A recovery in the offshore oil and gas market could have a significant effect on vessel supply in some parts of the offshore wind sector, delegates at the Offshore Wind Journal virtual conference heard
Demand for offshore oil and gas vessels has been low for several years. As a result, owners in the oil and gas market have looked to the offshore wind market for employment for their vessels.
But as Maritime Strategies International (MSI) senior offshore analyst Dr Ferenc Pasztor explained in the opening session of the virtual conference, if the oil market recovers, it could affect a number of vessel segments in offshore wind.
Among the vessel segments that could be affected are the walk-to-work market, heavy-lift crane vessels and anchor handling tug/supply vessels. Equally, if the offshore oil and gas market does not improve, and owners continue to seek work in the offshore wind sector, some segments of the offshore wind market – such as liftboats used for maintenance in some countries – could become oversupplied.
A recovery in the oil and gas market could remove vessels from the offshore wind market, Dr Pasztor said. Likewise, oil and gas vessels that have been converted for the offshore wind walk-to-work market could be in shorter supply if oil and gas work picks up.
“It is very difficult to predict exactly what effect the oil and gas market will have and when,” Dr Pasztor said. “A lot depends on the timing of a recovery in the offshore oil and gas industry.” If it does recover, and if oil and gas vessels are drawn out of the offshore wind sector, bottlenecks in vessel supply could develop and rates could rise, he suggests, unless new vessels are built specifically for offshore wind work.
Dr Pasztor and Bureau Veritas global market leader OSVs and tugs Eva Peño agreed that demand for anchor handling tug/supply vessels will grow quickly as the floating wind market expands, but not until the mid-2020s when large-scale commercial projects take off.
As previously highlighted by OWJ, the offshore oil and gas sector has long been the exclusive driver of demand for anchor handling vessels, but demand for these expensive assets plunged in 2014 when the oil price fell. Demand has failed to make a significant recovery since but the floating wind market – which is evolving from small-scale demonstration projects to large-scale commercial projects – is expected play a growing role in the supply and demand equation.
In the floating wind segment, anchor handlers will be required to preinstall moorings and anchors, tow floating foundations, hook up floating foundations to moorings, install dynamic cables, carry out inspection and maintenance and assist during decommissioning operations.
Analysis by MSI suggests that demand for anchor handlers in this new market will pick up significantly in the mid-2020s as huge projects get underway. This will improve AHTS utilisation and, combined with demand in the offshore oil and gas industry, it will drive up rates.
However, Ms Peño cautioned that when demand for anchor handlers does take off, not all anchor handlers will be equally attractive to the market: as has become evident in other vessel segments in the offshore wind industry, clients will want the most environmentally friendly vessels.
As the offshore wind market has grown, contracts for newbuild turbine installation vessels and service operation vessels (SOVs) have begun to tick upwards, said Dr Pasztor. The wind turbine installation vessel market continues to look under-supplied, as does the market for SOVs, but that could change, he said.
Orders for both types of vessel have been in evidence, but Dr Pasztor believes that, if all of the options in contracts for turbine installation vessels were to be confirmed, there is a danger of over-capacity. Whether they will be confirmed remains open to question, especially given the very high cost of building installation vessels.
Speaking during another session at the conference, Clarksons Platou Securities head of research Turner Holm put the cost of a newbuild turbine installation vessels at approximately US$300M. He cautioned that this level of expenditure could act as a brake on orders for new vessels and makes it unlikely that all of the rumoured orders for vessels will actually come to fruition.
However, Dr Pasztor said he does not see the SOV market as in any way over-heated. “We are at the beginning of a really big upcycle,” he explained. “Demand looks stellar for all regions.”
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