Gas megaprojects over the last decade have been key to Australia’s rise as the world’s largest exporter of LNG and beneficial to OSV demand
Over the last 10 years, some of the world’s most technologically advanced LNG megaprojects have been developed in Australia, helping the country to surpass Qatar as the top exporter of LNG earlier this year. Australia’s 10 LNG projects have a nameplate capacity of 88M tonnes per annum (mta) of LNG. These projects have had a knock-on effect on the OSV sector, creating demand for a diverse fleet of support vessels.
Singapore-based POSH Terasea made headlines in 2017 when it deployed five powerful anchor-handling tug supply (AHTS) vessels, each with 200 tonnes of bollard pull, to tow the world’s largest floating facility, Shell’s Prelude FLNG, some 5,600 km from Samsung Heavy Industries (SHI) shipyard in Geoje, South Korea to the Browse Basin in Northwest Australia.
In the same year, POSH Terasea also handled the challenging tows of the semi-submersible Ichthys Explorer – more commonly referred to as the Ichthys CPF (central processing facility) – from SHI and also the Ichthys floating production storage and offloading (FPSO) Ichthys Venturer vessel, from South Korea’s Daewoo Shipbuilding & Marine Engineering.
Operated by Japan’s Inpex, the US$40Bn Ichthys LNG project began producing LNG last year. Gas from the Ichthys gas and condensate field in the Browse Basin offshore Western Australia is fed via pipeline to an onshore gas liquefaction plant constructed in Darwin, Northern Territory. At peak production, it is expected to produce 8.9 mta.
POSH Terasea is a joint venture of PACC Offshore Services Holdings Ltd (POSH), Singapore-listed liftboat and tug owner Ezion Holdings Ltd and heavy-lift cargo transportation company Seabridge Marine Services Ltd. POSH Terasea has a fleet of high bollard pull ocean tugs to provide towage and mooring installation of FPSOs, floating production systems and semi-submersibles.
Last year, POSH’s semi-submersible accommodation vessel POSH Arcadia experienced 100% utilisation under a charter to Prelude FLNG.
Meanwhile, further development is proceeding at Ichthys LNG. Under a three-year contract with Inpex Australia, Maersk Drilling’s ultra-deepwater semi-submersible Mærsk Deliverer will drill at the Ichthys gas and condensate field. Commencing in Q1 2020, the estimated contract value of the three-year contract is US$300M, including mobilisation of the drill rig to the site. The contract, which has an estimated dayrate of US$270,000 per day, includes two one-year options.
The dayrate is a significant improvement to what Mærsk Deliverer, a nine-year-old ultra-deepwater semi-submersible rig, was receiving under a spot contract to Italy’s Eni in offshore Timor-Leste. Under that contract, which lasted until April, Maersk Deliverer had a reported dayrate of US$140,000, according to Oslo-based offshore rig brokerage Bassoe Offshore.
South Perth-based OSV owner Go Offshore was awarded an 80-plus 60-day options contract by Eni to support its drilling campaign in the Joint Development Area (JPDA), which is administered by Australia and Timor-Leste. In March, Go Offshore deployed the 78 m PSV Bahtera Pertiwi (former Bourbon Explorer 507), and 75 m AHTS Go Sirius.
Maersk Supply contract for Gorgon Project
The Chevron-operated Gorgon Project is another megaproject in the region, producing gas and condensates from the Jansz-lo and Gorgon fields off the Northwest Shelf of Australia. Chevron Australia contracted Denmark-based Maersk Supply Service’s AHTS vessels to support the Gorgon stage-two development drilling programme in Q2 2019. Under the contract, the AHTS vessels Maersk Mariner and Maersk Master will provide towing, anchor-handling supply and work-class remotely operated vehicle (ROV) services. Maersk Master was named the winner of the Vessel of the Year Award at the Offshore Support Journal Conference, Awards & Exhibition in 2018. Along with its sister vessel Maersk Mariner, Maersk Master has an open deck area of 800 m² with an additional 102 m² of covered deck area and comes equipped with a 450-tonne anchor-handling winch, housed in an enclosed garage to protect crew and equipment in harsh environments.
AHTS vessel Maersk Master will support the Gorgon stage 2 drilling programme in the Northwest Shelf (image: Maersk/Ytterland)
Part of the original development plan, Gorgon stage two will see the expansion of the subsea gas gathering network required to maintain long-term natural gas supply to the 15.6 mta LNG plant and domestic gas plant on Barrow Island.
“One of the largest gas fields ever discovered in Australia, Gorgon field is located in 250 m of water and about 70 km from Barrow Island”
This planned future development phase at the Gorgon natural gas facility involves new wells in the Gorgon and Jansz-Io fields, and accompanying offshore production pipelines and subsea structures.
Jansz-lo field is about 140 km from Barrow Island in 1,350 m of water. One of the largest gas fields ever discovered in Australia, Gorgon field is located in 250 m of water and about 70 km from Barrow Island. Gas from the field more than 3,400 m below the seabed is transported by pipeline to Barrow Island, the site of the Gorgon LNG plant.
Maersk Mariner has been working in Western Australia since September 2017, while Maersk Master has been in the country since March 2018. Both AHTS vessels have been manned by local crews and supported by Maersk’s shore base in Perth.
The Gorgon Project is operated by Chevron Australia and is a joint venture of the Australian subsidiaries of Chevron (47.3%), ExxonMobil (25%), Shell (25%), Osaka Gas (1.25%), Tokyo Gas (1%) and JERA (0.417%).
MMA Offshore repositions for recovery
Over the past four years, Australia-based MMA Offshore has executed a clear strategy to reposition its fleet and enhance its services in preparation for a recovery in the OSV market. MMA disposed of 36 vessels that it considered were non-core assets to focus on the more specialised and higher quality segment of the vessel market to generate higher returns.
“The downturn has drastically impacted both our vessel utilisation and charter rates, with the effect that our EBITDA return on assets has gone from averaging over 15% historically, to a meagre 2.8% return over the past three years,” MMA Offshore chairman Andrew Edwards told shareholders last year. “Clearly, this is unsustainable for MMA and the OSV industry as a whole; however, we do believe that the market is improving and as the market normalises, we should see utilisation and rates increase, which will improve our return on assets.”
Overall for H1 2019, MMA Offshore reported vessel utilisation at 73%, with 39% of its 2019 days contracted. And, positively, the company estimates that its EBITDA return on assets will rise to 4.3%.
“MMA disposed of 36 vessels to focus on the more specialised and higher quality segment of the vessel market”
Besides acquiring or chartering in high-quality distressed assets and improving its balance sheet, MMA is also looking to expand its activities in the subsea market. It is looking to develop partnerships in the Middle East and Southeast Asia, where it has a total of 14 vessels operating out of its fleet of 30 OSVs. Another 15 are operating in Australia, where MMA Offshore has experience in managing large marine logistics projects and has recently created a dedicated project logistics division as part of an internal restructuring.
MMA sees the outlook for marine logistics as “very positive, with a number of large LNG projects flagged for development over the next five years,” Mr Edwards told investors. He cited LNG developments in Mozambique which are “situated in a very remote region with no existing infrastructure, an environment well suited to MMA’s previous experience in the Northwest of Australia through Gorgon and similar projects.”
In April, MMA commenced a contract to provide accommodation and walk-to-work vessel services to support platform maintenance operations on oil and gas company Woodside’s Australian assets.
For the contract, MMA Offshore fit the multi-purpose support vessel (MPSV) MMA Pinnacle with a custom motion-compensated gangway system to enable personnel to transfer between the Woodside platforms and their accommodation on the vessel during the maintenance programme.
MMA Pinnacle was fitted with a special gangway to support platform maintenance for Woodside (image: MMA Offshore)
MMA’s inhouse engineering team worked with Dutch gangway manufacturer Safeway and Woodside to outfit the MPSV with the custom-built pedestal and motion-compensated mast and gangway, which offers workability at significant and variable platform heights.
MMA Pinnacle, which is on a long-term contract with i-Tech 7, the life-of-field business unit of UK-based subsea engineering firm Subsea 7, is permanently fitted with two identical Centurion SP work-class ROV systems capable of operating in up to 3,000 m of water and has an approved safety case for operations in Australia.
With accommodation for 100, the diesel-electric-powered MPSV is also fitted with a 150-tonne active heave-compensated subsea crane, manufactured by MacGregor, capable of reaching up to 3,000 m of water and has dynamic positioning class 2 capability.
Refueling for LNG-powered PSVs
Momentum is also building around Woodside’s growth plans for Scarborough, the expansion of the Pluto LNG facility, and Browse Basin, which are due for FID next year.
In a move to lower dependence on more carbon-intensive fossil fuels and boost domestic availability of LNG for power generation and refueling of heavy vehicles and coastal vessels, Woodside-operated Pluto LNG Project opened an LNG truck loading facility. LNG in tanker trucks will be available to bunker coastal marine vessels, including the LNG-powered platform supply vessel Siem Thiima which has been operating in Woodside’s fleet since 2017. As part of the ‘Green corridor’ initiative, Woodside is also developing infrastructure for bunkering LNG for iron ore carriers employed between Pilbara, Australia to Asia.
Based on a VS 4411 DF design from Wärtsilä Ship Design and built by Poland’s Remontowa Shipyard, Siem Thiima has Wärtsilä dual-fuel engines that can burn either marine gas oil or LNG. Siem Thiima and its sister vessel Siem Pride are owned by Norway’s Siem Offshore. Each PSV has an overall length of 89 m, beam of 19 m, and deck area of 970 m2.
Drilling in Great Australian Bight draws protests
While Australia is the world’s largest exporter of LNG, the country’s oil production has been in decline for about two decades. At the same time, the country’s appetite for crude oil, condensate and refined petroleum products continues to grow.
However, Equinor’s draught plan to drill in the Great Australian Bight off of South Australia has drawn countrywide protests and some 32,000 public comments during a 30-day feedback period. It would be the first well to be drilled in the area since 2003.
In its draught plan, Equinor says once it receives all regulatory approvals, it will most likely deploy a semi-submersible drilling unit to drill an exploratory well in 2020 or 2021. The well will be drilled over approximately 60 days. After the operation is finished, the well will be permanently sealed – regardless of whether hydrocarbons are discovered or not, says Equinor.
Because the wellhead has a footprint at the seafloor of less than 1 m2, rising only two to three metres above the seabed, Equinor has decided to seal the wellhead permanently with cement plugs and leave it in place.
It will also employ a 400-tonne blowout preventer (BOP) before it starts drilling. The BOP will be equipped with six rams to cut the drill string and a capping stack in case of an emergency.
In June 2017, Equinor became the operator and 100% equity owner of offshore exploration permits EPP 39 and 40 located in the Great Australian Bight. The Stromlo-1 well location is situated 372 km off the coast of South Australia and 476 km west of Port Lincoln.