The market for US Jones Act (USJA) deepwater OSVs has continued to trend favorably for vessel owners. While the seasonal uptick in demand is occurring as expected, the number of deepwater OSVs departing the Gulf of America also continues to increase. These two phenomena are creating a very tight supply in the near term and while the seasonal activity will ebb, the demand for these vessels outside of the GOA likely will not.

While it remains to be seen how busy the activity will be for the balance of the summer and early fall months, the start of this season indicates a robust summer and early fall can be expected. Vessel charterers are observing the supply and demand dynamic first hand and are taking action to secure charters to support their season activity and longer-term charter needs. This is creating upward pressure on charter rates favoring vessel owners in the GOA.

At the same time, demand for large, USJA qualified OSVs in markets outside of the GOA continues to surge. These markets include Suriname, Guyana and, Brazil, where there are increasing levels of offshore oil and gas activity. The water and well depths there require vessels with very large capacities of liquid mud. The USJA fleet is designed with large liquid mud capacities as the US GOA deepwater drilling environment requires massive volumes of liquid mud. For this reason, the USJA fleet is preferred for drilling projects in these three markets along with dozens of other US vessels—with more vessels expected to depart.

While seasonal activity will ebb and flow, the baseline levels of activity in the GOA are likely to be sustained. This supports a continued, solid demand for deepwater OSVs. As additional demand outside of the GOA continues to trend upward, availability of supply of vessels drawdown creating further tightness in the GOA.