Crew/supply boats

Deliveries of American-built OSVs sparse as vessel glut persists
Crew1
Courtesy SEACOR Marine
Very few newbuilds of any type hit the water last year to support offshore drilling activity in the Gulf of Mexico. One of the most prominent deliveries, the 221-foot SEACOR Totonaca from Master Boat Builders, is now working in West Africa.

U.S. shipyards will produce only a few offshore supply vessels (OSVs), which are considered the lifeline to oil and gas rigs, this year. Vessel owners are trimming a surplus that emerged after oil prices sank in late 2014 and drilling declined. Since then, inland shale output has kept a lid on oil prices.

Several vessel owners along the Gulf of Mexico have sprung out of bankruptcy protection, however, and with belt tightening they’re staying afloat. Oil producers remain committed to offshore investments, and the Trump administration supports an expansion in drilling.

The Gulf utilization rate for large platform supply vessels (PSVs), including those that are laid up, was 56 percent in July, according to Richard Sanchez, senior marine analyst at IHS Markit in Houston. The PSV glut is gradually shrinking as assets are moved from the Gulf to Trinidad, Mexico and Guyana. But Gulf vessel usage is below 50 percent when a wide range of offshore boats is considered.

The Gulf’s oil and gas hub, Port Fourchon in Louisiana, is somewhat busier than last year, port director Chett Chiasson said in July. “It can and should get better, with what we hope are continued increases in rig counts,” he said. “We’d really like to see 35 rigs or so drilling in the GOM.” The Gulf rig count was 26 in late August versus 16 a year earlier.

In February, vessel operator SEACOR Marine in Houston took delivery of the 221-foot SEACOR Totonaca from Master Boat Builders in Bayou La Batre, Ala. The OSV is now working in West Africa. In January, SEACOR received the 194-foot Libby L. McCall, a fast support vessel, from Gulf Craft in Franklin, La. It is the third in a series of Express Plus-class FSVs built for the operator by Gulf Craft.

Gulf Craft delivered Libby L. McCall, a 194-foot fast support vessel, to SEACOR Marine in January. The third boat in the Express Plus class features five Cummins QSK60 diesels driving HamiltonJet waterjets. Firefighting is handled by a pair of FFS pumps feeding two remote-controlled monitors at the stern.

Courtesy Incat Crowther/Gulf Craft

SEACOR Totonaca has large cargo capacities for a boat of its size class, especially bulk cement capacity,” said SEACOR President John Gellert. “Libby McCall is designed for speed and passenger comfort.”

Gellert said his company also has contracted with Gulf Craft to build 200-foot FSVs, including Alexandra for March 2020 delivery, a boat for late 2020 and another for September 2021.

“(Overall) the newbuild market for offshore in the U.S. remains gloomy,” Gellert said. “But we cater to offshore oil and gas and to wind power worldwide. We can send vessels to work anywhere. We’re a bit optimistic about demand for newbuilds in wind.” SEACOR and other Gulf firms are supplying boats to support offshore wind facilities on the U.S. East Coast.

New Orleans-based Harvey Gulf International Marine, with more than 50 offshore vessels, emerged from Chapter 11 proceedings in July 2018. Shane Guidry serves as chairman of its new board of directors. “I’m not seeing a recovery in the U.S. GOM until 2021 or 2022,” Guidry said in July. In addition to the United States, “we now have vessels contracted into Mexico, Guyana, Trinidad, Suriname and Nigeria. Plus we’ll contract very soon into Angola and are looking to contract into Gabon, Brazil, the U.K. and Australia.”

As for newbuilds, “We only have my ATB delivering next year, of which Harvey owns 30 percent and I own 70 percent,” Guidry said. The ATB tug is Q-Ocean Service, being built by VT Halter Marine. It will work the Eastern seaboard for Shell under a 15-year charter, he said, delivering LNG to ports for cruise ships.

Quality Liquefied Natural Gas Transport LLC, or Q-LNG, is a joint venture between Guidry and Harvey Gulf International Marine. Harvey Gulf introduced North America’s first LNG-powered offshore supply vessels in 2015.

Firefighting aboard Libby L. McCall is handled by a pair of FFS pumps feeding two remote-controlled monitors at the stern.

Courtesy Incat Crowther/Gulf Craft

In mid-June of this year, Harvey Gulf signed one-year charters in Nigeria for immediate placement of two U.S.-flag, 3,250-dwt PSVs able to work in shallow ports. The company also expects to send two deck vessels to West Africa in the third quarter.

Harvey Gulf is in talks to bring multipurpose support vessels (MPSVs) and dual-fuel PSVs to the North Sea, Brazil and Australia later this year and next, along with fast support intervention vessels to Angola.

In Galliano, La., family-run Edison Chouest Offshore (ECO) operates a fleet of over 200 offshore vessels that are in service worldwide. The company owns four shipyards along the Gulf Coast and one in Brazil.

ECO’s Tampa Ship in Florida is building a 312-foot PSV (Hull 298) for ECO affiliate C-Innovation, a marine services group in Mandeville, La., according to David Sheetz, the affiliate’s subsea manager in Houston. Asked in July if anything else is being built for C-Innovation, he said, “No, not in this market.”

In June, C-Innovation said it was awarded a BP contract for well intervention in the Gulf. Construction and intervention vessels Island Venture and Island Performer will be used in the deepwater operation, which started during the summer. “This contract complements the multiyear IMR (inspection, maintenance and repair) agreement currently in place with BP and other operators in the Gulf,” Sheetz said.

Oceaneering International took delivery of Ocean Evolution, a 353-foot multipurpose support vessel, from BAE Systems Southeast Alabama in April. The vessel was ordered in 2013 when the oil market was still strong.

Courtesy Oceaneering International

Bollinger Marine Fabricators in Amelia, La., delivered the 270-foot PSV Lucy to ECO’s Nautical Solutions in April for its U.S. offshore fleet. Bollinger is currently building the 270-foot OSV Millie for ECO. The company bought Bollinger’s assets in late 2014.

Tidewater Inc. in Houston exited bankruptcy in mid-2017 and merged with Houston-based GulfMark Offshore last November, forming the world’s largest OSV operator. Tidewater is now disposing of vessels, not acquiring them. In May, Tidewater reported a net loss of $21.7 million for the first three months of the year. The company disposed of 16 vessels in the quarter.

“Considerable progress has been made toward meeting our ambitious goal of selling or recycling 40 additional vessels by the end of the year,” Tidewater President and CEO John Rynd said in May.

On March 31, Tidewater owned 257 vessels, 85 of which were stacked. In the Americas region, 32 of its 71 vessels were stacked. When asked in July if any more vessels might be acquired this year, Matthew Mancheski, Tidewater’s investor relations vice president, responded that the company’s fleet “is fluid. If something attractive becomes available, we might consider it.”

“There are strong indications that exploration and production spending offshore will increase this year, driving steadily improving drilling activity,” Rynd said in May. Tidewater, with OSV leadership in almost every global region, “is best positioned to benefit from the upside as the market continues to improve through 2019,” he said.

BAE Systems Southeast Alabama in Mobile delivered the 353-foot multipurpose support vessel Ocean Evolution to Houston-based Oceaneering International in April. The boat was ordered in the second half of 2013, before offshore oil and gas activity peaked in 2014, said Mark Peterson, investor relations vice president at Oceaneering.

Breaux Brothers in Loreauville, La., a longtime builder of quality crew boats, has had to diversify in the wake of the oil downturn in the Gulf of Mexico. In early August the yard was working on Robert H., a 61-foot excursion vessel for Wendella Sightseeing in Chicago.

Brian Gauvin photo

“It was ordered when it made sense for us to build, versus chartering a vessel,” he said. “The offshore market has declined significantly since then, and the current supply of vessels is more than enough to handle demand.”

Oceaneering doesn’t plan to take any more deliveries in the next two years. But when asked if demand for subsea construction and intervention vessels is likely to grow over the next five years, Peterson said yes.

“The economics of offshore oil and gas developments have become competitive with onshore or shale again,” he said. “A combination of stabilized commodity prices, with Brent (crude oil) in the $55 to $65 a barrel range, lower break-even prices for offshore developments, and larger potential oil-and-gas reserves offshore have led to increasing activity.”

“Most researchers expect offshore activity to increase modestly over the medium term, and we agree,” Peterson added. “While that’s helpful to vessel utilization, it isn’t likely to result in a lot of new building, which would require sustained higher levels of utilization.”

Hornbeck Offshore Services in Covington, La., reported a $36.6 million net loss for the first quarter of 2019. When March ended, the company owned 66 new-generation OSVs and eight MPSVs. An average of 36 new-generation OSVs and two MPSVs were projected to be stacked during fiscal 2019. Hornbeck provides technologically advanced offshore vessels to service the Gulf and Latin America. Its build orders were overextended after oil prices dropped in 2014, but the company has used debt restructuring to stave off bankruptcy.

The torches were still lit during the summer at Breaux Brothers, but offshore order books were empty at many shipyards along the Gulf Coast.

Brian Gauvin photo

At Otto Candies in Des Allemands, La., company Vice Chairman Otto Candies III echoed the near-term views of other Gulf shipyard executives. “I don’t see anything currently that would lead me to expect dramatic improvement in the GOM OSV market in the next couple of years,” he said. “We have no plans now to deliver new supply vessels this year or in the next two years. It would take something drastic in the market for that to change.”

New uses are being found for some OSVs. Thoma-Sea Marine Constructors was awarded a Navy contract in May to buy an OSV and convert it to an Atlantic Undersea Test and Evaluation Center range support vessel, or ARSV. The work will be done at the company’s yard in Lockport, La., and should be complete by January.

In the Gulf crew boat market, “Rentals are picking up and day rates are improving a little,” Roy Breaux Jr., president of Breaux’s Bay Craft in Loreauville, La., said in July. His yard delivered the 202-foot all-aluminum Judith Ann to Tobias Inc. in April. “It’s the sister of the 202-foot Big P. that we delivered to Crewboats Inc. in 2016,” Breaux said. These vessels take workers on trips of four to five hours out to platforms in the Gulf and carry supplies and water.

Breaux’s Bay Craft and two other crew boat builders in Louisiana’s Bayou Teche area, Gulf Craft and Breaux Brothers, are diversified to stay busy. Gulf Craft has built tour boats recently, and in February Breaux Brothers in Loreauville christened a 193-passenger vessel, Half Moon Clipper, catering to Bahamas beach excursions for Carnival Corp.

Meanwhile at Port Fourchon, its 80 tenants hold 135 leases, and all waterfront rentals are intact from a year ago, Chett Chiasson said. A 20 percent discount on lease rates that began in April 2015 continues.

As for the future, “2025 is a bit far away for a strong opinion, but the hope is that by then things will pick up, and that through scrapping and attrition of older stacked vessels, some supply-demand balance will return,” Candies said. “The best hope for OSVs is an uptick in the (oil) market, combined with further scrapping and permanent retirement of currently stacked vessels.”

Categories: American Ship Review, Maritime News