Offshore wind, decommissioning markets provide opportunities for heavy-lift vessels

Offshore staff

LONDON– Heavy-lift vessel (HLV) contractors have faced a challenging market in recent years as the low oil price combined with a shift toward subsea installation and deepwater activity has seen fixed platform installations decline globally, according to analyst Douglas-Westwood (DW).

The number of fixed assets installed in 2017, the analyst says, is expected to be c.45% less than 2014 levels. This has resulted in a troublesome outlook forheavy-lift vessels within the market for topsides and jacket installation, leading contractors to seek out opportunities in less traditional markets.

Two such bright spots are offshore wind anddecommissioning. Offshore wind is increasingly-attractive as the volume of installed turbines per year grows rapidly and the projects become larger and farther from shore. Though this growth has historically been supported by government subsidy, recent (and projected) reduction in capital costs make the technology cost-competitive with conventional forms of power generation such as nuclear and combined cycle gas turbines.

While the market for turbine installation is predominantly covered by purpose built wind turbine installation vessels (WTIV), DW says the installation of foundations and substations is accessible to HLVs. A key requirement for entering this market is sufficient deck space with the ability to carry at least four monopiles typically preferred.

Although turbine size, and hence the size of the supporting foundation, are increasing with water depth, the analyst says that it is unlikely that HLVs will need lifting capacity of more than 3,000 metric tons; crane capacity in the range of 1,500-3,000 metric tons is suitable for most offshore wind installations.

For HLVs with lifting capacity of more than 5,000 metric tons, decommissioning represents a significant opportunity, particularly within theNorth Sea which is characterized by large platforms. According to DW, c.40% of platforms within the UK and c.85% of platforms within Norway have a combined substructure and topsides weight greater than 5,000 metric tons.

Until recently the largest single lift decommissioning operation had been the removal of the Frigg TCP2 MSF, weighing in at 8,500 metric tons. With the introduction of super heavy-lift vessels such asAllsea’sPioneering Spirit, Heerema’sSleipnir (due for delivery in 2019) as well as recent orders from Shandong Twin Marine for two vessels with lifting capacity of 34,000 metric tons, it is hoped that the decommissioning of the North Sea’s heaviest platforms will become more efficient.

The offshore wind and decommissioning markets both have a heavy emphasis on cost reduction, and the resultant requirement for cost-effective HLV solutions going forward will be extremely important. As such, in a market where day rates are often driven by tonnage requirements, super heavy-lift vessels may have a somewhat-limited market reach and vessels that are over specified will risk lower day rates, the analyst added.

02/13/2017