with Marcus Hemsted, Technical Sales Manager, CTC Marine Projects Limited
With the recent establishment of a local Australian office in 2008 where does Australia fit in the larger global strategy of CTC Marine and the Trico Marine Group?
Australia is seen as a key potential growth market for CTC Marine as there are numerous subsea LNG developments on the drawing board, most of which tie back to onshore infrastructure. CTC Marine’s core business is trenching; a number of the pipelines off the Northwest Shelf that tie back to the shore require some form of secondary pipeline stabilisation to enable integrity on the seabed on the North West Shelf which is affected by cyclones.
CTC Marine’s biggest trenching asset, RT-1, is a 200ton hard ground mechanical trencher that was developed specifically for the Australian market. Potential opportunities for RT-1 were one of the core drivers for CTC Marine establishing a presence in Australia.
We are also involved in the light construction market. We install flexible pipes, fibre optic cables, power cables, and on the back of the many planned and ongoing developments in Australia over the next 10 years we see a big market for CTC Marine’s business. The Perth office currently draws support from head office in the UK as well as regionally out of Singapore. One or two significant project awards moving forwards will enable the Perth office to man up significantly and become more autonomous.
We are currently looking to expand our local engineering capability and are focusing on recruiting personnel with good local knowledge as well as strong engineering capability; Australian specific industry knowledge is very important.
When did the planning phase begin for this office? When did CTC Marine identify that it needed the local presence and content in order to grow its business here?
In late 2005 and early 2006 we identified a market opportunity to develop a big rock trenching machine to trench trunk lines and pipelines off the Northwest Shelf. It was at that time that we started communicating with oil and gas operators – Woodside and Chevron for example – who had big LNG developments on the table and we decided to build the big trencher based on those projects moving ahead. In 2007 we won our first project for Woodside on their Angel development for power cable and umbilical installation work. That was CTC Marine’s first major work in Australia. On the back of this project, the decision was made to set up an office in Perth.
How did Woodside rate your performance? What was the “grade” they gave you?
Overall the job was a success; in particular the offshore phase of the project was excellent. We executed the workscope for them well for which we received excellent feedback. This work was power and flexible cable installation, both of which are CTC core business. Particularly as a result of our work on Angel, we continue a healthy relationship with Woodside and are currently conducting a significant amount of study work with them for some of their future gas developments. This is a positive indicator which will hopefully lead to bigger scopes of work in the coming years.
With the inevitable logistical challenges and/or favorable growth that can come with establishing a new business or local presence, how would you assess the first two full years of CTC Marine in Australia?
The first year was quite a challenge. The first 18 months was about introducing CTC Marine to Australia, Australia to CTC Marine, and putting CTC Marine on the map in Australia. Following the successful exhibitions at Australasian Oil & Gas Exhibition in 2009 and 2010, I believe the Australian market is now fully aware of CTC Marine and its capabilities; we are definitely seeing a huge increase in our tendering work load, which is a very positive indicator.
In 2009 we brought a dive support vessel (DSV) into Australia for three months of construction work in the Bass Strait. We have operated three different vessels in the country now and are familiar with the IR and regulatory intricacies of operating vessels in Australia.
This year has predominantly consisted of a high degree of tendering work for projects that are kicking off from late next year all the way through to 2016. If we are successful in winning work, this will bring significant growth to the Perth office. I am confident that by the end of the year we will have at least one and possibly two contracts signed up for work in Australia.
As stated, Australia is well aware of CTC Marine. Is Australia equally aware of DeepOcean and Trico Offshore? Why is just CTC Marine present in Australia from the group?
CTC Marine has always operated reasonably autonomously in the APAC region. DeepOcean was initially the parent company of CTC and in 2008 Trico Marine bought DeepOcean and CTC Marine was a part of that acquisition. At that point, however, CTC Marine had already independently made the decision to open an office here in Australia.
While DeepOcean and CTC Marine have traditionally been North Sea focused, CTC Marine opened an office in Singapore in early 2006. Having already made the step into Asia, CTC Marine extended itself into Australia in 2008.
DeepOcean, as a survey and IMR company, is very recognized in the North Sea, but not so much in this region. They are, however, looking to come down here and earlier this year DeepOcean’s senior management visited Australia with this in mind.
How will that affect your business as there seems to be some overlap in life of field services that both DeepOcean and CTC Marine provide?
Yes, there is a slight overlap, however there are some significant positive potential outcomes to be realized by us working together. With these synergies in mind there is a push for us to work together and focus on the Australia and New Zealand market.
CTC Marine’s core business is trenching, cable and flexible pipe installation while DeepOcean’s is more IMR and survey contracting. DeepOcean operate a fleet of modern DP vessels which CTC can access in addition to our own vessels. You can expect to see more activity in this regard next year.
What are some of the technical challenges posed by working in Australia’s offshore and subsea environment that might be difficult for some companies but which fit right into the expertise of CTC Marine?
As far as the specifics of providing trenching services on the North West Shelf projects, the conditions are challenging, the seabed shows significant variability from Calcarenites and Limestone to deep sand. There are not a lot of trenching machines capable of burying trunk lines in these seabed conditions in the current marketplace; this is where we feel we have an edge. Traditionally pipelines have been stabilized using rock dump, however this is often a very expensive solution and trenching potentially enables rock dump requirements to be reduced.
The Northwest Shelf is also a challenging place to work in the shallow water areas. It has high ambient temperatures, cyclone seasons, hard ground, and stringent environmental regulations in place that are tough to manage.
I feel we have a competitive edge at the moment as far as trenching for stabilisation is concerned. We recently completed a successful full scale hard ground trenching trial for a major Australian Operator, which no other trenching contractor has done. None of the other trenching companies competing in this market have the capability to trench large trunk lines, to the size that we can, in the hard ground conditions present on the North West Shelf.
Who, in particular, do you classify as your competitors?
Canyon Offshore, owned by Helix is one of our main trenching competitors; however we are not seeing a significant level of commitment to the Australian market at present from them. In the fibre optic cable installation market we generally compete with larger globally established cable installers. We have specific areas of expertise and likewise they have areas where they are much more capable than us, for example installation of long distance fibre optic cable systems. Power cable installation work is also increasing globally for CTC and we now have significant capability is this area.
While you certainly have a defined and concentrated area of expertise, is there an increasing pressure to diversify your capabilities and move more into life of field services as it becomes an increasing trend for subsea service companies?
I think the market in Australia will definitely increase in that capacity as more subsea developments come online and more maintenance is required. We are looking at increasing IMR capabilities in conjunction with the Trico Marine Group of companies. There is more established competition locally in this area with companies such as DOF Subsea, Fugro, and Neptune Marine Services all vying for similar workscopes. CTC is always looking to increase asset utilization through diversification and develop new equipment where required. Adapting some of our tracked trenching assets in order for them to be able to carry out both deep and shallow water geotechnical survey and investigation work is an area I am personally particularly interested in developing within CTC. I feel there is a market opportunity for providing an alternative solution to geotechnical drilling vessels for certain survey work. Some of our equipment could easily be adapted to operate from very shallow water to in excess of 2000m water depth without significant capital investment.
You are competing with both Australian companies who are growing their businesses in conjunction with their local market knowledge as well as multinational companies who have been in Australia for the past ten years. How soon or long before you think CTC Marine can catch up?
We have made a significant investment in the Australian market and that will increase. We need to secure one or two large contract awards and on the back of those contracts we will develop a much bigger local project team, become more autonomous and have more core capabilities within Australia which I hope will be viewed favourably by our potential Australian Client base.
There are no immediate plans to station a vessel in Australia, but we do have 3 in the Asia-Pacific region based in Singapore. Two of them have been into Australia before and they can come here at a moment’s notice since they have all the required paperwork and approvals in place.
What do your vessels and their capabilities offer to the market?
CTC has two Maersk R-class vessels, the Responder and Recorder on long term charter. They are very capable and adaptable DP2 vessels over 100 meters long with in excess of 1000m3 of free deck area, active heave compensated cranes and stern A Frames. Configuration can be as DSV’s for subsea construction or trenching and cable installation vessels; they have very good adverse weather capability and can accommodate over 5,000 tons of cable below the main deck. One of the R-Class’s was recently mobilised as a DPDSV with a full saturation spread, ROV and Flexible reel drive spread on board. The vessel is currently in Korea installing and trenching power cables.
CTC also has a Maersk A-Class vessel the Maersk Assister on long term charter; she is a big anchor handler with a 260 ton stern A-frame which we use as a trench support vessel and for mooring installation work. She is 24,000 horsepower and has a 280 ton bollard pull. The vessel is a very capable anchor handler and has huge chain lockers which can make it very attractive for mooring installations. The Assister is currently working in Vietnam installing an FPSO mooring system and has recently been working in Malaysia and China; she was brought into Australia earlier this year, mobilised as a trenching support vessel.
CTC also operates the Trico Sabre out of Singapore. The Sabre is a VS470 design DP2 vessel, fitted with a 60te eave compensated crane; capable of light construction, IMR, survey support and air diving support operations. She has been operating in China for two years.
What are the game changing or ground breaking ROV technologies being applied here in Australia?
RT-1 is potentially a game changing technology for large diameter subsea subsea pipeline stabilisation. Weighing over 200 tons and capable of trenching pipes up to 1.5 metres in diameter, she is the biggest mechanical subsea pipeline trencher in the world. RT-1 is currently stationed in Singapore and is set up to cut a 2 metre V-shaped trench in rocky or sandy seabed. With 2.3 megawatts of trenching power she is the most powerful mechanical rock trencher in the world. RT-1 is THE premiere reason for CTC Marine’s increasing presence in Australia. The potential market for this type of technology over the next five years I estimate to be in excess of $120 million.
Traditionally pipeline stabilisation in the Northwest Shelf has been done by rock dumping – which can be a very expensive exercise in Australia and brings with it additional environmental concerns. Our technology is not seen as a complete alternative but can be used in conjunction with rock dumping. If you bury the pipeline, then you do not need to put rock on top of the pipe to stabilise it. In sum, there is no other hard ground trencher like the RT-1 at the moment that can productively trench pipes as big as the ones she does in the hard seabed.
CTC operates one of the biggest fleets of trenching equipment in the world.
CTC Marine certainly has world-class physical capital on its books. What are the human capital assets of the Australian office personnel? What is the professional background that you brings to CTC Marine to grow the business here?
My background is in trenching. I started off as a design engineer and project manager for a company called Engineering Business in the UK. I then worked offshore in trenching and pipelines burying for 5 ½ years. My career has taken me to the North Sea, the Shetlands, New Zealand, Malaysia, Indonesia, Taiwan, China, Hong Kong, Panama, and Honduras and Australia. I have technical training on the design and build for this type of equipment as well as five years of practical experience in operating it. I got into the oil and gas market here in Australia in 2004 as a project engineer for Clough. I then went to West Africa for Woodside and most recently worked for Technip. Through Technip I worked on Chevron’s Gorgon Project. I bring practical and specific experience to CTC Marine’s core business of trenching. I also bring experience in subsea construction. I have worked on saturation diving projects and have experienced working for both Contractors and Operators in the subsea Oil and Gas industry. In addition to Australian market specific experience I provide technical trenching and subsea construction expertise to CTC Marine.
It was a difficult decision for me leaving a large subsea construction Contractor to join CTC, it was also an opportunity to start an office and grow CTC Marine’s business here. I have had a lot of support from CTC Marine’s senior management team over the last two years.
What would be the attraction for a prospective engineer to work here for CTC Marine in a tough, competitive, and labor constrained environment?
CTC has some very interesting prospects in Australia. The attraction to work for CTC Marine is that it is a chance to get in from the beginning, to benefit from the diverse experience that is gained by working with a small but dedicated and focused local team. The opportunity to work both subsea, light construction and trenching in Australia and the opportunities to migrate further afield within the group.
As with any company who identifies Australia as a market with tremendous “potential” what is the medium term vision you have laid out for CTC Marine here?
The five year vision is to generate a turnover of $30-50 million per year. By the end of 2011 I would like to see between 10-15 staff in the Perth office in addition contract staff coming in on a project specific basis. 2012-2014 I would like to see in excess of 20 CTC staff operating out of this office. There is definitely a market to support our growth plans, but we must secure and execute projects efficiently to increase Client confidence and build an Australian track record. CTC is expecting to secure some significant contracts by the end of 2010.
CTC’s local presence makes a huge difference; Operators want to be able to deal with someone who they can meet with locally. The bigger the commitment a company can make to Australia the better in order to secure work in this expanding marketplace.