2008 Asia-Pacific offshore supply vessels

Upon starting this article it looked reasonably simple to try to estimate the supply and demand of OSVs (AHT, AHTS, PSVs or straight supply vessels) for the Asia Pacific region in an attempt to help the Editor-in-Chief of Work Boat World to prove or disprove his theory that the OSV market looks to be overbuilding (a thought which I also share).

However, the whole picture comprising the elements below needs extremely careful examination before voting one way or the other. It's a very dynamic, nomadic and volatile industry and the comments have to be viewed in both a worldwide and regional context.

The tables 1, 2, 3, and 5 are only snapshots in time, as the situation is forever changing as rigs, OSVs, etcetera, arrive and leave all the time (see table 1), plus the fact that a country can be experiencing varying degrees of activity of exploration, appraisal and development drilling, along with construction projects and production.

Some of the factors contributing to the current ordering and buying frenzy could be due to:

• Variation in environments across this region: we have to use different benchmarks for estimating, but there is some disparity between them. (see table 4);
• Greater distances offshore (effects of deepwater drilling areas opening up) means more or larger vessels to deliver the goods;
• The advent of a particularly new sub class of larger AHTS (kW range 13,423 to 20,880) and larger PSVs (larger deck areas and larger underdeck capacities for bulk) for deepwater and ultra deepwater drilling support;
• The anticipated high scrapping rate of existing older vessels at, say, 25 years or 30 years of age may not materialise in such volume as predicted due to the current high charter rates, and the sustainability of the same;
• Owners may consider it worthwhile putting a vessel through a fifth special survey at a cost of close to US$1 million or more as the current high rates would yield a very fast "payback period" at time charter or even spot market rates of between US$10,000-20,000 a day. Payback at 50 days at US$20,000 is not to be 'sneezed at' – or even 100 days at US$10,000 per day.
• The exceptionally high utilisation rates of rigs (of all types) internationally at a current level of 90 percent (+/- 1 or 2 percent).
• A larger number of active rigs means an increase in demand for an extra AHT or AHTS chartered in from the spot market or as a "sublet" from a fellow oil company operator for rig anchor recovery and anchor setting, etcetera, during infield rig moves (minimum three tugs for a rig move), to recover and set anchors of a semi-sub rig or to tow a jack-up rig.
• A greater number of wells being drilled per rig due to enhanced drilling techniques (i.e. slim hole technology, batch drilling, etc.) means rigs finish the job quicker.
• More AHT or AHTS being hired as "assist tugs" on ocean tows for location moves of rigs, platforms, spars and barge transports, etcetera, and positioning, mooring up, tensioning, etcetera, of large platforms or FSOs/FPSOs.
• More mob/demob requirements of rigs (due to faster drilling times, etcetera).
• Growth of asset-sharing schemes among major oil company operators and supply chain management contractors.
• The media hype has encouraged some new players (with deep pockets and financial stamina) into the marketplace as owners (there is no barrier to entry).

Note: We have not included two categories of vessels in this study:

1. ERRVs (emergency response rapid evacuation vessels, mandatory in the North Sea, but quite often substituted elsewhere in world by OSVs performing multiple duties.
2. Crew/utility boats, as these usually compete with helicopters for demand.

If you look at Table 4, the multiplier in USA is only 10 percent of the total number of platforms when trying to estimate the number of OSVs needed. Also see the reality checks.

* The statistics for worldwide operational platforms have to be studied carefully for each area of the world. It's not the statistics that are faulty or doubtful, it's the interpretation of them that might be a cause of miscalculation of OSV demand.

For example, a large totally integrated structure (fixed platform secured to the seabed by driven and grouted piles) mostly used in harsher weather environments, only counts as one platform, whereas a platform complex of several small structures all linked to each other by steel walkways counts as several platforms (or structures). Some are also unmanned, so their life support needs are different to those of manned structures.

See the Thai Government's excellent statistics at www.dmf.go.th, showing production platform totals and unit, and producing and/or storage floating – a very transparent and useful site.

Existing production platforms in the Asia Pacific region 2008

Existing OSVs in the Asia Pacific region 2008

World fleet of OSVs (end 2007) include 3,600 existing vessels and about 575 on order.

– Asia Pacific has about <1,054 / 3,600 or 29.28%

World total of fixed platforms (April 2007):8,762

Source: "Infield Systems" London

– Asia Pacific has about 1,364 / 8,762 or 15.56%

World total of FSOs/FPSOs: 143

– Asia Pacific has 56 / 143 or 39.16%.

Source: Mustang Engineering Houston

Asia Pacific shipyards are building about 93 rigs.

Reality checks.

Total fixed platforms in the world (at April 2007): 8,762.

In 2001, the US Gulf of Mexico (G of M) had some 171 rigs (MODUs) and approximately 3,739 fixed platforms offshore supported by 775+ OSVs.

Therefore,

171 rigs (MODUs) x 1.7 OSVs = 342 OSVs

3,739 fixed platforms x 10 percent = 374 OSVs

Construction support vessels (estimated = 102 OSVs

Grand Total = 818 OSVs (close to 775+)

– Bass Strait (Australia) has 21 platforms supported by two dynamically-positioned Platform Supply vessels – another example of the 10 percent rule.

– Mexico has some 100+ fixed production platforms

– US G of M has 3,739

– North Sea has 600(estimated)

– Asia Pacific has 1,364

Subtotal 5,803

Therefore, the balance is 2,959 (8,762 -5,803)

The balance is shared between the other areas of the world. For example: Canada, the Caribbean, Brazil, West Africa, South Africa, the Mediterranean, the Caspian Sea and the Middle East.

*Note: Considerable caution is necessary in interpreting the figures in table 5 above

1. The multipurpose function of AHTSs means that there may be some duplication of the numbers calculated, particularly in respect of the OSVs for fixed platform support vessels.

2. A study by one oil company operator over a five year period utilisation of a fleet of OSVs concluded that the itemised breakdown of the duties in terms of time by the OSVs were approximately:

Port Time (load/unload) = 10%

Stand by duties = 50% **

Rig Moves = 8.%

Supply runs = 18% **

Downtime = 14%

Total = 100%

**That is, approximately 68% (standby duties & supply runs) of an OSV's time can be performed by either an AHTS or a PSV

#1. MODUs require 1,028 OSVs (mostly AHTS), and, #2. FPSOs need 243 OSVs (mostly AHTS ) – total: 1,271 OSVs

and,

#6. 8,762 fixed platforms require 4,070 OSVs (AHTS or PSVs or straight supply vessels) (384 + 15 + 346 + 1049 + 2,276).

So it's possible that a large proportion of that 4,070 estimate may contain a large proportion of the estimated 1,271 OSVs.

What that proportion is we do not know but assuming about 50 percent, for arguments sake, 1,271/2 = 636 (AHTS) deducted from 4,070 = 3,434 PSVs.

Then the reworked figures of table #5 above would be a shortfall of 1,014 vessels worldwide and not 1,650 vessels.

3. The main area where extreme caution is necessary in counting is the calculation of OSVs for fixed production platforms.

4. The current high levels of rig utilisation may not be so high in the future, so please watch the numerous rig utilization barometers provided by the industry – they are also very good indicators of OSV demand.

5. The benchmark multipliers/divisors above in table #4 may not be appropriate to the experience factors for various local areas, suggest checks are made with local oil company operators to see what multipliers/divisors they use (due to environmental factors, distances of fields from supply bases, numbers of MODUs employed by each oil company operator, any asset sharing schemes in operation, etcetera).

6. The effects of scrapping vessels over the age of 25 and the impact of newbuild rigs and newbuild FSOs, FPSOs, etc., has not been considered in this study.

Conclusions:

Estimating the demand (current needs) or increases in supply of OSVs for rigs i.e. all types of Mobile offshore Drilling Units (MODUs), Jack-ups, semi-subs, moored or in dynamic positioning (DP) mode, drill ships, moored or in DP mode, is achieved by using a multiplier between 1.7 to 2.25 as per table # 4 above.

Similarly, estimating for FSOs /FPSOs is obtained by using either a multiplier of 1 AHTS + 1 or 2 PSVs (for harsher weather environment areas, etc.) or for more benign areas a multiplier of 1.7.

Estimating the demand of OSVs (PSVs or straight supply vessels) for fixed production platforms is very much a local experience factor (country by country).

The current high rig utilisation figure of some 89 percent only has a small impact and will only reduce the numbers in #1, #3 and # 4 of table 5 by some 177 vessels overall if rig utilisation falls to 80 percent.

The major component for estimating demand of OSVs is the multipliers or divisors to be used for calculating the OSV support for the world's total operational platforms.

Probably, the enhanced drilling techniques and shorter drilling times and the improved success rate of finding oil or gas has accelerated the growth rate of platforms installed/operational in recent times (it can take about one year to fabricate and install platforms),

Combine this with the increasing trend to deepwater and ultra deepwater drilling, requiring larger and newer AHTS and PSVs, the high price of oil and the higher utilisation levels of MODUs as the major drivers of OSV demand.