Conditions in the offshore market remain challenging, with low day rates in the drill rig and offshore support vessel (OSV) sectors due to lingering supply side pressures.
However, increased demand for production units means there are some positive signs from the offshore support vessel market, leading to increased reactivations of laid-up vessels as new and delayed contracts are awarded.
While not all of these vessels will return to the active fleet, the topic of reactivation has become more popular as the recovery in the oil price continues and operators seek to position themselves to capture the potential upside.
Reactivation is a complex process and one dependent on detailed planning and preparation to achieve operational safety and maximise efficiency.
OSV owners need to carefully consider their options before beginning reactivation. Among the issues to be considered are the vessel’s age and its level of quality in terms of equipment and technology; whether the vessel is warm or cold stacked also drives the reactivation decision.
Reactivation is ultimately an economic choice for the owner and is likely to be based on the cost of the process versus the length of a potential service contract. Lead times are short because multiple vessels are in competition for the same work and the degree of readiness can vary widely.
Reactivation also comes with challenges and risks, including the need for technical resources and understanding applicable regulation. In some cases, there may be no history or working knowledge of the asset and weak or non-existent relationships with others in the supply chain.
Different owners will have applied varying levels of technical capability during lay-up and whether this process is done with a reactivation plan, as well as the quality of the preservation itself will have an impact.
Financial risks include the cost of work to be done, including transporting teams to the facility to perform the work. The reactivation timescale can include the availability of materials, the readiness of class, flag and vendors to support reactivation and software and automation plans.
Modern OSVs include complex technology such as dynamic positioning, power management and control systems that must be brought up to date. This means software must be upgraded and IT systems will need new cyber security measures.