A TIME OF GREAT EXPECTATIONS, ENTHUSIASM AND EXCITEMENT
Taking a long hard look at the f u t u r e without resorting to crystal ball gazing of any kind, it's fair to say the offshore oil and gas support service industry in general and Tidewater Inc. in particular stand at the threshold of a m a g n i f i c a n t business environment. It is my firm belief that the long term will reflect substantial growth, progress and profitability, not only for our marine fleet, which is the world's largest by a substantial margin, but also for our c o m p r e s s i on service and oil and gas businesses.
Let's take a look at the current a r e n a f o r our marine business and see if the facts lead to the conclusion suggested.
In recent months, we have witnessed a firming utilization for our fleet of approximately 400 vessels and are now experiencing the strongest sustained demand in the 25 years since we first began operations in the Gulf of Mexico early in 1956. The demand is consistent in most, but not all, areas of the globe where our fleet is currently deployed.
As followers of the industry know, capital spending for exploration and development worldwide has resulted in a 99-percent utilization rate for mobile drilling rigs worldwide. More rigs are being built today than in any other industry period. New production facilities are also on the rise, up 84 percent over 1979. We are also optimistic that there will be more lease sales at more frequent intervals, and are hopeful t h a t further favorable action by the new Administration will continue a strong domestic offshore program that will keep apace with the current foreign demand. This level of exploration, development and production activity should result in maximum utilization of our fleet and usher in a period of great expectations and enthusiasm for the long term.
The Tidewater fleet is active in 28 areas of the globe with on-theground management that supports day-to-day operations for our charterers, who are primarily national oil companies and their contractors, international major oil companies, and drilling contractors.
We have responded to the surge in capital spending in exploration and development worldwide by acquiring existing equipment and by building new vessels. The number of vessels in our fleet has remained relatively c o n s t a n t f or several years but we maintain an active, ongoing program of upgrading, modernization and replacement.
During the last fiscal year ending March 31, 1981, we acquired or committed to construction 40 vessels which aggregated a total capital commitment of approximately $83 million. This is the largest annual capital commitment for marine equipment in Tidewater's history. If our current plans are realized, the capital commitment for fiscal year 1982 will exceed 1981 commitments.
In general, we have found that current shipyard costs are too high and charter rate structures in some operating areas have been too low to allow us to build all types of new equipment and expect it to currently yield appropriate returns. However, we are beginning to see rates improve to a level which will provide adequate returns and consequently we continue to examine new construction possibilities.
Tidewater has long enjoyed a position of leadership within the marine services industry. A greater number of vessels and a wider variety of specialized vessel types deployed to more locations around the globe than any single competitor have been important factors contributing to the company's leadership position. Another key factor has been the company's strong f i n a n c i a l position, which has provided muscle to withstand industry-wide difficult times, to respond to special vessel needs of our customers, and has permitted us the flexibility to make a wider range of business decisions quickly.
The 40 vessels that were acquired or committed to construction prior to the close of the past fiscal year are becoming available precisely when they will be needed most by the offshore oil and gas industry. And it goes without saying they will also be c o m p e t i t i v e in most operating areas of the world.
The present approximate value of our fleet, based upon acquisition cost as of March 31, 1981, including wholly owned and joint venture equipment, is $364 million.
Included in the fleet makeup are towing/supply and supply vessels, offshore tugs, crewboats, utility vessels, inland tugs, barges, crane vessels and other specialized equipment.
Nearly half of the number of vessels in the fleet (77 percent of aggregate fleet value) consists of towing/supply and supply vessels in the medium horsepower range, with the supply vessels forming the focal point of the company's current expansion program. The new vessels are equipped with an improved pumping system that provides liquid mud and other chemicels, in addition to fuel and water, to offshore drilling rigs.
Vessels in the class are fitted with twin Caterpillar D-399 engines which deliver 2,250 continuous horsepower, a speed of 12 knots, and are particularly suited for jackup drilling operations and other relatively shallow water exploration and development programs.
Equipped with the latest communication and n a v i g a t i on devices, they have air conditioned and heated quarters. The deck area is 114 feet by 34 feet, with below-deck storage that accommodates 4,000 cubic feet of bulk storage.
Along with the strong demand for new and acquired equipment, construction p r i c e s have shot up. Typically, a basic 180-foot straight supply boat with no towing gear and an open deck, could now cost at least $3.75 million.
A larger towing/supply vessel with winch, roller, and more power in the engine room could cost an additional million dollars or more. And as the industry moves f a r t h e r o f f s h o r e , larger, more powerful and higher-cost vessels will be required to support it.
There also has been a trend to "extra" or "special" equipment on our vessels. All or most transport drilling- f l u i d in internal tanks. There also are fire monitors.
Public and industry concern about blowouts, fire, collisions and other accidents at sea has also created the need for improved rescue and pollution control equipment. This new equipment is rapidly becoming standard in the industry.
Tidewater has responded in yet another direction with respect to its expansion program by "packaging" a broad range of specialized equipment built to the customer's specifications.
A recent example of such specialization is a 170-foot, 3,000- bhp support vessel for the rug- ged Bass Strait offshore Australia.
This vessel is designed to provide support for a remotecontrolled undersea submersible used to survey and monitor pipelines and underwater construction, and to aid seabed survey work. Important secondary functions of the vessel include diving and fireflghting roles. It is among the most advanced vessels currently engaged in the offshore oil and gas industry, and ranks high among the world's most specialized offshore support equipment.
The remote-controlled vehicle is attached to the vessel by cable, propels itself along the seabed or pipeline, and relays pictures by television camera to the mother vessel. The mother vessel keeps station on the remote-controlled vehicle by operating in the dynamic positioning mode.
Another specialized vessel with extreme shallow draft capability (six feet) is now under construction for geophysical applications in the Gulf of Mexico. This vessel will represent another "first" for the industry.
Tidewater is beefing up its fleet of inshore towing/supply vessels in the 72-foot class. These new vessels have an open foredeck area t h a t provides carrying capacity for 25 long tons of cargo. They are also equipped to deliver diesel fuel and fresh water to inland drilling rigs and platforms. The most innovative feature of the new tugs is that they permit the delivery of limited amounts of deck and liquid cargoes to the drilling rig that heretofore required the use of a barge working in combination with the vessel.
These vessels are certified by the U.S. Coast Guard to serve the oil and gas industry.
Tidewater continues to acquire offshore tugs in the 4,200 horsepower and larger classes to meet the requirements for towing new jack-up drilling rigs due to come into Gulf of Mexico service within the next few years.
Although there are no current plans to add to the 218-foot, 10,000-horsepower towing-supply vessels in our fleet, we continue to remain alert to the opportunity.
These vessels were in demand in the North Sea in the decade of the 70s, and their resurgence awaits the step-up in construction of semisubmersible drilling rigs and consequent exploration and d e v e l o p m e n t of areas far offshore, in deep water or in harsh operating environments.
The f u t u r e also appears geared for work in frontier areas in addition to established oil-producing areas around the globe. The West Coast of Alaska, the Beaufort Sea, the East Coast of Canada, Argentina, China, and other areas yet to be opened to exploration, suggest continued strong utilization for higher-horsepower vessels in the Tidewater fleet.
The increase in opportunity also poses some problems. Our domestic industry continues to be beset by an increase in the number of passive investors who have risen to the bait of the investment tax credit and accelerated depreciation for the immediate benefit of the investor's personal tax situation.
This has resulted in lower levels of profitability in the U.S.
Gulf for publicly held vessel operators such as Tidewater.
However, recent changes have been proposed both in the qualification standards for Maritime Administration Title XI financing, and in the level of investment tax credit availability as part of President Reagan's "Economic Recovery Tax Act of 1981." If consummated, these changes will substantially erode the benefits that these limited partnerships now enjoy and should result in their decline.
Future opportunities for the Tidewater fleet are impressive on a broad scale. We close in on this new decade in industry progress confident of demonstrating good operating results, and also with high expectations, e n t h u s i a sm and excitement, not only for our marine business segment but for our other lines of business, too.
Other stories from June 1981 issue
- SPC Coatings Combat Rising Fuel Costs- Literature Available page: 5
- Ryan-Walsh Bulk Terminal In New Orleans Resumes Coal-Handling Operations page: 5
- Brochure Available On Gilkes Self-Priming Pumps For Marine Market page: 6
- Henschel Changes Name Of Its Oklahoma Unit To Tulsa Division page: 6
- Atlantic Marine To Build Cat-Powered Drill Barge For Mecom Company page: 6
- National Marine Service Adds Sixth Drydock At Its Harvey Shipyard page: 6
- General Ship Expands Its Facilities In South Boston page: 6
- Floating Doughnut Crane Shown At Shugart Crane Conference page: 7
- EMD-Powered 'Gulf Condor' Delivered By Quality Shipyards page: 8
- RCA Opens Marine Services Office In Morgan City, La. page: 8
- Hans Schaefer Succeeds Arthur Stout As President Of Todd Shipyards page: 8
- FELS To Construct Semisubmersible Rig For Western Company page: 9
- David Parrot To Head New Aldenships Division Of John G. Alden Firm page: 9
- Edward Walsh Named Asst VP And Controller At J.J. Henry Company page: 9
- Oosterhuis Talk Describes Decline In Fuel Q u a l i t y - Free Copies Available page: 10
- Second Occidental Tug/Barge Unit Christened At Avondale Yard page: 10
- Megasystems To Provide Automation Package For Southern-Built Dredge page: 10
- Interlake's 'De Lancey' Christened- Longest Vessel On The Great Lakes page: 12
- Dravo Negotiating To Buy Operating Assets Of Nilo Barge Line From Olin page: 14
- Brochure Available On Foster Wheeler Boilers And Auxiliary Equipment page: 14
- A TIME OF GREAT EXPECTATIONS, ENTHUSIASM AND EXCITEMENT page: 15
- Vincent Ferraro Named Estimating VP For Savannah Shipyard page: 15
- Paceco Container Crane Arrives At Massport's Castle Island Terminal page: 15
- NASSCO Lays Keel Of First In Series Of Product Carriers For American Tankships page: 16
- Bay Shipbuilding Completes EMD-Powered Columbia Star page: 16
- Bryant Named Manager Of McGraw-Edison's New Marine Marketing Dept. page: 17
- Three New Technical Reports Available From Ship Structure Committee page: 17
- Penske Offers Brochure On Diesels/Gas Turbines For Marine/Offshore Power page: 18
- Subsidy Approved On USL Conversion Job To Cost $5.3 Million page: 18
- Consolidated Inland Opens East Division Office— R.R. Simms Named Manager page: 18
- El Paso Promotes Three- Harry Ray Named VP Of El Paso Marine page: 18
- MOBILE JACKUP PLATFORMSPAST, PRESENT AND FUTURE page: 19
- Serrie Joins Levingston As VP Of Operations page: 19
- lotron Conducts ARPA Demonstration In New York City page: 20
- First Of Five Hydrofoil Combatants Launched By Boeing Marine Systems page: 20
- ALL INDICATORS POINT TO DRAMATIC INCREASE IN DEMAND FOR BARGE CAPACITY page: 22
- Levingston Reorganized— Barrios, Covington And Wise To Head Three Units page: 22
- B IW Awarded $247-Million Navy Contract To Build Three Missile Frigates page: 24
- North Florida Shipyards Appoints Three—White Named Production Manager page: 25
- Captain Barry Roberts Named CO Of USCG's Curtis Bay Shipyard page: 25
- James Retert Joins Waukesha Engine As Director Of Marketing page: 27
- New U.S. Built Coal-Fired Ship To Be Powered By G.E. Steam Turbine page: 27
- Wasacz Succeeds Gray As President Of Matson Navigation page: 28
- Bel-Aire Yard To Build Two Tuna Seiners At Total Cost Of $20 Million page: 29
- AWO'S AMERICAN WATERWAYS SHIPYARD CONFERENCE IS SHAPING POLICY FOR LONG-TERM GROWTH page: 33
- Washburn & Doughty Delivers Combination Scalloper-Dragger page: 34
- GE-Powered Product Carrier For Union Oil Christened At NASSCO page: 34
- South Jersey Port Orders Heavy Duty Multi-Purpose Crane From Kocks page: 35
- U.S. NAVY - A MORE POWERFUL FUTURE page: 39
- RORO81 PREVIEW page: 39
- First Of Three Waterman Combination Carriers Features Largest MacGregor Stern Ramp page: 40
- OFFSHORE DRILLING RIGS, SUPPORT VESSELS, NAVY SHIPS, INLAND BARGES, AND REPAIR WORK BRIGHTEN THE U.S. PICTURE page: 41
- Canadian Yards And Government Speed Up Shipbuilding Training page: 41
- EDO Gets $3.9-Million Navy Award To Improve Existing ASW System page: 42
- Barber Steamship Lines Names Steven Roberts Assistant Vice President page: 43
- Navy Awards $276-Million Contract To Todd For Three Additional FFGs page: 43
- Promet Gets $60-Million Order For Drill Rig For Sedco Incorporated page: 44
- A VIEW OF WORLDWIDE SHIPBUILDING REVEALS SIGNS OF REVIVAL IN SOME SECTORS page: 45
- CANADIAN EAST COAST OFFSHORE SERVICE VESSELS-EXPERIENCES AND PROBABLE FUTURE REQUIREMENTS page: 50
- CANADA'S EAST COAST OFFSHORE OIL POTENTIALOPPORTUNITIES FOR SHIPBUILDING page: 52
- First Aegis Missile Cruiser Christened At Ingalls Yard page: 58
- Blount Delivers Commuter Boat To Fire Island Ferries page: 58
- Promet Private Limited Completes Jackup Service Barge For Sun Contractors page: 60
- Cornelsen Named Manager- Technical Operations For Well Control Systems page: 60
- Northern New England ASNE Holds Joint Meeting With NCAA & NANTS page: 64
- 'Griffin-Alexander I' Now In Service- First Of Eight Costing $280 Million page: 66
- SNAME Philadelphia Section Hears Report On Stack Performance page: 66
- Captain Sandberg Honored At New York Section SNAME Meeting page: 66
- Smit International Performs Tow Of Huge Production Platform page: 70
- Jackup For Houston Offshore Commissioned At Bethlehem Yard page: 70
- Joe B. Foster Named An Executive Vice President Of Tenneco Inc. page: 71
- New Booklet Lists Oil Spill Prevention And Cleanup Organizations page: 74
- New Brochure Describes Goodway's Full Line Of Tube Cleaning Equipment page: 74
- New Armco Weld Wire Accepted By U.S. Navy —Literature Available page: 77
- New Brochure Describes Sewage Treatment Plants From Weir Pumps Limited page: 78
- J.D. Cain Appointed A Division Manager For Racal-Decca Survey page: 79
- Wilson Walton Develops New Marine Incinerator —Literature Available page: 79
- DCC Orders Satellite Ground Equipment From Scientific-Atlanta page: 80
- Charles Orem, President Of Bird-Johnson, Named Chief Executive Officer page: 80
- J.P. Elverdin Appointed Vice President-Shipping For United States Steel page: 81
- Uniroyal Collapsible Rubber Drums Are Rugged —Literature Available page: 81
- Student Paper Presented At SNAME Northern California page: 82
- Catalog Detailing Its Full Line Of Products Available From Kraissl page: 82
- Ordering Brisk At Dravo, Including Four Towboats At Cost Of $16 Million page: 84
- N.A. DiRenzo To Head New Philadelphia Office Of Designers & Planners page: 84
- Western Gear Awarded $1.5-Million Contract For Six Drilling Rig Drives page: 84
- Jan van Lier Named A Vice President Of Moore McCormack Resources page: 85
- Student Papers Presented At Los Angeles SNAME page: 85
- Sedco Jackup Drilling Rig Christened At Promet Yard page: 86
- Detroit-Powered Towboat Delivered To FOSTI By Orange Shipbuilding page: 86
- W.L. Kwitchoff Named VP-General Superintendent At Savannah Shipyard page: 87
- Lunceford Elected Board Chairman And President Of National River Academy page: 87
- Vu-Gctge Systems Ordered By NASSCO For Tankers page: 88
- Wood Elected President Of Northwest Towboat Association, Seattle page: 88
- R.E. Fisher Appointed VP-Marine Services At SeaTec International page: 88
- DEBEG Marine Opens New U.S. Headquarters page: 89
- Hampton Roads SNAME Meeting Featured Sailing Film-Narration page: 91
- Puget Sound ASNE Hears Firsthand Account Of 'Prinzendam' Incident page: 92
- Rivtow Straits Orders EMD-Powered Tugboat From John Manly Yard page: 92
- Fred Shumaker Joins McClure Associates As Vice President page: 92
- Sun Transport's Latest Carrier Has Many Advanced Features page: 93
- Albert Termo Named VP-Marketing And Planning At Universal Maritime page: 94
- Norshipco Names New Officers—Wesley Payne Promoted To Senior VP page: 94
- Yugoslav Shipyards Licensed To Build Rigs Designed By Levingston page: 95
- Walter Beam Named Vice President-Research And Development At Sperry page: 95
- Brochure Available On O i l / W a t e r Emulsifier From Cleanodan A/S page: 97
- Levingston To Build Rig For Mexican Owner At its Port Arthur Division page: 97
- $1.2-Million In Marisat Terminal Contracts Goes To Scientific-Atlanta page: 98
- Madeo Appointed Vice President-Operations For Ocean Salvors page: 98
- Riva Schwartz Promoted To Sales Manager For Simrad, Inc. page: 100
- $622,500 Contract For Atlantic Marine Yard Authorized By MSB page: 100
- New Brochure Describes High-Level Tanker Alarm With Automatic Shutdown page: 100
- Marinette Marine Awarded $1-Million Navy Contract For MCM Evaluation page: 102
- Forthofer And Reardon Named Vice Presidents For Perry Oceanographies page: 102
- Hitachi To Supply Four B&W Type Marine Diesels To People's Republic page: 103
- Hermann Helms Named VP-International For Lykes Bros. Steamship page: 103
- Reception Honors Wheeler's Appointment As Exclusive Agent For Schelde Yard page: 104
- New Kawasaki Stern Bulb System Provided Impressive Fuel Savings On Trial Run page: 104
- Marine Moisture's Tank Gauging Meets IMCO Rules —Literature Available page: 105
- Orders For Vessels Built To American Bureau Class Surged In 1980 page: 107
- Matson Promotes Three- John Couch Appointed Senior Vice President page: 107
- Macawber To Prepare Coal-Handling Manual Under MarAd Contract page: 108
- Hartzell Marine Blowers Meet Federal Specs- Literature Available page: 108
- Rick Comoglio Appointed Sales Engineer For EG&G Sea-Link Systems page: 108
- Ingalls To Build Second Jackup For Bonito Offshore page: 109
- Drew Promotes Three In Ameroid Marine D i v i s i o n - Kay Named Vice President page: 109
- Big Living Quarters Module For North Sea Production Rig Delivered By Blohm + Voss Yard page: 110
- N a t i o n a l Supply Promotes Three In Sales—Petersen Named VP-Marketing page: 112
- Boston VLCC Companies Ask For Title XI Aid On Tanker Retrofits page: 115
- New Gems Flow Switches Designed For Heavy D u t y - Literature Available page: 115
- Selfbulk Vessel Provides Versatile Cargo-Handling System page: 116
- Bender Yard Awarded Contract To Re-power Towboat 'Great America' With S.E.M.T. Pielstick Engines page: 117
- Bayou Black Shipyard Delivers Crewboat And Pusher To Sundance page: 134
- Admiral John M. W i l l - Navy And Merchant Marine Leader-1900-1981 page: 134