Maritime Solutions - Naval Architects – Marine Engineers - Managers

Alternate Applications of Surplus

Offshore Support Vessels

www.TAIEngineers.com 1

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The life of an Oil and Gas Support Vessel

• The service life of an OSV is approximately 30 years

• Last two major dips in oil and gas prices were 15 to 20 years

apart

• A major demand dip started in 1981 and lasted until the mid-

1990’s when a small amount of rebuilding surged

• Significant building rebound in new OSV construction in

2004. Current demand dip started in 2015.

• Important lesson: Good OSV designers keep this cyclic

nature of the business in consideration. This makes the

Shareholder and Financier feel more stable.

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Global OSV Utilization by Market Category

Source: IHS Petrodata MarineBase 03/02/16

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Global OSV Utilization by Market Region

Source: IHS Petrodata MarineBase 11/30/16

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US Gulf Jones Act Market – March 2, 2016

Source: IHS Petrodata MarineBase 03/02/16

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US Gulf Shallow Water Supply & Demand (Jan 2005 to Feb 2016) Contracted jackups/PSVs less than 2,999 dwt

Source: IHS Petrodata RigBase and MarineBase

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Excess Supply vs. Demand Phenomenon:

• Highly Competitive Market

• Drop in charter rates, lowered revenues

• Stacked Vessels

• Loss of Trained Personnel

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IMAGES NO ONE LIKES TO SEE……!!!

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Supply and Demand Phenomenon

Owners Options:

• Wait out the event until rates improve

• Mergers and Acquisitions

• Seek Alternate Markets

• The unthinkable “D” word !

Broad Segments of the Marine

Industry

• Marine Transportation: Bulk, Break Bulk Containerized

cargo, & Support Vessels

• Offshore Oil and Gas: Exploration, Development and

Production Vessels

• Defense and Coastal: Protection; Military and Search and

Rescue Vessels

• Recreation: Yachts, Cruise and Excursion Vessels

• Fisheries and Seafood Processing

• Environmental protection and clean up: Research, Survey

and Response Vessels

• Development of Alternate Energy Sources: Wind, Wave,

Ocean thermal energy generation

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Fact: Marine Industry Segments are Cyclical

The cycles depend upon factors such as:

• Demand for raw products, consumer & durable goods

• Demand for Energy and Petroleum derivatives

• Price of Oil and Oil Products

• Availability of Finance Capital

• Regional and Worldwide economic and political stability

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• Marine Transportation: Depend on demand of goods

• Offshore Oil and Gas: Depend on price of oil and gas

• Defense and Coastal: Depend on political cycles and threats

• Recreation: Depend on discretionary income

• Fisheries and Seafood Processing: Depend on availability

and price of catch

• Environmental protection and clean up: Depend on

political cycles, and available budgets

• Development of Alternate Energy Sources: Depend on

public awareness, political cycles and available budgets

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Marine Industry Sector Cycles are not in sync!

The Good News is:

• The world is 72% water

• Waterborne transportation is the most cost-effective mode of

transportation

• Water is a continual source of food, energy and recreation

• 75% of world’s population lives within 50 miles of a navigable

waterway

• Different segments of the marine industry are not always

on the same cycle

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ATTRIBUTES OF AN OSV DESIGN

• Deck house forward

• Large expansive open deck aft

• Most newer generation OSVs are diesel electric

• Mechanical OSVs have excess electric power

for cargo offload systems

• Rugged hull design

• Extra strong deck

• Twin screw

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Suitability for Conversion

• OSVs are extremely adaptable due to their expansive

open deck space

• Essentially the “flat bed truck” of the ocean

• The rear deck serves as a foundation capable of

supporting many different structures

• OSVs are rugged and built to carry large loads

• The efficient and maneuverable hull-form is

advantageous to most applications

• Shallow draft, allows access to most ports

• Diesel electric power plant offers a wide range of options

for distributed power applications

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Lessons from History

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Conversion to Cruise Vessel

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Passenger Ferry

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Conversion to Fish Processor

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Another Conversion to Cruise Vessel

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Conversion to Diving Support Vessel

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Conversion to SWARM support

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Conversion to SWARM support

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Conversion to Surveillance Vessel

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Passenger & Auto Ferry Conversion

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Conversion of OSV to Seismic Vessel

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More Exmaples

Growth in complexity can increase revenues with minimal capital investment.

Yacht Escort Vessel Research platform to

defense projects

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OSV to OCSV, Container, Lightering Vessel

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Short Sea Container Vessel

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Ferry

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Oil Spill Response Vessel

Growth in complexity can increase revenues with minimal capital investment. 31

Bunkering or Lightering Vessel

Growth in complexity can increase revenues with minimal capital investment. 32

Flotel, Hospital Ships, Humanitarian Support

Growth in complexity can increase revenues with minimal capital investment. 33

Yacht or Boat Transportation

Growth in complexity can increase revenues with minimal capital investment. 34

NAVY Shadow Boats – Submarine Support

Growth in complexity can increase revenues with minimal capital investment. 35

Fishing Trawler

Growth in complexity can increase revenues with minimal capital investment. 36

Fish Processing Vessel

Growth in complexity can increase revenues with minimal capital investment. 37

Ocean Surveillance Vessel

Growth in complexity can increase revenues with minimal capital investment. 38

Cable Laying

Growth in complexity can increase revenues with minimal capital investment. 39

Possible Alternate Markets for OSVs

• Ferry

• Container (Short Sea Shipping)

• Navy Salvage

• General Cargo

• Deep Sea Salvage Standby

• Casino Gambling Vessel

• Wind Farm Support

• Wind Farm Installation

• Cable laying

• Twin Hull Heavy Lift Vessel

• Oceanographic Research Vessel

• Hydrographic Research

• Mega Yachts

• Launch and Retrieval of Autonomous

Vehicles

• Naval Refueling

• Bunkering Operations

• Boat/Yacht transportation

• Helicopter launch

• Migrant Surveillance

• Hospital Ships

• Production testing

• Well acidizing

• Early production

• Oil Spill Response

• Oil well intervention

• Floatel

• Deep water platform maintenance

• Humanitarian support

• Fishing Vessels

• Emergency Power Supply

• Ocean Mining Support

• Transshipping/Cargo Handling

• Dredges

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Next Step…..

GAP STUDY TO EVAUATE VARIOUS OPTIONS

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SUSTAINABLE (R)EVOLUTION

OFFSHORE ACADEMY &

THE MULTI-MISSION MARITIME EDUCATION FLEET

• Current State of the Offshore Sector

• Opportunity

• How Do We Capitalize?

• Approach

• Challenges

• Conclusions

AGENDA

www.offshore-mag-com

www.offshore-mag-com

www.Bloomberg.com

CURRENT STATE OF THE OFFSHORE SECTOR

OPPORTUNITY…

You need to think outside the box. If you’ve got something as complex as a helicopter, but it’s not needed to take oil workers around, maybe it could be doing something else…

What’s important is to maintain the skills base.

– Bruce Dickinson, 08 September 2016

HOW CAN THE INDUSTRY CAPITALIZE?

US Flagged, Jones Act eligible, ocean going vessels compared to OSVs (US DOT 2013).

FEDERALLY SUPPORT TRAINING VESSEL

Maritime Executive; NSMV: the Built-for-Purpose Training Ship; 29 July 2016

IN WITH THE NEW

www.moxa.com

IN WITH THE NEW

www.MAC-L.com

ANOTHER OPTION:

Supporting the development of future maritime

leaders through sustainability and collaboration

Offshore Academy – Joint Industry Initiative

APPROACH

Partnership

Scholarship

Stewardship

SCHOLARSHIP

The first priority of Offshore Academy and the Multi-Mission Maritime Education

Fleet will be the education, training, and development of the future professionals

and leaders of the maritime industry.

SCHOLARSHIP Training & Education Afloat –

• Mariners & Engineers • Unlicensed Marine Crew • Surveyors • Technicians

Shoreside Education & Experience –

• Management & Support Staff • Logistics • Marketing

PARTNERSHIP Industry Cooperation –

• Varied industry participation • Vessel Owners / Operators • OEM / Vendors • Academic Institutions

Commercial Viability / Availability –

• The fleet of OSVs would maintain viability and continue to serve the needs of various commercial entities with revenue used to offset operating costs and further develop programs.

PARTNERSHIP

Glosten; Regional Class Research Vessel Design; Design Summary, 29 July 2016

PARTNERSHIP

Government Cooperation –

• Government Financial Support • Training & Education

National Defense –

• Military Sealift • Military Support Operations

STEWARDSHIP

Community, Humanity, & Environment

• Re-Use of Existing Assets • Promote Industry Awareness • Veteran Transition Programs • Oil Spill & Environmental Response • Support Humanitarian Efforts • Disaster Relief

CHALLENGES Commercial

• Feasibility – Taking the “long view” • Sharing resources / logistics

Government

• Return on investment • Licensing restrictions • Vessel repurposing vs. $1.2billion newbuild package

CONCLUSION

Is this an opportunity, or is it a necessity?

THANK YOU FOR YOUR TIME

Any questions?

Chad N. Fuhrmann

(R)Evolution Consulting & Engineering Services Chad.Fuhrmann@revolutionces.com

+1 920 750 8844