GoM Outlook

Thinking about what I was seeing on a trip from Fourchon to Theodore to Amelia and back: two Seadrill drillships anchored (and apparently idle) seaward of the LOOP. Five Ensco rigs stacked west of the rabbit field. 30 boats pushed-up in the mud on the bayou, and another 30-40 larger OSVs tied-up in Flotation and Slips A and B. By my count (350 targets on AIS) that’s something like 20 percent or more of all the boats in Fourchon not working.

On the one hand, we’ve seen record lease sales in the GoM in the past year, and it looks like nearshore Atlantic waters will finally be opening up. Mexico is becoming a friendlier place to do business. As recently as a year ago, I was reading that there weren’t enough advanced drilling units to do the work that was waiting. Now day rates for those same units are about 60 percent of what they were a year ago (see the post in this same forum: http://www.gcaptain.com/forum/offshore/15530-seadrill-fall.html).

On the other hand, there has been a huge reshuffling of assets on the shelf with some of the established large independents and majors abandoning those fields. We have downward pressure on the price of oil from land-based production in the shale formations and from a strong dollar.

Meanwhile, it seems like the large boat companies – and a few of the smaller ones – are continuing an ambitious newbuild program.

One can assume that this industry will mirror every other industry in America and that the big Baby Boomer retirement exodus should have begun last year (and be continuing). But it looks like hiring has slowed and folks are moving around less than before. I base that in part on what appears to be a slowdown on hiring reports and job announcements on gCaptain (but of course that could be that gCaptain is simply much harder to access via mobile now than it was a year ago) but also what I see and hear among friends who also work out here.

All of this leaves me confused – and a little uneasy. I haven’t been out here long enough to remember the wholesale layoffs of the 1980s, but I’ve heard about them. Nor do I know enough about any of this to know if I’m truly seeing a slowdown or I’m just noticing more than I did when I was brand-new to the industry.

Thinking that the next maritime sector to see growth is the downstream end of the business – ATBs, tugs and barges, tankers – moving all that shale product out.

Anyone have any thoughts on the outlook for mariners in the Gulf?

well the devastation in the GoM during the 80’s was caused by a plunge in the price of oil which happened because so much other energy was discovered and produced from other provinces of the planet and all coming to market about the same time. Short of a major drop in energy prices which I do not believe is possible these days, there should not be a roll back of any such similar magnitude. The GoM remains a very attractive place for the majors to drill and produce and American vessels and mariners are required to accomplish this.

Yet, we hear all the majors telling their shareholders that they will cut E&P spending which means they will hire fewer rigs or certainly try to push down the charter rates. With fewer rigs on hire, there wto ill be a lower demand for support for them which means supply vessels and crewboats which would mean lower dayrates for those vessels. Plus fewer new fields going into production means less activity in subsea, heavylift and pipelaying with similar downward pressure on the dayrates those vessels earn.

So, how does this effect us mariners in the immediate term remains to be seen, but I think the long period we’ve experienced without any significant raise in pay indicates the market has stabilized for manpower and the companies need not throw any more money at mariners. Will there be rollbacks in wages coming? I don’t know. I certainly would think so if the OSV owners end up with boats that are stacked looking for work. Are there too many OSVs and other support vessels coming remains a question but there might be. Right now everything seems to be working but that might not hold next year.

regarding the ATB and tankship segment of the industry, it does appear that it is still rolling and as long as humans consume oil, there will always be a need to move it to market. I don’t think there will be a downturn there.

I worked in and out of the oilfield from '70 to '85. There were several cycles over that period. None as bad as the mid '80s. Look back to the fury of work in Mexico and the GOM early '80s. I lost count of new company start-ups. Shipyards turned out a massive number of boats, many cheap built and MARAD financed. On top of that, the CG was giving licenses away by just filling out a declaration form. When the downward cycle reached it’s nadir, the excess number of idle tugs, along with companies going down kicking and screaming, Zapata-Gulf ect, were running the tug day rates down. All of this was at the start of the 333 strike and the scab-a-thon was on. The towing industry still hasn’t recovered. I remember seeing the reserve fleet full of repos for years…

With the massive amplitude of this up cycle, we’ll probably see many high-tech sailors make the same mistakes as many before when the next crunch hits. Living beyond their means…Look out ATBs!

I hear a few rigs are idol due to the loop current. Not sure how true or how many it has affected.

So, doing a little digging … according to Seadrill’s website, both of the vessels pictured above are in fact under contract until 2020. So I guess they are just waiting on something (o