Anyone who has made a career in our industry knows the cyclical nature of offshore oil and gas activity. These cycles can be erratic, and momentum can change quickly. Some are even “mini-cycles” that typically occur within a longer-term cycle due to planned seasonal activities. The severity of seasonal cycles can be jarring, and though we are early in this winter cycle, it seems like it could be slower than last winter. This highlights these quick and dramatic changes that can cycle from season to season. 

Generally, June is representative of the summer season, with December representing the winter. The Bureau of Safety and Environmental Enforcement (BSEE) is a great resource that reports weekly on the total deepwater oil and gas activity. Their Deepwater Activity Report provides a weekly total of the number of deepwater oil and gas prospects and ongoing drilling and work-over activity. 

In mid-June, the BSEE reported 52 deepwater prospects with drilling or work-over activities. This activity was representative of the high summer vessel demand and a tight market with strong spot-charter rates. As of December 17th, the BSEE reports the number of prospects had fallen to 37. This represents a 29% decrease, though the vessel demand per deepwater prospect varies. It has also resulted in a noticeable softening of deepwater OSV demand and an overall decline in spot-charter rates. 

While this decrease in demand is likely due to usual seasonal declines in activity, we should all remain cautious about emerging long-term downtrends. While I am not saying this is the case, we must be prepared for the next downturn. Among things that are certain in life, a downturn in the US Gulf OSV industry is coming—sooner or later.