A prominent trade publication covering the offshore marine industry recently published an article highlighting the “large” order book of OSVs and noted that about 50% of the order book was ordered speculatively. The headline summed this up concisely but also came across as alarming. Given the limited number of new build OSVs announced in recent years, it seemed clear that the story required more context.

The first point of clarification is the reported global order book of OSVs, stated as 209 units. This figure, however, includes non-oilfield support OSVs, specifically vessels intended for the offshore renewable energy market. By contrast, the existing fleet is composed almost entirely of oilfield-dedicated OSVs. For the sake of analysis, if all 209 vessels are assumed to be oilfield-specific, they would represent roughly 15% of the current global fleet of about 1,400 OSVs. While this is not insignificant, it appears far less impactful when viewed in historical context.

In 2011, at the height of the last OSV building cycle, more than 1,000 OSVs were on order, and all were oilfield service vessels. Even as these units were delivered, additional orders continued through the downturn that began in 2014, and by 2016, approximately 500 OSVs were still on order worldwide. Many of those vessels never delivered, and it is likely that some of those same hulls remain on the books today. Most notably, there are currently no oilfield OSVs on order for Jones Act-qualified trade in the United States.

Although the article suggested that nearly 50% of the OSV order book is speculative, there will not be any speculative builds in the United States for the foreseeable future. The cost to construct a new OSV domestically is not only higher than in most of the world but is prohibitively expensive. Without an ironclad contract and strong financing terms in place, a new U.S.-built OSV for the oilfield market simply cannot be ordered.