A well intervention/lay-vessel or a DSV?

I’ve missed something with this… is it a Dive Support Vessel or a lay-vessel? News that UDS is building a new vessel left me confused:

The Salt 310 design vessel will be capable of well intervention, flex lay and rigid pipe lay operations in 3,000 m of water.

The vessel will be fitted with first-of-its-kind ‘3 in 1’ tower designed by Huisman in the Netherlands. It will also be fitted with a Huisman 600-1,000 tonne crane which can work in depths of up to 3,000 m and a 650 m hydrogen saturation diving system along with two integrated hydrogen refineries.

Either it’s the worlds most advanced DSV, capable of diving at an incredible 650m (no info on the Hs at that depth), and therefore it will need to travel and be a global asset as those jobs are so rare, or it’s a deepwater well intervention and lay vessel? In either mode of operation it will be overcapitalised, with one part of its functionality redundant? But it would still require dive techs etc even in pipelay mode and vice versa? I am perplexed… Questions abound… A 1000t crane is a monster… Who does 1000t lifts? How often? How much does this crane cost? How many days does it have to work to pay for itself? How much strengthening of the deck was required for the payload? This vessel will clearly be an astonishing technical achievement.

The economics on the other hand look more challenging: If you made the assumption that the dive system was worth $100m, not unreasonable comparing a CSV to a DSV price, then the dive system is depreciating at 11k per day (365 over 25 years), regardless of whether it is being used, and excluding OpEx (about 15% of a working DSV day rate in Asia). The lay system/well intervention system, at say $150m, would be depreciating at $17k per day (365 over 25 years), again excluding running costs. And I have a feeling this j-lay/ flexlay system is closer to $200m, with the tower giving you the well intervention capability for free (with another expensive Lego set).  This effectively adds that to the cost of diving or lay each day depending on what you aren’t doing? And that is without OpEx? I am struggling to see how that is economically efficient.  An economic value calculation would substantially increase those numbers. On a more realistic assumption of 270 days utilisation, given schedule gaps and transit, those numbers rise by a quarter.

Are UDS planning on being a EPCI contractor for rigid lay? There is no spot market for rigid lay vessels? Or do they have a charter for this vessel? Surely for a core delivery asset, such as this, a charterer would be intimately involved?

I could be wrong but this reminds me of the CSS Derwent. It could do almost everything possible (in the right region and water depth), and nothing economically efficiently. At a cost of USD 110m it ended up in Angola once Hallin folded, where I doubt the collective value of offshore shipping assets is USD 110m, and certainly caused a massive loss for the yard (STX).

CSS-Hallin Derwent

In an industry which requires standardisation and cost reduction I struggle to see this as the future. I have voiced concerns before about the willingness of the offshore industry to do something because it can, not because it is economically viable, hidden in a boom market it is a real issue now. But the great thing about capitalism is it’s not my money, and I don’t know everything.

Don’t get me wrong, I have huge admiration for UDS. They are delivering and ordering, by an order of magnitude, a DSV fleet bigger than Subsea 7, a company with a market cap of USD 4.8bn! It is an astonishing organisational and financing achievement, and when  the history of this period is written this will be one of the more interesting stories. By any rough calculation UDS must have ordered, and/or taken delivery, of ~$1bn in vessels.

This is all happening at a time when very good DSVs are underutilised or going into lay-up (Toisa Pegasus) and there is massive over capacity in the lay fleet. If I owned a DSV I’d be dreading seeing UDS pop-up in my LinkedIn feed, as they start delivering these vessels it will almost be call for an asset impairment review everytime. This is turning into a countercylical bet so large it will deserve a place in financial history whichever way it goes.

 

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