THE october 2011 ISSUE 2 THE MONTHLY REPORT FROM WESTSHORE SHIPBROKERS AS INSIDE THIS ISSUE: HEADLINES 2 NEWBUILDING NEWS 3 RIG RUNDOWN 4 IN & OUT 5 MARKET FORECAST 6 THE INSIDE STORY 7 THE LAST WORD 8
02 HEADLINE News offshore app launch update The much anticipated iPhone app will be ready this week and will have everything you need to keep updated on the o shore market both in the North Sea and in Brazil. Available from the iTunes store, our next project is to make it available for Android which we aim to have ready within a few weeks. Any feedback regarding the app is much appreciated!North Sea Giant signi cantly larger. The discovery isThe positive news announced by transformational for Lundin Petroleum with a 40Statoil, Lundin and partners percent equity interest in PL501 and 10 percentregarding the Avaldsnes/ Aldous in PL265. Avaldsnes and Aldous will beMajor discovery has gone from developed together and we are already workingstrength to strength. What last closely with our partners and Statoil as operatormonth was being touted as one of of PL265 to ensure that the project proceedsNorway’s top 10 nds is now without delay. The discovery is located in 115being hailed as a ‘sleeping giant’ metres water depth, at a reservoir depth of less than 2,000 metres and close to existingOn Friday (Sept 30th) Lundin revised estimates at infrastructure with signi cant spare pipeline Thank you to..the eld stating that following drilling further capacity. The discovery is likely to be one of the This month’s pictures have beenAvaldsnes appraisal wells it has been determined largest ve discoveries on the Norwegian sent to us from Jörg Lindemann, anthat the two elds – Avaldsnes and Aldous Major Continental shelf and certainly the largest since o shore supply vessel enthusiastSouth - are connected with the same oil type, the mid 80s and highlights the continued and amateur model maker ofreservoir and oil water contact. The recoverable prospectivity of what many viewed as a mature supply vessels based in Germany.resources were increased from 800 million to 1.8 region with limited remaining potential." Details of which can be found atbillion boe putting the combined contingent www.osv-society.inforesource range of the two at 1.2 billion to 2.6 In terms of development the two companiesbillion boe. Moreover Lundin stated that further have established a joint team to begin work onupside potential was envisaged as it continued to conceptual development of the eld in additiondevelop the prospect with partner Statoil on to further appraisal wells due to be drilledwhat has been termed a ‘fast-track development’. through into 2012. The ultimate decision as to how the eld will be developed hinges on theAshley Heppenstall, President and CEO of Lundin nal estimates of the size of the reserve. The pairPetroleum comments; "Avaldsnes/Aldous which have yet to reach an agreement as to whichis already a world class discovery has, following entity will assume the role of operator on thethis years appraisal program, become eld.
03 newbuilding News Announcements about the for a further vessel exists. The vessel is set construction of new PSVs have slowed in the last couple of months but the immi- to deliver in December next year and appears to be a liated with the owners of PSV nent delivery of several orders placed the Seabed Worker. But the news at the during the last order boom is nearing. The only orders placed for North Sea capable moment does not necessarily centre around more newbuild announcements deliveries vessels this month came from Gulf O shore. The US-owner inked a deal for but rather the imminent delivery of several North Sea PSVs. On the AHTS front the new on the two 1000m2 deck PSV and a 800m2 decked build deliveries are thin on the ground, PSV all to be built at Remontowa in Poland. In addition we understand a contract has leading us to believe that the tough couple of years the AHTS market has gone horizon been signed for a VS 485 MkII at Fjellstrand through may be at an end. A more in depth for one Norside Supply I AS and an option analysis of this is on page 6. newbuild announcements this month • Rem Oﬀshore will take delivery of two newbuild PSVs in October, the rst being Rem Fortress, VS 485 MkII design and the second – Rem Server of STX PSV 06 design. • Skandi Saigon has oﬃcially delivered from the yard in Vietnam and is en route to the North Sea. The vessel picked up work in the Med while making its way here and is expected in Aberdeen shortly. • Island Oﬀshore’s newbuild programme of UT776CD design PSVs will see the rst in the latest series deliver in October – Island Centurion under construction at Brevik is tipped to trade the spot market on delivery. • Olympic Shipping has announced the name of its MT6009L PSV under construction at Myklebust Verft, Olympic Electra should be ready for the spot market in November this year new island offshore vessel ‘island centurion’ the market impact New vessels entering North Sea The graph to the left gives an estimation of when we could7 see new vessels enter the North Sea market, this relates to6 PSVs above 3,000 dwt and AHTS above 18,000 bhp. The5 vessels are all currently under construction for owners who have either stated that the vessel will enter the North Sea or4 going by past history, it would seem probable. As we have3 stated before the number of newbuild AHTS vessels is fairly scarce. The last round of newbuild orders placed was in the2 distant past and few vessels are left to deliver. For the PSVs1 however the story is rather di erent, we estimate that as many as 40 vessels could enter the North Sea market0 Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec between now and the end of 2012. We have taken a look at PSV AHTS what the spot rates could be on page 6, as one might expect this is heavily dependent on the supply of tonnage and with estimated delivery schedule of north sea capable vessels through to end-2012 many new vessels coming in, 2012 could be a tough year for PSVs in the North Sea – particularly on the spot market.
04 RIG rundownStatoil secures On the move in october… • Polar Pioneer (BP Norge)West Hercules - • Songa Delta (Odfjell to yard) • John Shaw (Enquest)another semi for • Borgholm Dolphin (BP UK) • Noble Julie Robertson (Venture)the North Sea • ENSCO 70 (PA Resources to ADTI) • Safe Scandinavia (BP Norge) • ENSCO 92 (E-On to Senergy)This month Statoil announced it had secured particularly for the deep water units, leaving semi-submersible drilling rig West Hercules for operators looking further a eld to secure units. Apache snaps up Exxon’s drilling on the Norwegian Continental Shelf North Sea assets after it completes its current contract for Husky A spate of new rig orders have been Oil around May 2012. West Hercules is added to announced these last few months as Apache North Sea has agreed to the growing list of drilling rigs entering the con dence in the market takes an upswing. acquire Exxon Mobil’s LLC assets North Sea in the near future. Jon Arnt Noble Corporation con rmed it will take its in the North Sea which includes Jacobsen, Statoil’s chief procurement o cer, fourth option at Hyundai Heavy industries for the Beryl eld and associated said Statoil is working to add more modern, an UDW drillship. Meanwhile COSL Drilling has resources and infrastructure. It exible rigs adding that West Hercules was the invited selected yards, thought to be in China, also includes non-operated rst-available suitable rig already in operation. to bid for the construction of an upgraded interests at Maclure, Scott and A number of new rigs will also be entering the version of the COSL Pioneer. The rig would Telford elds. If all goes to plan eet next year, rst o will likely be Saipem’s have basic winterization and be aimed at the the transaction will be complete Scarabeo 8 which was originally penned for Norwegian market. In addition Daewoo in late 2011. Exxon Mobil will entry into the market in late 2009 but reports Shipbuilding recently con rmed an order for continue its interest in over 40 say that the UDW semi has incurred further two semi submersibles to be built for Songa producing elds in the UK sector delays and will not be ready before March O shore. News of the two units rst surfaced in of the North Sea and insists that 2012. On delivery Scarabeo 8 will commence July and is backed by eight-year charters with it remains committed to North drilling operations for ENI at Goliat. Availability Statoil on delivery, expected in second half of Sea operations. of semi submersibles next year is tight 2014. Upcoming & ongoing Standard Drilling which currently has a Drilling continues at the Aldous Major ExxonMobil has declared a one well jackup under construction at Keppel FELS South prospect for Lundin, Statoil and option on the West Alpha meaning the has agreed to sell the unit to an undisclosed partners. Lundin recently commenced rig will be on contract until May 2013. UK buyer. drilling of a further appraisal well at Espevær/AMS using Transocean leader, the RWE-Dea has agreed to take a slot on Total has requested expressions of interest well is expected to take 50 days. Rig Management Norway contracted for a drilling unit to undertake a 300 day semi West Alpha which had previously campaign in the Norwegian sector in 2012 A duster for Rocksource as news surfaces been allocated to Noreco. The well is comprising of four wells. of drilling with Borgland Dolphin does not located approximately 15 kilometers encounter hydrocarbons at the Phoenix northwest of Heidrun and expected to Aker Drilling’s sixth generation semi Aker prospect in the Norwegian Sea recently. The last around 100 days. Earliest start of Barents has arrived on location at Heilo and unit is currently on hire to consortium Rig drilling will be October 2011. commenced drilling operations for GDF Management Norway AS until beginning of Suez. The well is expected to take 50 days to 2012. Vessel contracting is done through drill. MLS.
05 in and out Vessel Design Manager ENTRY From Bourbon Front PX 105 Bourbon Oﬀshore End-Oct Newbuild – Yard China UP Jasper VS 483 MkII Gulf Oﬀshore Start – Oct Newbuild – Yard China Olympic Electra MT 6009 L Olympic Shipping End - Oct Newbuild – Yard Norway Rem Fortress VS 485 MkII Rem Maritime Mid - Oct Newbuild – Yard Norway Island Centurion UT 776 CD Island Oﬀshore End – Oct Newbuild – Yard Norway Skandi Saigon Aker AH 08 DOF Start - Oct Newbuild – Vietnam Rem Server STX PSV 06 Rem Maritime End-Oct Newbuild - Norway Vessel Design Manager ENTRY From Rem Star PSV Rem Maritime Start - Oct Peterson Island Valiant AHTS Island Oﬀshore Mid - Oct AGR Maersk Launcher AHTS Maersk Supply Mid – Oct BP – Skarv Toisa Valiant PSV Sealion Mid - Oct Fugro Durga Devi PSV Durga Oﬀshore Mid - Oct PA Resources North Truck PSV Gulf Oﬀshore Mid – Oct PA Resources Rem Supplier PSV Rem Oﬀshore Mid – Oct SPD Paci�ic Blade AHTS Swire End – Oct Shell Dina Supplier PSV Myklebusthaug Mid – Oct Statoil Vessel Design Manager EXIT To Skandi Skansen AHTS DOF Mid – Oct Technip Rem Provider PSV Rem Oﬀshore Start – Oct ADTI Highland Trader PSV Gulf Oﬀshore Start – Oct BHP Boa Fortune PSV Sold Mid – Oct Indian interests * we are estimating that those vessels which are currently operating in Greenland will re-enter the market no earlier than November
06 market forecast Rate Forecast for 2012 Rate Forecast for 2012 Rate forecast 2012 (North Sea spot) 60000 50000 40000 PSV > 800 m2GBP 30000 AHTS > 18,000 bhp 20000 10000 0 Dec Jan Feb Sept Apr Nov Aug Mar May Jun Jul Oct new vessel magne viking has this years record for highest spot rate year’s record for highest spot rateThere has been a positive trend in the spot market over the last quarter.Vessels expected to return to the spot following completion of term chartershave either been extended or the additional tonnage has been successfullyabsorbed into the market with limited detrimental e ect on rates. A major Semis & Jackups North Seacontributor to this is rig activity. It appears that global economic factors 80 2010 18,00impacted North Sea drilling quite signi cantly in the rst half of 2011. Be it the 70 2011 16,00 % inc 14,00new tax regime imposed in the UK or other factors, operators were contracting 60 12,00rigs for less time than they were over the same period in 2010. Given the fact Rig months contracted 50 10,00that the eet had increased, particularly in the rst quarter of 2011, rates took % increase from 8,00 40a hit resulting in some fairly dire xtures being concluded on the spot market. 2010 6,00 30 4,00And then the trend started to reverse, the eet started to decrease as vessels 20 2,00left for other regions and the ow of newbuilds started to slow down. More 10 0,00 -2,00importantly the rig activity started to pick up and come July was nearly 5% up 0 -4,00on the same month in 2010. Moreover the increase in activity for the remainder Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Decof 2011 is forecasted to climb to around 15%. As we go in to 2012 known source: ods-petrodatademand in the rst half of the year shows a further increase on the rigscontracted over the same period in 2011. The picture is less clear as we move into the last quarter as contracts are yet to be announced.In terms of the AHTS market for next year we feel the outlook is positive. The Gøran Røstadnumber of newbuilds that could enter the market is dwindeling and even Completer of half marathonswithout factoring in any signi cant departures to other regions – Brazil beingan obvious candidate – with rising demand and relatively stable supply levels, “Overall it’s been a tight marketnext year could yield some very acceptable rates for owners. for PSVs in 2011 but less so for AHTS, it’s interesting that we seeOn the PSV side the eet increase is far greater than that of AHTS and even with a reversal for 2012. ”an increase in drilling support required, a large increase in eet numbers willmore than likely impact on rates achievable on the spot market. A WORD WITH Westshore…
07 the inside story As European and other global economies sink into deeper trouble, WRITTEN BY the offshore sector continues to Inger Louise Molver burgeon, is a discrepancy emerging? Westshore ShipbrokerAnalysts and energy agencies alike major economies. A large part of the growth construction and installation on a globalhave poured fourth their forecasts in demand is expected to come from the basis. The industry is far from mimicking theon the global economies over the emerging economies, particularly China. dire sentiment in the global economy.last few months and although Traditionally peak demand is seen in the thirdgrowth is expected in most quarter but OPEC reports that this has been Whether a fall in economic growth will resultnations, most agencies are weaker than expected. in an impact on the o shore industry, such astrimming growth expectations – it did in 2008/2009 remains to be seen. But forsome quite signi cantly. Despite all this doom and gloom those of us the time being the phrase that’s most often sitting in the o shore industry are observing heard is ‘the fundamentals are strong’ and itsIn Europe, sovereign debt problems rage and something altogether more uplifting. This this exact sentiment that is likely to prevail forrecent comments from across the pond year’s E&P spending surveys done by major at least the next year.suggested that the European debt crisis was nancial institutions came back with similar“scaring the world”. Portugal, Greece and messages, spending is up this year and goingIreland have already reached out for help even further up in 2012. The surveys arefrom the IMF’s rescue scheme and other conducted from a range of oil companies;nations remain under threat. Unemployment independents, national oil companies andand rising debt are causing civil unrest in a majors and garners the opinions of literallynumber of nations, albeit in a more contained hundreds of players. The June report frommanner when compared to the unrest seen Dahlman Rose, an extensive survey coveringrecently in some of the Middle East countries. hundreds of companies noted that the latestOPEC reported in its most recent Oil Market report was one of the strongest in terms ofReport that a deceleration in growth was upwards revisions in nearly 30 years ofnoted in even the stronger European nations conducting the survey. Expected increase inof Germany and France. In the bi-annual spending for 2011 from the various nancial spain : the rising cost of livingWorld Economic Outlook Report the IMF institutions that conducted surveys averageddiscussed a far more uncertain recovery for at around 15%.global economy than had been originallyanticipated and went on to say that the The outlook for 2012 went beyond that“downside risks to global growth have risen”. however with one speculating on a 15-20% increase in E&P spending over the previousFocusing in on how this relates to the need year.for oil we also see a slowing in demand. TheInternational Energy Agency, which Down at ground level the demand forpublishes a monthly oil market report, numerous aspects of o shore E&P is on therevised down its predictions for global oil rise. Even the seismic industry which is source: energy files ltddemand for the rest of 2011 and in to 2012. notoriously capricious is receiving albeitThe new gures showed a 13% drop in hesitant reports of an upturn next year. Forgrowth for 2011 and 12% drop for 2012. The o shore drilling there is almost no availabilitybasis for this centered around the reduced of UDW semis for the North Sea next year andeconomic growth expectations. OPEC also a corresponding demand for support vesselsreduced its demand forecast for the rest of may also be expected. Contracts continue tothis year and next, reason cited was a global be announced for new o shore projects withslowdown in industrial activity in most of the awards granted for pipelay, subsea source: opec oil market report sept 2011
08 the last word Westshore Asks: What do think will be the average rate for a rig move xture in October? And the winner is.. Last month it was Tor Sven Slaake from MLS who was closest the mark when we asked what the highest rig move xture would be over the coming month. His answer came just days before MLS xed up several vessels for the move of Borgland Dolphin, Magne Viking took the charter This month we have asked (from left to right) Tor Sven Slaake (Tor securing the highest rate of the Sven was actually out of the o ce when we called so an answer was year so far. And at the other end given on his behalf ), Stig Erik Kyrkjeeide Financial Analyst at First Securities and Olaf Hafredal Marketing Director at Deep Sea Supply. of the scale it was also Tor Sven who came closest with his answer Their answers are; of NOK 150,000. So Tor Sven stays on to battle another month…. Tor Sven Slaake - NOK 350,000 Stig Erik Kyrkjeeide - GBP 27,500 Olaf Hafredal - GBP 38,000 Again thanks to all the panelists for their participation, good luck for next month! westshore online In addition to our much viewed website, Westshore is on Facebook & Twitter where you can nd a daily updated newsfeed on the market and what’s going on at Westshore. @WestshoreShip facebook/Westshore Shipbrokers