TitleNatural gas-powered supply vessels too costly, Hornbeck CEO tells Louisiana Energy Conference
BodyAs some in the marine industry have begun to look at using liquified natural gas to power offshore supply vessels, the head of the Covington-based Hornbeck Offshore Services said Wednesday that he believes moving full-steam ahead in that direction is too cost-prohibitive. "We're not there yet as a company," CEO Todd Hornbeck told a crowd of analysts, investors and industry executives at the opening day of the Louisiana Energy Conference at the Windsor Court Hotel. Hornbeck said he has seen "a big push by some of our customers to make a market for LNG," giving credit to oil giant Royal Dutch Shell, which has invested tens of billions of dollars in its LNG business, including production plants and storage terminals. "For us, we just don't see the economic advantage right now to speculatively build for that market," Hornbeck said. "Trying to get the LNG as a reliable source for the vessels is extremely difficult and very cost-prohibitive at this point, the infrastructure's not there, and the cost of building those vessels is about 20 times more" than those relying on heavy fuel oil. Natural gas prices have plummeted since 2008, from $13 to $4 per million Btu, as oil and gas reserves, long thought to be out of reach, are being extracted using a technique called hydraulic fracturing. But despite the financial incentive, Hornbeck said available space is another challenge. The systems needed for platform supply vessels to be powered by LNG take up more room, as much as 20 percent of the ship's capacity. "You really have to have a customer that's got a strategic need for that, to bear the cost, and so I don't think it's going to be a market-wide mover" in the exploration and production side of the transportation business, he said. "I think as LNG technology develops worldwide, we'll probably see it more with deep-draft cargo vessels," Hornbeck said. "That can make a difference in the carbon footprint, as they do transatlantic or worldwide moves." Elsewhere across the region, Harvey Gulf International Marine, a New Orleans offshore supply and towing company, said earlier this month that it plans to spend $400 million to build and operate the nation's first offshore LNG fueling station at Port Fourchon in Lafourche Parish, the major jumping-off point for deepwater oil and gas production. Reflecting on his career, Hornbeck said the company went public in 1997 "as deepwater really started to emerge." "We started with a cocktail napkin and a dream, and $1 million worth of seed capital, and a huge risk that deepwater wasn't going to take off," he said. By now, he has two dozen offshore supply vessels under construction, in addition to a fleet of 50. The company earned $147.5 million in the first quarter of the fiscal year, up 23 percent from the same period a year earlier.
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