenance and commissioning programmes that created a surge in demand for subsea vessels with walk-towork systems. This was true of the Gulf of Mexico and the North Sea, which were hot spots for this kind of activity, bringing decent margins to operators. In addition, the offshore wind market has taken some vessels for the same purpose, although at expected lower margins. Large subsea vessels such as Havila Phoenix, Far Sentinel, Polar Queen, Boa Deep C, Wayfarer and Skandi Seven have all worked in this way, but there are indications that spending on maintenance will decline in 2016, and there will be fewer commissioning projects. In addition, offshore wind is seeing more purpose-built solutions entering the market, taking the opportunities once met by subsea vessels. “Offshore wind has not only provided opportunities for walk-to-work work but also for more traditional light subsea work. We expect this to continue in the same manner,” said FOSAS. “However, there will be greater competition for windfarm scopes ahead. “Although tender activity still appears

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high and commercial teams appear very busy, there are relatively few awards and everyone is running after everything. The effect has been a race to the bottom for construction services and vessel days, with utilisation more important in the short run than securing margins. For vessel owners, a strong relationship with the banks will be the key to surviving the downturn, with vessel values falling and less favourable charter contract terms for existing and new contracts.” FOSAS says most observers of the subsea segment agree that there will be a recovery at some point, because oil companies need to start drilling for new oil and develop new fields to maintain production levels. Cost cutting is a painful exercise, it says, but could also help save the sector. “The cost spiral over the last decade was not sustainable, and a reduction in the cost of offshore oil will nurture new investment eventually,” it said. “A reported 20–30 per cent cost reduction should indicate that the marginal cost of offshore reserves has come down from about US$75/bbl to US$50–60/

bbl. However, this has not yet resulted in renewed investment appetite on the part of the oil companies. They are under massive pressure, struggling with obligations from earlier investment decisions, and have at the same time seen their income halve compared to peak 18 months ago. Even though it makes sense to invest in new field developments now, they need more time to heal their wounds before they are ready to accelerate.” However, as FOSAS points out, postponing investment is not without consequences. Oil companies, both national and international, need to keep developing business and keep up production levels. At the same time, earlier investments have obligations, and maintenance is inevitable. The risk, says FOSAS, is that the oil companies will come back to the market as the supply chain has minimised. “Subsea backlogs are coming down quickly, with five consecutive quarters of deteriorating backlogs for equipment and installation companies,” said the broker. “For the three largest contractors – Saipem, Subsea 7 and Technip – backlog for execution next year

BELOW: Subsea vessels have been pressed into service as walk-to-work accommodation units

Offshore Support Journal | April 2016

38 | SUBSEA

sits 25 per cent lower than one year ago. We see a risk of even lower activity levels in 2017. Subsea companies are adapting to this by cutting costs, and the above-mentioned contractors alone have announced cost saving programmes north of US$3 billion. “We see no real incentives for the oil companies to sanction projects now, as the oil price remains highly volatile and costs are still falling. We see few signs that oil companies are considering counter-cyclical investment, grasping the opportunity of lower unit costs. Subsea operators continue to work on simplification and standardisation, and the creation of joint ventures and alliances is ongoing.” FOSAS says that, following years with large discoveries, a substantial list of tenders was released for subsea, umbilicals, risers and flowlines (Surf ) projects. Although sizeable and valued at up to US$850 million, most projects in the pipeline are smaller than those currently in process (such as the Kaombo Surf award, which came in at approximately US$3.5 billion). The award process is dragging out, and it is highly uncertain when award and

offshore activity will take place, resulting in further downsizing of capacity with the subsea contractors. The latter part of 2015 saw limited new contract awards in the subsea market. While some fresh RFQs were issued, there have been very few from the contractors’ side. There are still some uncovered term requirements in West Africa with awards expected soon, but markets such as Brazil and Mexico are barely moving, and despite rumours of fixing, tenders seem either to be cancelled or delayed or reopened for rebidding. Vessel owners and contractors have been looking outside the North Sea for work, and Ocean Installer, Technip and Subsea 7 have all increased their presence in West Africa. Acergy Viking is working in Mauritania, and Subsea 7 has been tendering for a third-party vessel from February 2016. Technip has various projects where Viking Neptun, Far Sleipner and other support tonnage is carrying out work. Ocean Installer’s West African efforts have paid off, and their Total project in Congo will utilise

Normand Vision until late 2016. Harkand is an investment-backed subsea player that remains relatively active, with most of its assets working. However, it is not a positive sign to see vessels going to layup, as did Viking Poseidon, which was the subject of a long-term charter. “While some players are facing challenges, others are seeing opportunities. EMAS AMC and Chiyoda joining forces might be a mix of this,” said FOSAS. “Generally speaking, we have noticed contractors are preparing some of their assets for tougher times ahead and taking steps on a speculative basis to prepare for entering alternative markets. An example is DeepOcean’s Volantis, which is being prepared to meet Australia’s strict NOPSEMA regulations and will hence be in a position to take on work in that region on shorter notice.” That particular vessel has just secured a project charter with Saipem offshore Western Australia, and FOSAS expects more owners to take similar steps. The same mentality is also evident at the corporate level, with contractors establishing

in brief ■ Subsea 7 has exercised its option to extend an existing contract for Solstad’s vessel Normand Subsea by approximately three and a half years, following renegotiation of terms and conditions. The contract extension will commence in June 2016, with an option for Subsea 7 to extend the contract by a further two years. Normand Subsea is a versatile IMR vessel designed and built for operations in harsh environments. ■ Subsea 7 has secured an extension to an existing contract from BP Exploration Operating Company Ltd for the provision of subsea construction and IMR services in the North Sea. Under the terms of the agreement, Subsea 7 will provide BP with an additional two years of IMR delivery, extending the contract to 2019. This is the continuation of the long-standing relationship between Subsea 7 and BP that has been in place since 1998. It covers the maintenance of the Schiehallion, Loyal, Foinaven and East Foinaven fields west of Shetland and will provide increased operational value and return for BP and its joint venture partners in the respective fields (Shell, OMV, Marathon Oil and Faroe Petroleum). Project management and engineering work will be managed from Subsea 7’s Aberdeen office. ■ Ocean Installer has been awarded three contracts for subsea installation and tie-in operations for Statoil on the Johan Sverdrup, Oseberg Vestflanken and Gina Krog

Offshore Support Journal | April 2016

fields. The three awards constitute a significant portion of Statoil’s planned subsea construction work on the Norwegian Continental Shelf for the 2017 season. On Gina Krog, the work scope consists of fabrication of spools and installation of the pipeline end manifold structure, pipeline spools and protection covers. On Oseberg, the work scope encompasses fabrication of pipeline spools and protection covers as well as installation of umbilical, tie-in and pre-commissioning. The work scope on Johan Sverdrup includes installation of three subsea templates for water injection. Ocean Installer will utilise its construction support vessel (CSV) Normand Vision and a smaller CSV, Normand Mermaid. Offshore operations will take place in the second and third quarters of 2017. Project management and engineering will be based at Ocean Installer’s headquarter in Stavanger and commence with immediate effect. ■ Harkand has been chosen to deliver installation work to support a leading US-headquartered operator with its existing drilling campaign in the Nevis South Field in the North Sea. The project will see Harkand provide project management and engineering services and deploy its personnel and one of its diving support vessels (Harkand Da Vinci or Harkand Atlantis) to install new subsea equipment for Apache Beryl I Ltd. The scope of work has been called off against the master service agreement (MSA) the firm signed with the operator in 2014.

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40 | SUBSEA

joint ventures in countries considered as emerging markets, where such local alliances are a prerequisite to be considered for bid invitations. Large contractors are teaming up with equipment providers for new development projects. This is a strategic move, in order to be well placed when the market returns, but also a way to keep skilled personnel through the downturn. Many engineers have been transferred from FMC and Technip to the different Forsys affiliates, focusing on innovation and business development. Tendering activity for new projects is generally limited to smaller projects for 2016 and larger feed studies for 2018 and beyond. “The market is challenging for all contractors – the larger ones, which were well off, expecting a decline in demand in 2017, and the smaller contractors already feeling the chill because of their dependency of short lead time projects and sublet from larger contractors. Interestingly, as FOSAS also noted, first-generation subsea installation vessels

are already leaving the market. Examples are Subsea 7’s Seven Polaris, reportedly for sale for scrap, and Technip’s Deep Constructor, reportedly sold and likely for scrap as well. Cal Dive’s fleet has also left the market, reducing the number of vessels on the supply side. The subsea vessel sector as a whole is not nearly as oversupplied as other segments, such as platform supply vessels, but parts of the sector will see very limited demand, said the broker. The flurry of newbuilding orders in recent years depended on a strong construction market, and now that that market has slowed down, many vessels are fighting for a part of the inspection, maintenance and repair (IMR) market, but the IMR market has not been growing as rapidly as expected and owners are taking redelivery light construction vessels from contractors. Looking further ahead, FOSAS says that many owners are beginning to feel that the time for profitable long-term charters for light construction vessels and

IMR vessels has passed and might not return this decade. FOSAS says that recent examples of charters such as a three-year deal from Subtech for Far Sentinel is an exception to the new rule and not proof that there are plenty of opportunities to secure long-term charters. Rumour has it that DOF will have to order a newbuilding to accommodate requirements in its long-term agreement with Husky Canada, and Vard has announced a newbuilding award without revealing the buyer or vessel type, but there is no connection yet. “We believe this type of order will be a feature of the subsea newbuilding market in the coming years, and speculative orders will be limited,” the broker said. “Before we see firm demand for new vessels for construction support allowing room for speculative orders, we will have to wait until the current light construction/IMR vessel fleet is no longer able to cover the technical requirements as a result of new technology or unforeseen changes. In the meantime, the broker says it

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SUBSEA | 41

sees demand for core subsea work shrinking and vessels fighting for non-subsea related activity such as windfarm walkto-work, topside support walk-to-work, decommissioning support and other work scopes not taking place on the seabed. For a few brave owners, falling prices at yards are an opportunity. These include Topaz Marine, which ordered two units of the VARD 3 07 design, and Ultra Deep Solutions (UDS), which has continued to add to its orderbook with an MT 6023 DSV. In addition, it has one MT 6027 diving support/construction vessel already under construction. All of these vessels are understood to be being built on speculation, and only time will tell if these seemingly brave out-of-cycle moves will pay off. OSJ

RIGHT: Increasingly, vessel owners have been looking for work outside the North Sea

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DYNAMIC POSITIONING | 43

Andrew Rodden describes the challenges ahead in dynamic positioning

WHEN MARKET PICKS UP, DPOS COULD BE IN SHORT SUPPLY A number of issues facing the dynamic positioning sector were addressed at Riviera Maritime Media’s European Dynamic Positioning Conference in London in February, including a potential shortage of personnel when the market recovers and new sensor technology

shortage of experienced offshore and onshore personnel will be a key challenge for the offshore support vessel industry when demand improves again. Bibby Ship Management regional managing director Andrew Rodden highlighted the issue at Riviera Maritime Media’s European Dynamic Positioning Conference in London. Offshore vessel owners and managers have cut costs by reducing staff levels and laying up vessels, but there is an expectation that demand will return, leaving the industry without the required level of experience in shore support and crew. This is particularly the case for dynamic positioning (DP) vessels as it takes longer to train competent operators and support staff. “We have vessels in layup, and people have left the industry. The question is will they return when the market picks up?” Mr Rodden asked. “Where will the support people and crews come from when ships are reactivated? Who will

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be there for inspections and auditing, and for validating the training and competence of DP operators?” He said this is the biggest risk to the DP sector. Another challenge is the transfer of experience and technology knowledge. “We need to replicate the experience because of the age of the workforce – and this is a bigger challenge because of the downturn in the business. We are concerned about knowledge transfer and investing in a balanced crew.” He wants to bridge the generation gap, as the current low oil price climate has led to experienced people leaving the sector. The DP sector is expecting another tough year of low demand and cost cutting. Mr Rodden said driving technology forward and merging this with traditional maritime methods will enable the industry to overcome the challenges. “Clients need to spend on technology and drive in DP to improve. Customers are seeing a return on investment, so we should apply the right technology. They

Offshore Support Journal | April 2016

44 | DYNAMIC POSITIONING

can use smart devices to improve operations.” He gave an example of using smart devices to improve efficiency of machinery, such as engine systems. Different positioning reference sensors and propulsion technologies were at the forefront of discussions at the conference. Suppliers of reference systems for DP systems explained the latest developments. Sonardyne and iXBlue described the benefits of combining inertial navigation system (INS) technology with acoustic sensors on the seabed for cost-effective positioning of drilling rigs and offshore vessels in DP. Sonardyne global business manager Mark Carter said use of INS for DP enables vessel owners to reduce the number of acoustic transceivers that need to be installed on the seabed. This reduces installation costs and time as well as minimising downtime on vessel operations. He said this type of investment has a payback time of less than one year. iXBlue product line manager Pierre-Yves Morvan explained how an INS device can be used in conjunction with receivers of satellite positioning data to feed more reliable data into the DP controllers on vessels. In the engineering and technology session, Guidance Marine business development manager Sasha Heriot unveiled the new RadaScan View concept. This combines a radar-based reference system that is widely used on offshore vessels to position them next to production facilities with navigation radar. This enables DP operators to visualise the position of the vessel with the structures around it, such as floating production systems or fixed platforms. Braemar Engineering manager for DP and offshore projects Kyle Eddings explained how the use of tablets by crew and inspectors can reduce the time for producing electronic documents during annual DP trials (see box). These are being tested on a number of offshore vessels to reduce workload. Braemar is also developing more interactive failure modes and effects analysis (FMEA) tools that DP operators can use to improve uptime and engineers can utilise for maintenance. Rolls-Royce Marine started the session off with a presentation on how computational fluid dynamics (CFD) is aiding the design of propulsion systems on drillships, semi-submersible rigs and heavy construction vessels. These use a series of azimuth thrusters, up to eight on a semi-submersible rig, for propulsion and DP.

Nick Trier explains the workings of the Cloud@Sea service

Rolls-Royce Marine senior vice president Knut Eilert Rosvik said the results of the CFD analysis showed thrusters should be tilted to prevent interference of the slipstreams from propulsors during DP and transit. Maersk Supply Service is trialling a new cloud-based system for documenting work of dynamic positioning operators on its offshore support vessels. The Danish shipowner is testing the Cloud@Sea application to reduce costs of DP operator log keeping, certification and validation. Nick Trier, senior marine specialist, Maersk Supply Service, said this would be expanded across the fleet as the trial has already shown some success. He explained the process at the London conference. On the vessels, DP operators log their time operating DP systems on an online application. This is sent to the captain for approval and then forwarded to shore for approval by managers and the Nautical Institute. It combines the certification of DP operators, DP time logbooks, registering DP operator time and the approval process in one system. It uses existing formats set out by the International Marine Contractors Association (IMCA). It is one of the different technologies that Maersk Supply Service is testing to reduce operating costs at a time when there is severe cost pressure on its fleet due to the downturn in demand for offshore support vessels in a low oil price market.

New system from Braemar Engineering reduces costs Braemar Engineering claims that it can save up to 35 per cent of the cost of carrying out annual DP trials. The system offers savings that hard-pressed vessel owners and operators in the offshore sector can utilise to increase their competitive advantage while ensuring that the highest quality standards are maintained. “Traditionally, these trials are carried out using paper-based systems, which are time consuming to prepare and complete,” explained Kyle Eddings, global manager for DP and offshore projects at Braemar Engineering. “This new system allows crew and surveyors to use the latest tablet technology to control, record and analyse data in real time, increasing efficiency and resulting in cost savings for the customer. We can cut out up to three days of post trials reporting by simply delivering the document offshore rather than having the client incur additional costs and delay waiting for the surveyor to return to shore and prepare the report.” Mr Eddings said, “We are constantly looking at better ways to

Offshore Support Journal | April 2016

do business. Our dynamic team of younger surveyors are keen to explore how even simple technologies can be used to challenge traditional ways of doing business to our customers’ benefit. We ran a successful trial of the system last year and have now rolled it out to all areas of our DP surveying business. There is substantial pressure on owners and operators in the offshore sector to look at ways of reducing costs. This new system means that significant savings can be made without cutting corners, ensuring safety and quality comes first.” The new system uses high powered Microsoft tablet computers in all stages of the survey process from preparation to the survey itself. The crew supports the surveyor during trials, and results are then delivered instantly onsite, avoiding the lengthy write-up process that is traditionally carried out afterwards. Not only does this save time but also allows any necessary actions to be flagged up immediately and any remedial action to be taken, if required. OSJ

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CRANES | 47

Pure fibre cranes enable deeper, more cost-effective operation A number of companies have offered hybrid fibre rope cranes to the market that combine fibre and steel wire, but now there are three all offering a pure fibre rope solution

mong the new pure fibre rope crane on the market is National Oilwell Varco’s (NOV’s) Trident crane, which won the Innovation of the Year award at the 2016 Annual Offshore Support Journal Conference, Awards & Exhibition in London in February. The crane has been described before in OSJ, but, like the other fibre rope cranes now available, was designed to overcome a well known problem that cranes with wire rope all suffer from – the weight of the wire, which limits a crane’s operational capacity. In contrast, fibre rope can help cranes lift heavier loads and deploy them to greater depths. This is because, unlike conventional steel wire, fibre rope is neutrally buoyant in water. Because it weighs so much, steel wire significantly reduces hook capacity as more and more wire is paid out to reach greater depths. Because fibre rope is neutrally buoyant, water depth and the weight of the wire used to lower a load is no longer an issue. The crane’s hook capacity remains the same, no matter what the water depth. What this means is that a 150-tonne capacity

Trident crane can raise and lower a 150-tonne module to a depth of 3,000m, whereas a similar crane with steel wire will only manage about 60–70 tonnes to the same depth. Equally, a 400-tonne capacity Trident crane can lower a full 400-tonne load to whatever depth is required, or a 200-tonne Trident crane can do the job that a 400-tonne crane would normally do. A smaller crane is also less expensive and can be installed on a smaller vessel, reducing costs considerably. You can read more about how NOV went about designing the crane in the special supplement published by OSJ about the awards and conference. MacGregor unveiled a new crane concept that also makes use of fibre rope rather than steel wire at the 2016 Annual Offshore Support Journal Conference, Exhibition & Awards. The crane was developed by combining MacGregor’s offshore crane technology with the fibre rope tensioning technology developed by Parkburn Precision Handling Systems. The companies have entered into a co-operation agreement to combine MacGregor’s

For more articles visit: www.osjonline.com

Among the latest companies to launch a pure fibre rope crane is MacGregor

expertise with Parkburn’s fibre rope tensioning technology. “MacGregor recognises that, by partnering with experts in specific technological areas, it can deliver solutions that exceed its own capabilities,” said Baard Trond Alsaker, MacGregor’s vice president

for R&D and technology. “We see ourselves as being able to integrate the best technology available to deliver systems with technology-leading capabilities.” The new crane features a simple to operate fibre rope lifting system that employs Parkburn’s

Offshore Support Journal | April 2016

48 | CRANES

tensioning technology. The equipment eliminates heating and degradation problems associated with on-load fibre ropes stored on winch drums. It can also accommodate non-uniformities resulting from splices in the rope. “This is an important advance for handling loads at depth,” said Mr Alsaker. “The great advantage of fibre rope in this context is that it weighs virtually nothing in water, so regardless of the length of rope paid out, it does not add anything to the load experienced by the crane. This is in complete contrast to the situation with wire rope, where the ever increasing weight of wire paid out limits the load permissible in relation to depth.” The new crane will be introduced to the market as a 150-tonne fully heavecompensated knuckleboom crane capable of lowering loads to 4,000m, but the offering will be extended to the complete range of MacGregor subsea crane fleet. The fibre rope technology is also suitable for retrofit on existing subsea cranes. Parkburn is a UK-based marine handling systems provider and has spent many years working on deepwater handling systems of the type required for fibre rope cranes.

Its fibre rope winch system can be delivered as digitally controlled electrically driven or hydraulic driven. Features include integral active heave compensation and power regeneration capabilities. An offshore knuckleboom crane that uses fibre rope is the latest to be introduced by RollsRoyce. Two sizes are available, rated at 150 tonnes and 250 tonnes. The new cranes combine the company’s fieldproven expertise in equipment that uses braided fibre rope for deepwater offshore operations with its offshore crane and control systems technology. “Compared to cranes of similar type using steel wire, a 250-tonne fibre rope crane working at water depths greater than 2,400m can do the same work as a 400-tonne crane equipped with wire rope,” said Rolls-Royce. Like the other crane concepts described here, the reason for this is that the braided fibre rope has virtually zero weight in water, so the length of rope deployed does not affect the crane’s useful lifting capacity. “To illustrate the difference, a 250-tonne fibre rope crane can install 250 tonne modules in 4,000m of water, whereas a 400-tonne crane with wire rope is limited to installing 250-tonne modules in 2,400m,” said Bjørn

A 200-tonne Trident crane can do the job that a 400-tonne crane would normally do

Offshore Support Journal | April 2016

Gerde, Rolls-Royce’s general manager, subsea. “This means smaller cranes and therefore potentially smaller vessels can be used to do the same work.” Reducing the size of crane for a given deepwater work capacity has a number of side benefits, not least lower procurement costs and crane weight. This in turns places less demand on ship stability, leading to a more comfortable ship or one that can safely continue working as the weather worsens. The 250-tonne version of the Rolls-Royce crane handles 250 tonnes at 17m outreach, has a 35m lifting height and works to 4,000m, while the auxiliary boom is equipped with a high performance active heave compensated wire winch for 50-tonne loads and 3,000m depth. Fibre rope handling is taken care of below deck in a compact system using the field-proven Rolls-Royce cable traction control unit (CTCU), which assures reliable and predictable rope spooling and storage in all conditions. The proven CTCU system has unique benefits for the vessel owners and operators. As the company points out, unlike its wire counterpart, braided fibre rope can easily have new sections spliced in if part of it is damaged or abraded. For a wire rope, the complete wire must normally be replaced even when a small section is damaged. The CTCU is designed to accommodate the increased local rope diameter at the splices. Splicing can normally be carried out onboard in a few hours. Of course there are other options available. The Subsea Innovation Award at the OSJ conference was awarded for the Soft Rope System, which was developed in collaboration by Deep Tek, Dyneema and Lankhorst Ropes. It is capable of handling heavy loads at

water depths of in excess of 3,000m. It combines an active heave compensated drum winch system developed by Deep Tek with Lankhorst Ropes’ LankoDeep rope and DSM Dyneema’s fibre rope. The innovative patented drum winch design ensures a spooling pattern that allows multiple layers of fibre rope to be spooled onto a loadbearing winch drum with no risk of cutting in. It is certified by DNV GL at 110 tonnes in air and 110 tonnes at 3,000m water depth. Larger Soft Rope Systems capable of handling 165 tonnes and 275 tonnes are in development. The companies claim that the Soft Rope System – which is described in more detail in the conference and awards supplement – effectively doubles a crane’s capacity, enabling a vessel smaller than 90m to be competitive against much larger ships with 200-tonne steel wire rope cranes. “It’s all about an integrated system approach,” said Håvard Haanes, Deep Tek’s managing director. “This technology is significantly lower cost and less complex than current technologies that use synthetic rope for lowering and lifting objects subsea and comes with DNV GL certification. In the current market, with the emphasis on cutting the cost of both vessels and subsea operations, we see the upgrade of existing cranes with steel wire rope to soft rope as a cost-attractive proposition for vessel owners. They can simply change out one drum winch system for another, keeping weights and footprint much the same.” Crane manufacturer Jebsen & Jessen of Singapore also played a crucial role in the development of the concept and has incorporated the technology in two cranes built for offshore vessels. OSJ

For more articles visit: www.osjonline.com

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BRIDGE SYSTEMS | 51

New bridge designs and systems unveiled Rolls-Royce has delivered integrated Unified Bridges to seven vessels, while Navico and Furuno have introduced new radar systems and Kongsberg an updated gyro compass by Martyn Wingrove

ABOVE: Rolls-Royce has developed a new bridge concept for PSVs

For more articles visit: www.osjonline.com

olls-Royce Marine has set out its concept for the next generation of bridge systems and remote control rooms. This comes as the company is planning further developments to its recently delivered Unified Bridge systems. Rolls-Royce’s general manager for remote and autonomous systems, Iiro Lindborg, unveiled graphics of the Operator Experience Concept (oX) bridge concept for offshore vessels at the Annual Offshore Support Journal Conference, Awards & Exhibition in London in February. The presentation included augmented reality technology on bridge window displays and smart navigation technology. “This is the future of bridges, with intuitive operator interfaces and dynamic displays,” he told delegates. Rolls-Royce developed the oX bridge concept in partnership with research organisations including the VTT Technical Research Centre of Finland, Aalto University of Arts, Design and Architecture and the Tampere University of Computer Human Interaction. Together, they came up with designs for a platform supply vessel (PSV) and a tug. Mr Lindborg said the future bridge design would have operator interfaces that were intuitive, systems that improved internal and external communication and dynamic visual displays. The oX bridge would have virtual assistance from audio-visual warnings, route analysers for voyage planning and a method of analysing ice conditions. Part of the information available to bridge teams would give them an implicit understanding on the intentions

Offshore Support Journal | April 2016

52 | BRIDGE SYSTEMS

of surrounding vessels. The bridge would prevent cognitive overloading of the operator and improve their situation awareness and general vigilance, Mr Lindborg said. The oX bridge is for the future. For the present, Rolls-Royce has the Unified Bridge on offer. It has successfully delivered integrated Unified Bridges to six vessels, including anchor handlers and PSVs, and one will be installed on a vessel that is scheduled for delivery in 2017. The first vessel with a Unified Bridge was Simon Møkster’s PSV Stril Luna delivered in August 2014 from Astilleros Gondán shipyard in Spain. Its sistership, Stril Mar, also has one. According to Rolls-Royce principal engineer for human factors and control centres Frøy Birte Bjørneseth, this product was a game changer for the bridge environment when it was unveiled. “In designing the Unified Bridge, we focused on the human factor with a user-centred design, with the seafarer part of the development process from the beginning,” she said. “We looked at how we could improve the working environment during offshore operations to ensure operators do not want to have to struggle to find the right equipment or software. We reduced the cognitive load on the operator by simplifying the tools used and their proximity to the operator when safety critical operations occur.” She added that the system has good ergonomics, variations in working positions, proximity of controls and monitors, touchscreen interfaces and lever controls, flexibility to fit different operators, flexibility of software applications on workstations and good vision of aft deck and support software operations. Dr Bjørneseth said part of the design involved removing a lot of the unwanted bridge controls from the operational workstations by placing them on a dedicated console elsewhere on the bridge. “We used the Acon bridge control system to put the equipment controls, telephone lists, controls for bridge air conditioning and screen wipers together, removing them from other consoles and placing them on one station with touchscreen display.” The forward bridge has navigation aids, such as radar, ecdis, conning and propulsion control. Offshore vessels also have bridge wings and aft bridge workstations, where there are controls for propulsion, Rolls-Royce dynamic positioning, Acon automation control systems and, on anchor handlers, workstations for winch controls. Workstations have multipurpose capabilities so different functions can be brought up on the various displays. “The bridge enables the operator to bring up any application on any screen (depending on classification requirements), making more information available on more positions on the bridge,” said

The first Unified Bridge was installed on platform supply vessel Stril Luna

Offshore Support Journal | April 2016

Dr Bjørneseth. Some pre-set configurations are available to easily bring up information of operational preference, such as information typically needed when being in transit or operating in DP mode. Furuno Electric has introduced a new compact, solid-state radar that incorporates the latest target detection technology and bridge displays. The DRS4D-NXT is a solid-state radar with pulse compression and Doppler frequency shift sensing technology. It is delivered in a 24in radome and includes Furuno’s own target Analyzer function that automatically changes the colour of targets approaching vessels to highlight collision hazards. Green echoes are stationary targets, land formations and targets moving away from the host vessel. Green is also the colour given to targets that are moving at a velocity of less than 3 knots. The target echoes would turn red when targets are approaching a vessel at a speed of more than 3 knots. A fast target tracking feature enables mariners to swiftly interpret threats to vessels, which also display red. It has a signal processor that will automatically acquire and track up to 40 targets in a single sweep of the radar antenna. Furuno said up to 100 targets can be displayed and tracked simultaneously. Furuno has introduced two new radar displays and advanced processing and target detection. The FAR-15x3 series of radars is for workboats, and the FAR-15x8 series is for commercial ships. Both radar models have automatic clutter elimination, which adjusts the radar image to remove sea surface and rain clutter, improving target detection. They have target analysers that enable operators to identify moving and stationary targets, which Furuno said can improve situational awareness and supports safety of vessel operations. The radars also have fast target tracking, where Furuno has improved the acquisition speed and time it takes to display course vectors, as well as touchpads and trackballs for easier controls. Navico-owned Simrad has extended its portfolio for the workboat sector with its new R2009 and R3016 radar control units. These dedicated radar displays, designed for use with Simrad’s radar antennas, have display dimensions of 9in and 16in respectively. Both systems utilise an intuitive control interface combined with latest-generation digital tuning to optimise situational awareness in even the most adverse conditions. Simrad claims that outstanding target resolutions are achieved using beam sharpening technology when paired with the Simrad Broadband 3G and Broadband 4G radomes or Halo pulse compression arrays. The R2009 and R3016 radar control units are well suited for use as stand-alone dedicated radar stations. “Commercial operators will appreciate the professional grade interface and ease of installation, even in demanding retrofit applications,” states Jose Herrero, managing director of the Simrad commercial division. Kongsberg Maritime has received IMO type approval for its latest gyro compass, MGC R3 Compass. This integrates three ring laser gyros and three linear accelerometers in a strap-down configuration with no moving parts. It was designed to deliver precision heading and position data, which is used to optimise seabed mapping and to enhance the safety of complex offshore operations. The MGC R3 Compass is approved for DP operations as well as for navigation purposes for use together with a heading and bearing repeater. It can be operated as an inertial navigation system as well as a gyro compass with output of position and heading. Linear position and velocity measurements can then be output in up to four different points on the vessel. It can operate in an attitude and heading reference system to provide information on heading, roll, pitch and heave of a vessel. OSJ

For more articles visit: www.osjonline.com

54 | DIVE SUPPORT VESSELS & EQUIPMENT

Commercial sector could learn A service model used for submarine rescue in the naval sector could have applications in the commercial diving sector, where a new model for hyperbaric rescue facilities for divers is needed, claims James Fisher Defence

n recent years, the naval sector has made increasing use of commercial standards, where appropriate, and of commercial technology, but there has been relatively little transfer of technology and business models in the opposite direction. However, according to a recent presentation from the company, JFD (which incorporates James Fisher Defence) thinks hyperbaric rescue – the process by which divers are rescued whilst conducting saturation diving – could benefit from adopting a model now widely used in the naval sphere. When a diving support vessel (DSV) is severely damaged, there may come a time when it has to be abandoned. For such a situation, DSVs are required to have adequate lifeboats (or liferafts) onboard for all personnel. In such an emergency, the evacuation of divers in saturation represents a particular problem as they cannot be readily decompressed in order to be evacuated in the same way as other crew members. The divers need to be transferred to a self-propelled hyperbaric lifeboat (SPHL) which can be detached from the diving system on the vessel and lowered by its launch and recovery system (LARS) into the sea. This means that, for all saturation diving operations, a SPHL unit needs to be provided that, in the event of

a vessel evacuation, is capable of evacuating the maximum number of divers. Planning and facilities also need to be in place (called the hyperbaric evacuation plan) to ensure that the SPHL and its occupants are taken to their designated port of safe haven where they can be docked onto a hyperbaric reception facility (HRF) and decompressed back to surface pressure in a safe and controlled manner. JFD was formed by the amalgamation of four companies – the National Hyperbaric Centre, Divex, JFD and DCE. It employs around 400 people involved in all aspects of design, manufacture, maintenance and operation of subsea equipment, and one of its objectives is to

establish a global hyperbaric rescue service that makes saturation diving safer and saves the industry money. The company has been involved in submarine rescue for 31 years and currently provides submarine rescue services for five nations from three main service centres – Naval Base Clyde (Faslane UK), Singapore and Australia (Dampier). Divex is well known as a leader in the design and build of HRFs, and the National Hyperbaric Centre is renowned as the first fixed hyperbaric reception facility, having been opened in 1986. Speaking at the 2015 Diving Seminar, Brian G Redden, director, global hyperbaric rescue services at

JFD, described the current status of hyperbaric rescue in the commercial diving industry. He noted that the majority of saturation diving around the world now incorporates use of a SPHL or hyperbaric rescue chamber (HRC). IMCA DO52 and DO53 guidance and OGP Report 478 lay out the requirements for hyperbaric rescue, but interpretations vary by region with solutions made up of a mixture of SPHLs and HRCs with life support packages (LSPs). Then there are Statoil’s rapid response rescue vessels and fixed and mobile HRFs but no consistent approach. “Arguably, the main hyperbaric rescue issue worldwide is the lack of credible, safe and timely SPHL recovery methods,” Mr Redden said. “One option for SPHL recovery is based on a service model developed and used over three decades of submarine rescue operations. In the JFD service model, submarine rescue customers contract for capability. JFD provides a complete rescue

JFD believes the submarine rescue service it provides could form the basis of a hyperbaric rescue service for commercial diving

Offshore Support Journal | April 2016

For more articles visit: www.osjonline.com

DIVE SUPPORT VESSELS & EQUIPMENT | 55

from sub rescue service model Bailout rebreather enhances safety levels

In an emergency, saturation divers need to be transferred to a pressurised compartment which can be detached from the vessel

service with guaranteed response time for a monthly fee. JFD is responsible for equipment provision, personnel, assurance, technical support, maintenance and training.” For SPHL recovery, the company uses a davit-based LARS which was designed by Caley and proven in use onboard Canadian Coast Guard vessels to launch and recover 27 tonne workboats in up to sea state 6. This is, the company believes, more manageable than a stern A-frame with easier lee with side recovery, constant tension two-point lift, adjustable cradles for one or two up to 24-person SPHLs and offload directly to an HRF. For the North Sea region JFD are currently talking to a number of PSV owners about having a davit LARS and LSP permanently installed, taking up about 20 per cent of the deck space, thereby becoming a mothership or ‘moship.’ Operation of the mothership is co-ordinated by the JFD Submarine Rescue team in Govan. One moship will provide cover for the southern

and mid-North Sea areas. The position of the vessel is monitored via AIS. The moship service will be available all year and is fully compliant with OGP Report 478 requirements. JFD are guaranteeing 32 hours’ time to first rescue. “JFD’s objective is to save the industry money and make diving safer,” Mr Redden said. “In the context of SPHL recovery, the JFD approach is the only credible option available today. “JFD’s davit LARS SPHL recovery method is currently the safest one around,” he said. “Alternatives such as stern ramp/ stinger recovery are great if they are the only option available but the risk of damaging the SPHL bottom mount mating flange are high and stern A-frame single-point lift risks swinging collision damage in anything but flat calm conditions. A global hyperbaric rescue service is achievable but only with cross-industry co-operation,” he concluded. “Submarine rescue is a parallel world with lots of synergies. Let’s capitalise on the lessons learned there.”

For more articles visit: www.osjonline.com

Recent weeks also saw JFD unveil a new compact bailout rebreathing apparatus (COBRA) for commercial divers, which it says is “a direct response to the urgent need for significant improvements in safety in the saturation diving industry”. The system significantly extends the duration of the supply of emergency breathing gas, delivering 45 minutes of emergency life support at a depth of 120m. A conventional open-circuit 300 bar twinset bailout system will deliver only seven minutes at that depth. The extended emergency breathing gas supply significantly improves the likelihood of a successful rescue in the event of an emergency, says JFD. COBRA was designed and developed by JFD as part of its Divex range of rebreathers and supplies up to 45 minutes of fully independent breathing gas in an emergency scenario. The system is designed to be smaller than most bailout systems, ensuring COBRA does not impact on the operations of the diver. It is entirely mechanical with no complex electronic systems that could potentially compromise safety. It is operated via a single turn activation and can be tested prior to its use without affecting the functionality of the system, providing reassurance to the diver that there is a reliable and efficient life support system in place in case of an emergency. “Compared to conventional bailout methods, which at

certain depths provide less than 10 minutes of breathing gas, COBRA is a significant step forward in improving subsea safety,” JFD claimed. It is widely recognised in the commercial diving industry that the same extended bailout breathing facility used as standard in operations at depths of over 200m of sea water should be available for divers operating at 50–200m, a far more common operating depth. Modern diving operations often require the use of extended excursion umbilicals from bigger diving bells, meaning that the time required to return to the safety of the bell can be greatly extended. When combined with factors such as cold water, darkness, subsea structures and a diver’s alarm and disorientation, the risk to the diver’s life is significantly increased. It is critical that divers have a substantial emergency breathing gas supply that is adequate for the operating conditions to ensure that their safety is assured. The diving industry has already begun to recognise and address the increased risk associated with modern saturation diving operations. The Norwegian petroleum industry has dictated via NORSOK standards that divers must have a minimum of 10 minutes of emergency breathing air, circulated at a rate of 62.5 l/ min. This requirement renders many common systems such as scuba out of scope and therefore unsafe for use. OSJ

Offshore Support Journal | April 2016

56 | DIVE SUPPORT VESSELS & EQUIPMENT

Australian firm claims world first for recovery equipment Thrust Maritime is to provide Malaysian offshore engineering and construction contractor SapuraAcergy and its diving associate SapuraKencana Allied Marine with a remote hyperbaric recovery and reception capability for its latest project in Myanmar

The THOR A-Frame and HRF shown on the aft deck of the HRV

n what the equipment provider claims is a world first, SapuraAcergy will use patented technology from Melbourne, Australia-based Thrust Maritime to ensure the safe recovery of saturation divers in the event of a diving incident on the Badamyar low compression platform project, which is owned by French oil and gas giant Total. The project involves installing Thrust Maritime’s fully classcertified man-riding A-frame and a hyperbaric reception facility (HRF, with associated mating and life support equipment) on a hyperbaric rescue vessel (HRV), allowing immediate evacuation and treatment of the diving team. Thrust Maritime claims to be the only company in the world to provide ‘for hire’ man-riding A-frames (known as THORs), which are DNV GL-certified and specifically designed and used for the recovery of self-propelled hyperbaric lifeboats (SPHLs) and hyperbaric rescue capsules (HRCs). “Thrust Maritime’s THOR provides the capability to recover SPHLs and HRCs in the most challenging offshore conditions, providing options for offshore personnel in the event of an incident with a diving support vessel and ensuring best practice for saturation diving activities,” said the company. Installation of the equipment was due to take place in Malaysia in March 2016 with diving operations to be conducted in the northern sector of the Andaman Sea in Myanmar in the second quarter of 2016. At the completion of installation, a drill will be conducted to ensure operational readiness. Thrust Maritime’s managing director Ben Healy said, “As this operation is in a remote area, the traditional approach of leaving the HRF at port would mean the time spent on the HRV would

JFD wins SPHL deal JFD, part of James Fisher and Sons plc, has won a contract from Singaporean company Flash Tekk Engineering for the design and manufacture of up to eight SPHLs that are to be installed as part of the saturation diving systems on Ultra Deep Solutions’ Red-class DSVs. The multimillion pound contract includes scope for the design, manufacture and integration of up to eight SPHLs – six with the

Offshore Support Journal | April 2016

significantly increase risk to the divers – having the HRF onboard allows immediate access for medical support and commencement of decompression within two hours of an incident. We believe that this project will redefine the term ‘as low as reasonably practical’ (ALARP) with respect to hyperbaric evacuation.” Thrust Maritime specialises in the integration, rental and manufacture of DNV-certified THOR systems/A-frames for the recovery of SPHLs and HRCs and for subsea lifting duties. The company’s THOR/A-frames are available globally for project-based rental and specifically designed for HRC and SPHL recovery. They have a patented remote hook connection system for handsfree SPHL/HRC hook-up and are designed to control swing in accordance with IMO LSA impact requirements. They are easily mobilised in 2 x 40ft containers and, being DNV GL-certified with design capacity of 81 tonnes, can be used for high sea state recovery. They are suitable for a broad range of vessels. Since the company commenced operations in 2011, it has completed more than 10 projects.

capacity to accommodate 18 divers and two larger ones for up to 24 divers. To execute the project, JFD has teamed its Divex-branded hyperbaric systems and chamber design expertise with lifeboat manufacturer Vanguard Composite Engineering Pte Ltd, based in Singapore. JFD’s Divex chamber and life support systems will be installed in the Vanguard-designed lifeboat, and Vanguard will supply the launch and recovery systems. The partnership will provide a marketleading product that will be available to all builders, shipyards and operators of saturation diving systems. OSJ

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DIVE SUPPORT VESSELS & EQUIPMENT | 59

Working A together will continue to enhance safety, say divers Speakers at the 2015 NUI Diving Seminar, which took place in late 2015 in Norway, described progress that has been made in the last couple of years but also highlighted a number of challenges

BELOW: A diver enters a diving bell from the pressurised complex in which he lives during a hyperbaric project

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ccording to Phil Newsum from the Association of Diving Contractors International (ADCI), the diving support sector has benefited from greater client awareness in recent years and from greater communication among contractors and throughout the industry, but there are important issues that remain to be addressed. “Oil operators are arguably the most astute clients in the underwater industry,” said Mr Newsum, “and there are more diving safety meetings taking place, paving the way for greater discussion among contractors towards addressing shared industry challenges.” Increasingly, the industry is leveraging social media to deliver safety messages on Facebook, Twitter and LinkedIn, and ADCI TV (which can be found at http://videos.adc-int.org/home) is being used to get important messages across on issues such as emergency procedures and first aid, emergency drills and the use of energy drinks and supplements while diving. Overall, he explained, safety had increased, there are increased requirements for training and certification and the use of ‘stop work authority’ had paid benefits. “Documentation of formal training and experience by clients in all sectors of the industry is on the rise,” said Mr Newsum, and there has been a resurgence of support for industry self-regulation and an increase in the number of committees and work groups focusing on industry challenges. “In the US, we have seen a real increase in support by the Occupational Safety & Health Administration and the US Coast Guard,” said Mr Newsum. He said that this has allowed for greater input from the field and other industry SMEs. Class societies, contractors, manufacturers, regulators and clients are working together to respond to industry challenges, he said. Other positive trends include revisions/improvements to operational guidelines from contractors and associations and the institution of formal reviews for widespread input on issues such as nitrox, penetration diving guidelines, underwater excavation, the use of underwater lift bags, live boating, diving applications, cold water/weather operations, DPV diving operations, pre-dive and inspection protocols, improved and more cost-effective approaches to underwater cutting and emergency hyperbaric evacuation. However, as he also noted, challenges remain, among them, the lack of standardised equipment in saturation diving to allow for emergency transfers under pressure, outside of bell-to-bell transfers. Saturation diving safety committees, as well as system manufacturers, are working to respond to this challenge, he explained, noting that standardisation of systems and equipment needs to be a primary focus. Reporting of information to contribute to lessons learned is important, but unfortunately current requirements by regulators and associations have not allowed for a climate of trust for contractors to provide full disclosure. “Client input into this issue can help to alter the current culture,” he told delegates, noting that information sharing at safety meetings has provided a big first step towards altering the current culture of non-disclosure. Another major challenge is differential pressure, which remains a leading cause of diving fatalities, especially in the inland sector, despite studies, information sharing, lessons learned, the promulgation of DVDs and other forms of multimedia available in several languages. He also highlighted ongoing issues with the use of scuba for construction diving applications. “This is a case of the wrong tool for the job,” he said. “This is still a major problem in several regions around the world and is prevalent outside the US.” Contractors who use it do so because it is easy to mobilise and inexpensive and

Offshore Support Journal | April 2016

60 | DIVE SUPPORT VESSELS & EQUIPMENT

because clients appreciate the lower cost that comes with its use. Another issue he highlighted is educating contractors on the importance of real-time job hazard analyses ( JHAs). “There is still a glaring need to put a focus on risk hazard analysis and JHAs that reflect what the tasks are that are to be performed, including the current status of all external conditions, equipment and personnel,” said Mr Newsum. There is also too much complacency in the workplace and a need for greater focus on crew rotations for longterm jobs (swapping out of selected members of divers pressed down in saturation). Evacuation and medical treatment of injured divers from remote locations and facilities is another issue that needs more attention, Mr Newsum believes. There is a need to distinguish between barotrauma and non-barotrauma injuries and focus on alternatives to current treatment tables. “There is a lack of consistency with approaches to the issue,” he said, and a lack of established protocols for evacuation of a saturation or surface diver while under pressure. The need to be able to provide surgery for divers under pressure needs to be addressed, Mr Newsum told the NUI conference, and it is important to identify helicopter-capable platforms and loads that current helicopters can accommodate. Mitigating the hazards of dangerous marine life, such as the growing number of venomous fish (such as lion fish, scorpion fish and stone fish) is important too, and there is a need to look afresh at near misses and fatalities from manta ray contacts. Even now, he said, language barriers are an issue in the diving sector, and there is a need for more multilanguage operational guidelines, training tools and assessments of competency. “We must continue to address the current industry challenges and look to place them in the positive industry trends category,” Mr Newsum concluded. “This can be achieved by continuing to leverage the collaborative efforts between contractors, regulators, operators/clients and industry trade associations. The greatest and most worthwhile improvements to our industry will always come through the hard work of ‘the group’ versus that of a single entity.”

BELOW: Life support crew monitor divers in pressurised chambers

Challenges aplenty in Middle East and Africa A presentation by Joar Gangenes, group diving manager at Subsea 7, highlighted some of the challenges – of which there seem to be a number – of working in the Middle East and Africa. Mr Gangenes said doing so as a diving support contractor can be difficult unless companies have a local entity or partner in country. It is important to incorporate local content/divers, he explained, but even those that have an IMCA air dive ticket have very little experience. “It is difficult to find skilled and qualified local personnel with the minimum certification required,” he told the NUI diving conference. Visas are also an issue – one that Mr Gangenes described as “a very big problem”. They can take a long time to obtain – anything from a week to two months depending on the country in question. Logistics and customs can be a challenge, and the local infrastructure is not as “fluent and well set up” he explained. Another challenge is that equipment “takes a very long time to be Customs cleared”, and although some spare parts/equipment are available in country, this is often at a high cost. “Diving gas for saturation operations is not available in West Africa. It needs to come from Cape Town, Europe, Dubai or Cairo,” Mr Gangenes told delegates. This means that, once again, Customs clearance becomes an issue. As he also explained, it is becoming more and more difficult for contractors to use their own vessels, and more and more countries are pushing to use local vessels for projects. Unfortunately, few local vessels are top of the range, and they are often old and not well equipped. In terms of equipment, high temperatures in Africa can cause equipment failures and overheating. Then there is the question of hyperbaric rescue facilities (HRFs). Mr Gangenes said TPSMI in the Congo and Hydradive in Nigeria are “talking about getting one” but there is nothing operational, although it is possible to rent equipment from Hydra Marine in Cape Town and Mimir Marine Ltd. Malaria and sickness is also a real risk to personnel onshore and offshore, and in countries such as Mozambique, infrastructure is very underdeveloped and access to remote locations is not straightforward. In Egypt, in contrast, the infrastructure is good, roads are good and there are several well set-up companies in country, but the country is very unstable for expats. OSJ

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62 | SOFTWARE & IT

Pacific Radiance begins Unisea implementation An Asian vessel owner expects Unisea software to improve safety, enhance the quality of its services and reduce the administration burden on seafarers

Pacific Radiance says investing in software demonstrates its commitment to safety

by Martyn Wingrove

acific Radiance has begun rolling out Unisea’s software and IT platform across all of its fleet and managing offices to improve safety, quality of services and efficiencies. It chose Unisea programs in December 2015 following requests for a more integrated system for quality assurance, safety and operating cost management. The system was implemented on the main office server in Singapore during January, and the separate elements were set up and configured to Pacific Radiance’s requirements. The software will be deployed to the various vessels in the diverse fleet during the second quarter of this year. Deployment of Unisea comes at a time when Pacific Radiance is investing in its quality, health and safety and environment (QHSE) department. The vessel operator is deploying Unisea HSE, quality assurance and fuel monitoring solutions. It is investing in better business processes to strengthen its position in tough offshore vessel markets. Pacific Radiance’s group finance director Loo Choo Leong said investment in these software modules shows its commitment to seafarer safety. “Our crews operate in rough

Offshore Support Journal | April 2016

conditions, where we cannot compromise on safety,” he explained. “Unisea gives us a competitive edge over other companies as it is about increasing safety and efficiencies. It shows our company has taken steps to separate ourselves from companies that are working at lower levels.” He said clients appreciate that the vessel owner is using the latest software and information technology to ensure it is robust on standards and more efficient in offshore operations. It is also important to get the right people in the company to implement the deployment of Unisea software and systems. “If executed correctly, it means we will be able to utilise resources more efficiently and can achieve what we want, especially in this tough market,” said Mr Leong. “It will be making us more efficient to ensure our cost restructuring can continue. But it is not just about cutting costs. It is about spending wisely – to spend US$100 to save US$1,000.” One of the key benefits is reducing the time vessel crews devote to administration. It means seafarers can concentrate on the mission-critical operations and safety. “It is

our job to ensure our seafarers in the front line, doing the most difficult part of our operations, are equipped as well as possible so they can do this in the most effective method,” he said. Unisea worked with Pacific Radiance to configure the system, set up dashboards and lay out the incident and daily reports as well as the emission and fuel reports as required under the ISO 14001 standard. It is helping the vessel operator utilise the information to improve its operations by rolling it out to the fleet. According to Unisea chief executive Kurt Vilhelmsen, the software reduces the administration burden on vessel crews and the fuel expenditure of owners. “The volume of demands on crew is increasing with more reports for class and clients as well as internal requirements, which increase the burden on seafarers.” He said owners are faced with three alternatives to reduce this burden. They can either cut back on the demands, hire seafarers as document control officers or find IT solutions for documentation. Once owners have implemented Unisea systems, they can tailor reports and data

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SOFTWARE & IT | 63

analytics to manage fuel use across the fleet. “Owners can look at the fuel consumption by vessel and compare by vessel type, such as just looking at all platform supply vessels (PSVs),” he said. “They can look at fuel consumption compared to the vessel’s activities, such as analysing consumption during steaming or dynamic positioning. They can calculate the average value during operations and compare vessels in the fleet to see what fuel is used by PSVs versus AHTS anchor handlers.” They can also see the different fuel consumption values per vessel and identify which ones are spending more on fuel than others. The quality and procedures module of the software includes functions for quality assurance procedures, audits and inspection reports, vessel vettings and master reviews. The safety and security section incorporates incident reporting, safety observations, risk assessment, safe job analysis, permit to work, emergency logs and safe job analysis. Vessel operators can also use system monitoring and data analytics to improve operations, reduce fuel costs and implement condition-based maintenance strategies. Caterpillar Marine has developed a service that advises owners on how to manage maintenance on engines and auxiliary systems. According to offshore segment manager Bart Long, the Caterpillar Marine Asset Intelligence and Analytics can help owners increase the overall performance of a vessel’s engine set. In a presentation at the Annual Offshore Support Journal Conference, Awards & Exhibition in London, he

said automated analytics can transform raw data into actionable information that owners can use for condition-based maintenance and operations. It involves the remote monitoring of these systems and feeding the data back to a shore-based centre for analysis. Caterpillar qualifies the data and runs automated algorithms to produce actionable information, which can include prognosis of issues and predictions of equipment failure. Mr Long said this would enable owners to eliminate defects, improve system performance and optimise energy consumption. It includes problem diagnostics, predictive analysis and efficiency reports, as well as vessel operator dashboards for displaying the information. The asset intelligence approach to predictive analytics means going from a position of having too much data to a stage where owners have just the right amount of data for their operations, Mr Long said. He added that the benefits include predicting and avoiding failures, as well as assisting crew with problems with remote expert troubleshooting. “Owners can make the shift to condition-based maintenance to avoid unnecessary maintenance and extend overhaul intervals,” said Mr Long. They can also increase fuel efficiency of their vessels by managing engine loads during different operations, such as steaming or dynamic positioning, to reduce the total fuel consumption from their key assets, he added. Part of the analysis could include Caterpillar’s Multi-Engine Optimizer

(MEO), which was designed to reduce fuel consumption and emissions and increase maintenance intervals. It is intelligence for power management systems, said Mr Long. It means owners run only the engines needed for the operations and the most efficient load point. The MEO will integrate with existing systems to reduce fuel consumption by between 10 and 15 per cent and nitrogen oxide emissions by up to 50 per cent. Meanwhile, Interschalt Maritime Systems has developed a maritime data engine (MDE) for the collection, normalisation and provision of data from vessel systems. It uses a standardised and platform-independent industrial communication protocol, which means it is accessible to equipment supplied by other companies. Information from Interschalt’s voyage data recorders (VDRs) is fed to the data engine for ship operators and managers to analyse in real time. This will enable managers to identify performance trends on various vessel systems. When installed onboard, the MDE generates a normalised, process image of the ship systems. If all vessels in a fleet are networked via wide area connections, the MDE can provide the normalised process images of the fleet. The MDE enables third-party systems, such as fire alarm systems, to use the data for different applications. “The MDE fulfils the requirement necessary to tap into the data pool of ships as a part of business intelligence,” Interschalt chief executive Robert Gärtner explained. MDE uses the open platform communications (OPC) unified architecture (UA) protocol for industry machine-to-machine connectivity. “By using the OPC-UA standard, the MDE has the potential to establish itself as a central interface for onboard system integration and is the ideal supplement to our VDR systems,” said Mr Gärtner. OSJ

LEFT: Loo Choo Leong talks with Kurt Vilhelmsen about the benefits of using Unisea software

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Offshore Support Journal | April 2016

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CONTRACTOR PROFILE | 65

Boskalis reports strong year but expects stormy conditions offshore Once known purely as a dredging company, Royal Boskalis Westminster has grown into a marine and offshore group which is very much involved in the offshore support sector

aving acquired all of the shares in semi-submersible heavy lift company Dockwise in 2013, Boskalis has expended well beyond the dredging market. It is increasingly active in the offshore energy sector and, of course, in towage and salvage. According to broker Seabrokers, it recently acquired two anchor handling tug/supply vessels from Deep Sea Supply, Sea Lynx and Sea Bear, which were delivered to the company in February. Royal Boskalis Westminster says it had a good 2015, but expects 2016 to be harder because of factors outside its control, such as the oil price. The offshore and marine company has begun making cost reductions as a result. However it believes that there are opportunities in the offshore wind sector, hence its recent acquisition of VolkerWessels’ offshore activities. Peter Berdowski, CEO of Boskalis, said: “We look back on a very successful year in which we achieved excellent results across the entire business. While the storm was gathering strength outside, we had an exceptionally busy year with many impressive projects.” The company’s dredging division completed projects such as the expansion of the Suez Canal. Its offshore division did well in 2015, too, and even beat its record year of 2014. Salvage had one of its busiest years ever, with prominent projects such as the removal of the wreck of the Baltic Ace from the access channel to the Port of Rotterdam. However, Mr Berdowski said ‘stormy conditions’ are increasingly being felt in the company. “Falling prices for oil, gas and commodities are also taking their toll in various market segments we operate in,” he said, noting that volumes and prices are under pressure, which is also affecting its orderbook. “Conditions that require us to steer a different course,” he said. “We are tightening up the fleet and the organisation and are alert to opportunities the market continues to present.” He said a good example of this is the acquisition of VolkerWessels’ offshore activities, which substantially strengthens the company’s position in the growing offshore wind market. “Our fleet, organization and balance sheet put us in an excellent position to weather the storm with reason and consideration and come out of it even stronger,” he said. The picture offshore remains mixed, said Mr Berdowski. “A

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number of long-term contracts and work already contracted provide stability for part of the fleet, but spot market-related transport activities and subsea services are experiencing pressure on utilization rates and margins. To respond to these market developments we have launched a fleet rationalization and cost reduction programme .It is expected that equipment will be taken out of service at both dredging and offshore energy with the associated implications for staffing levels. In addition, we are taking a critical look at reducing the cost of the global office network.” Most recently, Boskalis was awarded a contract by National Petroleum Construction Company of Abu Dhabi for dredging work related to the installation of an offshore gas pipeline for Abu Dhabi National Oil Company (ADNOC) as well as to an existing offshore gas pipeline. Activity is due to commence in the first quarter of 2016 and will be executed in phases with completion expected in the second half of 2017. Boskalis will dredge a trench for the installation of the new pipeline over a total distance of more than 50km, between Das Island and Ras Al Qila onshore Abu Dhabi. OSJ

Peter Berdowski: “conditions require us to steer a different course”

Offshore Support Journal | April 2016

66 | ITALIAN SHIPBUILDING

The last offshore vessel completed by Rosetti Marino was AH Varazze

Italian yard adjusts to new reality and returns to its roots Like most shipyards active in the offshore vessel sector, Rosetti Marino in Italy has had to adapt quickly to the downturn in the market. It has done so by moving further into related areas in which it was already established

ased in Ravenna, Rosetti Marino has long designed and built a range of vessels, including offshore support vessels, tugs and ferries. The company’s shipbuilding experience goes back almost 70 years, but its first significant newbuilding activity was in the early 1990s when it began building tugs. “Over the years, confident in our increasing shipbuilding skills, we made significant investments to develop and expand the San Vitale shipyard to accommodate larger vessels,” Iacopo Sintini, deputy sales manager at Rosetti Marino Group explained. “Today, the yard is competitive when it comes to building a range of vessels of up to 140m length overall and 32m breadth.” After riding what Mr Sintini described as “a very favourable wave” over the last decade, and delivering more than 60 vessels that are now operating in Europe, Brazil and West Africa, Rosetti Marino has been hit – as have many yards around the world – by a steep fall in demand as a result of the slump in crude oil prices. “After delivering our last offshore vessel, a UT 712 CD anchor handling tug supply vessel AH Varazze to owner Finarge – Armamento Genovese, the downturn prompted us to return to our origins,” Mr Sintini explained. “We went back to building tugs and made a competitive return on the ferry market, proposing vessels with innovative liquefied natural gas (LNG) and hybrid battery propulsion systems. We are also developing our own new projects as owners look to order more environmentally friendly ships, especially with regards to LNG so that we can stay ahead of competition.” Mr Sintini said that among recent deliveries Rosetti Marino has handed over a tug, Gatto, to Ravenna, Italy-based owner/operator SERS. This Voith tractor tug was built in Rosetti Marino’s San Vitale

Offshore Support Journal | April 2016

Shipyard. Measuring 29.50m x 11.00m with a design draft of 2.50m, the tug is powered by a pair of GE type 12V 228 diesels each developing 2,450kW at 1,050 rpm. These drive Voith Schneider type 30 R5/265-2 propellers to give a bollard pull of 73 tonnes and a free-running speed of than 12.5 knots. Despite the downturn in the market for offshore vessels, Rosetti Marino has a useful orderbook, which includes two tugs for Fratelli Neri. These RAstar 3200W LNG terminal/escort tugs will be 32m x 13.20m with a design draft of 6.05m. They will be powered by a pair of MAN 7L27/38 diesels each developing 2,555kW at 800 rpm. The new tugs will have a bollard pull of 90 tonnes ahead and 85 tonnes astern and will have a free running speed of approximately 13.5 knots. The new vessel will be used as terminal/tanker assist units at LNG terminals and, for this reason, will be specially outfitted to enable them to work safely at all times. They will, for instance, have explosion-proof external lights, navigation and signal lights, deck machinery and a gas detection system with oxygen metering fitted both on and above main deck. Two more sister vessels are under construction for owner Augusta Maritime Services (AMS). These azimuthing 2,386kW stern drive tugs will measure 24.35m x 8m with a design draft of 3.4m. They will be powered by a pair of Cummins KTA 50-M2 diesels each developing 1,193kW at 1,800 rpm. Their bollard pull will be in excess of 40 tonnes and they will have a free running speed of approximately 11 knots. “These new contracts, awarded by Italian ship owners, are keeping Rosetti Marino busy during these hard times,” said Mr Sintini. “We are confident that our ability to adapt quickly to market changes will enable Rosetti Marino to come out of the current crisis in the offshore vessel market even stronger than before.” OSJ

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LEGAL/FINANCE | 69

OFFSHORE MARITIME SECTOR MUST BE ALERT TO NEW LEASE ACCOUNTING RULES As Cassie Forman, a director at Moore Stephens LLP explains, charterers and vessel owners need to be cognisant of the effects of accounting standards that came into force earlier this year

BELOW: Cassie Forman: “the changes will have a bigger impact on charterers than owners, as lessor accounting will largely remain unchanged”

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016 has seen the release of the long awaited changes to the lease accounting standards for companies reporting under International Financial Reporting Standards (IFRS) and US GAAP. This might sound like something only accountants need to worry about, but is more far-reaching. The changes will have a bigger impact on charterers than owners, as lessor accounting will largely remain unchanged. As a general rule, bareboat and time charters will fall within the scope of the new standards, whilst voyage charters will not. The changes cover the lease of assets and therefore, for a time charter, an allocation will need to be made between hire paid for the use of the ship versus the services provided. Until now, most time charters have been accounted for as operating leases, meaning that for charterers a single expense was recorded in the income statement and the total amounts due under the charter were simply disclosed in the notes to the financial statements. This is all set to change. Under both US and international requirements the present value of the total amount due under the charter will have to be brought onto the balance sheet together with a right of use asset. Although net assets may not be greatly affected, gross assets and gross liabilities will increase significantly for companies which currently have major operating leases. There will also be some effect on reported profit, although that will vary between companies. Current operating leases are nearly always spread evenly over their life, so the charge is constant. Under the new IFRS rules, the total charges will consist of two elements – the depreciation of the vessel and the interest charge arising due to the financing. The depreciation will normally continue to be on a straight line basis, but the interest charges will be weighted towards the

earlier part of the lease period. So, whilst ultimately, the total lease charges over the charter period will be the same as before they will be more front-loaded, with higher charges in the earlier years and lower charges in the later years. Obviously, the effect of this will be greatest on companies with just a few substantial charters, or even just one – those with many charters at various stages may find that even though the charges on each one change, the overall charges remain broadly the same. The new US GAAP rules will have less impact on profits. Expenses under the US standard will remain flatter than under IFRS and may be unchanged from current standards. Originally it had been expected that the US and international standards would be identical, but there are instead now two standards which, although similar in many respects, contain significant differences. On inception of a lease, the balance sheet entries prepared under the two new standards will usually be similar, but they will then diverge as the basis of charging expense differs. There are also differences of detail dealing with matters such as subleases, and sale and leaseback transactions. It will be a few years before the first financial statements are published which have to comply with the new standards; nevertheless, many companies in the offshore maritime sector will need to consider the effect on their financial statements quite soon. Some will see major changes to their balance sheets, and a certain amount of change to their reported profits. Companies will also need to consider the effect that the changes will have on compliance with the terms of financing which include covenants. And where breaches of covenants are likely, or reasonably possible, talking to lenders before the change hits the accounts will be crucial. OSJ

Offshore Support Journal | April 2016

70 | ROV/AUV

Nexans extends ROV contract with IKM Subsea IKM Subsea and subsea cable specialist Nexans Norway have agreed to extend the current remotely operated vehicle (ROV) services contracts onboard cable ship Nexans Skagerrak. The contract value including options is NKr75 million (US$8.7 million) and will run for three years with two further one-year options. It involves IKM Subsea’s proprietary Merlin ROV technology. IKM Subsea’s ROV services will be integrated with iSURVEY’s positioning and monitoring service during cablelay and trenching operations. IKM Subsea’s managing director Ben Pollard said, “I am pleased to announce the news of this long-term contract in these challenging times. This enables us to further develop our capabilities within the subsea power cablelay market. We have had an excellent working relationship with Nexans Norway over the last three and a half years, and the fact they are extending the contract by five years is a testament to the quality of service we have supplied.” Since 2012, IKM Subsea has supplied a Merlin WR200 work-class ROV onboard and has additionally supplied the ROVs with personnel and other related services.

ABOVE: IKM Subsea will continue to provide ROV services onboard Nexans Skagerrak

iSURVEY wins Solstad survey deal iSURVEY Pte Ltd in Singapore has been awarded a marine construction support contract by Solstad Offshore Asia Pacific to provide positioning and survey support for its 2016 pipeline and platform installation programme in Thailand, onboard the derrick/lay barge Norce Endeavour. iSURVEY will provide positioning services to support the installation of numerous pipelines and platforms including monitoring during jacket setting, together with final positioning, levelling and survey assistance during pile cut-off. The estimated contract duration is 200 days commencing in mid-January 2016. Subsea positioning will also integrate with IKM Subsea’s Merlin work-class ROV during installation operations.

SMD delivers seabed mining unit Late January marked a significant milestone for SMD in the UK when the world’s first deepsea mining vehicles left the Port of Tyne. In late 2007, SMD was awarded with a contract to design and build the world’s first deepsea mining vehicles for Canadian listed company Nautilus Minerals.

Eight years on, having worked in close partnership with the customer, the project is complete. The seafloor production tools (SPTs) and associated equipment, which weigh more than 1,000 tonnes, were loaded onto a heavylift vessel, which has set sail for Duqm Port in Oman

where they will undergo further testing. As well as the three SPTs, SMD designed and manufactured the full spread equipment required to remotely operate, launch and recover the SPTs from the deck of the ship onto which they will be installed in 2017.

C-Innovation plans AUV acquisition Kongsberg Maritime has confirmed that C-Innovation (C-I), a member of the Edison Chouest Offshore group of companies, has signed an agreement with the company to acquire four new autonomous underwater vehicles (AUVs). C-I’s general manager Richard Bourque said the

contract allows C-I to do more advanced and faster surveys in deeper water: “We can now offer HiSAS (a wideband synthetic aperture sonar (SAS) with frequency range of 70–100 kHz, capable of producing very high resolution acoustic images as well as co-registered bathymetry

Offshore Support Journal | April 2016

data) from the 4,500m Hugin AUV to the offshore industry. All vehicles are portable to some extent, but especially the Munin vehicles can be mobilised anywhere in a very short time.” The Kongsberg Maritime AUV delivery includes two Hugins and two Munin AUVs.

Two Leopards for Louis Dreyfus TravOcean Specialist submarine cable installation company Louis Dreyfus TravOcean has ordered two Saab Seaeye Leopards for touchdown monitoring and support. Specialising in laying and protecting submarine cable, Louis Dreyfus TravOcean provides turnkey installations worldwide and is a specialist in the design and construction of trenching equipment. The company has selected Saab Seaeye’s Leopard ROV with its 11 thrusters and iCON intelligent control system to provide a stable work platform in strong currents. OSJ

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PEOPLE NEWS | 73

Åge Remøy to retire

Kongsberg CEO resigns

Åge Remøy has informed the board of directors at Rem Offshore that he intends to resign as CEO of the company with effect from 1 May 2016. Mr Remøy is the majority owner and founder of Rem Offshore. The board of directors at the company said it has decided to appoint Arild Myrvoll to succeed him. Mr Myrvoll was first employed by the company in 2007 and has held the position as chief financial officer of Rem Offshore since then. Mr Myrvoll has also acted as deputy to the CEO.

The CEO of Kongsberg Group in Norway, Walter Qvam, has informed the board of directors of the company that he plans to resign in June 2016. The board has conducted a process to find a new CEO and has chosen Geir Håøy, currently president of Kongsberg Maritime. Mr Håøy is 49 years old and has been employed at Kongsberg since 1993. He has been a part of the corporate management team since 2010. With Mr Håøy being promoted to head the company, Egil Haugsdal has been appointed as the next president of Kongsberg Maritime. Mr Haugsdal has extensive leadership experience at Kongsberg and currently heads Kongsberg Oil & Gas Technologies. He has previous experience as executive VP of business development and as president of Kongsberg Protech Systems. “I am pleased that I will be handing over the role of president of Kongsberg Maritime to Egil Haugsdal. After several years of co-operation in the corporate management team, I have developed a great respect for Egil’s capacity and experience. He has achieved good results and knows Kongsberg Maritime well,” said Mr Håøy. Mr Haugsdal will assume his new position after a short period of overlap with Mr Håøy. OSJ

Åge Remøy, founder and majority owner of Rem Offshore, is to retire in May

Valerio Percoco joins JFD JFD has announced the appointment of Valerio Percoco as sales director. The appointment follows the company’s significant growth over the past 12 months, which included a significant contract win with NATO, as well as the merger of James Fisher Defence, Divex and the National

Hyperbaric Centre to create what the company describes as the world’s largest provider of subsea operations and engineering solutions, equipment and services for defence and commercial markets. Mr Percoco joined JFD from Offshore Installation Services.

New head of finance at UTEC Survey UTEC Survey has announced the appointment of Caroline McGovern as its new head of finance. Before joining UTEC, Mrs McGovern was the CFO for MOL Energy UK where she was a founding director of the business, which grew to comprise ownership of 20 North Sea exploration and production licences. Prior to that, she was finance manager for EnQuest PLC, where she spent four years leading and supporting the finance function through their initial IPO listing on the UK stock market and the company’s subsequent asset consolidation and growth period. She is a chartered accountant with the Scottish Institute (ICAS) and holds a Bachelor of Science in business management studies and a diploma in marketing. Based in Aberdeen, Scotland, she leads UTEC’s global finance and compliance efforts and participates in a number of other strategic projects.

For more articles visit: www.osjonline.com

LEFT: Caroline McGovern is joining UTEC Survey as the company’s head of finance

Offshore Support Journal | April 2016

74 | IMCA NEWS

Two important DP documents revised by IMCA

MCA M 103 Guidelines for the Design and Operation of Dynamically Positioned Vessels and IMCA M 166 Guidance on Failure Modes & Effects Analyses (FMEAs) are both now freely available on the IMCA website. As Richard Benzie, technical director, at the International Marine Contractors Association (IMCA) explained, a great many stakeholders have had impact on the documents, both having been reviewed using the IMCA ‘open forum’ web-based system introduced last year. “This enables those wanting to voice their opinion to have access 24/7 to the document in draft form (important with global interest in these two guidance documents),” said Mr Benzie. “It’s a win-win situation for it makes it easier for those revising the document to keep a close eye on submitted suggestions. All comments were welcomed and taken onboard, so M 103 and M 166 have been updated by the industry for the industry.” Mr Benzie said the industry had one crucial request on M 103, which was “fewer words please”. “The revised document should satisfy this request,” he explained. “We have done away with unnecessary repetition and made the document more user-friendly.” M 103 was last revised in 2007, and specifications for the rewrite included separating the areas of design and operation into two sections and ensuring the section on design was based on IMO Circular MSC 645. “We also needed to ensure that we developed guidance for differing vessel types,” said

Two IMCA documents, often written into contracts by clients, have been revised and published

BELOW: Richard Benzie: “IMCA’s open forum, webbased system enabled many users to have input to the documents”

Offshore Support Journal | April 2016

Mr Benzie. “We expanded the guidance on training and experience of DP personnel, included guidance on manning and watchkeeping arrangements and also referenced existing guidance, not only from IMCA (30 documents), but also from other organisations (including MTS, OCIMF and DNV).” Importantly, the revised M 103 includes generic design and operational guidance as well as specific guidance for 17 representative vessel types that use DP in support of the offshore oil and gas and other offshore energy industries. Diving in deeper, the design guidance focuses on the methods for creating faulttolerant DP systems based on the principles of redundancy, and the operational guidance focuses on current good industry practice and draws from existing operational guidance from industry. The vessel type-specific guidance looks at the industrial mission of the 17 vessel types and the impact this has on design and operation. A brief description of the industrial mission is included for each vessel in order to better explain the technical and operational guidance and to give an indication of the risks associated with an inability to maintain position. M 103 stresses the importance of DP stationkeeping event reporting. IMCA has been collecting such reports

and publishing them as annual reports since 1991. “Learning from others’ experience is vital,” Mr Benzie said. “We are confident that M 103 is right for the current era of DP vessels and can be easily modified when needed, thanks to our decision to produce only pdf versions of all guidance documents.” An FMEA is an easy to use yet powerful proactive engineering quality tool that assists in the identification and countering of weak points in the early design phase of products and processes. “M 166 is very much a technical document and a statement of fact. It’s a living document, and with technology improving all the time, we need to keep in step with these developments, so ‘virtual publication’ will undoubtedly be a boon,” said Mr Benzie. The guidance aims to assist in producing more consistent and thorough FMEAs. The original document published in 2002 has been updated with four sections – a comprehensive introduction, specifying an FMEA, DP FMEA methodology and DP FMEA proving trials – and appendices designed to be read separately or as a single document. Its contents embrace M 178 (now withdrawn). Whilst the emphasis of this document is on DP systems, FMEA techniques can be applied to any system, whether land, sea or air-based equipment or systems, in which it is required that no single failure shall cause a total failure of the system or process. “We look forward to positive feedback on both documents,” Mr Benzie concluded. OSJ

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COMPANY NEWS | 77

Jeffrey Webber: “conditions will remain challenging into FY17”

MMA Offshore expects tough conditions to continue MMA Offshore chairman Tony Howarth says market conditions in the offshore oil and gas industry continue to be very challenging. He said MMA’s first-half result, whilst disappointing, was in line with expectations and reflective of current market conditions. “In the current environment, MMA is focused on improving the business through areas that it can control such as reducing costs, increasing productivity and improving our operating performance,” he said. “We are also strongly

focused on our asset sales programme to reduce debt. MMA has recently renegotiated the terms and conditions of its banking facilities and is committed to reducing its debt levels to better match the company’s earnings in the current market. We have suspended the payment of dividends in order to retain cash.” MMA managing director Jeffrey Weber said, “At this stage, we anticipate market conditions will remain challenging for the remainder of FY16 and into FY17.”

Vallianz obtains Islamic funding Vallianz Holdings Ltd has successfully entered the Sukuk market in the Middle East with its maiden Saudi riyal-denominated Sukuk issuance of SAR1 billion (US$266.7 million). Sukuk finance enables companies to secure Islamic bonds that are structured in such a way as to generate returns to investors without infringing Islamic law, which prohibits interest. The Shariah-compliant Sukuk was facilitated through Rawabi Vallianz Offshore Services (RVOS) Ltd and jointly led and managed by four financial institutions in Saudi Arabia – Alinma Investment Co, Saudi

Fransi Capital, Saudi Hollandi Capital and GIB Capital LLC. Sheikh Abdulaziz Alturki, group chairman of Rawabi Company Holding Ltd and chairman of RVOS, said, “Sukuk has become a prominent financing product. It is an important funding channel that can provide the liquidity at an acceptable cost as well as pave the way for other means of funding.” The Sukuk has a fixed term of five years, with certain amortised principal repayments during the term and a bullet repayment of the remaining principal amount at the end of the tenure.

DryShips on wrong end of Petrobras decision

Edison Chouest Offshore to build another yard

Only weeks after the company entered the offshore vessel market with the acquisition through its affiliate Ocean Rig UDW of Nautilus Offshore Services, DryShips has confirmed that Petrobras has given notice of termination of a contract for the platform supply vessel Vega Crusader. The contract for Vega Crusader was due to expire on 8 January 2017, and losing the contract means a loss in contracted EBITDA of approximately US$2.2 million for the balance of 2016.

Edison Chouest Offshore has confirmed the company plans to develop a shipbuilding facility at Port of Gulfport in Gulfport, Mississippi. Around US$68 million will be invested in the project, which will create 1,000 full-time jobs. Edison Chouest Offshore’s Gulfport operations, TopShip LLC, will be located at the new inland port. The company will be operating from the former Huntington Ingalls Composite Facility, which was acquired by the port in March 2015.

EMGS reasonably optimistic despite challenges Electromagnetic GeoServices (EMGS), which specialises in acquiring and processing controlled-source electromagnetic (CSEM) data to characterise oil fields and enhance exploration activity, says the downturn in the industry is “challenging”, but it is hopeful that demand for its services will remain reasonably buoyant. The company recorded revenues of US$20.5 million in the fourth quarter of 2015, up

from US$16.3 million in the third quarter and down from US$52.5 million in the fourth quarter of 2014. Contract sales ended at US$9 million, while sales from the multiclient library ended at US$11.5 million in the quarter. “The low oil price presents a challenge as exploration budgets continue to come down. However, with the adoption of our technology on the

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increase, EMGS continues to be well positioned within the industry. I am encouraged by the healthy amount of business opportunities, even though our customers tend to delay decisions to award work closer to the start-up of the surveys,” said the company’s chief executive, Christiaan Vermeijden. “The outlook for oil services continues to be challenging and is characterised by a high level of uncertainty. Oil

companies have continued to reduce spending in 2016 compared to 2015 as a response to the sharp decline in oil price. Interest in the CSEM technology from the oil companies is healthy, although challenged by reduced budgets.” EMGS expects costreduction measures to have full effect from the second quarter of 2016 and is currently ahead of its target to cut costs. OSJ

Offshore Support Journal | April 2016

78 | SAFETY FLASHES

FATALITY DURING LOADING OPERATIONS The International Marine Contractors Association (IMCA) regularly publishes safety flashes summarising safety matters and incidents, allowing wider dissemination of lessons learned from them, a recent example of which is reproduced here

n IMCA member has reported an incident in which a crew member was struck and fatally injured by a mini container whilst working on back-loaded cargo from a drilling rig. The incident occurred when heavy seas struck the vessel, causing sudden movement of landed cargo, upon which the crew were still working to make it fully secure. The movement of this cargo resulted in a crew member being trapped between a mini container and a skip bin. The crew responded to the injured person, releasing him and administering first aid and CPR. He was further attended to by a medic who was transferred from the drilling rig. He was transferred to the rig but unfortunately could not be revived. The vessel had been alongside the rig for a number of hours during the night, during which time six loads had been transferred to the rig and nine loads (mostly empty containers) back-loaded from the rig. After four hours, the weather had started to deteriorate. The chief officer of the vessel advised the drilling rig that the vessel would be ceasing cargo operations and that the drilling rig crew should stop any further loading. The vessel moved approximately 30m away from the rig (still sitting in the lee of the rig for additional shelter). Seas at the time were running between 2m and 3m and the wind was 24 knots, gusting to 36 knots. During this time, the deck crew continued work on securing the cargo. Two able seamen (ABs) working on the deck decided that the sea fastening arrangement was not adequate to restrain the two mini containers located at the forward end of the deck. Additional rigging was required to rectify this. One of the ABs left the deck to go to the nearby rigging store. The

Offshore Support Journal | April 2016

tension on the tugger winch was released to facilitate installation of the new rigging. A large wave crashed over the back deck of the vessel and travelled along the length of the deck, with the force of the wave causing movement of some of the landed cargo. The movement of this cargo resulted in the ABs becoming trapped. An investigation identified the following immediate causes: • working in and around unsecured cargo had become part of a familiar routine • a vessel with an open stern being used for cargo operations • wave struck cargo • cargo shifted 3–4 m on deck aft to forward • the crewman involved did not get out of the “line of fire” or hear the bridge warning over UHF radio. The investigation identified the following root causes: • vessel operations in the 500m rig zone are not recognised as simultaneous operations (SIMOPS) for the rig and vessel. There was no process in place to ensure effective communications, load sequencing, deck layout planning, cargo securing plans and optimising time of vessel alongside rig in dynamic positioning (DP) mode • the potential for injuries to crew undertaking cargo securing tasks offshore on anchor-handling tug/supply (AHTS) vessels (due to open stern) had not been identified as high risk • no risk assessment had been carried out for suitability of AHTS vessels performing cargo operations • the vessel procedure for cargo loading and unloading did not describe a cargo lashing plan, and although there was a risk assessment for cargo loading, there

was no specific risk assessment for the work activities associated with the further securing of landed cargo. The company took the following actions, with a view to minimising the risks associated with cargo operations to as low as reasonably practicable: • further detailed risk assessment for AHTS vessels conducting cargo operations. Risk assessment should include consideration of engineering controls to minimise excessive water on the vessel back deck (stern door or use of other vessel type); a review and update of company adverse weather working guidelines; a review of company cargo loading procedure to include cargo lashing arrangements and further risk assessment for securing cargo; a review and update of company cargo securing procedure and risk assessment to include the requirement for a lashing plan and load sequence planning with rig before entering the 500m zone.

MALARIA FATALITY A recent offshore fatality from malaria has focused attention on mosquito-borne diseases of all kinds, including malaria and the Zika virus. Useful information can be found at: A handy PDF poster on Mosquito bite prevention for travellers, prepared by the United States’ Center for Disease Control & Prevention (CDC). This is reproduced in entirety as part of this safety flash – www.cdc.gov/chikungunya/ pdfs/fs_mosquito_bite_prevention_ travelers.pdf; information from the CDC on mosquito borne diseases – www.cdc. gov/features/stopmosquitoes/; vectorborne disease management programmes: A guide for managers and supervisors in the oil and gas industry – www.ogp.org. uk/pubs/481.pdf. OSJ

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MARKET DATA | 81

OSVs ordered worldwide The following information is the first update to the OSV worldwide orderbook published in the March 2016 issue of Offshore Support Journal

OWNER

VESSEL TYPE

DWT

DESIGN

$M PRICE

MTH

YEAR

Briggs Marine

Work/repair

Multi Cat 2712

2016

Iceni Marine Services

Workboat

2016

Coastal Contracts

Undisclosed

OSV

4,000

2016

Coastal Contracts

Undisclosed

OSV

4,000

2016

Coastal Contracts

Undisclosed

OSV

4,000

2017

Taiwan Ocean Research

Oceanographic research

2017

Bohai

Huake Wuzhou Offshore

Jack-up platform

2017

Bohai

Huake Wuzhou Offshore

Jack-up platform

2018

BUILDER/REGION

EUROPE The Netherlands Damen Hardinxveld

UK Alicat Workboats

ASIA Malaysia

FAR EAST Vietnam Triyards

China

Source: BRL Online Data Service

Orders for new vessels have been few and far between in recent months â&#x20AC;&#x201C; one exception is this windfarm transfer vessel for Iceni Marine Services in the UK

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Offshore Support Journal | April 2016

82 | 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: FEBRUARY 2016

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