There are emerging headwinds in the offshore oil and gas industry in the Gulf of America that many operators are citing as challenges to growth in activity in the region. Among these challenges are the rising costs associated with drilling wells in the GOA. Data presented at a recent industry association meeting indicated that the daily cost of drilling a deepwater well in the GOA, including equipment, services, and personnel, has increased from approximately $850,000 in 2020 to $1.3 million today. While using 2020 as a comparison year skews the data due to the COVID shutdown and its impact on demand and pricing, there has nevertheless been a meaningful increase in drilling costs. This trend is prompting clients to reevaluate whether and how they can achieve the required rates of return to justify new drilling activity and production growth. As a result, vessel demand could soften over time, although the supply dynamics of deepwater OSVs must also be considered.

Despite these headwinds, the OSV sector should remain fundamentally solid. Most importantly, there are currently no oil and gas OSVs under construction, and it is highly unlikely that any new OSVs will be built in the next several years. The supply of deepwater-capable OSVs serving the GOA will therefore remain static. At the same time, there continues to be strong demand for U.S. Jones Act OSVs outside the GOA, further reducing the number of vessels available to service traditional oil and gas operations in the region. Of the 134 OSVs greater than 3,000 deadweight tons, 39 were working outside the U.S. GOA as of the end of June last year. By the end of 2025, there was a further net reduction of 10 vessels in the GOA as assets were relocated to pursue charters in other markets and industries. Even if demand softens in the GOA, the constrained supply of OSVs supports charter rates remaining within their current range.

While close attention is being paid to the potential for a slowdown in the U.S. GOA, the underlying vessel supply dynamics continue to work in owners’ favor, and client preference will increasingly shift toward the most efficient vessels.