Page 40: of Maritime Logistics Professional Magazine (Q4 2015)

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OFFSHORE OUTLOOK

Oil Downturn Gives FPSO Labor Market Pause

Image courtesy Prillen (2011)

Depressed prices, cost reductions put workers on notice.

By Patricia Keefe t’s starting to look a lot like, well, not Christmas, that’s There are two oil prices that drive investment decision in for sure. The buzz at the 7th FPSO Vessel Conference in new FPSOs, according to McCaul: The price that prevails over

IHouston earlier this month was about the likelihood of a the few years in which the decision is being made; and the prolonged downturn in oil prices, much like what happened expected price once the FPSO comes into operation, typically after the oil crash in the mid-1980s, when fallout from the 3-4 years down the road. “The price today affects how much massive layoffs, project shutdowns and bankruptcies took a cash is available for spending, but the expected price in four toll for years. years is really what’s relevant.” “The market is going to hell – there is very little happening Given the time lag between orders and delivery – McCaul right now. There are a few studies and not many new proj- expects the number of FPSOs to increase in the foreseeable fu- ects,” said keynote speaker Peter Lovie, senior advisor, ? oat- ture as the industry was averaging 10-12 new orders a year over ing systems, Peter M Lovie PE, LLC. There will be a few the last decade, even though new orders have virtually stopped. places where ? eld development is economic at $50/barrel, So from an employment perspective, the picture is not all with smaller vessels producing smaller amounts, but many gloom and doom in the FPSO market, say recruiting ? rms. less than a few years ago, he added. Companies that over hired last summer and up through 18 “This will be different from the downturn of ’09, where there months ago are in the process of “rightsizing,” says Eric Pe- was a big recovery the following year,” Lovie warned, citing ters, managing director for the Americas, Faststream Recruit- recent comments from BP CEO Robert Dudley and others that ment, Ltd. He adds that companies also are trying to shift la- the current depression in oil prices will prove to be longer than bor from a ? xed to a variable cost. anyone expected, possibly extending through 2018. The FPSOs coming on line will have to be built, readied and “FPSO orders are drying up, and in 2015 it’s looking more and crewed, so there are jobs, but candidates will see some distinct more like MODUs in 1986,” says Lovie. “Companies cutting back changes: very speci? c job requirements, a movement onshore, on CapEx has had a big impact on proceeding with FPSO proj- a move toward contracting over fulltime employment, and ects,” adds Jim McCaul, President, IMA/World Energy Reports. more responsibility for retirement planning.

A Sevan FPSO model 300 built in 2007-08 at Yantai Raf? es (hull), Keppel Verolme (topside integration) and

Nymo (gas compression plant). It is nearly complete here at the Nymo yard at Eydehavn, Arendal, Norway.

40 | Maritime Professional | 4Q 2015 34-49 Q4 MP2015.indd 40 11/18/2015 9:43:56 AM