Skip to main content
SpringerLink
Log in

Economic impacts of the offshore supply vessel shipbuilding market in the Gulf of Mexico

  • Original Article
  • Published:
Maritime Economics & Logistics Aims and scope

Abstract

Offshore support vessels (OSVs) play an important role in the offshore oil and gas industry with significant benefit to the coastal communities that provide the labor and materials to construct, crew and support the logistics network. OSVs connect onshore material and equipment suppliers and offshore operators, and are known as the ‘trucks’ of the ocean. The purpose of this article is to analyze OSV shipbuilding and to estimate the capital, labor and geographic distribution of the industry in order to inform regional economic analysis and debates about the Jones Act and other US policies. OSV construction is heavily concentrated along the Gulf Coast of southern Louisiana and Alabama. From 2003 to 2010, a total of 429 OSVs were delivered by 35 US shipyards valued between US$900 and US$1200 million per year, approximately half of the total US commercial self-propelled newbuilding industry. Four shipyards accounted for about 40 per cent of deliveries and Louisiana captured about 70 per cent of the capital expenditures followed by Alabama (14 per cent), Florida (10 per cent), Washington (3 per cent) and Mississippi (2 per cent). Equipment is a major driver of material costs and links the OSV shipbuilding industry with the US manufacturing sector. Using US shipyard revenue per labor hour and production values, OSV construction employment in the US Gulf Coast from 2007 to 2010 is estimated between 4400 and 5400 people per year. Indirect and induced impacts from OSV construction are estimated using shipbuilding average multipliers between $2.6 billion and $3.5 billion per year.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Figure 7
Figure 8
Figure 9
Figure 10
Figure 11

Similar content being viewed by others

Notes

  1. The OCS is the area of federal offshore jurisdiction, between 3 and 200 nautical miles offshore for all coastal states except Texas and west Florida where the OCS starts nine nautical miles from the coastline.

  2. Vessels carrying merchandise between two points within the same country.

  3. Gross tonnage is a unitless measure of the volume of a vessel.

  4. Owner furnished equipment is often specialized mission equipment. For most PSVs and crewboats, owner furnished equipment is minimal; for DSVs, IMRs and WSVs, owner furnished equipment may be more substantial.

  5. Compensated gross tonnage is the gross tonnage multiplied by a vessel-class dependent factor.

  6. Two US-built IMRs, the Ocean Project and Grant Candies, are included in the sample. The Ocean Project is a small shallow water vessel, with a low normalized cost while the Grant Candies is a larger, more capable vessel with higher normalized costs. The two vessels account for the maximum and minimum normalized costs in the IMR sample, suggesting that the international data are within the range of US costs.

  7. This is broadly consistent with anecdotal reports. For example, from July 2001 to March 2004 C&G Boatworks delivered 12 crewboats and employed approximately 175 people during the period, giving approximately 77 000 man-hours per vessel. Similarly, Thoma-Sea Shipyard is building four, 300 ft PSVs over the next 3 years. Thoma-Sea has reported they will employee at least 130 people, with each vessel requiring at least 200 000 man-hours of labor (Davidson, 2004; Schmidt, 2010).

  8. E=L(B+T)+0.85L(D−T)+0.85∑l1h1+0.75∑l2h2, where L is the ship length, B is ship beam, T is ship draft, D is ship depth, l1 and h1 are the length and height of full width superstructures, and l2 and h2 are the length and height of houses all measured in meters (Molland, 2008).

  9. The block coefficient is a measure of the shape of a ship's hull and is defined as the ratio of the volume of the ship's underwater form to the volume of a circumscribing rectangular cuboid.

  10. The outfit mass of a vessel is estimated from W o =k′LB, where L is the length and B the beam of the vessel and k′ is another vessel class-dependent constant. Machinery mass may be estimated as a function of the installed power: W m =9.38(P/N)0.84 + k′′P0.7 where P is the installed power of the propulsion machinery (in hp) and N is the engine rpm (Molland, 2008).

  11. For example, a vessel delivered in 2008 would be paid in installments from the time of the start of construction to its delivery.

References

  • Aas, B., Gribkovskaia, I., Halskau Sr, O. and Shlopak, A. (2007) Routing of supply vessels to petroleum installations. International Journal of Physical Distribution & Logistics Management 37 (2): 164–179.

    Article  Google Scholar 

  • Aas, B., Halskau, O.S. and Wallace, S. (2009) The role of supply vessels in offshore logistics. Maritime Economics and Logistics 2 (3): 302–325.

    Article  Google Scholar 

  • Abel, J. and Taylor, J. (2008) Gulf coast shipbuilding and fabrication for the offshore oil industry. In: D. Austin et al (eds.) History of the Offshore Oil and Gas Industry in Southern Louisiana, OCS Study MMS 2008-042. Gulf of Mexico OCS Region, New Orleans, Louisiana: U.S. Department of the Interior, Minerals Management Service, pp. 191–211.

    Google Scholar 

  • Barrett, D. (2005) The Offshore Supply Boat Sector, Sector Note. New York, USA: Fortis Bank.

    Google Scholar 

  • Bruce, G. (2006) A review of the use of compensated gross tonnes for shipbuilding performance measurement. Journal of Ship Production 22 (2): 99–104.

    Google Scholar 

  • Bureau of Labor Statistics (BLS). (2010) CES NAVSEA shipyard earning index, http://www.bls.gov/ces/cesship.htm.

  • Colton, T. (2011) Shipbuilding history, http://shipbuildinghistory.com/, accessed 15 February 2011.

  • Davidson, L. (2004) C&G Boatworks of mobile building eight supply boats. Mobile Register, Mobile AL, 26 March.

  • Dikos, G. (2004) New building prices: Demand inelastic or perfectly competitive? Maritime Economics and Logistics 6 (2): 312–321.

    Article  Google Scholar 

  • Fagerholt, K. and Lindstad, H. (2000) Optimal policies for maintaining a supply service in the Norwegian Sea. Omega 28 (3): 269–275.

    Article  Google Scholar 

  • Goulielmos, A.M. (2009) Risk analysis of the Aframax freight market and of its new building and second hand prices, 1976–2008 and 1984–2008. International Journal of Shipping and Transport Logistics 1 (1): 74–97.

    Article  Google Scholar 

  • Greenberg, J. (2008) Deep seated. Workboat Magazine, 1 October.

  • Hardberger, M. (2007) Dual personality. Workboat Magazine, 1 March.

  • Hocke, K. (2010) No buyers. Workboat Magazine, 1 June.

  • Kaiser, M.J. (2010) An integrated systems framework for service vessel forecasting in the Gulf of Mexico. Energy 35 (7): 2777–2795.

    Article  Google Scholar 

  • Kaiser, M.J. and Snyder, B.F. (2010) An empirical analysis of offshore service vessel utilization in the US Gulf of Mexico. International Journal of Energy Sector Management 4 (2): 152–182.

    Article  Google Scholar 

  • Kaiser, M.J. and Snyder, B.F. (2012) Modeling offshore wind installation vessel day-rates in the United States. Maritime Economics and Logistics 14 (2): 220–248.

    Article  Google Scholar 

  • McCain, J. (2010) Senator John McCain Introduces Open America’s Waters Act. http://www.mccain.senate.gov/public/index.cfm?FuseAction=PressOffice.PressReleases&ContentRecord_id=6f6b73f4-a9f3-8433-0472-f3bd97d2fa86, accessed 18 February 2013.

  • Molland, A.F. (2008) The Maritime Engineering Reference Book; A Guide to Ship Design, Construction and Operation. Amsterdam, The Netherlands: Elsevier.

    Google Scholar 

  • Mulligan, R.F. (2008) A simple model for estimating newbuilding costs. Maritime Economics and Logistics 10 (3): 310–321.

    Article  Google Scholar 

  • National Marine Fisheries Service. (2011) Vessel documentation database, http://www.st.nmfs.noaa.gov/st1/CoastGuard/VesselByName.html, accessed 30 January 2011.

  • Parameswaran, B. (2004) The Liberalization of Maritime Transport Services. Berlin: Elsevier.

    Book  Google Scholar 

  • Scott, L.C. (2010) The Economic Impact of the Shipbuilders and Vessel Operators Servicing the Offshore Exploration, Development, and Production Industry on the U.S. Economy. Baton Rouge, LA: Loren C. Scott and Associates.

    Google Scholar 

  • Schmidt, K. (2010) New vessel contract announced. Daily Comet, Lafourche LA, 24 January.

  • U.S. Census Bureau. (2010) 2007 Economic census. Sector 31: EC0731I1: Manufacturing: Industry Series: Detailed Statistics by Industry for the United States: 2007. http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-ds_name=EC0731I1&-_lang=en.

  • U.S. Coast Guard. (2011) Port state information exchange database, http://cgmix.uscg.mil/psix/, accessed 15 February 2011.

  • Workboat. (2010) Construction survey of workboat building yards, http://www.workboat.com/newsdetail.aspx?id=4294989568, accessed 1 March 2011.

Download references

Author information

Authors and Affiliations

  1. Center for Energy Studies, Energy Coast and Environment Bldg, Louisiana State University, Baton Rouge, 70803, Louisiana, USA

    Mark J Kaiser & Brian F Snyder

Authors
  1. Mark J Kaiser
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Brian F Snyder
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kaiser, M., Snyder, B. Economic impacts of the offshore supply vessel shipbuilding market in the Gulf of Mexico. Marit Econ Logist 15, 256–287 (2013). https://doi.org/10.1057/mel.2013.4

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/mel.2013.4

Keywords

Search

Navigation