Boskalis looks to wind and subsea to capitalise on acquisitions

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The semi-submersible heavy-lift vessel Boka Vanguard performed a record lift of the P-67 FPSO

Posted April 2, 2019

Having reshaped itself through a series of acquisitions, Boskalis is now focused on prospects in offshore wind and subsea markets

From land reclamation projects in Singapore to subsea cable installations for offshore windfarms in Europe to salvage operations in the Middle East, Royal Boskalis Westminster NV is a global player in the offshore energy, dredging, towing and maritime salvage sectors.

Backed by a diverse fleet of about 900 vessels, including offshore construction vessels, heavy transport ships and trailing suction hopper dredges, Boskalis operations cover offshore oil and gas, renewables, port and coastal infrastructure and salvage.

The effects of climate change, especially extreme weather conditions and the threat of flooding and storm surges, kept Boskalis busy in coastal resiliency and riverbank protection projects last year, as did the strong growth in European offshore wind.Boskalis chief executive Peter A Berdowski described 2018 as “a year with some appealing highlights in a market that continues to be challenging.”

Like most companies with interests in the offshore oil and gas sector, Boskalis has had to weather the prolonged downturn. The Dutch public company’s strategy has been to grow and diversify through highly targeted acquisitions, investments in its fleet and paring of underperforming assets.

Despite the sharp decline in the price of oil and the cutback on capital expenditures by the international oil companies over the last few years, specific segments of the offshore energy market remain attractive to Boskalis. Mr Berdowski sees cautious signs of recovery but notes “we are still a long way away from the exuberant market climate of three to five years ago.”

To support the offshore energy business, Boskalis is now focusing its assets on what it sees as the most promising sectors: installation and intervention (I&I); subsea work including inspection, maintenance and repair (IRM); offshore wind and survey; and the more specialised short-term heavy marine transport and marine services business.

“With numerous players being financially stretched, we see opportunities for expanding our position by acquiring assets or by acquiring a player with assets”

Boskalis has an impressive fleet of semi-submersible heavy transport vessels, which was enhanced with its acquisition of Dockwise back in 2013. One of the assets acquired through Dockwise helped Boskalis “push back boundaries” in 2018 according to Mr Berdowski; he is referring to the technically challenging, record-setting dry transport of the floating production storage and offloading (FPSO) P-67 from China to Brasil. Weighing a record 90,000 tonnes, the FPSO was transported by the semi-submersible heavy-lift vessel Boka Vanguard, formerly Dockwise Vanguard. With a deadweight capacity of 117,000 tonnes, the Boka Vanguard has a “bowless design” to accommodate offshore structures or vessels that might overhang the bow or stern of the vessel. Boskalis says the project demonstrated the benefits of the dry transportation of box-shaped FPSOs in terms of time and reliability.

Production of oil and natural gas through FPSO P-67 in Brasil’s Lula Norte area in the pre-salt of the Santos Basin began last February. With the capacity to process up to 150,000 barrels of oil and compress of up to 6 million m³ of natural gas per day, P-67 is the ninth FPSO set up in the deepwater BM-S-11 block, which is jointly owned by Petrobras (65%) in partnership with Shell Brasil Petróleo Ltda. (25%) and Petrogal Brasil S.A. (10%).

Peter Berdowski (Boskalis): “A year with some appealing highlights in a market that continues to be challenging”

Subsea expansion

Over the years Boskalis has developed a modest but successful position in the subsea services market, focusing on survey and unexploded ordnance (UXO) clearance, diving and IRM work in shallow water regions in Northwest Europe, Africa and the Middle East.

Boskalis views subsea services as a highly fragmented market, with the majority of players operating just one or two survey and diving support vessels in a region. “With numerous players also being financially stretched, we see opportunities for expanding our position in Northwest Europe, Africa and the Middle East by acquiring assets or by acquiring a player with assets” says Boskalis.

Based on its market outlook and existing subsea contracting capabilities, the company is gradually expanding its footprint in the shallow water SURF (Subsea, Umbilicals, Risers and Flowlines) market.

This past February, Boskalis acquired a 62.5% stake in UAE-based oilfield services company Horizon Group, providing a local presence in the Middle East.

The Horizon acquisition follows a partnership with Dubai-based oil drill rig builder Lamprell in Saudi Aramco’s Long-Term Agreement for Offshore Facilities (LTA) programme. The LTA covers engineering, procurement, construction, transportation and installation (EPCI) contracts in support of the oil giant’s offshore investment programme.

Within the scope of the LTA, investments could exceed US$3Bn per annum with a programme lasting six years, with options by Saudi Aramco to extend for a further three- plus-three years, according to Boskalis. Selected contractors also have the right to bid for tenders put out by Saudi Aramco without further technical prequalification, considerably shortening the lead time through to award.

Under the LTA, Lamprell will focus on the engineering, procurement and construction of offshore structures, such as topsides and jackets.

Boskalis, meanwhile, will be responsible for the transport and installation of these structures, in addition to dredging activities and specialist subsea activities, including survey as well as pipeline and cable installation.

Tyra gas field redevelopment

The largest oil and gas investment ever made in the Danish North Sea, the Tyra redevelopment will allow the gas field to keep producing for 25 years after its completion in 2022. The US$3.4Bn redevelopment will require substantial subsea work, including EPCI work. Boskalis also opened a new office in Aberdeen, UK, to support its subsea services in the North Sea and has acquired a SURF contract for phase II of the redevelopment of the subsea installation of the Tyra gas field. Boskalis will deploy the dive support vessel Boka Atlantis in support of the project.

Last year, Boskalis enhanced its fleet with the addition of a construction support vessel (CSV). Boka Falcon is a DP2 vessel with a bollard pull in excess of 400 tonnes, equipped with two remotely operated vehicles, a 150-tonne crane, and a large working deck. The vessel is on a multi-year charter and will enter into service in March. Boskalis said “if the right opportunity presented itself” it would consider adding a second CSV to its fleet.

In the short term, Boskalis is committed to maintaining “a disciplined and selective focus on opportunities to strengthen its position, in anticipation of recovery further down the line."

One of these opportunities was the acquisition of privately held UK-based marine survey company Gardline in 2017, for a total consideration of about US$52M. The deal was seen as a move to fortify the Dutch company’s efforts to further penetrate the seismic survey business and the growing renewable energy sector.

As a leading installer of subsea export and array cables and offshore wind turbine foundations, Boskalis stands to gain from the growth in renewables”

Specialising in marine geophysical, geotechnical and environmental surveys, Gardline was contracted last year by Alpine Ocean Seismic Survey, Inc to gather survey results to develop windfarm design and permitting assessments for the proposed Empire Wind site, Equinor’s first significant offshore wind investment in the US.

The Empire Wind site is located approximately 32 km south of Long Island, New York, covering 321 km2. The lease comprises an area that could potentially accommodate more than 1 GW of offshore wind, with a phased development of between 400-800 MW, with potential operations starting in the mid-2020s.

The commercial lease for this federal offshore wind area was signed by Equinor in March 2017, following the US Department of the Interior’s Bureau of Ocean Energy Management (BOEM) auction in December 2016.

Empire Wind will be constructed by private investors at a projected cost of approximately US$3Bn.

Water depth at the Empire Wind site ranges between 1,981 and 4,000 cm. Each wind turbine is expected to have an installed capacity of 10-15 MW.

Earlier this year, Gardline acquired a new vessel which will be equipped to become a high-end geophysical vessel to accommodate the Northwest European market.

Strong foundation in offshore wind

The near-term outlook for the offshore wind market in Europe continues to be strong, with 409 new offshore wind turbines connected to the grid across 18 projects, according to Wind Europe. Europe now has a total installed offshore wind capacity of 18,499 MW and 4,543 grid-connected wind turbines across 11 countries.

Over the last year, 12 new offshore wind projects reached FID. Investments in new assets amounted to approximately US$11.5Bn.

As a leading European installer of subsea export and array cables and offshore wind turbine foundations, Boskalis stands to gain from the continued growth in renewables.

It estimates its market share in foundation installations in Europe at approximately 10% and cable installations at about 35%.

To bolster its capabilities in the foundation installation market, Boskalis commissioned Bokalift 1, a dynamically positioned class 2 capable crane vessel in 2018. Boskalis reports the vessel was almost fully booked in its first year on an offshore wind foundation installation project.

Key acquisitions have bolstered the position of Boskalis in offshore wind

Once it moves off charter, the vessel’s next assignment will involve the decommissioning of a number of offshore platforms, starting in mid-2019.

Boskalis is conducting a design and engineering review for the possible conversion of a second crane vessel. It is expected to make a firm decision on the conversion and its configuration between 2020-2022.

In a consortium with cable supplier NKT, Boskalis secured its largest cable-laying contract last year, for offshore grid connection work for Germany’s Ostwind 2 project. Valued at US$281.5, the contract will see Boskalis combine multiple in-house disciplines including UXO survey, geotechnical and geophysical surveys, seabed preparation works, the transport and installation of 270 km export cable and seabed reinstatement.

The export cable will connect the planned Arcadis Ost 1 and Baltic Eagle offshore windfarms to the onshore substation in Lubmin, Germany.

The grid connection is expected to be completed by late 2022.

Boskalis is also laying and installing cable under contracts totalling US$225M in support of the UK offshore windfarms Triton Knoll and Moray East.

It has also won a contract to support Scotland’s Inch Cape offshore windfarm – with a potential value of over US$225M – with a transport and installation scope, comprising turbine foundations, inter-array and export cables and an offshore substation. The project is currently under development and is expected to enter construction in 2020.

In 2018 Boskalis also strengthened its offshore cable installation position with the acquisition of the cable-laying assets of Germany’s Bohlen & Doyen (BoDo). Based near Wilhelmshaven, BoDo has a long-established position in the German offshore cable installation market. The company’s operations comprise grid-to-grid and offshore substation-to-shore connections, which includes the installation of shallow-water offshore cables and the connection of offshore windfarms to substations.

Rolled into the acquisition were equipment, burial tools, personnel, plus several smaller commercial and maintenance contracts. The most important assets were three large cable-laying barges, with capacities ranging from 800 to 4,000 metric tonnes.

As subcontractor to Prysmian, BoDo was involved in the first phase of the Ostwind project for 50Hertz. Recently, Boskalis received the award for Ostwind 2.

In February, Boskalis was awarded a US$90M contract for the replacement and repair of a part of the inter-array cables at an offshore windfarm. To accomplish the repair and replacement, Boskalis will use three, anchored-barge spreads, including the Bokabarge 82 and BoDo Constructor acquired from Bohlen Doyen.

Shedding towing interests

While Boskalis has been busy transforming itself by adding key pieces, it has also been shedding underperforming divisions. Starting in 2016, a wave of consolidation transformed the container shipping business, which had a knock-on effect on the company’s towing division joint ventures, Saam Smit Towage and Kotug Smit Towage. With revenues declining, Boskalis made the decision early this year to divest itself from both ventures. Mr Berdowski explains: “In a market which offers no prospects for improvement, it was decided to fully exit this loss-making segment.” Due in part to this decision, as well as impairment charges in the towage division, an extraordinary charge of €519M (US$583M) was recognised, consisting mainly of goodwill impairments and a write-off of vessels.

Boskalis has now signed a letter of interest with Spain’s Boluda Corporacion Maritima to sell its interest in Kotug Smit Towage for €300M (US$337M), with the deal expected to close in H2 2019. Boskalis plans to sell its interest in Saam Smit Towage to its partner SAAM SA.

Notable among Smit Salvage activities was being the lead salvor when the ultra-large container ship Maersk Honam caught fire on 6 March 2018, about 900 nautical miles from Salalah, Oman. The 15,000 teu container ship was towed to Dubai, where the remaining cargo was offloaded. While the ship’s fire-damaged bow section and accommodation block are being removed at Dubai Drydocks, the stern section of the vessel is being reused by Maersk in the construction of a new vessel in South Korea, with delivery set for the end of this year.

Boskalis is also reshaping Singapore’s waterfront with two land reclamation projects, valued at approximately US$786M. Working with Penta Ocean and Hyundai, Boskalis is designing and constructing 387 hectares of land reclamation works, bounded by 9.1 km of caisson walls as part of the expansion of Tuas Port.

The second project marks the construction of Singapore’s first polder, Pulau Tekong. This will require dike closures, dike reinforcements, drainage of the reclamation area and extensive dry earthmoving activities in a joint venture with Penta Ocean.

Boskalis also has a hand in the growing North American LNG export business. It has been contracted for dredging work in support of the US$40Bn LNG Canada export facility contract in Kitimat in British Columbia, Canada. The dredging scope for Boskalis includes the removal and cleaning of contaminated and non-contaminated soil from the site of the future LNG export facility.

Cutting emissions with biofuel

As shipping moves towards a zero-carbon future, Boskalis has been testing biofuels that reduce CO2 emissions in its vessels. Back in 2015, Boskalis Nederland partnered with Amsterdam-based sustainable fuel provider GoodFuels and Finnish engine manufacturer and designer Wärtsilä in the Boskalis on Bio programme; a project to reduce the CO2 emissions from its vessels, trucks and earthmoving equipment operating in the Netherlands.

Initial testing in 2016 involved the operation of the cutter suction dredger Edax on a B50 biofuel blend, 50% of which was made from residual products from the paper industry. The testing was so successful, Boskalis Nederland now uses this fuel not only for its vessels, but also for its dry earthmoving equipment and trucks.

Part of that effort involves the use of a fuel water emulsion in the main engines of the hopper dredger Shoalway. Through its Keppel Smit Towage joint venture, Boskalis added two dual-fuel harbour tugs built by Singapore’s Keppel Singmarine. KST Liberty was the first LNG-fuelled tug to operate in Southeast Asia.