Economic impacts of the offshore supply vessel shipbuilding market in the Gulf of Mexico

Abstract

Offshore support vessels (OSVs) play an important role in the offshore oil and gas industry with significant benefit to the coastal communities that provide the labor and materials to construct, crew and support the logistics network. OSVs connect onshore material and equipment suppliers and offshore operators, and are known as the ‘trucks’ of the ocean. The purpose of this article is to analyze OSV shipbuilding and to estimate the capital, labor and geographic distribution of the industry in order to inform regional economic analysis and debates about the Jones Act and other US policies. OSV construction is heavily concentrated along the Gulf Coast of southern Louisiana and Alabama. From 2003 to 2010, a total of 429 OSVs were delivered by 35 US shipyards valued between US$900 and US$1200 million per year, approximately half of the total US commercial self-propelled newbuilding industry. Four shipyards accounted for about 40 per cent of deliveries and Louisiana captured about 70 per cent of the capital expenditures followed by Alabama (14 per cent), Florida (10 per cent), Washington (3 per cent) and Mississippi (2 per cent). Equipment is a major driver of material costs and links the OSV shipbuilding industry with the US manufacturing sector. Using US shipyard revenue per labor hour and production values, OSV construction employment in the US Gulf Coast from 2007 to 2010 is estimated between 4400 and 5400 people per year. Indirect and induced impacts from OSV construction are estimated using shipbuilding average multipliers between $2.6 billion and $3.5 billion per year.