Archives for posts with tag: offshore fleet

The global fixed platform “fleet” consists of over 7,700 installed structures, equivalent in unit terms to 58% of the mobile offshore fleet. Yet the significant role played by fixed platforms in generating requirement for offshore vessels and services (such as platform installation and IMR) is at times overshadowed by the role of the mobile offshore fleet. So what, then, is the current outlook for the fixed platform sector?

Back To Basics

Fixed platforms are immobile structures that are attached to the seabed and used to exploit offshore fields. All but 32 fixed platforms are located in water depths of less than 200m and the average water depth of the 7,744 installed units is 42m. Platforms usually consist of a ‘jacket’ (the legs) and ‘topsides’ (the decks), and are fabricated from steel, though concrete or wood have been used. Indeed, the first ever fixed platforms were wooden structures off California in the 1930s; these have been dismantled, but North America still accounts for 31% of the fixed platform “fleet”, a legacy of shallow water E&P in the GoM. Other major historical areas of fixed platform installation include the Middle East/ISC (15% of the fleet), SE Asia (22%) and the North Sea (7%). The North Sea is home to most larger structures, such as the 898,000t “Gullfaks C” gravity base platform. Most structures in areas like the Middle East and the US GoM, meanwhile, are at the opposite end of the scale – unmanned monopod/tripod wellhead platforms of less than 100t.

Construction Crunch

Historically, fixed platforms have been a core business area for a number of fabrication yards and EPCI companies. Installation of small structures tends to involve units like liftboats in the US GoM and crane barges in the Middle East. Larger structures (in the North Sea or West Africa) have required more robust transportation and heavy-lift vessels. At present though, the fabrication and installation outlook is subdued. As shown in the inset graph, 96 platforms were ordered in 2014, down 49% y-o-y; in 2015, 42 were ordered, down another 56% y-o-y. Most ordering has been for smaller units in the Middle East (14%, 2014-15) and SE Asia (39%): platforms like the 43,700t “Johan Sverdrup CPP” (North Sea) are exceptional. Reduced contracting is partly due to the weaker oil price, but it also reflects a longer term shift towards subsea developments and deepwater E&P.

A Shift To Services?

It seems, then, that outside of expansion projects in a few areas, the near term demand generated by fixed platforms is likely to be mainly from servicing existing units: facilities need maintaining, paint needs reapplication and so on. For example, long-term, multi-field IMR contracts have reportedly been awarded for platforms in the UK and Saudi Arabia in recent months. PSV and helicopter demand to supply manned platforms (and ERRV demand in the North Sea) will also persist unless fields are shut down. And even then, potential exists in platform removal: there are currently five planned decommissioning projects involving platforms, each project with a value of c.$400m.

So the fixed platform construction market is fairly challenged. But there are other ways in which fixed platforms can create opportunities. These may be quite niche or oblige EPCI companies to adapt, but with 7,744 units in place, the sector is in several regards still worth some attention.



The rise of deepwater E&P constituted a boon for the offshore fleet, helping to drive, for example, 180% and 60% increases in the FPSO and floater fleets from 2000 to 2015. However, deepwater development has lagged exploration, and so the offshore sector is fairly exposed to projects with high breakevens – problematic, given the oil price. But could the downturn actually help deepwater E&P in the long term?

Deepwater Exploration

The first deepwater offshore discovery was not made until 1976, by which point 1,018 shallow water fields had been discovered and 350 brought onstream, and it was only in the late-1990s that deepwater E&P really took off. Oil companies began pushing deeper into the US GoM, while the internationalization of the industry in the 2000s saw a spate of deepwater discoveries off West Africa and Brazil. A robust and rising oil price helped sustain rising deepwater E&P until 2015, with India, Australia and East Africa becoming important frontiers too. The average water depth of global offshore field discoveries passed 200m for the first time in 1996, 500m in 2004 and 800m in 2012, and the number of deepwater discoveries averaged 55 per year from 2005 to 2015.

Deepwater Production

However, as the main graph shows, the mean water depth of discoveries rose much faster than did that of start-ups: the former stood at 734m in 2015, the latter at 377m. Indeed, by 2016, out of a total of 998 deepwater finds, just 27% had started up, with deepwater start-ups averaging 19 per year from 2005 to 2015. The divergence was in large part because technological barriers and cost overheads in deepwater production – subsea, SURF and MOPU – are more complex and expensive than in exploration, and efficiency gains seem to have been more limited to date as well. Deepwater project sanctioning was therefore relatively inhibited, and due to limited sanctioning, the backlog of undeveloped deepwater fields grew at a faster rate than that of shallow water fields, as indicated by the inset graph. Thus over time, the overall backlog of potential projects has become more costly and complex. Indeed, some reports suggest oil project average breakevens have risen by c.270% since 2003.

Deepwater Challenges

This is partly why the offshore outlook is challenged at present: deepwater fields have relatively high breakevens (usually $60-$90/bbl) yet also form a major part of oil companies’ portfolios. Some major oil companies have indicated that 2016 E&P spending cuts are to bite deeper off than onshore, where costs are lower (even for shale, in many cases). In January 2016, Chevron decided to axe outright Buckskin, a US GoM project in a water depth of 1,816m with a breakeven of c.$72/bbl. ConocoPhilips, meanwhile, is planning to exit deepwater altogether.

However, in order to make deepwater viable again, many companies are trying instead to cut project costs. Statoil, for example, has reduced the CAPEX of Johan Castberg by 48% and the breakeven by 40%. Some cost savings (in day rates, for instance) are likely to be cyclical; others, such as in subsea fabrication, yielding improved deepwater project economics, are likely to be more lasting. So while exposure to deepwater projects is clearly a challenge given the current oil price, cost cutting now could be to the benefit of deepwater E&P in the long run.


The rigid pipe layer fleet is complex, varied and sometimes perplexing: S-lay, J-lay, reel-lay; barge, vessel, semi-sub; tensioners, carousels, moonpools – units therein defy easy comparison with one another. And so, unlike in many sectors of the offshore fleet, it is not immediately clear what is a ‘high-spec’ and what a ‘low-spec’ unit. What is needed, then, is a framework to analyse the 172-strong pipe layer fleet…

Offshore Operations

In essence, pipe layers are used to install rigid pipelines on the seabed, primarily during the development of offshore fields. These pipelines are used to export oil/gas to shore, or to transport fluids between seabed or surface installations within a project area. Pipe laying is conducted during the EPC phase of project development, consequent on award of (typically lump-sum) EPIC and SURF contracts, usually to specialist offshore construction companies like Allseas, McDermott, Saipem, Subsea7 or Technip, who own 4, 5, 14, 6 and 6 pipe layers respectively – 20% of the fleet. There is no pipe layer spot market as such, so comparing day rates to pick out the high-spec from low-spec units is not possible.

Inscrutable Idiosyncrasy?

Vessels’ traits are not immediately helpful either. Monohull structures account for 19% of units and barge/semi-sub structures for 81%. Pipe sections are welded on-board and deployed via J-Lay towers (8% of units) or S-Lay stingers (76%), the letter indicating the curvature of the pipeline as it is lowered to the sea floor. However, 3% of vessels have both J-Lay and S-Lay structures; 16% use cranes or have hybrid, reel-lay systems; and the tensioner capacities of lay systems (i.e. the weight of pipeline they can support) range from under 10mT up to 2,000mT. There is no simple correlation between a single feature and a unit’s capabilities: “Lorelay” has tensioners of 265mT, yet cannot lay pipes in ultra-deepwaters; “C Master”, with tensioners of 160mT, can. The secondary functions of units can also vary greatly: 10% of units have ROV capabilities, for example. Moreover, 19% of units in the flexi-lay fleet can install rigid pipelines (and 5% vice versa). How then, amidst this variation, to distinguish a ‘high-spec’ from a ‘low-spec’ pipe layer?

A Promising Perspective

One way is to cross reference the maximum pipe lay water depth of units with the maximum diameter of pipe they can lay. Thus the 12 units in the “red” segment of the inset chart (e.g. “Seven Borealis” and “Sapura 3000”) could be considered high-spec and versatile, competing with units in the “dark blue” segment for ultra-deepwater subsea contracts, but with the “light blue” segment for large export pipelines in shallower waters. In the opposite quarter of the matrix, the 55 “grey” units are mostly barges, deployed in shallow waters like the Niger Delta and Lake Maracaibo. One could say there are four (overlapping) markets for pipe layer work. The range of EPC contracts for which construction companies are likely to bid will depend in part on the segmentation of their pipe layer fleets.

So, pipe layers have an array of characteristics complicating segmentation. However, some units are clearly better suited to some projects than others. By cross-referencing factors like water depth with pipe width, one can craft a framework for sorting through this diverse fleet.


Self-Elevating Platforms (‘SEPs’) are generally used to provide offshore support for construction and maintenance projects. These units fall within the wider ‘construction’ sector in the segmentation of the offshore fleet, and can generally operate in water depths of up to 120m. The key deployment areas for these structures exist in the US Gulf of Mexico (GoM), West Africa and the Middle East. Despite high numbers of shallow water developments in the North Sea and South East Asia, there has been relatively little deployment of SEPs in these regions, although recent contracting patterns within South East Asia suggest this may soon change.

Rising Above Regional Regimen

The Graph of the Month shows the regional breakdown of producing fields with a water depth of <100m, as well as the share of self-elevating platform deployment across these regions. South-East Asia contains the largest number of shallow water developments with 552 active fields, closely followed by the US GoM (508) and the North Sea (452). However, there is a large disparity between these regions in terms of SEP deployment, with the US GoM accounting for the deployment of 161 units compared to the North Sea and South East Asia where just 10 and 19 structures are deployed respectively.

Lower deployment numbers in these regions can be largely attributed to a major factor in each region. In the North Sea, self-elevating platform use is often restricted by harsh operating conditions. In South-East Asia an ample supply of support vessels has provided ships for use in construction and support duties in the region.

Jacking-Up Orders

The current SEP orderbook includes 24 units with a record combined contract value of almost $2bn, of which 13 are for South-East Asian owners. Of the 15 contracts agreed in 2014, 60% of these are for Asian owners. Although these units will be capable of operating internationally, indications from owners including Teras Offshore, Swissco Marine and East Sunrise Group hint at a South-East Asian target market. There is a large fleet of mid-sized supply vessels in the region and historically these units have worked similar roles to the SEP fleet. However, the mid-sized supply vessel orderbook has diminished from around 200 units in 2012 to the current total of around 70 vessels, potentially supporting future deployment of SEPs in the region.

Lifting Expectations

An abundance of shallow water fields and relatively benign conditions means that South-East Asia is a region with strong potential for the future deployment of SEPs. Despite a lack of historical deployment, the attraction of competitive day rates in comparison to support vessels has reportedly begun to attract interest, in turn leading to investment in newbuild units from Asian owners.

So, a reduced orderbook for mid-sized supply units and an expected increase in field developments within China and South-East Asia could be positive news for SEP owners. Whilst still way below levels of deployment in the Gulf of Mexico, this region could provide impetus to self-elevating platform demand in the future.