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April 2022

Between uncertainties and strong convictions...

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Between uncertainties and strong convictions...

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GB
Gaël Bodénès
CEO - BOURBON
2 min

Our energy sector is currently in a paradoxical situation, to say the least, marked by the unpredictable nature of the crisis we are experiencing today, but also by a strong belief in the energy transition! Unpredictable indeed, because the war in Ukraine is impacting the energy and commodities markets and bringing us its share of uncertainties every day. As I write these few lines, I naturally have a thought for our seafarers and their families severely affected by this war and who are going through such difficult times. I want to assure them of my full support. The Covid pandemic continues to have a severe impact on the entire global supply chain. For some critical equipment, we now need almost a year's delivery time.

In recent months, the price of the barrel has reached pre-crisis levels of nearly $120, after having stabilized for a long time at around $60, which the market had previously considered to be a "new normal". Finally, close to our business, we have moved almost seamlessly from an overcapacity of offshore support vessels during the years 2015 to 2020 to a lack of vessels available in the short term to support market growth.

But beyond these short-term uncertainties, there is one clear and predictable point: support for the energy transition is not an option. It is an imperative necessity in the face of the urgent challenges of global warming, which concerns us all. The ambition and objective of net zero by 2050 are well set. For at least a decade, Oil&Gas will remain the necessary alternative to replace coal in the short term. Its development over the next few years will undoubtedly be essential to support demand, but also to finance the development of renewable energies, particularly offshore wind energy.

As Thom Payne of Westwood Global Energy Group points out in this edition of PartnerShip, many Oil&Gas projects that were halted during the pandemic have indeed been reactivated, investments are up sharply and new geographical areas are coming on stream. At the same time, offshore renewable energies, and in particular floating wind turbines, are experiencing exponential growth. In Western Europe, many demonstrators, including that of the British company Marine Power Systems, to which BOURBON is providing support, are about to enter the industrialization phase, and countries such as Scotland, Ireland, the United Kingdom, Norway, Germany and France are initiating ambitious action plans to take this strategic shift.

In this context, our group is at the crossroads, with its recognized expertise both in Oil&Gas, its historic core business, and in the installation of offshore wind turbines, for which it has become a reference. All over the world, we stand by the side of offshore energy producers to provide them with innovative solutions.

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Expert insight

A demand supported by massive investments

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TP
Thom Payne
Head of Offshore Energy Services - Westwood Global Energy Group
5 min

Spending on offshore Oil & Gas is expected to be US$300bn until 2025, according to Westwood Global Energy Group. This is more than was spent on both offshore oil & gas and renewables between 2016 and 2020. We asked Thom Payne, Head of Offshore Energy Services, Westwood Global Energy Group, to describe the outlook for the O&G market over the next 5-10 years.
 

PartnerShip: Despite the exponential development of renewable energy, the O&G market is expected to grow strongly in the next 5 to 10 years. How do you see the situation?

Thom Payne: We certainly think the offshore oil and gas industry is set to see significant recovery in investment activity over the next 5 years. Indeed, 2020 was one of the most challenging years ever for the O&G industry as a whole, with oil-price benchmarks falling to record lows and WTI going very briefly negative, for the first time in its history. This all led to a very difficult investment climate and a real low point in terms of E&P spending on new project sanctioning. In 2021, we saw a sharp rebound, because, going into the pandemic, there was already quite an optimistic sense in the industry, despite it having been heavily beleaguered since 2014 and the original downturn. So, year-on-year, since 2016, we’ve seen improvements. There was a lot of optimism in late 2019, which, of course, was killed by the pandemic, but many of the projects that were talked about then have since come back to the fore. We actually ended 2021 with a very similar level of investment to that of 2019 and we’re certainly on the rebound now. In the next couple of years, we expect to see a further pick-up in levels of O&G investment and spending, project sanctioning, etc. Expected high levels of investment have already got off to a good start this year…
 

PS: Some analysts are talking about a barrel price of around $120 to $150 for next year. Do you see a rise in the barrel price in the short term?

TP: Barrel price is unpredictable and anticipating short-term flux is especially hard. A lot of the Brent barrel hitting US$110 was a geopolitical premium. That geopolitical risk was probably baked in for most of February, with an oil price of around US$90 a barrel. Prior to that, more structural issues were driving an increase in Brents, such as the seeming inability of the OPEC + block to keep up with quotas. If we take out the geopolitical risk, do we think prices can be sustained at US$120 a barrel? This is not our view, at the moment. There are simply too many barrels artificially off the market – several million a day that will, in theory, be brought back on. There’s also massive investment in new production capacity for crude in the GCC states. And we’ve seen huge investment in new capacity in Brazil and Guyana. So, from a purely supply and demand or structural perspective, we can’t really justify the oil barrel being sustained at US$120. The market should remain relatively tight, though.
 

PS: Can you say more about the anticipated increase in O&G investments until 2025? Who are the main players investing? Do you foresee new geographies?

TP: We’ve looked at some of the factors that will be driving investments and NOCs in the Middle East have very ambitious capacity expansion plans, so that’s Aramco, ADNOC, Qatar Energies. Other hotspots we’ve seen include Australia, who have been very busy in terms of project sanctioning, but the Latin American market is front and center in this. Petrobras has been extremely resurgent in its levels of project sanctioning and investment in new production capacity. You can add to that the phenomenal success Exxon has had in Guyana. We didn’t see any sanctions last year, but we do expect them to return this year, with projects such as Yellowtail. And we can even see a first sanction in Surinam. So, that part of the world is certainly going to be in the forefront. It’s going to be a big spend on deep water investment, especially. We will certainly see a resurgence in West Africa, too. I’ve mentioned ExxonMobil, they have also had exploration success in Namibia, where we hope to see some fast-tracking of projects. There’s also Angola.

The pandemic has accelerated the push towards the energy transition and offshore wind has taken the lead, with huge growth plans, across the world, to expand capacity.

Thom Payne
Head of Offshore Energy Services - Westwood Global Energy Group

PS: What is your view of the strategy of the majors today in terms of investment in both Oil & Gas and renewable energy? Are the strategies of European and American majors comparable?

TP: The European super majors have been leading the way in investment in renewable capacity, particularly offshore wind. They have deep pockets, because of high oil prices and their operating cash flows, but they’ve been using that to invest in their greener portfolios. The US big majors seem to be favoring their core operations, which typically offer higher returns. If we compare the IRRs of oil&gas projects versus renewable projects, there’s a big difference, with typically the expected IRR of renewable at maybe 5-7%, compared to around 25% for oil&gas. So, we’ve seen the US super majors focusing big investment in what is familiar. Having said that, they have embraced carbon capture. So, we do expect huge plans by the American super majors to invest in carbon capture in oil&gas operations  to reduce their emissions footprint, time will tell if these strategies will be successful.
 

PS: What will be the consequences on the OSV market?

TP: Typically, the OSV market, tends to lag behind the general industry activity. However, everything I’ve mentioned points to an extremely positive future. This industry has been heavily beleaguered, going through a very tough time, since the original downturn, in 2014. However, rather like the rig market, we’ve seen an increasingly rapid rationalization of the fleet, especially since 2016. There’s been laying-up and increased scrapping of vessels, though scrapping the fleet does pose certain challenges. We’ve also seen improving demand. We’re expecting a more positive outlook over the next few years. And that’s off the back of project sanctioning and increased rig counts in the Oil and Gas industry. We also think that total utilization rate for the OSV fleet, which is currently around 61%, if you ignore the lay-ups, will be close to 78%. So, in certain segments, some regions will be experiencing a real tightness in supply. Once again, the Middle East is leading the way. It is probably one of the tightest markets right now. So, with all this investment in production-capacity expansion, demand can only grow. On the flip side, we’re still seeing very stringent tendering guidelines by NOCs and IOCs in this region, largely concerning limitations on the age of vessels or some of the specifications of vessels. That reduces the available pool and is going to lead to an even tighter market and a far more positive market dynamic.
 

PS: You mentioned a real tightness in supply vessels in some regions. Can you explain?

TP: There are still about 1,100 vessels in lay-up and around a third of those are less than 15 years old. So, a sizeable proportion of that laid-up fleet can come back into service and be reactivated – and we see reactivations quarter-on-quarter. So that’s likely. You’ve also got increased local content requirements, across most regions, which you didn’t necessarily have in 2014-2016. This limits the inter-regional mobilization that was a core part of the market in 2016 and will lead to increasing regional shortages, rather than global shortages. Some markets will still be pretty well supplied, notably Latin America for the larger PSV class, the Middle East for anchor handlers, etc.
 

PS: We’d like your opinion on the current transition in the energy markets, with the emergence of offshore wind in recent years. Which geographies will take the lead here?

TP: 2021 was a very good year for the oil & gas industry, in terms of investment and recovery. But despite those great indicators, the offshore wind sector is certainly front and center, looking at the last couple of years. The pandemic has accelerated the push towards the energy transition and offshore wind has taken the lead, with huge growth plans, across the world, to expand capacity. Indeed, China overtook the UK in the offshore wind market over the last couple of months. The European super powers, the UK, Germany and the Netherlands, will continue to invest heavily. We’re seeing increased pick-up in France, especially for some of the floating offshore wind opportunities there. When we look outside Europe, Taiwan is a market that has been an early mover on the international stage, in the sanctioning of wind projects. We also expect to see a significant ramp-up in other Asian territories, such as Japan and South Korea and a portion of the USA has been a real growth story. The latter struggled to get off the ground but with the change of administration and a real focus on the offshore wind sector we’ve seen a flurry of sanctioning and new leases for seabed rights over the past couple of quarters and ambitious capacity plans, to meet 30 gigawatts in the US of offshore wind capacity by 2030. There’s huge potential for the sector globally, but the expedited growth plans don’t come without significant challenges, mainly in supply chain and profitability. This doesn’t mean they are not going to do it. There’s of course a real need for more renewable energy but there’s still work to be done to enable the necessary momentum we’re seeing in the wind sector and cement its role in offshore energy sector over the coming decades.
 

Note: The data referenced in this article is correct as of 2nd March 2022

Expert insight
Their stories

ROVs adapted to the renewable energy market

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fabian-bonetti
Fabian Bonetti
Managing Director - BO DNT
3 min

BOURBON’s ROV Italian affiliate, Bourbon Offshore DNT (BO DNT) is performing desktop studies for a critical upgrade of part of its ROV (Remotely Operated Vehicles) fleet, to address the specific needs of the Renewable Energy offshore market. Fabian Bonetti, Managing Director of BO DNT, spoke to us about the project.
 

PartnerShip: What prompted this upgrade initiative and what does it involve?

Fabian Bonetti: One of our client asked us to perform this upgrade study, having been granted European funding to carry out subsea surveying for a major Renewable Energy project. Significantly improved ROV performance would speed up data acquisition and save time and money along the projects. We did two different studies, one of the hydrodynamics of the system and the other of performance increase. So, we looked at the propeller and the speed and whatever other modifications we can bring to the existing configuration of our ROVs. Rather as we anticipated, the studies show us that such a conversion can increase performance by up to 60 percent! This compares really favorably with the performance of the high-speed ROV available on the market.
 

PS: Will you convert the whole fleet?

FB: The modifications only concern some of our Work-Class ROVs, known as WROVs. We have thirteen of these. In fact, the current dynamic market for Renewable Energy, with its windfarms and offshore wind turbines, really requires an upgraded or new type of ROVs. These installations are typically sited in shallow waters, meaning that there will be strong currents. Standard ROVs, designed for the Oil & Gas market are best for deep-water work, where surface conditions and current are not so much an issue. So, market demand dictates that we upgrade some WROVs for optimal efficiency in shallow-water conditions. If fact, we’ll probably only need to convert two or three. Needless to say, our standard ROVs remain ideal for the Oil & Gas market, in which we’ll continue to be highly active.
 

PS: How soon will you proceed with the upgrade?

FB: We’re currently awaiting contractual go-ahead from our client before converting the first ROV. At the same time, we’re evaluating the probable market uptake for this kind of ROV, to see how quickly turnover might recover our investment should we convert more.
 

PS: How long will it take to perform the upgrade?

FB: We estimate between 16 to 20 weeks. The long lead time is largely due to delays in sourcing materials, since, worldwide, there are currently many restrictions and shortages of components. Had we started last year, the lead time would have been more like 8 weeks!

Significantly improved ROV performance would speed up data acquisition and save time and money along the projects.

Fabian Bonetti
Managing Director - Bourbon Offshore DNT

PS: What is the ROV's status in offshore wind installations?

FB: We worked closely with them, for example, on the WindFloat Atlantic (Portugal), the TetraSpar project, off the Norwegian coast, and Kincardine Wind farm, in the North Sea. Our ROVs were employed on all these projects. When our WROVs are converted, Bourbon Subsea Services will be able to offer strong-current capabilities entirely from the company’s own fleet.
 

PS: You are upgrading existing WROVs but is an entirely new type of ROV is currently in development?

FB: This is the current market trend, the subject is in the forefront of all conferences. We are working with our client to identify a manufacturer that can offer an ROV that can move through the water as fast as a vessel. For the moment, this process is still at embryo stage but a prototype will soon be available.

Their stories
Successful together

Personnel transport: The FSIV strenght

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Jérôme Goutières
CCO - Bourbon Mobility
3 min

Sometimes neglected during the crisis in the Oil & Gas sector in recent years, FSIVs (Fast Support Intervention Vessels) are now making a strong comeback in the maritime services market, and are highly appreciated by clients for their versatility. Jérôme Goutières, Chief Commercial Officer of Bourbon Mobility, explains.

In Senegal, a new area of operation for Bourbon Mobility, the Bourbon Sirocco quickly established itself as a key vessel to support the field it serves. "Our client wanted a versatile vessel that could handle both crew changes and regular refueling. The Bourbon Sirocco has a large deck area and many passenger seats," explains Jérôme Goutières. "The vessel makes three refueling trips per week, between Dakar and the field, located 120 nautical miles from the coast. These supplies mainly consist of bringing food, evacuating waste and transporting materials in both directions. We are combining supplies with crew transfers, which means that only one vessel is needed. The Bourbon Sirocco is full on every trip and is used at 100 percent capacity, on trips of about six or seven hours."

FSIVs are therefore again seen as a very efficient solution to actively contribute to the exploration / production phases of offshore construction. Client benefit: a single vessel that meets all the needs, i.e. crew transfers and refueling in excellent conditions of comfort and safety, in compliance with BOURBON standards. Their assets: great speed to respond to emergencies, increased carrying capacity, which has risen from 20 t 10 years ago to over 200 t today (up to 226 t for the Bourbon Harmattan), great versatility, once again, enabling them to transport and deliver liquid bulk (fuel oil and water), but also dynamic class 2 positioning (which equips almost all the BOURBON fleet).

"While our clients are expressing more interest in FSIVs, their demand has become more refined. Most of them now want faster vessels, with a cruising speed approaching 30 knots. To meet these expectations, we have come up with a new series of FSIVs based on a specific design with a flared hull - benefiting the comfort of personnel - and increased carrying capacity," explains Jérôme Goutières. "These vessels offer an ideal compromise between weight and speed, thanks to their aluminum hulls, are more comfortable thanks to the use of soundproofing and more ergonomic seats, and of course have exceptional sailing qualities, thanks to the DP2 ensuring optimum maneuverability and increased safety."

 

These vessels offer an ideal compromise between weight and speed [...] and have exceptional sailing qualities, thanks to the DP2 ensuring optimum maneuverability and increased safety."

Jérôme Goutières
CCO - Bourbon Mobility
Successful together
In pictures

MPS: A promising new demonstrator

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Benoit Dromard
Project Manager - BSS
2 min

As the offshore wind turbine industry gradually enters the industrialization phase, the British company Marine Power Systems (MPS) is about to accelerate the development of its demonstrator, with the support of Principia and Bourbon Subsea Services (BSS). Benoît Dromard, Project Manager at BSS, offers some explanations.
 

The demonstrator designed by the British company Marine Power Systems (MPS) is a floating wind turbine that can be stably anchored in deep waters (depths greater than around 60 m). Easily transportable and towable over long distances, using non-specialized vessels, its installation on site is fast and safe. Its disconnection is quick and safe, which facilitates removal from the site in case of major maintenance. Once operational, it also benefits from great stability in all types of weather conditions, including storms. This demonstrator should be installed in early 2023 at the BiMEP 1 test site in northern Spain.

"A wide variety of floaters have been developed during the past decade but only a few have reached the 1:1 scale of a demonstrator. Moreover, Bourbon Subsea Services has had the opportunity to support the approach of the market’s main players. This new collaboration with MPS enables us to work alongside a future leader. We are proud to be pioneers in the development of the floating wind energy industry and to assist MPS to demonstrate the added value of its technologies."

The interest of offshore wind energy in decarbonizing the energy mix is no longer in question, but conventional (fixed) offshore wind energy is limited worldwide by the availability of shallow areas. Floating wind technology considerably expands the field of possibilities and is therefore essential at an industrial stage.

MPS awarded Principia a contract for the design and project management assistance concerning the management, execution and coordination of the demonstrator design, the supervision of the supply, construction and final assembly of the platform, as well as its commissioning and operation.

Principia has awarded Bourbon Subsea Services a subcontract for consultancy services, during the design phase, covering a certain number of operational subjects, as well as the supervision of the supply and construction of the demonstrator. “Bourbon Subsea Services will provide its operational added value, based on both its experience in operations installations and its know-how developed during the completion of turnkey projects over the entire development chain of floating offshore wind energy over the last 10 years”.

After years of development, tests, and the installation of demonstrators and pilot farms, the floating wind energy market has reached a level of maturity that enables the award of the first concessions to developers. Bourbon Subsea Services positions itself on this market as an EPCI operator for those clients that need to minimize contract interfaces and all the associated risks.
 

 1Offshore testing area with grid connection for demonstration and validation of wave energy converters and floating wind platforms.

In pictures
Shared views

Vibration analysis: Data at the service of operational efficiency

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Raphaël Brière - Directeur Général Bourbon Tech Solutions
Raphaël Brière
Managing Director - Bourbon Tech Solutions
3 min

Like so many other industries, the maritime industry is benefiting from the digital revolution, not only at the operational level, but also for all aspects of vessel maintenance. CEO of Bourbon Tech Solutions, Raphaël Brière sheds lights on what largely contributes to "operational efficiency" and provides us with details about the digital vibration analysis solution that is being deployed within the fleet.
 

Maintenance lies at the crossroads between operations and safety. For this reason, it is a particularly important element for vessel performance, one that is scrutinized by the end clients, flag registries, etc., who have exacting requirements. Today, data processing is a key element for the optimization of this performance. The maintenance of offshore support vessels is no exception to this rule — the sensors that equip all propulsion systems have disrupted the procedures in use until now.

"The data gathered enables us to both control the operation of the equipment remotely and to intervene in real time. This reduces intervention time but above all enables us to refine the diagnosis," emphasizes Raphaël Brière. "It is an essential element because the implementation of the right solution depends on the quality of the diagnosis."

The implementation of predictive maintenance in place of traditional conditional maintenance is a real challenge. The goal is to go beyond manufacturers’ recommendations and to adjust the interventions thanks to the input of artificial intelligence and machine learning.
 

"A valuable decision-support tool"
 

This type of maintenance is thus based on data collection, either by the external sensors installed by BOURBON, or by using the data provided by equipment manufacturers. This data now enables us to perform vibration analyses on engines or, more exactly, on rotating machines (alternators, propulsion systems, electric motors, etc.). The crews can measure the state of wear of the equipment and adapt maintenance interventions accordingly. On one hand, it enables the scheduled replacement of a bearing, for example, to be postponed if it is still in good condition and, on the other hand, it facilitates the early detection of a failure. This detection makes it possible to intervene before the situation deteriorates and makes the vessel unavailable for use.

"These data enable us to deploy a more appropriate approach toward technical risk and therefore to make the best decisions to optimize technical availability... and costs. Here, vibration analysis is carried out on board and the data is sent to a platform to be analyzed by Bourbon Tech Solutions engineers. A report is issued to the crew after each analysis, along with recommendations."

From a practical point of view, the sensors are connected to software installed on a tablet with a Bluetooth connection. The engineer performs a reading with the tablet, which recovers data from the sensors by Bluetooth and sends them via internet to a cloud platform. Once on this platform, the vibration data is analyzed and the recommendations are registered in a report distributed onshore and aboard the vessel. "This 'digital' vibration analysis solution is simple to deploy and more user-friendly, and is also both regular and pertinent to help us make the best technical decisions. The deployment of this type of solution is in progress on a part of the fleet." A welcome solution that will lead to others…  

Shared views
Panorama

Compliance: A continuous improvement approach

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EDH
Eric d’Harcourt
Group Chief Compliance Officer
3 min

The Compliance function has to deal with the increasingly rapid and frequent changes in the company's environment. It is not simply a matter of doing things right: it is a vector of operational excellence and sustainable and responsible growth. In recent months, BOURBON has demonstrated its agility and proactivity by developing its Compliance program. We asked Eric d'Harcourt, Group Chief Compliance Officer, to comment on Codes of Conduct and the ethical alert system.
 

The implementation of a Compliance program has no end or limit. It requires an approach of continuous improvement and frequent questioning in order to be always in phase with internal and external developments. "I have always considered Compliance as a long run, not a sprint. The effects of its measures, just like those of safety, are most of the time visible in the long term," underlines Eric d'Harcourt. « Compliance and risk management are at the heart of the Group's performance. They are undoubtedly a differentiating factor in our market, compared to our competitors, and require constant vigilance. Our actions in recent months are a perfect illustration of this, with not only an update of our Code of conduct but also a major review of the Supplier Code of Conduct and the optimization of our ethical alert system ».

The BOURBON Code of conduct applies to all employees on land and at sea and to any person working on behalf of BOURBON. It has been updated to reinforce several topics such as the fight against money laundering and the financing of terrorism, sanctions, embargoes, export controls, etc.

As part of its compliance with the French "Sapin 2" law, several years ago BOURBON set up an ethics alert system enabling all employees and stakeholders (clients, suppliers, etc.) to draw attention, in a confidential and secure manner, to non-compliant behavior, in particular behavior that is contrary to its Code of Conduct, and thus to play a role in preventing the risks of non-compliance.

This system was upgraded in June 2021 to a web platform (Bourbon.signalement.net) secured by a certified third party and accessible in 10 languages, 24 hours a day, 7 days a week. It complements the other reporting methods already in place, in particular through the hierarchy. Alerts are processed and followed up within this platform. « The ethics alert line is one of the key elements of our program. We communicate regularly internally on the subject and do everything possible to ensure effective follow-up of alerts. We have counted nearly thirty alerts since the new alert line was set up in June 2021: 100% of these alerts have been investigated. A Directive on this system and on whistleblowers was also finalized in 2021 It will have to be updated following the promulgation of the law of March 21, 2022 on whistleblower protection. »

« Compliance is a pivotal function in the BOURBON organization; in a way, it plays the role of conductor between the various functions and stakeholders » concludes Eric d'Harcourt. « Its missions are expanding with the growing number of regulations and, more generally, with the increased importance of ESG (Environmental, Social and Governance) criteria, including ethical values in business life ».

Panorama