March 4, 2007

U.S.-flag OSV operators set for $3 billion fleet expansion

U.S.-flag offshore service vessel operators plan to invest up to $3 billion in new vessels over the next five years.

That's one of the findings in a study just released by OMSA--the Offshore Marine Service Association.

The study looks at how much the U.S.-flag workboat industry pays in wages, taxes and local spending. It also attempts to put a dollar figure on the number of vessels that are currently under construction.

The U.S. Flag offshore energy sector, including OMSA members and non-members, is supported by approximately 1,200 U.S. flagged vessels, including offshore supply vessels (OSVs), crewboats, liftboats, tugboat and barges.

About 12,000 U.S. citizens work as mariners on these vessels.

OMSA says the study clearly shows the significant contributions of the U.S. flag fleet to the U.S. economy and local communities.

Specifically, the study says:

• The U.S.-flag fleet of offshore support vessels pays more than $750 million per year in wages to crews. With an average workboat paying $700,000 to $1 million in total wages per year.

• The men and women who work in the offshore fleet pay more than $40 million in state and Federal income taxes (estimated), or approximately $105,000 for the total crew of an average vessel.

• The average vessel pays more than $39,000 per year in local property taxes. These taxes go to support local schools, build roads and fund local governments and law enforcement agencies.

• The average workboat spends roughly $60,000 a year on groceries alone, an indication of the impact the industry has on non-maritime businesses in coastal areas.

The study also shows that the current build program will produce lasting benefits for the coastal states.

The industry has plans to build more than 150 new vessels in the next five years, with an average price tag of $10-to-20 million per vessel.

The total value of this rebuilding effort may be $3 billion.

In order to meet the needs of these new vessels, the industry will need approximately 1,500 new mariners.

The build program will result in thousands of jobs at U.S. shipyards for the initial construction and continuing employment for maintenance and repair over the life of the vessels.

OMSA says the study is important in a number of ways. It sends an important message about the economic impact of the Jones Act. Foreign vessels don't hire U.S. workers, pay U.S. taxes or build in U.S. shipyards. They generally avoid local repairs and minimize their use of locally bought supplies. Clearly, says OMSA, when foreign vessels are used in place of U.S. vessels, local communities suffer.

The study also shows what a powerful economic force the industry is for states that have oil and gas drilling off their shores. This is important in the effort to expand drilling to other areas of the country.

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