Jack Up Barge & Liftboat

Jack Up Barge/Liftboat are self-elevating vessels typically used during the development and production stages of the oil and gas lifecycle. Liftboats feature large hulls and a number of legs (typically 3 or 4) that are deployed at location raising the hull out of the water and providing a stable platform for the work to be performed

Barge
Self Propelled
Well Intervention
Crane

IMPORTANCE

LEVERAGE STRATEGIC ROUTINE BOTTLENECK

BUYER POWER

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WEAK

BUYER POWER

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BALANCED

BUYER POWER

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STRONG

Category Description Image

Category Description

A Liftboat (or Jack Up Barge) is a type of vessel that is self-elevating and may be self-propelled. A Liftboat has legs to raise its hull, propulsion to move, accommodation, deck space and cranes. In the oil and gas industry Liftboats are predominantly used in operations and maintenance (OPEX) related activities (approx. 70%) with the remainder focusing on project CAPEX based work. In recent years wind farm installation and maintenance has been a growing source of demand for Liftboats. Liftboats are generally differentiated by class meaning the length in feet of the Liftboat's legs. This can range from 65’ all the way up to 335’. As a rule of thumb, the higher the number, the larger the Liftboat.

Liftboats are incredibly flexible catering to a range of needs including:

  • Accommodation support
  • Well intervention work such as coiled tubing, wireline, snubbing and enhanced oil recovery techniques
  • Drilling support, completions and testing
  • Greenfield platform construction, hookup and commissioning
  • Brownfield maintenance, repair and expansion
  • Well abandonment and decommissioning 

Where self-propelled, Liftboats offer improved mobility and safety. They move without the support of tugs, many with dynamic positioning capabilities, and once in place provide a very stable work location. Prior to jacking up on location a seabed survey of the jack up location is carried out to ensure the topography of the location is known, pipelines and cables are avoided and the area is free of debris and obstructions. Once on location the a Liftboat lowers its legs to a predetermined depth before carry out a pre-load operation (filling tanks with water and jacking up just above the wave height). This operation can take multiple hours however is required to ensure the safe and stable placement of the Liftboat legs. Once the pre-load operation is complete the Liftboat can be fully jacked up. Liftboats may have 3 or 4-legs. 4 legged Liftboats are generally quicker to set up with shorter pre-load durations and added redundancy from the risk of a punch through. 

Supply & Demand Dynamics Image

Supply & Demand Dynamics

The demand for Liftboat's continues to be driven by the world's increased energy demands. According to BP Energy Outlook energy demands will continue to grow at a pace of about 1.2% per annum until 2040 with oil and gas remaining the dominant source (circa 55%). Further demand for Liftboat's is created from the increased uptake in renewable sources - offshore wind farms - with renewables expected to be the fastest growing source of energy over the next 20 years. 

Demand Outlook

Demand for Liftboats and/or Jackup Barges within the oil and gas industry is closely linked to oil price and the investments of oil and gas companies. Despite growing investment in the offshore wind energy sector demand remains weakened following the global pandemic and the low oil prices. Following the events of H1 2020 many Liftboat owners reported downward trends in rates and utilization. 

The Middle East, despite downward pressure on rates, continues to support stronger utilization than other regions somewhat protected by the large National Oil Company presence. In recent years the Middle East market has become a major source of demand for owners, becoming progressively more competitive at the same time. Markets in South East Asia and Africa are much less penetrated than the Gulf of Mexico, Northern Europe, and the Middle East. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Average global penetration SCM Daleel estimates

 

Supply Outlook

As of Q3 2020, globally there are circa 220 Liftboats operating (and circa 6 under construction). More than 70% of the Liftboats in operation are used in oil and gas only, 25% are used in both oil and gas and the wind industry, and the remainder (circa 5% ) used only by the wind industry.

Compared to Q1 2020, Q3 2020 saw an increase in Liftboat count in the Middle East and Europe with Asia and GoM mostly unchanged 

REGION 0-50 POB 50-100 POB 100-150 POB 150-300 POB TOTAL
Gulf of Mexico 113 3 1 - 117
Middle East  - 2 5 50 57
Western Europe  5 15 8 1 29
Asia  1 1 3 4 9
West Africa 4 - 1 3 8
TOTAL  123 21 48 28 220

*based on publicly available information and SCM Daleel estimates

 

Key PlayersImage

Key Players

Below are the global key companies, suppliers and contractors currently operating 5 or more Liftboats and jackup barges around the world. 

Detailed Liftboat Fleet Listings:

Portfolio Positioning Image

Portfolio Positioning

It is typical to see spend within the Liftboat category sit in the “Leverage” quadrant of the Kraljic Matrix (low supply risk, high value).

At present buyers are in a strong position with low demand, and high competition between owners.

 

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Total Cost of Ownership

Parameter Service Cost Fuel Cost Performance Cost Support Costs
Cost Visibility High Medium Medium High
Description  The rates and charges agreed in a contract for the performance of the service The cost of fuel used by the vessel in performance of duties The cost of inefficiency in performing duties The cost of supporting the operation 
Cost Drivers
  • Mob and Demob
  • Structural Alterations
  • Daily Hire Rate
  • Food and Lodge
  • Type of operation
  • NPT (breakdown)
  • In-field transit, preload, and jack up times
  • Learning curve
  • Quality of work (rework, quality of work activities)
  • Schedule adherence
  • Tugs (where required)
  • Supply vessel support (food, fuel etc.)
  • Seabed Survey
Commercial Impact High Low High High

StrategyImage

Strategy

Given the current market conditions any strategy should be focused on increasing competition and maintaining flexibility in the market. Below are a few options to consider:

  • Aggregate Demand - It can often be difficult to get a clear picture of Liftboat demand within an organization due to the mixture of projects (maintenance, installation, well intervention, accomodation, and asset integrity) and different departments responsible for the projects. This often leads to multiple spot charters at shorter notice and higher prices. Try to aggregate demand into campaigns to deliver the best rates. Depending on the demand it may be cheaper and more effective to contract Liftboats full time over individual spot charters.
  • Specification and Scope - For marine construction contracts be clear on who is responsible for what in terms of services (ie. are you providing any services), materials  (ie. are there any free-issue materials) and risks (ie. who pays for weather downtime). Where the Liftboat is being time chartered be sure the Liftboat can cover all your scope needs (deck area, cranes, accomodation, water depth). 
  • Maintain Flexibility - The most competitive prices will be achieved through short to mid-term charter durations (6 months to 18 months) with Owners reluctant to lock in low for long. Always retain flexibility to exit the charter on short notice (no more than 90 days).
  • Competitive Tender - Whether it is a lump sum price for an agreed scope or multiple projects on a daily hire rate competitively tendering in the current market maximizes competition and will drive the lowest rates. 
  • Contract Selection - Time charters or Marine Construction agreements are the preferred choice of contract in the oil and gas Liftboat market. Below is a table of the contracting options available for consideration.

 

Parameter Time Charter Marine Construction Bareboat
Description Per day or duration of time Per day, duration of time or work scope Vessel hull & machinery only
Operational Preference Preferred Preferred particular where multiple work scopes are involved. Not preferred
Vessel Owner Responsibility Vessel
Crewing
Maintenance
Insurance
Subject to agreement however may include:
Vessel
Crewing
Maintenance
Insurance
Port Charges
Cargo Loading & Discharge
Bunkers
All ancillary equipment and services
Vessel only
Charterer Responsibility Port Charges
Cargo Loading & Discharge
Bunkers
All ancillary equipment and services
Subject to agreement however may include:
Engineering & design documents
Free-issue materials

 
Crewing
Maintenance
Insurance
Port Charges
Cargo Loading & Discharge
Bunkers
Calculation of Charges Daily hire rate Daily hire rate or lump sum price Monthly lump sum payment
Standard Form Contracts BIMCO SUPPLYTIME LOGIC Marine Construction, IMCA Marine Construction, BIMCO BARECON

Technical InsightsImage

Technical Insights

Jack up Drilling Rig vs. Liftboat - Moving on to Location

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