As the price of oil tumbled below $40 per barrel last month—again—the offshore market reeled from the news that nearly half of offshore rigs currently being constructed likely would be scrapped and that commercial banks had all but completely turned off the money tap to offshore energy companies. For the beleaguered offshore helicopter industry that serves this market the news could hardly be worse.
Yet, amid the gloom comes a ray of sunshine; A leading projection for the offshore wind energy market suggests that in the coming decades the epicenter of domestic U.S. offshore helicopter activity could shift from the Gulf of Mexico to a near-urban area called the “New York Bight.” And instead of supporting oil rigs, they will be delivering workers and supplies to install and maintain giant offshore wind turbines. A new study from the consulting firm Wood Mackenzie (Woodmac) predicts that investment in U.S. offshore wind could soar to $166 billion by 2035.
And there are more promising areas than just the “Bight,” which comprises several areas totaling 1.735 million acres of federal waters. Other locations include 1.22 million acres off the Carolinas; 687,832 acres off the California coast; and 350,000 acres in the Gulf of Maine. There are already leases in place for 422,864 acres of federal waters off New York and New Jersey, an area sufficient to produce 6 gigawatts of offshore electricity. Additional leaser auctions in the area could take place yet this year, reports Woodmac. Some waters off the California coast, comprising more than 343,000 acres, could be auctioned off this year and next and generate up to 5 gigawatts. The construction end of offshore wind could amount to $158 billion and create 70,000 jobs between 2025 and 2035 and preconstruction between 2022 and 2024 could account for 3,500 jobs per year.
For helicopter operators, the expansion of offshore wind could represent a life preserver when it is needed the most. Westwood Global Energy Group estimates that more than 6,000 offshore wind turbines will be installed globally by 2022, boosting the global utilization rate of medium and heavy helicopters to almost 60 percent. Offshore wind already is a staple in the North and Baltic seas with more than 2,000 wind turbines installed there, driving utilization of medium to heavy helicopters.
Bristow CEO Chris Bradshaw recently said he saw wind as the logical next stepping stone from search and rescue operations, where cross mission capabilities such as hoisting and over water operations are common. Bradshaw told stock analysts that with regard to offshore wind, “we’ve been looking at that market for a very long time. It’s not tied to the price of oil, and we do expect it will be a long-term secular growing market.” He cautioned that “It is a really a nascent market in the U.S., but we have been following developments and as that market grows here in the U.S., which will be principally on the eastern seaboard over the next several years, it is something that we're looking at. It's a more mature market in parts of Europe and Asia.”
Offshore wind is growing quickly throughout Europe, driven by the EU’s ambitious clean energy goals. Airbus Helicopters notes that 409 offshore turbines were added to the European power grid in 2018, part of 4,543 turbines installed across 11 countries. In Germany, power production from German wind farms in the North Sea increased by 16 percent from January to June 2019, compared to the year-ago period.
Bristow competitor Babcock has been actively supporting offshore wind farms in Europe for decades. But the number and size of the helicopters required to support offshore wind are smaller. Babcock supports one 87-turbine offshore wind farm in the U.K. with just two light twins. Other operators flying offshore to support wind turbines throughout Europe include NHV, Wiking, HTM, and NHC.