Page 34: of Maritime Logistics Professional Magazine (Q3 2013)

In the midst of a red hot offshore boom, one that argu- ably has its epicenter squarely in the middle of the Gulf of Mexico, everyone seems to be busy: shipbuilders, opera- tors, OEM vendors ? everyone. Scores of new offshore assets are on the way. As it unfolds, three U.S.-based offshore sup- port providers are pouring hundreds of millions of dollars into  eet and infrastructure renewals. One of those  rms, Harvey Gulf International Marine LLC, and its CEO Shane Guidry, have combined its growth plans with the introduction of inno- vative technologies, a new  nancing vehicle, high end equip- ment and an aggressive acquisition strategy. The Harvey Gulf plan is dependent on a number of assump- tions, both fraught with risk, and at the same time, the promise of great reward. Gambling that ?the  ight to quality? will  nally come to fruition, Guidry and Harvey Gulf are set to deliver into the market a modern  eet of support vessels the likes of which have never before been seen under U.S.  ag. Bigger, more capa- ble, cleaner LNG-powered vessels will arrive, also equipped with accommodation standards and redundant safety features that, un-til now, were commonly found only in the Norwegian markets. As the new tonnage comes out, the upgrade of a newly ac- quired, older  eet of outside acquisitions is also underway. And then, there are the new LNG bunkering facilities, a re- cently inked Moody?s $1 billion credit facility and the new additions of engineering and operations staff to run it all. It?s a long list of ? rsts? for Harvey Gulf and industry, too. To sort it all out, MarPro spent a morning with Guidry on the Gulf Coast in July. As with all things in the Harvey Gulf business model, it isn?t for the faint of heart. Wherewithal The  rst public rating from Moody?s for a new $1 billion credit facility, announced by Harvey Gulf in June, is the cor- nerstone upon which the Louisiana-based  rm will build its future expansion plans. Shane Guidry, Harvey Gulf CEO ex- plained, ?The Moody?s rating gives you better access to capi- tal; as good as if you were a publicly traded company. The loan was done through Bank of America ? so that?s the only entity I?m dealing with.? Competing against other  rms, some of which are publicly traded and can access capital in other ways and perhaps with more ease, the Moody?s rating was a key step for the company. The LNG Play: risk, payback and the future The June announcement that Guidry had exercised its op- tion for a sixth clean burning LNG OSV hull with Missis-sippi-based TY Offshore leaves no doubt that Harvey Gulf is committed to the concept. The only question left to answer is why no one else is following. Guidry has his own take on that. ?It?s a combination of several things. Others claim that this is a niche market only. It?s not a niche market; it?s a new market. So, it?s going to be a situation where everyone is looking to see how successful we are and perhaps Shell, too. We have interest from foreign oil concerns who want to talk about tak- ing the LNG boats to Australia. Here?s what happening: the only LNG boats in the world are being built in Norway, most likely  nanced by the Norwegian government, so they have to be used in Norway. So, now there are boats available to be operated anywhere in the world. We?ve been contacted by a company in the Middle East. It just has to make economic sense. So, we chartered the  rst three boats to Shell ? which was the right thing to do ? and the entire oil and gas world can see that somebody is interested in this and can make it work.? Responding to doubters who point to the operational draw- backs of a dual fuel arrangement, Guidry shrugged and said, ?The LNG tank weighs 100 tons ? we lose 100 tons of cargo there, but we got back 50 tons by recon guring the vessels. Now, the engines weigh more because they are bigger so you lost some there. But, at the end of the day, instead of being 5,500 deadweight tons, we end up being 5250.? He adds, for emphasis, ?When we  nish the build out of the current 49 vessel plan, 6 of the 49 will be dual fuel vessels. But, we have options for 4 more ? they?re called options but we are going to exercise them. That?s because I?d sign for them today if the yard didn?t require a deposit. But, I?m not going to give them money until they can start the boat.? According to Guidry, the Wärtsilä dual fuel engines will not require after treatment, because when burning LNG, they ex- ceed the requirements for tier 4, and on the diesel side, there are no rules for tier 4 in this class. That said; the lure of LNG and dual fuel for Harvey Gulf had more to do with the prom- ised reduction in maintenance issues and longer span between service intervals. Detractors point out that the real merits of the concept are as yet unknown and may not be all they are cracked up to be. Again, Guidry shakes his head and says, ?People do not understand these engines and until they do, they shouldn?t make statements like that.? He continued, ?Here?s what we do know: Wärtsilä recently had a dual fuel engine that ran for 20,000 hours on a Nor- wegian offshore vessel and when they opened that engine up and took a white glove to the inside of it, there was no car- bon. If you can make 20,000 hours ? why can?t you make 60 or 80,000 hours, as long as you do not operate those engines using diesel. And that?s why I am hell bent on not allowing anyone to use diesel fuel in my boats. When we bring these boats in, I?m not going back offshore until we  ll those LNG tanks. The CAPEX is a lot higher ? yes. But, the maintenance CAPEX is a lot less to support the decent rate that I?ve been giving out. But, in order to do that, I have to run LNG.? Finally, Guidry addressed the issue of cost. ?They talk about the building costs. It does cost $12 million more per boat. So, with the 6 boats I am building, I could?ve gotten 1.5 more. Right now, the returns are no more than what a $42 million supply boat is getting. But, Harvey Gulf is not the compa- OFFSHORE SUPPORT 34 Maritime Professional 3Q 2013MP #3 34-49.indd 34MP #3 34-49.indd 349/10/2013 10:16:24 AM9/10/2013 10:16:24 AM