The deepwater OSV market in the Gulf of America (GOA) has remained relatively tight mostly due to the general lack of available supply of vessels. Though the total fleet of Jones Act qualified deepwater OSVs is just over 100 boats, nearly one third are working outside of the GOA. Unless, and until a meaningful number of the vessels return, any slight uptick in deewpater activity will further the tightness in the domestic market, pushing charter rates higher.

The level of GOA activity has been relatively consistent over the last several quarters with small fluctuations due to seasonal changes. The general consensus is that this current level is to be expected for the foreseeable future and our clients have not been taking action to secure additional vessels. However, this seems to be changing, and has suddenly put all vessel charters on notice that market dynamics may be changing in favor of vessel owners.

Recently, a major energy company with a large presence in the GOA issued a request for quotation (RFQ) for a total of four deepwater OSVs for long-term charter. Given the lack of excess supply of vessels, this RFQ will likely result in upward pressure on charter rates across the market. It is also prompting a response from other energy companies operating in the GOA to engage with vessel owners to renew or extend existing charters. This is happening due concerns that failing to secure vessels for long-term could result in significantly higher rates, especially when the existing contracts expire (or the possible lack of OSV availability to fill requirements).