Offshore helicopter experts: Fleet replacement will trump growth

Written by Mark Huber and retrieved from Vertical Magazine

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The global offshore helicopter fleet will refresh, but fleet size largely will remain unchanged over the next decade.

That was the consensus of providers and analysts during a recent webinar sponsored by the Cirium Ascend consultancy. Cirium’s lead appraiser, Sara Dhariwal, predicted that 90 percent of the forecasted 400 new deliveries for the offshore sector over the next 10 years will be replacements for existing aircraft, and that the sector will post a very modest 0.3 percent compound annual growth rate (CAGR) during the period.

Leasing companies will continue to control roughly 30 percent of the market and what little growth there is will be driven by emerging markets and offshore wind, she said. Dhariwal added that new deliveries would skew toward newer technology helicopters with better range and payload.

She said several factors are driving this reality, including a reduction in the ratio of helicopters per active offshore rigs from 1.1 in 2016 to 0.8 today, an overall contraction of the offshore fleet by 25 percent from its high in 2014, the continued attrition of single-engine and light twin usage for near-shore operations in favor of medium twins to larger classes, and an industry shift to more automated rigs that need smaller crews.

Despite the current boom, Dhariwal said the industry continues to recover from the post-2015 consolidation and restructuring brought on by overcapacity, but that the market has now stabilized.

The aging Sikorsky S-92A fleet — and the lack of a viable alternative in the heavy twin class — will drive demand for super mediums, including the Bell 525, which she characterized as more of a new class between super-medium and heavy. Dhariwal predicted that mediums and super-mediums combined would comprise 50 percent of all new helicopter deliveries for offshore by 2032.

Brazil was one of the emerging growth markets mentioned by Dhariwal, where the downturn hit particularly hard. State-owned oil company Petrobras had 127 helicopters under contract in 2014, according to Lider Aviacão CEO Junia Hermont. But the downturn and a related political scandal in Brazil shrank that number to 56.

Lider is a leading supplier of helicopters to Petrobras. The fleet servicing Petrobras has subsequently rebounded to 78, and new tenders will be issued later this year for service beginning in 2026 and 2027. Hermont noted that Petrobras plans to invest $102 billion for additional offshore exploration and production between 2024 and 2028 and likely would add 15 more helicopters under contract “in the next few years.” The additional investment is part of Petrobras’s stated goal to become one of the world’s top five oil producers by 2030.

But despite recent advances in predictive analytics, right-sizing offshore fleets remains something of a black art, according to Samantha Willenbacher, Bristow Group vice president for key accounts.

“Demand for the underlying oil is quite difficult to predict,” she said. However, she added that “the industry information that is out there by a number of organizations shows there is an expected growth in final investment decisions.”

Bristow also constantly monitors customer forecasts, which drove it to order 10 new Leonardo AW189 super mediums in February “given what we see is our supply requirement in the interim.”

Willenbacher also pointed to set production limits as a driver for increased sector investment.

“OPEC production cuts that tighten global oil supply and will help keep the price of oil at a point where the customers and [Hermont] and I will want to continue to invest [in new helicopters].”

Willenbacher said that a good deal of entropy still encompasses the offshore wind market and that helicopters that service offshore oil and wind are not typically interchangeable.

“You can’t just divert an offshore machine and start serving wind farms,” she said. “It’s quite different technology that is needed for that.”

Hermont emphasized that multi-year lead times for new helicopters made negotiating longer-term, seven- to 10-year contracts imperative. She added that the new helicopter best practices benchmarks, laid down in the International Association of Oil and Gas Producers Report 690, are a “huge challenge for the growth you are going to see in the market.” The ongoing need to recruit and train pilots and technicians remain potential growth impediments, she said.

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