The growing number of floating wind projects could boost AHTS demand, but will it be enough to drive a significant improvement in utilisation? MSI senior offshore analyst Ferenc Pasztor investigates
The first decades of the offshore oil and gas industry are a story of shallow-water, near-shore production platforms with structures fixed to the seabed, increasing in size year after year. The appearance of floating platforms was a step change, helping to commercialise deepwater investment and open up prolific production basins. We are witnessing the genesis of a similar transition in the offshore wind sector.
After years of successful proof-of-concept floating wind projects, large-scale commercial projects are closer than ever to being green-lighted. In recent months, Total and Macquarie’s Green Investment Group have formed a partnership to develop five floating wind projects with a total capacity of 2 GW starting in 2023 offshore South Korea. To generate electricity on this scale, hundreds of floating wind turbines will be required.
Not only has the area of potential offshore wind projects increased considerably with the new technology, but so has the way in which those turbines are installed. Instead of assembling various components at the offshore windfarm, floating turbines can be fully assembled at a construction yard and then towed to the site.
While fixed-foundation windfarm projects face supply chain bottlenecks with the requirement for massive wind turbine installation vessels (WTIV), at least until the next wave of supply becomes available, for floating wind there is an ample supply of high-capacity anchor handling tug supply (AHTS) vessels that can provide both the towing and anchor handling services needed to perform the yard-to-site installation of floating wind turbines.
AHTS availability has been exacerbated by the well documented offshore downturn. The 2014 oil price collapse and subsequent weak recovery ended abruptly with the current pandemic. The resulting oil company budget cuts have weakened an already stricken offshore drilling industry – the major driver of AHTS demand.
AHTS owners, carrying unsustainable debt, are in a dire financial situation. Many have already gone through debt restructurings and bankruptcies. With oil and gas-driven demand expected to be weak going forward, could they turn to the renewables industry for some relief?
Turbines to be towed, anchors to be laid
Small floating wind pilot projects of recent years have offered some insight into related vessel operations and what could be required of the AHTS fleet. Although we expect towing and anchor handling to become more time efficient in the future, we think the vessel operations data already available can be reliably used to help predict future AHTS demand for floating wind work and quantify its contribution to overall AHTS demand.
For our vessel demand calculations (per turbine), we have assumed 4.5 days are required for installing the pre-lay mooring system (PLMS) at the windfarm, 3.5 days for the mobilisation and demobilisation for the PLMS installation, 7 days for towing the turbine from the construction yard to the windfarm and sailing back to the yard and 2.5 days for the hook-up of the turbine at the windfarm. In reality, each of the above have some variance and the potential to be shortened as operators gain more experience with new projects.
Time spent on towing may differ significantly for actual projects, depending on the distance between the construction yard and the windfarm. Our assumption represents a scenario with a distance of 250 nautical miles. We have also taken into account mooring line maintenance of turbines in situ, with the assumption that 3 out of 100 floating turbines need a mooring line replacement per year (5.5 vessel days per such turbine). For an easier understanding of how many AHTSs will be needed for windfarm work per year in the forecast, we have converted vessel days to vessel years.
As the first step in the analysis, we have made a forecast for the first half of the decade, as that period has relatively good project visibility based on already sanctioned developments. We have also performed a long-term scenario analysis, where we assumed a 10% (low case) and a 20% (high case) year-on-year increase of the numbers of turbines installed from 2025 onwards. For calculating utilisation levels, we use the assumption that only AHTSs with capacity above 12,000 bhp would be used to serve the market.
The results of the short/mid-term forecast (Shown in figure 1) clearly indicate that the level of floating wind turbine installation activity is insufficient to act as a panacea for the industry’s woes. Near-term, floating wind will not provide a significant lift to AHTS utilisation. The numbers start to look more promising by the end of the first half of the decade but compared to the number of AHTS vessels that are forecast to be working in the oil and gas sector, the floating wind call on AHTS vessels will still be very limited.
The long-term outlook shown in figure 2 is more positive. The addition of floating windfarms will generate a significantly higher level of vessel utilisation by the end of the decade (86% in the high case scenario) compared to a situation when only oil and gas-related demand is taken into account (79%), providing a boost to vessel owners’ pricing power.
There are uncertainties regarding the demand drivers of both sectors nevertheless. A faster shift from hydrocarbon to renewable energy consumption may make our oil price assumption too high and even the high case scenario of floating wind turbine installation activity too conservative. In that case, the contribution of windfarms to AHTS utilisation may be even bigger. Also, our demand calculations do not consider potential additional vessel days due to sea conditions.
For the analysis, we have kept the vessel supply assumptions (ie deliveries and scrapping) unchanged, but it is important to note that depending on market conditions, those might also change significantly, affecting utilisation levels.
We can conclude that floating wind installation activity will not provide material incremental upside to the AHTS market in the near-term, and although its contribution to overall AHTS demand will be significant by the end of this decade, the story will only become exciting in the next decade.