Clarksons Renewables Offshore Wind project and Vessels Newsletter

Week 44

OFFSHORE VESSEL DAYRATES BACK TO 2014 LEVELS

by Jens Egenberg, Divisional Director, Marine Advisory ?

Upward Trajectory: Offshore dayrates have been steadily increasing, driven by robust demand in both the oil and gas sector and the offshore wind industry. This surge in dayrates is a result of heightened activity in these sectors, with offshore wind projects experiencing remarkable growth.

Impact of Fleet Decay: The offshore oil and gas sector has faced challenges due to the gradual decay of the vessel fleet, primarily resulting from subdued activity since 2014. The scarcity of vessels in this sector has led to increased competition and a subsequent rise in dayrates, as demand gradually came back.

Increasing Indexes: It's worth noting that offshore dayrates have been steadily increasing since their lowest point in 2017. This trend is can be seen in the two indexes below, demonstrating a clear and consistent upward trajectory over the years.

Ripple Effect: Escalating dayrates in the oil and gas sector have also affected the offshore wind segment, which often shares vessel resources, especially from the subsea vessel sector.

Dedicated offshore wind vessels: Support vessels, such as Crew Transfer Vessels (CTV) and Commissioning Service Operations Vessels (CSOV), have also witnessed consistent dayrate growth since 2020, the latter very closely linked to the raise in subsea rates.

Installation Vessels: Key installation assets like Wind Turbine Installation Vessels (WTIV), Floating Foundation Installation Vessels (FFIV), and Cable Lay Vessels (CLV) have seen their dayrates steadily increase to record highs. Contracts for these assets are being secured for the years 2026-2027, at record high rates, reflecting confidence in these markets. Limited newbuilding activity in the installation asset sectors is expected to continue exerting upward pressure on dayrates, making them a significant focus for industry stakeholders and investors.

Conclusion: In summary, offshore dayrates are on the rise due to increased demand in both the oil and gas and offshore wind sectors. The scarcity of vessels in the oil and gas sector has led to heightened competition and higher dayrates, which have spilled over to the offshore wind sector. This trend is expected to persist, particularly in the WTIV, FFIV, and CLV segments, with contracts secured well into the mid-2020s, indicating the strength and growth opportunities in these sectors.

OFFSHORE RENEWABLES NEWS

?rsted has revised impairments on US offshore wind portfolio upwards to $4bn and canceled 2.2GW of projects in New Jersey.?After estimating impairments on its US offshore wind portfolio of DKK 16bn (~$2.3bn) in late August, ?rsted has revised that figure upwards to DKK 28.4bn (~$4bn) and announced canceling the development of its Ocean Wind 1 and 2 projects in New Jersey, with ~2.2GW capacity combined, on the back of a deteriorating supply chain situation, higher interest rates, and the lack of an adjustment on the funding mechanism for its Sunrise Wind project. ~70% (DKK 20bn) of the impairments are related to Ocean Wind 1, which was originally planned to be operational already by 2025. On top of the impairments, ?rsted expects a provision of DKK 8bn-11bn related to the decision to cancel Ocean Wind 1, to cover potential additional contract cancellation penalties, to impact its 4Q23 results negatively. The offshore wind sector has been hit with massive cost inflation this year affecting not only ?rsted but also peers such as Equinor and BP, who recently sought to renegotiate the subsidies offered for their three offshore wind projects under development off the coast of New York with a combined capacity of 3.3 GW. Their request was rejected in October by the State governor however, and we mused at the time that the current adverse environment for offshore wind may lead to some projects being canceled by their developers. Both Equinor and BP have since booked impairments of $300m and $540m, respectively, on their New York projects. As we have argued before, offshore wind is increasingly at risk of losing competitiveness compared to cheaper renewable energy alternatives, in particular solar PV where costs continue to drop. Source: Clarksons Securities Renewables ?

Siemens comments on media reports about talks with the German government about financial support: “In light of recent media reports regarding talks with the German government, Siemens Energy states the following: Siemens Energy financial results for fiscal year 2023 are expected to be fully in line with guidance. The former Gas and Power businesses are expected to continue their excellent performance in fiscal year 2024 and are on track to achieve their mid-term targets (fiscal year 2025). The wind business Siemens Gamesa is working through the quality issues and is addressing the offshore ramp up challenges as announced in the third quarter communication for fiscal year 2023. As Siemens Gamesa is for the time being not concluding new contracts for certain onshore platforms and is applying strict selectivity in the offshore business, order intake and revenue are expected to be lower than market expectations for fiscal year 2024, and net losses and cash outflow are expected to be higher than market forecasts. The strong growth in order intake, particularly in the former Gas and Power business areas, leads to a rising need of guarantees for long-term projects. Considering this requirement, the Executive Board is evaluating various measures to strengthen the balance sheet of Siemens Energy and is in preliminary talks with different stakeholders, including banking partners and the German government, to ensure access to an increasing volume of guarantees necessary to facilitate the anticipated strong growth. Siemens Energy’s budgeting process is still ongoing and no decisions in respect to the annual budget 2024 and/or any specific financing measures have yet been taken by the Executive Board.” Source: Siemens Energy

US-based Friede & Goldman and Norway’s OIM Wind have launched a new wind turbine installation vessel (WTIV) design. The new FO-146 is based on F&G Friede & Goldman’s WindSetter Class WTIVs. The vessel can accommodate up to five x 18 MW or four x 20 MW wind turbine generator (WTG) sets, including their full height towers. It has a water depth capacity of 80 meters and is equipped with a 3200 mT SWL leg encircling crane, which is ready to install XXL foundations. The developers claim they have plans for at least two units to meet growing demand. Source: Friede & Goldman

Umoe Mandal has launched a crew transfer vessel (CTV) for MHO Co. Named MHO Furious, this new CTV will undergo tests and commissioning, with delivery scheduled for the second half of November. This vessel is the second in a series of two, both of which will be deployed for ?rsted on the Race Bank and Westermost Rough windfarms in the UK. These CTVs are equipped with surface effect ship (SES) technology and combine high speed, comfortable ride for wind farm technicians and safe boat landing on wind turbines in waves up to 2.5 metre. The CTVs can reach speeds of up to 32 knots in 1.5 metre waves and a top speed of around 50 knots in calm waters. In addition, they can carry up to 24 industrial personnel and crew of four. Source: Umoe / Clarksons Renewables Intelligence Network

Singapore-based Megamas Resources in partnership with Renaissance Technologies (RTM) has contracted Ulstein for the design of a cable laying and repair vessel.? This decision was taken in view of the shortage of cable ships, as well as an aging fleet in the submarine cable industry. Megamas Resources will be introducing two new-builds with the first targeting to be ready for service early 2026, to fill the gap in meeting the industry demands. The vessel is designed for the laying and maintenance of submarine cables, both fibre-optic telecommunication cables and power cables, covering the inter-array and export power cables for offshore wind farms. The cable ship will be 120 metres long with a beam of 23 metres. She can accommodate 70 people, with a deadweight capacity of 8,000 tonnes, and is yet able to achieve a passage speed of 14 knots. The cable ship is DP2 Class and can operate in shallow water down to 15 metres. She also has a built-in advanced acoustic sonar capable of producing seabed maps. She will be equipped with two cable tanks, of which one to be fitted with a carousel system and a guided spooler. An integral hangar enabling operations and sheltered maintenance of TROV (Trenching ROV) and an A-Frame for plough deployment over the stern enable the vessel to undertake all type of cable burial operations. Source: Ulstein

Ty?vene will build three CTVs for MCS. The Finnish shipyard Ty?vene has secured an order for three hybrid-ready crew transfer vessels (CTVs) from UK-based Maritime Craft Services (MCS). ?The contract for the hybrid-ready CTVs – which will have small waterplane areas twin hull (SWATH) hullforms – is the Finnish yard’s first in the offshore wind market. all of the CTVs will be ‘hybrid-ready’ for easy and cost-efficient retrofitting of hybrid propulsion technology. He said they will also be equipped with ballast water treatment plants. The CTVs will have a length of 29 m, speed of 22 knots and deadweight of 30 tonnes. The first of Ty?vene’s SWATH CTVs will be delivered to MCS in early 2025. Source: Clarksons Renewables Intelligence Network ?

QUICK BITES

1. Havila has sold the PSV Havila Commander to undisclosed buyer and AHTS Havila Jupiter and Havila Venus to Seatankers.
2. DOF announced that is has been selected by the new vessels owners as commercial and technical manager for the AHTS Skandi Jupiter and Skandi Mercury, formerly known as the Havila Jupiter and Havila Venus respectively. DOF is expected to take over the management the week beginning 6th of November 2023. Source: Clarksons Offshore & Renewables, DOF ? Norwind Breeze is fixed as front runner for Norwind Storm to SGRE for 210 days commencing April/May for W2W at Moray West.
3. Olympic Taurus fixed to DEME for W2W at Doggerbank for 21 days + options. Source: Clarksons Offshore & Renewables
4. Fugro published its Q3 2023 trading update and reported a 32,6% revenue growth and EBIDTA (earnings before interest, taxes, depreciation and amortization) of EURO 136 million. Source: Clarksons Offshore & Renewables
5. Siem Offshore published in its financial report an EBIDTA of USD 41,5 million (EBIDTA margin 48%) on the back of 87% fleet utilization (100% on subsea fleet).
6. BP had Q3 earnings of USD 3,3 billion whilst taking a USD 540 million impairment on the Empire Wind 1 & 2 and Beacon Wind projects. ?

The Connecticut Department of Energy and Environmental Protection (DEEP) has released a Request for Proposals (RFP) seeking 2 GW of offshore wind generation capacity. This RFP introduces several new features, including an indexed pricing option that accounts for inflation and the inclusion of multi-state bids in accordance with the recently established agreement with Massachusetts and Rhode Island. The offshore wind solicitation commenced on October 27th, and developers are required to submit their proposals by January 31, 2024. Notably, during the drafting process of the RFP over the summer, it was anticipated that the state would make available up to 1,196 MW of total offshore wind capacity in this particular round. Source: Offshore WIND ?

The US Bureau of Ocean Energy Management (BOEM) has completed the designation of four new wind energy areas (WEAs) in the Gulf of Mexico. These WEAs are as follows: Option J: Encompassing 495,567 acres, situated approximately 47.2 miles off the coast of Texas, this area has the potential to support projects capable of powering 2.1 million homes. Option K: Covering 119,635 acres and located approximately 61.5 miles off the coast of Texas, this area holds the potential to facilitate projects that could provide power to 508,200 homes.? Option L: Spanning 91,157 acres, positioned approximately 52.9 miles off the coast of Texas, this area has the potential to support projects that could power 387,450 homes. Option N: Encompassing 56,978 acres and located approximately 82 miles off the coast of Louisiana, this area holds the potential to support projects that could power approximately 242,000 homes. The next steps in the leasing process involve the issuance of a proposed sale notice, followed by a 60-day public comment period, as stated by BOEM. This announcement of new WEAs follows the historic first-ever Gulf of Mexico offshore wind lease sale in August, during which two developers bid for one of three available offshore wind area leases. The highest bid of USD 5.6 million was submitted by RWE Offshore US Gulf, LLC for the Lake Charles Lease Area, which has the potential to generate around 1.24 gigawatts of offshore wind energy capacity, thereby providing renewable energy to nearly 435,400 homes, as reported by BOEM. Notably, the Galveston I and Galveston II areas offshore Texas did not receive any bids and were left unawarded. Source: Offshore WIND ?

Korean companies have joined forces for offshore wind farm development in Jindo-gun, Jeollanam-do. HD Hyundai Electric, Pacifico Energy Korea, CS Wind, Korea Ocean Engineering & Consultants Co, LTD., and Daebul Shipbuilding signed a memorandum of understanding (MOU) for an offshore wind farm project located in the Southwest of Korea. The project is to build a 3.2GW offshore wind farm consisting of three power generation complexes in the coast of Jindo-gun, Jeollanam-do. This wind farm is supposed to should supply electricity to 3 million households with a total cost of 19 trillion won. The participating companies agreed to strengthen the cooperation system to complete the project successfully. Pacifico Energy will be in charge of equity investment and overall business development, and HD Hyundai Electric will supply wind turbines and power equipment for offshore substations. They also shared their roles in wind towers and substructures, submarine cable installation, and maintenance. Source: HD Hyunday Electric

MEET CLARKSONS AT RENEWABLES EVENTS

Offshore Energy, Amsterdam 28th – 29th Nov. |?More information

Contacts

OSLO

Frederik Colban-Andersen?|?Managing Director? Erik T?nne?|?Managing Director, Market Analysis Jens Egenberg?| Head of Research Renewables Anders C. Hagen?| Chartering Walk-2-Work, Subsea Vegard Volls?ter?| S&P and Newbuilding T&I/CSOV Espen Bj?rnson?| Chartering Subsea & Wind

HAMBURG

David Matthews?| Head of Strategy Renewables Rouven C. Willner?| Projects SOV, CSOV Tim?B?rner?|?Chartering Walk-2-Work, Gangways Henning Leverkus?| Chartering CTV, Tugs & Workboats Sina Ingber?| Marketing & Projects

COPENHAGEN

Gabriel Andersen?| Principal Consultant Logistics and EPC ?

LONDON

Neil Buchan?| Head of APAC Subsea & Wind? Mikkel Nielsen?| Principal Consultant Logistics & O&M? Chris Roberts | Chartering and Renewables Consultant

ABERDEEN

James Braid?| Divisional Director Logistics, Transport & Installation Olivier Candeel?| Chartering & Consultant Transport & Installation Oliver Thompson?| Market Analyst, Transport & Installation Chris Tweedie?| Chartering Subsea and Offshore

HOUSTON

Jonathan Lints | Director Subsea and Renewables Jack Fitzgerald?| Chartering Jones Act Specialist? Tylor Bojé | Chartering?OSV / Jones Act Lead

SHANGHAI Jack Qiu?| Projects Newbuilds and China?

SINGAPORE Tilly Manley?| Chartering APAC Renewables ?