Study: OSV wages rise in Gulf amid shortage of qualified crews

The following is the text of a press release issued by GBI Reseach:

(NEW YORK) — Disasters in the oil and gas production industry can be deadly, and the 2010 BP oil spill provides a strong example of how the sector’s economy can suffer as a result, states a new report by oil and gas experts GBI Research.

The new report* cites rising wages for offshore workforces as a result of the US Gulf of Mexico (USGOM)’s tragic spill.

The USGOM is a reigning region for oil and gas production, holding around 90 announced deepwater prospects as of March this year. The emergence of new technologies in the deepwater exploration and production (E&P) industry such as the design of advanced, enterprise-class drillships and semi-submersibles which are capable of drilling in water depths of up to 12,000 feet or even more, has been driving E&P operations in deepwater USGOM during the past decade. Deepwater operators in the region have been creating new records in terms of increased water depth and accuracy of drilling procedures. A reduction in operational costs and risks has also been a result of new technologies implemented in context to deepwater E&P activity.

However, it has been observed that since 2011, there has been an increase in labor costs, as a result of increased wages for qualified offshore mariners working in the USGOM, who possess the expertise and experience of working on offshore supply vessels used in deepwater projects. The rise in their wages is linked to a shortage of crew members, triggered by new regulatory requirements following the April 2010 Deepwater Horizon tragedy.

The BP oil spill in 2010 has been cited as the largest accidental marine oil spill in the history of the petroleum industry, and saw oil flow unabated in the Gulf of Mexico for three months, releasing around 4.9 million barrels. This caused extensive damage to marine wildlife, and fishing and tourism sectors. The spill stemmed from an explosion which killed 11 men working on the platform and injured 17 others, and which a White House oil spill commission blamed on BP and its partners, as a result of cost-cutting measures and the lack of a well safety system. BP consequently set up a $20 billion fund to compensate victims of the oil spill.

The new Safety and Environmental Management System (SEMS) requirements for the Gulf of Mexico are based on API RP 75 (SEMP); safety standards that were introduced about 15 years ago. Key elements of the new SEMS requirements for the US Gulf of Mexico include mandatory regulations on hazards analysis, operating procedures and mechanical integrity. These standards are expected to be rigorously enforced, with defaulting E&P players likely to face heavy fines or be subject to shutdown of operations.

After this tragedy, many offshore supply vessel service providers dry-docked their vessels and laid-off their qualified marine crew. This led to the crew taking up jobs on different vessel types, as the disaster resulted in the introduction of stringent regulatory regulations being put in place globally, which have been estimated to lead 50 offshore supply vessels and crew members away from drilling activities in the USGOM to different deepwater locations worldwide. The USGOM must recover from the BP oil spill, and learn from mistakes made, in order to truly flourish as a major fossil fuel power.

Click here to access more information about the report.

By Professional Mariner Staff