It’s hard to imagine a more serious challenge to the offshore oil and gas industry, or for that matter the world at large, than the current pandemic sweeping the globe.
Covid-19 has extracted a huge human and economic toll. But while the world grapples with the coronavirus, lurking in the shadows is an even bigger menace: climate change.
Of course, climate change never left. Its signs are with us every day; it’s behind the massive wildfires on the US west coast, accessibility of the Northern Shipping Route and the Siberian heatwave where temperatures reached 38°C in a Russian town – the highest temperature ever recorded north of the Arctic circle.
To combat climate change, IMO has already set industry targets, including a 40% cut in greenhouse gas (GHG) emissions by 2030, with potential for 70% less GHG emissions per vessel and 50% for the fleet as a whole by 2050.
“Climate change never left; its signs are with us every day”
As oil companies and charterers push to wring out CO2 emissions from their supply chains, more and more OSV owners are being asked to provide vessels that feature low-emission propulsion technology. This often involves using battery storage systems in diesel-electric and hybrid propulsion, or LNG or another low-carbon intensive alternative fuel. Additionally, investments in digitalisation are increasingly necessary to underpin fuel monitoring, lower fuel consumption, and improve uptime, asset utilisation and more efficient routing.
These investment pressures come at a time when the OSV sector is stuck in a prolonged downturn, marked by a persistent oversupply of tonnage, cuts in capital spending and strict cost controls imposed by oil companies, coupled with low day rates – all barriers to investment.
“Very low charter rates will not allow for the investment needed to build the new vessels that incorporate the required technology,” said SEACOR Marine vice president, engineering Tim Clerc during Riviera Maritime Media’s The Future OSV – what will it look like? Webinar.
SEACOR Marine has been in the forefront of the market, most recently adding six new UT 771WP platform supply vessels (PSVs) with battery storage systems through its acquisition of COSCO Shipping Group’s 50% of the equity interests in SEACOSCO. The acquisition cements SEACOR Marine as one of the leading owners of hybrid battery OSVs.
OSVs could well benefit from new service operations vessels (SOVs) being built for the growing offshore wind market.
“With a greater likelihood of profitability from the operation of SOVs, the existing technology from the OSV to the SOV will reverse,” said Mr Clerc. “The future technological investments for OSVs will be driven by the successful implementation of the new tech in SOVs.”
With strong growth in the offshore wind market – some 6.1 GW were added in 2019 – Mr Clerc’s observation makes a great deal of sense. New hull designs and new technologies are being deployed in SOVs and crew transfer vessels.
SEACOR Marine’s offshore wind vessel unit, Windcat Workboats, is pushing the technology frontier with the development of a prototype hydrogen-powered crew transfer vessel (CTV). Being developed in a partnership with CMB Technologies, the 21-m Hydrocat 1 will be equipped with a dual-fuel hydrogen-diesel propulsion.
In mid-September, BeHydro, CMB’s joint venture with ABC Engine, was set to launch a 1 MW dual-fuel hydrogen diesel engine.
Clearly, technological solutions that will support the industry’s goal of decarbonisation are rapidly emerging. The real question is ‘How will OSV owners afford to make those investments in a down market?’
Mr Clerc’s answer is simple: “All stakeholders must be prepared to make the required investment. This starts with increased charter rates for those owners committed to decarbonisation.”