Prosafe CCO: Efficiencies can be found if you look hard enough (Interview)

Offshore Energy Today has interviewed Mr. Ryan Stewart, Chief Commercial Officer at Prosafe, one of the world’s largest providers of offshore accommodation vessels.

In the interview below, one can learn about the high-spec offshore accommodation units in general, attractive regions for deployment, both advantages and disadvantages over lower specification units; and also about the challenges of doing business in the current low oil price environment.

OET: Dear Mr. Stewart, thank you for accepting our interview invitation. In case there are people in the industry who know little about offshore accommodation units, can you tell us how is it that Prosafe is considered one of the largest companies in the sector?

Stewart: Prosafe is the world’s leading owner and operator of semi-submersible accommodation vessels. The company operates globally and employs about 800 people and owns 12 semi-submersible accommodation vessels. In addition, Prosafe has a further 3 harsh environment semi-submersible accommodation vessels under construction that will be ready for operations in 2016.

For readers that do not know what the accommodation business is about; Accommodation vessels are used when there is a need for additional accommodation, engineering, construction or storage capacity offshore. Prosafe’s vessels have accommodation capacity for 306-812 people and offer high quality welfare and catering facilities, storage, workshops, offices, medical services, deck cranes and lifesaving and fire fighting equipment. The units are positioned alongside the host installation and are connected by means of a telescopic gangway so that personnel can walk to work.

Our operations are related to maintenance and modification of installations on fields already in production, hook-up and commissioning of new fields, tie-backs to existing infrastructure and decommissioning.

Prosafe has decades of experience, primarily centered within the North Sea although with projects completed in the US Gulf, Brazil, Australia, west Africa, Russia, and other regions, Prosafe is truly a global company. So when we are considered to be the leading owner and operator, this refers both to our fleet size and to our extensive experience.

Can you speak a little bit about the geographical spread of your semi-submersible accommodation units, popularly known as flotels? What is the toughest market to enter, geographically speaking, and why?

Stewart: Semi-submersible accommodation vessels (‘Flotels’) have typically been deployed in moderate to harsh environments – areas such as the North Sea. Nevertheless, the inherent traits associated with semi-submersibles lend themselves very well to less extreme environments. Indeed, one of our key areas has been Mexico, and also Brazil has recently employed semi-submersible flotels to a great extent.

One area that has seen a greater demand for these types of units is in the Far East where semi-submersible motion characteristics provide a very stable and comfortable platform through monsoon and typhoon seasons.

Conventional barges and ship shaped vessels will inevitably experience difficulty in achieving high gangway connectivity, whereas a semi-submersible will typically achieve almost permanent connectivity.

It is however a commercial challenge in more benign regions to compete against low cost/ low quality accommodation solutions – areas such as West Africa will continue to pose both opportunity and challenge, with only the larger projects considering the type of vessels Prosafe has to offer.

OET: Prosafe is operating worldwide. Who is your biggest client, and what is your advantage over competitors?

Stewart: Prosafe over the years has amassed a large portfolio of clients, with operators such as Statoil, BP and Shell prominent. It is noteworthy that five of Prosafe’s units are in Mexico and have been for many years working on Pemex facilities through partner Cotemar – this has been a very successful relationship and one we hope to continue for many years.

There are a number of areas that set Prosafe apart from our competitors including the diversity of our fleet – more than double the number of vessels than our closest competitor – and ability to adapt to many differing types of project, although the one element that really sets Prosafe apart is the wealth of knowledge gained through our operations. No other Flotel operator can rely on the core competence of personnel both offshore and onshore.

OET: Your clients, the oil and gas companies, have been cutting costs all over pressured by low oil prices. They are also slashing capex for 2016. How is this affecting Prosafe, and the flotel sector in general? Is there a pressure on your company to reduce its services costs?

Stewart: We all have our part to play to ensure a sustainable industry. The drilling and seismic sectors have been the hardest hit due to the relative simplicity of ceasing exploration activities – this has an immediate effect on the bottom line. Accommodation vessels are further down the life cycle of a field, typically employed at hook-up and commissioning through maintenance and thereafter decommissioning.

Prosafe has adopted a principle whereby we must move with overall market forces although satisfying our long term strategical decisions. Inevitably day rates will reduce although Prosafe are well placed to react, relying on a robust contract portfolio and years of operating experience. Furthermore, like all responsible service providers, Prosafe are looking hard at its supply chain – this does not necessarily mean a direct financial impact but can lead to greater efficiencies and thus a better value proposition to our clients.

OET: Would you paint some color on your fleet’s current contract coverage?

Prosafe has a fairly solid order backlog with good contracts throughout 2016 and into 2017. There is a number of North Sea hook-up and commissioning projects in 2016 that will utilize the Prosafe new build fleet, complimented by some maintenance and modification work that will keep the rest of the fleet occupied. One of the more diverse projects that will be ongoing is the supply of the Safe Scandinavia semi-submersible providing Tender Support Vessel (TSV) services to Statoil on a three-year contract with four one-year options. Out with the North Sea, we have long-term commitments in both Mexico and Brazil.

OET: Prosafe recently decided to defer the delivery of the Safe Zephyrus new build unit. Why is that?

Stewart: The decision to defer the delivery of the Safe Zephyrus was done in close coordination with the yard to align with the first commitment for the vessel in mid-2016. The new delivery window agreed allows Prosafe to best optimize the transit from Singapore to the North Sea whilst ensuring that the client is delivered the very high specification vessel with crew fully familiarized.

OET: In 2015, we’ve seen several offshore drillers and OSV suppliers, stacking rigs and laying up vessels, due to a combination of factors: the oversupply of units, lack of demand, and low oil prices. Do you see anything similar happening in the flotels market?

Stewart: The way projects are being shelved, cancelled or deferred, means that there is a possibility of flotels entering lay-up. There are many hypotheses as to when things could turn around – although this is mostly conjecture based on information that is constantly changing. As with others, Prosafe must plan accordingly, scaling spend to be representative to what we are facing. We do however continue to prudently invest in our accommodation vessels to ensure that they remain high quality, value enhancing solutions to our clients.

OET: The end of the year is approaching. How would you describe the company’s performance in 2015? Also, what are some of the important lessons you’ve learned from this downturn?

Stewart: Prosafe operational performance has been extremely good, with a number of worldwide projects completed. We took delivery of the Safe Boreas in January 2015, and completed her first project with Lundin Norway in the Norwegian sector of the North Sea. Capital investment in the fleet has been high, although mainly linked to client contractual commitments – this will also have a long-term benefit. We, as with probably most companies, have found that efficiencies can be found if you look hard enough – many companies believe they run at an optimal level but when faced with an industry challenge that most certainly comes into sharp focus.

OET: Finally, to conclude with the outlook. What will be Prosafe’s focus in 2016?

Stewart: Safe operations and delivering excellent client services are the foundation of Prosafe activities and will continue to be through the economic challenges the industry is facing. Ensuring that client contracts are performed to the highest standard, winning new work, and maintaining the fleet to the highest level remain the key drivers for Prosafe. The market has most certainly been heavily impacted and new work opportunities have been reduced, but there are prospects across a number of regions that we are actively pursuing. The larger, more prominent, new installations will always be important to the Prosafe portfolio, although there is normally a good amount of balance with existing platform work.

Offshore Energy Today Staff; Images by Prosafe