The impact of fuel prices on the Offshore marine market to major engine manufacturers

by Contributor Jaime-Tetrault on ‎02-04-2010 05:54 AM - last edited on ‎02-04-2010 04:12 PM by Contributor colgamj

The Offshore Marine Market


Have you seen the price of fuel at the pumps over the past couple of years? It’s amazing how quickly these prices can increase and impact our individual spending habits, but have you thought how the price of fuel is impacting the global marine industry?


Interestingly enough, the increasing price of fuel has a very positive effect on the offshore marine market. Offshore marine service providers employ their vessels to global petroleum companies to provide services supporting the construction, positioning, and ongoing operations of the offshore oil and natural gas drilling rigs and platforms. A majority of the revenues realized by these operators are directly a result of the “day rates” achieved in providing these services.


As the price of fuel increases, and the known reserves decrease, the amount of exploration undertaken by the petroleum companies increases. Trends in oil and natural gas prices, strongly influenced by development of the fields, combined with changes in production efficiencies, has a major impact on the number of operating and new vessels. In general, this marine sub-segment is most strongly influenced by the upstream expenditures the oil companies have related to oil and gas exploration. As this exploration moves into deeper and deeper water, the costs involved in the exploration increases as well. Consequently, the market demand for larger and more expensive vessels capable of supporting these activities has increased substantially. Factor into this the average age of the existing fleet (most built in the boom of the 1970's) and there is an increasing demand to scrap out old vessels and replace with new larger, more technically advanced vessels.


As more demand exists for exploration, and more known reserves are identified further and further offshore, the marine offshore market assets will increasingly become a further cost to the petroleum companies. The impact of this is clearly seen in the results of the major engine manufacturers, such as Caterpillar & MaK. During the most recent peak in oil prices, Caterpillar saw our engine deliveries to the offshore customers increase more than five-fold. A great byproduct of a very difficult element of our daily lives.  Of course, the result of this boom in shipbuilding is higher prices for ships and equipment. Eventually this cost filters down to you at the pump. Higher costs for equipment by the fuel companies equates to one of the many contributors to higher fuel price at the pump.


Now that you partly know why your fuel price is so high at the pump, what are your thoughts about the effects on both the Marine industry and you as a consumer?

Message Edited by colgamj on 02-04-2010 03:12 PM

Comments
by Super Contributor
on ‎02-05-2010 01:42 PM

Increased costs will drive innovation.  5 years ago a hybrid marine drive system would have been unthinkable, today in my home port a harbor tour vessel demonstrates the technology, and if fuel costs and emissions pressures remain high, this will become a common power plant design in some applications.

 

Ideas like diesel electric drive systems and compound drives are not common except in specialized applications, but are being considered more as cost of fuel and operation increase and cost of capital equipment including controls and monitoring can be reduced with improved reliability to make these systems viable in broader applications.

 

The cost will increase, as the resource becomes more scarce and demand continues to grow, only those with the energy and foresight to find relaible and cost effective solutions will survive and thrive, those that continue to do business the same old way won't.

 

So will CAT be a leader or a follower?

by New member sguarniz
on ‎02-11-2010 10:07 AM

How the 2020 vision of Caterpillar is matching aobut this kind of business?

by Contributor Jaime-Tetrault
on ‎02-11-2010 03:02 PM

Vision 2020 sets targets for our corporation relative to many different variables.  The most exciting is profit, however, revenue is also a key factor.  Considering these ambitious targets, Caterpillar has formed a new division called MPPD (Marine Petroleum Power Division) and appointed a new Vice President, Richard Case.  We see this as a excellent alignment of our Vision 2020 to the growth in the petroleum prices.  We now have the segment focus to ride the wave of increasing fuel prices, while developing specialized and targeted solutions to reach our revenue and profit targets within the marine and petroleum segments.

About the Author
  • I joined Caterpillar in 2001 in the Extended Service Coverage (extended warranty) department of Cat Insurance (division of Cat Financial). I have always loved the water, ships, boats and the challenges of this industry and moved to Caterpillar Marine Power Systems (CMPS) in 2007. I was fortunate to be able to work at CMPS Headquarters in Hamburg, Germany for 2 years and now reside at our Marine Center of Excellence in South Carolina, USA. As the Marine Parts Manager for Cat Marine Parts I am able to work cross functionally with our regional product support teams, our extensive dealer network, customers and bring this knowledge and customer expectations to Caterpillar's incredible resources to design new and innovative product support solutions to meet our customer expectations. This gives me great pride and enjoyment to meet and exceed your expectations and promote the Cat Marine Brand.
  • In 2005, I started my career at Caterpillar as an intern in Kiel, after that I worked as a student and then a temporary employee. I finally became a permanent employee in 2008, working at the Marine World headquarters in Hamburg. Through all these years I was supporting and leading Marketing projects from various areas, including Electronic Sales Tools, Shows, Novelties etc. By May 01, 2011 my job role changed to the current one. In this position I am leading several Electronic Marketing projects such as all Marine and Oil & Gas Social Media activities.
  • After around 10 years of good time in mineral & metal industry, the destiny has guided me through BMW, ThyssenKrupp to the Caterpillar station. At the moment I'm serving as a Six Sigma Strategy Black Belt in Caterpillar Marine Power System.
  • I joined the Caterpillar Team 2007 and worked in several positions most likely in Product Support. 2008 I passed the 6 Sigma Black Belt Training and has leaded various sales and process related projects. After the certification as a 6 Sigma Black Belt I joined the CMPS Product Support Team as a Global Marketing Representative.
  • A maritime academy graduate and a 17 year employee of Caterpillar with 25 years of marine experience, currently managing the Caterpillar Marine Power System Product Support Division representing all product health, product support, parts sales and distribution development activities for Cat and MaK brand marine engines.
  • Originally from Spain, I moved to Hamburg, Germany, in 2010 to write my Master’s Thesis in Industrial Engineering. Upon its completion, I had the opportunity to join Caterpillar Marine Power Systems as an intern at their headquarters. During this period, I supported, in various capacities, sales into the Cargo and European Inland Waterways markets, as well as Offshore Wind opportunities. I am currently working as a Junior Territory Sales Manager in the Europe, Africa, Middle East and CIS Sales Team.
  • Born in Brazil, Luiz joined the Caterpillar engine team in 1998 and has worked in different positions covering marine service, product application and sales. Currently he is a Black Belt under the Caterpillar Marine group.
  • A veteran of 12.5 years Naval service, in the U.S. Naval Nuclear Propulsion Program. 3.5 years as a Marine Application and Installation Engineer at a CAT dealership. I have been working for Caterpillar Marine Power Systems since 2008. My time at Caterpillar has been spent helping to develop global emissions solutions for 3500 marine engines.
  • I am the Asia Pacific contact for marine parts marketing. With marine customers being the most mobile group, with operations spanning the entire globe, there are always new challenges and learning opportunties to engage in. Life in marine is never boring!
  • I have been involved in sales and marketing of Caterpillar marine products for almost 45 years including 10 years in the U.K. where I worked on North Sea oil and gas projects. For the past 35 years I have various roles within the marine business of Toromont Cat where I have assembled a portfolio of Caterpillar and MaK powered new construction and repower projects including ferries, Great Lakes bulk-carriers and self-unloaders, Coast Guard vessels and pleasure craft. I admit that my knowledge has come from a hands-on approach to engine sales by wearing coveralls and a hard hat rather than a business suit. I am based in Toronto and am an active member of the C.I.Mar. E. Great Lakes Branch and participate in SNAME Great Lakes/Great Rivers meetings in the U.S.
  • I ensure that our Cat global dealer network has the tools required to support our Propulsion Solutions products including our Cat Three60 Precision Control.
  • I have been at Caterpillar for nearly 31 years. All this time has been related to Diesel engines, with the first 23 years in Fuel Systems, the next 3 in the Engine Center, and the last 4 here in Hamburg, Germany, as the Worldwide Demand Manager for Marine and Petroleum MaK engines. In this role, I touch many areas, from concept to delivery, from shipyard to factory. I work with Dealers, Sales Managers, Customers, Accountants, and Order Processors, all the way to the factory floor. Those who know me know that I wouldn’t have it any other way.
  • I am a Mechanical Engineer with 17 years of experience with Caterpillar Engine Products, currently working at Caterpillar Marine Power Systems Headquarters in Hamburg, Germany. I am responsible for product support and Dealer development, and support dealers in the United Kingdom, Ireland, the Mediterranean, and the Middle East.
  • I am a 33 year employee of Caterpillar and have focused on engines my entire career. For the last 18 years I have worked in the Marine group in various capacities. Since 2004 I have been the Global Marketing Manager for the Pleasure Craft segment, managing all trade shows, advertising, events, and NPI (New Product Introduction) launches.
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