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With a fleet of offshore vessels with an average age of 5.6 years, Bourbon is poised to tap into the increasing markets for deepwater and shallow water vessels.
Over 600 offshore service vessels -- about 40% of the total shallow-water fleet -- are more than 25 years old, which opens up the market for newer, high-productivity vessels. In the deepwater fleet, only about 10% of the fleet is older than 25 years.
“Where we are really making a difference is in the shallow-water market. Here we have a competitive advantage with series-built, high-productivity vessels like our Bourbon Liberty vessels,” Gael Bodenes, executive vice president and chief operating officer, Bourbon, told Hart Energy E&P Online.
In the shallow-water segment, the industry has more than 600 vessels that need to be replaced. “Even if we don’t replace them one for one, but instead one for two or one for three, there is a huge potential demand just for replacement -- between 200 and 300 vessels.
“Today, you only have about 100 vessels under construction and 40% of those are Bourbon vessels,” he emphasized. This is where I think we will still be growing and taking market share.”
Almost all of the company’s supply vessels have diesel-electric propulsion, redundancy, dynamic positioning system (DP2) and fire-fighting systems. For example, the diesel-electric propulsion allows the company to make a difference for its clients based on savings in fuel consumption.
|The Bourbon Viking is in cargo operation for a rig offshore Tanzania. (Copyright: Bourbon)|
“In our deepwater segment, we are concentrating on growing with the market. Mainly, our markets for deepwater are Brazil, West Africa and Southeast Asia. For the shallow-water segment, we are in those same markets along with the Middle East and Mexico,” he explained.
The difference between deepwater and shallow-water vessels is based on either bollard pull or deadweight tons (dwt), according to Bodenes. Anchor-handling, tug/supply (AHTS) vessels with 100 tons of bollard pull or 10,000 bhp or less are considered shallow water while vessels above those numbers are considered deepwater. Platform supply vessels (PSVs) are for shallow water under 2,000 dwt and for deepwater above that number.
At the end of 2011, the company had 436 vessels, an increase of 39 vessels from 2010. Revenues rose to €1.01 billion (about $1.34 billion) in 2011 from €849.9 million (about $1.13 billion) a year earlier. The largest revenues came from the deepwater vessels, followed by shallow-water vessels, crewboats and subsea services.
|The Bourbon Jade is providing subsea installation support offshore Angola. (Copyright: Bourbon)|
“First, we are trying to match our investment to the demand and cycle. We will take delivery of 45 vessels this year, and all in all, 107 vessels are still under construction. This will allow us to match the increasing demands of the oil companies,” he said.
“Second, we are moving to offer more services because that is part of the demand from the clients. We are doing that through our four-pillars model,” Bodenes emphasized.
The first pillar is dedicated to safety. “Safety is paramount for Bourbon and we constantly adapt to deliver safe operations and to match new requirements of the oil companies through an organization called OCIMF (Offshore Companies International Marine Forum) with regards to safety and inspection.
“Our second pillar is crew competence. We are investing a lot in terms of people because they will be the key tomorrow, especially if the market is moving again.
“The third pillar is technical availability of our vessels. We have committed by 2015 to deliver on that strategy and reach more than 95% of technical availability. This goal is also due to demand from clients to have more and more continuous operations,” he added.
“The last pillar is cost optimization for our clients, which is mainly translated into fuel management, built around the diesel-electric propulsion,” he stated.
“In terms of the market, what we are seeing is that the emphasis is still more and more on safety, but also now on risk management,” Bodenes noted.
“They are asking for more indicators in terms of safety, maintenance, crew competence and optimized costs. Even if it is a small cost, vessel issues can have a big impact on their operations,” he emphasized.
In terms of its market, the company is seeing a high level of utilization in its deepwater segment -- an average of 89%-90%. “What we expect is to increase the utilization rate to above 90% and keep going, which will result in increasing day rates.
“The utilization rate will depend on whether or not there is an oversupply of vessels. In 2008-09, a large number of vessels were ordered. While a lot of these vessels have already been delivered, there are still a lot to come,” he added.
“If we look at PSVs, the market is a little bit better. However, last year, more than 140 vessels were ordered. I think we are done now in terms of new vessels for the next three to four years. Now, the question for the deepwater segment is: will the growth be enough to cope with all the vessels that are under construction?
|The Bourbon Monsoon and Bourbon Mistral are at work offshore Norway. (Copyright: Bourbon)|
“For the short-term, I would say we still see this market to be well balanced and the demand growing,” he added. “What we have also seen are day rates starting to increase, especially for niche market, medium-sized PSVs.”
The shallow-water market for Bourbon is a little different. A year ago, the company’s utilization rate was about 75%.
“We increased our utilization rate at the end of the year to 88%. After we reached that rate, step by step, we are seeing the day rates increasing,” he stated.
In answering a question about where the company expects to see its revenues grow this year, Bodenes said, “We still see the revenue growing in the deepwater market in both our marine and subsea activities. Now, we expect growth on the shallow-water side with our utilization rate and day rates increasing.”
He also pointed out that another important point for the company’s growth is that it now has a full, worldwide network that allows it to catch demand wherever it is.
For example, the company had two to three vessels working in Tanzania. Providing offshore service vessels at this stage is less complicated, he explained.
“When you are in the exploration phase, it is not complicated because you are sending vessels to follow the drilling rigs. If they are moving into production, that will be much more demanding,” he added. “In that part of the world, there is more of a security issue since it is close to Somalia. Until now, we have been able to manage it gently with our client, but it will be a concern if production activity increases.”
Bourbon believes it has the right products in place at the right time. Already, the company has vessels around the world. “If we look at the North Sea market and especially the new discoveries in the Barents Sea, we can expect high demand coming from the North Sea market for the next five to 10 years,” Bodenes said.
“In Brazil, demand is huge. There is no reason for this demand to stop, especially since we can see that Petrobras is able to finance all of its projects so far. Brazil will still be a strong and demanding market.
“The question about Brazil is: will they be able to find a solution for stopping the increases in operating costs? For example, there is a lack of Brazilian officers for vessels. Either they need to train more people or change their cabotage law,” he explained.
West Africa, in terms of market, is still increasing in deepwater. In Angola, pre-salt discoveries are the same type as those in Brazil.
“They are finding or at least exploring for oil in areas like the Ivory Coast, Ghana and Gabon. This is also quite promising,” he noted.
Bodenes also pointed out that the first deepwater fields to be developed are now 10 years old and more maintenance is needed. “They are doing a lot of maintenance of the existing platforms in shallow water. There is quite a bit of demand because the offshore installations for the oil companies have to be maintained. Right now, we are seeing quite good demand from contractors.
“On the east coast of Africa in Tanzania and Mozambique, you also have some exploration campaigns that have found natural gas,” he added.
In Southeast Asia, deepwater activity is starting to increase in Indonesia, Brunei and Malaysia. More exploration work is also coming in Australia.
Bourbon works offshore Mexico in the Gulf of Mexico since the company can’t work in U.S. waters because of the Jones Act. “In terms of Mexico agreeing to the marine border with the U.S., this will give the green light to deepwater development on both sides.
“What is interesting in Mexico is that Pemex has renewed its fleet and is asking for more high-productivity vessels,” Bodenes said.
Contact the author, Scott Weeden, at email@example.com.