OCS Study 

BOEMRE 2010-042 

Coastal Marine Institute 

Fact Book: Offshore Oil and Gas Industry 

Support Sectors 

U.S. Department of the Interior

Bureau of Ocean Energy Management, 

 Regulation and Enforcement 

Gulf of Mexico OCS Region 

Cooperative Agreement

Coastal Marine Institute 

Louisiana State University 
U.S. Department of the Interior Cooperative Agreement 

Bureau of Ocean Energy Management, Coastal Marine Institute 

 Regulation and Enforcement Louisiana State University 

Gulf of Mexico OCS Region 

OCS Study 

BOEMRE 2010-042 

Coastal Marine Institute 

Fact Book: Offshore Oil and Gas Industry 

Support Sectors 

Author 

David E. Dismukes 

December 2010 

Prepared under BOEMRE Cooperative Agreement 

1435-01-99-CA-30951-85248 (M07AC12508) 

by 

Louisiana State University 

Center for Energy Studies 

Baton Rouge, Louisiana 70803 

Published by 
iii

DISCLAIMER

This report was prepared under contract between the Bureau of Ocean Energy Management, 

Regulation and Enforcement (BOEMRE) and Louisiana State University’s Center for Energy 

Studies. This report has been technically reviewed by the BOEMRE, and it has been approved 

for publication. Approval does not signify that the contents necessarily reflect the views and 

policies of the BOEMRE, nor does mention of trade names or commercial products constitute 

endorsement or recommendation for use. It is, however, exempt from review and compliance 

with the BOEMRE editorial standards. 

REPORT AVAILABILITY 

This report is available only in compact disc format from the Bureau of Ocean Energy 

Management, Regulation and Enforcement, Gulf of Mexico OCS Region, at a charge of $15.00, 

by referencing OCS Study BOEMRE 2010-042. The report may be downloaded from the 

BOEMRE website through the Environmental Studies Program Information System (ESPIS). 

You will be able to obtain this report also from the National Technical Information Service in the 

near future. Here are the addresses. You may also inspect copies at selected Federal Depository 

Libraries. 

 U.S. Department of the Interior U.S. Department of Commerce 

 Bureau of Ocean Energy Management, National Technical Information Service 

 Regulation and Enforcement 5285 Port Royal Road 

 Gulf of Mexico OCS Region Springfield, Virginia 22161 

 Public Information Office (MS 5034) Phone: (703) 605-6040 

 1201 Elmwood Park Boulevard Fax: (703) 605-6900 

 New Orleans, Louisiana 70123-2394 Email: bookstore@ntis.gov

Telephone requests may be placed at 

 (504) 736-2519, 1-800-200-GULF, or 

Rush Orders: 1-800-553-6847 

 Fax: (504) 736-2620 

CITATION 

Suggested citation: 

Dismukes, D.E. 2010. Fact book: Offshore oil and gas industry support sectors. U.S. Dept. of the 

Interior, Bureau of Ocean Energy Management, Regulation and Enforcement, Gulf of 

Mexico OCS Region, New Orleans, LA. OCS Study BOEMRE 2010-042. 138 pp. 
v

ABSTRACT

The purpose of this research has been to examine the nature and trends associated with a wide 

range of industries and activities that support offshore oil and gas exploration, development, and 

production. The sectors and activities examined include: drilling contractors; underwater 

contractors (diving); mud, drilling, and lubricants; air transport; water transport; geophysical 

services; dredging; catering; workover services and environmental consulting and mitigation. 

A number of issues and aspects were examined for each of these sectors that includes a basic 

description of the industry and the types of services provided, typical industry characteristics that 

includes an examination of typical facilities, the geographical distribution of the firms and their 

location along the Gulf of Mexico, a description of each sectors’ labor force, and identification 

of typical or leading firms in those particular sectors. 

Each chapter includes an examination of the industry trends and outlook for that respective 

support sector/activity including a discussion of the impacts that hurricane activity of 2005 had 

on each of the various support sectors and activities. 

 
vii

TABLE OF CONTENTS

Page

LIST OF FIGURES ....................................................................................................................... xi 

LIST OF TABLES....................................................................................................................... xiii 

ABBREVIATIONS AND ACRONYMS......................................................................................xv 

EXECUTIVE SUMMARY ............................................................................................................ 1 

I. DRILLING CONTRACTORS ............................................................................................... 5 

A. Description of Industry and Services Provided ...............................................................5 

B. Industry Characteristics ...................................................................................................5

1. Typical Facilities......................................................................................................5 

2. Geographical Distribution........................................................................................9 

3. Labor Force............................................................................................................10 

4. Labor Statistics.......................................................................................................11 

5. Typical Firms.........................................................................................................12 

C. Industry Trends and Outlook .........................................................................................14 

1. Rig Count...............................................................................................................14 

2. Rig Contractors ......................................................................................................16 

3. Hurricane Impacts..................................................................................................19 

4. Outlook ..................................................................................................................21 

D. Chapter Resources .........................................................................................................22

II. UNDERWATER CONTRACTORS .................................................................................... 23 

A. Description of Industry and Services Provided .............................................................23 

B. Industry Characteristics .................................................................................................26 

1. Typical Facilities – Diving.....................................................................................26 

2. Typical Facilities – ROVs......................................................................................27 

3. Geographical Distribution......................................................................................31 

4. Labor Force............................................................................................................32 

5. Typical Firms.........................................................................................................33 

C. Industry Trends and Outlook .........................................................................................35 

1. Trends ....................................................................................................................35

2. Hurricane Impacts..................................................................................................36 

3. Outlook ..................................................................................................................37 

D. Chapter Resources .........................................................................................................37

III. MUDS, DRILLING FLUIDS AND LUBRICANTS ............................................................ 39 

A. Description of Industry and Services Provided .............................................................39 

B. Industry Characteristics .................................................................................................40 

1. Typical Facilities....................................................................................................40 

2. Geographical Distribution......................................................................................44 

3. Labor Force............................................................................................................44 

4. Typical Firms.........................................................................................................45
viii

TABLE OF CONTENTS 

(continued) 

Page

C. Industry Trends and Outlook .........................................................................................46 

1. Trends ....................................................................................................................46

2. Hurricane Impacts..................................................................................................47 

3. Outlook ..................................................................................................................47 

D. Chapter Resources .........................................................................................................47

IV. AIR TRANSPORT ............................................................................................................... 49 

A. Description of Industry and Services Provided .............................................................49 

B. Industry Characteristics .................................................................................................49 

1. Typical Facilities....................................................................................................49 

2. Geographical Distribution......................................................................................50 

3. Labor Force............................................................................................................51 

4. Labor Requirements...............................................................................................52 

5. Typical Firms.........................................................................................................52 

C. Industry Trends and Outlook .........................................................................................54 

1. Trends ....................................................................................................................54

2. Hurricane Impacts..................................................................................................55 

3. Outlook ..................................................................................................................55 

D. Chapter Resources .........................................................................................................56

V. WATER TRANSPORTATION............................................................................................ 57 

A. Description of Industry and Services Provided .............................................................57 

B. Industry Characteristics .................................................................................................57 

1. Typical Facilities....................................................................................................57 

2. Geographical Distribution......................................................................................59 

3. Labor Force............................................................................................................60 

4. Typical Firms.........................................................................................................60 

C. Industry Trends and Outlook .........................................................................................61 

1. Trends ....................................................................................................................61

2. Hurricane Impacts..................................................................................................65 

3. Outlook ..................................................................................................................66 

D. Chapter Resources .........................................................................................................66

VI. GEOPHYSICAL SERVICES............................................................................................... 69 

A. Description of Industry and Services Provided .............................................................69 

B. Industry Characteristics .................................................................................................73 

1. Typical Facilities....................................................................................................73 

2. Geographical Distribution......................................................................................74 

3. Labor Force............................................................................................................75 

4. Typical Firms.........................................................................................................76
ix

TABLE OF CONTENTS 

(continued) 

Page

C. Industry Trends and Outlook .........................................................................................77 

1. Trends ....................................................................................................................77

2. Hurricane Impacts..................................................................................................79 

3. Outlook ..................................................................................................................79 

D. Chapter Resources .........................................................................................................79

VII. DREDGING.......................................................................................................................... 81 

A. Description of Industry and Services Provided .............................................................81 

B. Industry Characteristics .................................................................................................81 

1. Vessels and Methods..............................................................................................81 

2. Geographical Distribution......................................................................................86 

3. Labor Force............................................................................................................87 

4. Typical Firms.........................................................................................................88 

C. Industry Trends and Outlook .........................................................................................89 

1. Trends ....................................................................................................................89

2. Hurricane Impacts..................................................................................................90 

3. Outlook ..................................................................................................................91 

D. Chapter Resources .........................................................................................................92

VIII. CATERING AND PERSONAL SUPPORT SERVICES.................................................... 93 

A. Description of Industry and Services Provided .............................................................93 

B. Industry Characteristics .................................................................................................93 

1. Typical Facilities....................................................................................................93 

2. Geographical Distribution......................................................................................97 

3. Labor Force............................................................................................................98 

4. Typical Firms.........................................................................................................99 

C. Industry Trends and Outlook .......................................................................................100 

1. Trends ..................................................................................................................100 

2. Hurricane Impacts................................................................................................100 

3. Outlook ................................................................................................................100 

D. Chapter Resources .......................................................................................................101 

IX. WORKOVER SERVICES...................................................................................................103 

A. Description of Industry and Services Provided ...........................................................103 

B. Industry Characteristics ...............................................................................................104 

1. Typical Facilities..................................................................................................104 

2. Geographical Distribution....................................................................................105 

3. Labor Force..........................................................................................................106 

4. Typical Firms.......................................................................................................107
x

TABLE OF CONTENTS 

(continued) 

Page

C. Industry Trends and Outlook .......................................................................................108 

1. Trends ..................................................................................................................108 

2. Hurricane Impacts................................................................................................110 

3. Outlook ................................................................................................................111 

D. Chapter Resources .......................................................................................................112 

X. ENVIRONMENTAL CONSULTING AND MITIGATION............................................. 113 

A. Description of Industry and Services Provided ...........................................................113 

B. Industry Characteristics ...............................................................................................115 

1. Typical Facilities..................................................................................................115 

2. Geographical Distribution....................................................................................115 

3. Labor Force..........................................................................................................116 

4. Typical Firms.......................................................................................................117 

C. Industry Trends and Outlook .......................................................................................118 

1. Trends ..................................................................................................................118 

2. Hurricane Impacts................................................................................................120 

3. Outlook ................................................................................................................120 

D. Chapter Resources .......................................................................................................121 

REFERENCES............................................................................................................................123 
xi

LIST OF FIGURES 

Page

Figure 1. Offshore drilling platforms............................................................................................8 

Figure 2. Worldwide offshore mobile fleet.................................................................................10

Figure 3. Number of employees, oil and gas extraction .............................................................12 

Figure 4. Worldwide rig activity.................................................................................................14 

Figure 5. Active rigs offshore .....................................................................................................15 

Figure 6. Average number of rigs operating in deepwater Gulf of Mexico ...............................16 

Figure 7. Drilling contractors, number of rig owners .................................................................17 

Figure 8. Drilling contractors, owner fleet size ..........................................................................18

Figure 9. Number of available and active rigs in the U.S. GOM ...............................................19 

Figure 10. Hurricanes Katrina and Rita paths, 2005.....................................................................20 

Figure 11. What is an ROV?.........................................................................................................24 

Figure 12. Number of employees at GOM-based diving and ROV contractors...........................33 

Figure 13. Mud injection process..................................................................................................40 

Figure 14. Typical dispersion of ocean discharge ........................................................................41 

Figure 15. Shale shaker.................................................................................................................43 

Figure 16. Number of employees at GOM-based drilling mud and services companies .............45 

Figure 17. Locations of major helicopter service providers .........................................................51 

Figure 18. Number of employees at GOM helicopter service companies....................................52 

Figure 19. Market shares of major helicopter service providers in the Gulf ................................53 

Figure 20. Existing deepwater structures and corresponding service bases .................................59 

Figure 21. Pending plans and corresponding service bases..........................................................60 

Figure 22. GOM rig and working boat counts, 1995 to 2004.......................................................62 

Figure 23. OSV day rates..............................................................................................................63 

Figure 24. OSV fleet utilization rates ...........................................................................................63 

Figure 25. Average number of deepwater rigs operating .............................................................65 

Figure 26. Two-dimensional seismic data set-pp .........................................................................70 

Figure 27. Two-dimensional seismic data ....................................................................................70 

Figure 28. Interactive 3-D volume slicing of seismic data ...........................................................71 

Figure 29. 3-D visualization using 3-D seismic data....................................................................71 

Figure 30. Q-Marine seismic vessel..............................................................................................74 

Figure 31. Distribution of labor among geophysical service companies registered 

 within the five GOM states..........................................................................................75 

Figure 32. Seismic crew survey....................................................................................................78 

Figure 33. Mechanical dredge.......................................................................................................82 

Figure 34. Hydraulic dredge .........................................................................................................83 

Figure 35. Beach restoration project.............................................................................................85 

Figure 36. Existing deepwater oil and gas supply ports ...............................................................86 

Figure 37. Proposed deepwater oil and gas supply ports..............................................................87 

Figure 38. Before and after photo of Katrina damage to Chandeleur Islands 

 off coast of Louisiana ..................................................................................................91 

Figure 39. Typical kitchen facility on large offshore platform.....................................................94 

Figure 40. Offshore accommodations...........................................................................................95 

Figure 41. Offshore floating accommodations (Floatel)...............................................................96 
xii

LIST OF FIGURES 

(continued) 

Page

Figure 42. GOM existing supply bases and ports.........................................................................98 

Figure 43. Future sites of GOM supply bases and ports...............................................................98 

Figure 44. Cantilever jack-up rigs: Pride Kansas, Pride Mississippi and Pride 

 Missouri .....................................................................................................................105 

Figure 45. Locations of workover and well services companies................................................106 

Figure 46. Number of employees, oil and gas extraction ...........................................................107 

Figure 47. Gulf of Mexico and Southeast workover rig count (2000 to present).......................109 

Figure 48. Total U.S. workover rig count (2003 to present).......................................................110 

Figure 49. Gulf Coast workover rig count (2003 to present)......................................................110 

Figure 50. Typical dispersion of cuttings from drilling operations ............................................114 

Figure 51. Geographic distribution of environmental consulting firms in the U.S. ...................116 

Figure 52. Number of employees at environmental services companies....................................118 

 
xiii

LIST OF TABLES 

Page

Table 1. Worldwide Offshore Fleet by Type..................................................................................9 

Table 2. Top 25 Drillers Ranked by Footage Drilled. ..................................................................13 

Table 3. Location of Major Diving and ROV Contractors ...........................................................32 

Table 4. Work Class ROV Systems Operating Worldwide..........................................................34 

Table 5. Summary of U.S. Offshore Requirements for Drilling Wastes ......................................43 

Table 6. U.S. Geophysical Activity in Terms of Active Seismic Crews......................................76 

Table 7. Public Port Capital Dredging Expenditures by Region, 2006 ........................................90 

Table 8. Environmental Consulting Firms by Employment (2002). ..........................................117 

 
xv

ABBREVIATIONS AND ACRONYMS 

2-D 2-dimensional 

3-D 3-dimensional 

4-D 4-dimensional 

AAPA American Association of Port 

 Authority 

AAPG American Association of 

 Petroleum Geologists

AHTS Anchor Handling, Towing 

 and Supply vessel 

AMSA Australian Marine Sciences 

 Association 

ATP airline transport pilot 

AUV autonomous underwater 

 vehicle 

AVO amplitude variation with 

 offset 

BLS Bureau of Labor Statistics 

CERCLA Comprehensive 

 Environmental Resource 

 Compensation and Liability 

 Act 

CGG Compagnie Generale de 

 Geophysique 

CMP Coastal Management Plan 

CNSOPB Canada-Nova Scotia 

 Offshore Petroleum Board 

CPRA Coastal Protection and 

 Restoration Authority 

CRI cuttings re-injection 

CSEMI controlled seismic 

 electromagnetic imaging 

CWA Clean Water Act 

CZMA Coastal Zone Management 

 Act 

DNR Department of Natural 

 Resources 

DOE Department of Energy 

DOT Department of Transportation

DP dynamic positioning 

DWMIS Drilling Waste Management 

 Information System

EBJ Environmental Business 

 Journal 

ECO Environmental Careers 

 Organization

ELG effluent limitations 

 guidelines 

E&P exploration and production 

FAA Federal Aviation 

 Administration 

FPSO Floating, Production, Storage 

 and Offloading 

FSV Fast Support Vessel 

GDP gross domestic product 

GOM Gulf of Mexico 

HRSDC Human Resources and Skills 

 Development Canada 

INC incident of non-compliance 

IPAA Independent Petroleum 

 Association of America 

JPL Jet Propulsion Laboratory 

LCA Louisiana coastal area 

LCROV "Low-cost" remotely 

 operated vehicle 

LCWC Louisiana Coastal Wetlands 

 Conservation 

LNG liquefied natural gas 

LOOP Louisiana Offshore Oil Port 

LWD logging while drilling 

MMcf million cubic feet 

MMS Minerals Management 

 Service 

MODU mobile offshore drilling unit 

MPRSA Marine Protection, Research 

 and Sanctuaries Act 

MSV mini-supply vessel 

MWD measurement while drilling 

NAICS North American Industry 

 Classification System 

NCP National Contingency Plan 

NPDES National Pollutant Discharge 

 Elimination System 

OBM oil-based drilling mud 

OCS Outer Continental Shelf
xvi

ABBREVIATIONS AND ACRONYMS 

(continued) 

OMSA Offshore Marine Service 

 Association 

OPA Oil Pollution Act 

OPEC Organization of the 

 Petroleum Exporting 

 Countries 

OSV offshore supply vessel 

PAH polynuclear aromatic 

 hydrocarbon 

PGS Petroleum Geo-Services 

PHI Petroleum Helicopters, 

 Incorporated 

PIC pilot in charge 

PSV platform supply vessel 

R&D research and development 

RCRA Resource Conservation 

 and Recovery Act 

RON remaining over night 

ROV remotely operated 

 vehicles 

SAT saturation diving system 

SBM synthetic-based drilling 

 mud 

SDWA Safe Drinking Water Act 

SEC Securities and Exchange 

 Commission 

SEG Society of Exploration 

 Geophysicists 

SPCC spill prevention, control, 

 and countermeasure 

SPE Society of Petroleum 

 Engineers 

SPURV self-propelled underwater 

 research vehicle 

STCW Standards of Training, 

 Certification and 

 Watchkeeping 

SWD seismic while drilling 

ULCC ultra large crude carriers 

USACE U.S. Army Corps of 

 Engineers 

USCG U.S. Coast Guard 

USDOC U.S. Department of 

 Commerce 

USDOI U.S. Department of the 

 Interior 

USEPA U.S. Environmental 

 Protection Agency 

VLCC very large crude carrier 

VSP vertical seismic profile 

WBM water- based drilling mud 

WGN World Geophysical News
1

EXECUTIVE SUMMARY 

The purpose of this research has been to examine the nature and trends in the industries and 

activities that support offshore oil and gas exploration, development, and production. The 

sectors and activities examined include: drilling contractors; underwater contractors (diving); 

mud, drilling, and lubricants; air transport; water transport; geophysical services; dredging; 

catering; workover services and environmental consulting and mitigation. 

The issues examined for each of these sectors includes a basic description of the industry and the 

types of services provided, typical industry characteristics that include an examination of typical 

facilities, the geographical distribution of the firms and their location along the Gulf of Mexico 

(GOM), a description of each sectors’ labor force, and identification of typical or leading firms 

in those particular sectors. Each chapter includes an examination of the industry trends and 

outlook for that respective support sector/activity and the impact of 2005 hurricane activity on 

each of the various support sectors and activities. 

Drilling 

Drilling contractors provide the equipment, personnel, and expertise required to drill for oil and 

gas. They typically own and operate their own equipment, which can consist of onshore drilling 

rigs and offshore vessels, such as submersibles, jack-ups, semi-submersibles and drillships, and 

charge a fixed daily rate, or day rate, for the hardware (the rig) plus the associated costs of 

personnel and routine supplies. This cost may include fuel, but usually does not cover capital 

goods such as casing and wellheads; nor does it include special services, such as logging or 

cementing. As a guideline, the day rate can be considered as roughly half of the cost of the well 

(Schlumberger, 2007). 

The tropical season of 2004-2005 caused considerable damage to drilling platforms throughout 

the GOM. Of particular concern during and immediately after these events was the dislocation 

and drifting of platforms during some of the more significant storms of this period (Ivan, 

Katrina, Rita). Numerous drilling platforms, primarily jack-ups, were pulled significant 

distances from their original drilling locations, in some instances up to 70 miles off station, 

causing damage to both the seafloor and the supporting pipeline infrastructure in the region and 

requiring restoration and recovery work for the drilling sector. 

Overall industry trends have seen drilling contractor activity increase with high energy prices (oil 

and natural gas) starting in 2000, decreasing in 2002, then increasing considerably and staying 

robust through 2007 and into 2008. Despite the increase in overall drilling activity, however, a 

relative decrease in GOM activity has been caused by such factors as relative returns to drilling 

investments; regulatory regimes; and resource extraction opportunities. 

Underwater contractors, specifically commercial divers, perform underwater activities related to 

construction, inspection, search, salvage, repair and photography. They can be employed by 

commercial diving contractors, shipping and marine construction companies or by the oil and gas 

companies themselves for these offshore operations. 
2

Remotely operated vehicles (ROVs) are used in oil and gas production efforts world-wide, 

assisting or even replacing commercial divers in hazardous environments or water depths greater 

than 850 feet. The hurricanes of 2004-2005 increased the demand for offshore removal and 

repair work, and the increase in demand for subsea projects including inspection and repair has 

brought an influx of demand for both commercial divers and ROV equipment in the GOM. 

Underwater contracting trends are dependent on the willingness of oil and gas companies to 

invest in offshore exploration, drilling and production. The future outlook for underwater 

contractors depends on the economy and advances in technology. With further deepwater 

exploration in the future ROV demand is expected to continue. 

Drilling fluids or muds are used primarily to lubricate drill bits and to help keep them clean and 

cool during operation. Drilling fluids are made from a mixture of natural clays, minerals and 

small amounts of chemicals suspended in water or an organic liquid. The three types of drilling 

muds used in offshore production are water-based, oil-based and synthetic-based. Drilling wastes 

must be disposed of in accordance with environmental regulations. 

Because drilling fluids are costly—about 10 percent of the total cost of the well construction— 

reliable, accurate mud engineers are important to a drilling operation. The hurricanes’ impact on 

drilling fluids was directly correlated to well shut-ins and damage to infrastructure. With 

production suspended, the need for fluids decreased. By 2006, repairs to wells increased 

production, and drilling fluids were in demand. Industry trends for drilling fluids depend heavily 

on the level, type, depth and complexity of oil and gas drilling. The amount spent on product has 

grown from 2005 to 2006. With high oil and gas prices and demand for deepwater drilling, the 

demand for drilling fluids will increase. 

Transport 

Air transportation involves the use of helicopters to transport equipment and/or personnel to and 

from vessels, drilling rigs, production platforms and pipeline terminals. Helicopters can be used 

for routine transport, time-sensitive operations and for surveying pipelines for damage. 

Helicopter service providers usually have helicopters of various sizes, used for different 

purposes. These helicopters are dispersed throughout the Gulf for quick response. This industry 

is very concentrated and specialized. 

In the months after the 2005 hurricanes, helicopter services increased in the Gulf, yet many of 

the bases for the helicopters were destroyed, resulting in damages and loss of equipment. 

This industry is largely dependent on the level of production, development and exploration in the 

Gulf. Demand for helicopters increases with an increase in activity levels associated with oil and 

gas production; however, as oil and gas companies seek to reduce costs with respect to air 

transportation services, demand for the frequency of these services is reduced. 

Since the 2005 hurricanes, new equipment has been purchased and demand for services has 

increased along with the increases in offshore exploration and development. Water 

transportation vessels help transport supplies and personnel from land-based facilities to rigs and 

platforms in the Gulf. There are six general types of offshore supply vessels: tugs; marine 
3

platform supply vessels; anchor handling; towing and supply vessels; mini-supply vessels; fast 

support vessels and liftboats; and floating, production, storage and offloading. 

After the 2005 hurricanes, supply vessels were used for repairs, and that trend continues even 

today, with most of the vessels being used for construction supplies. Because of the large 

demand and the decrease in the number of vessels available since the hurricanes, the day rates 

for these vessels have increased an average of 71 percent. Industry trends project an increase in 

specialized vessels that can handle a longer range and capacity for the deepwater drilling that has 

been increasing recently. 

Dredging, the removal of sediments from navigation channels, ensures the correct depth of water 

for ships to move safely. With the recent trend in the use of larger container ships, dredging is 

crucial to keeping ports and channels deep enough for safe navigation. 

Dredging operations work primarily on capital projects, beach nourishment and maintenance. 

Dredging can also be used for land creation, pipeline trenching and equipment recovery. The 

2005 hurricanes damaged many shorelines, wetlands and barrier islands in the Gulf. Dredging 

plays a vital role in restoring these areas. Challenges to dredging operations include their 

proximity to protected areas, such as wetlands, estuaries and fisheries, and reduced funding for 

required port maintenance and improvements. 

Geophysical & Environmental Operations 

Geophysical services include acquiring, processing and selling seismic data. Services can be 

performed onshore from the seismic company’s headquarters or in large seismic exploration 

vessels in deeper waters and can take several months to conduct. Services can be provided by a 

one-man seismic broker or a large company. 

The 2005 hurricanes did not affect the geophysical services industry, as most of the work is 

performed in onshore facilities, where no damage was reported. The post-hurricane cleanup 

efforts, however, did affect this industry. 

With increasing exploration, the demand for geophysical services is increasing. Deepwater 

exploration requires high-quality equipment. Strong demand, coupled with low reserve 

replacements, brings a high demand for geophysical services. 

Environmental consulting and mitigation is a service offered by companies who provide advice 

and technical assistance to businesses, government agencies and other organizations regarding 

environmental issues. They advise clients on emissions control, clean up, recycling programs 

and compliance with environmental laws and regulations. These companies conduct studies, 

audits or any other types of research needed to help client operations run efficiently. 

Impacts from hurricanes in 2005 called for the services of many environmental companies for 

clean-up and restoration efforts. The oil spills and damages to infrastructure increased demand 

for environmental consulting services. 
4

Industry trends in environmental consulting and mitigation are greatly affected by changes in 

environmental regulations at the state, local, federal and foreign levels. Changes in 

environmental consulting can also be the result of changes in environmental regulations in other 

industries, as well as changes in the overall economy. As the economy expands, for instance, 

construction, industrial and manufacturing activity also tends to expand, increasing the need for 

permitting and other environmental consulting services. 

Catering Services 

Catering services for oil and gas structures and those who run them include food management, 

accommodation management, security, medical services, potable water, waste management and 

more. As with all other services during the 2005 hurricanes, catering services were on hold 

during the storms, as employees were removed from the platforms. Soon after, services resumed 

to employees who were back in operation. 

Demand for catering services depends on worker schedules. Due to high operating costs and 

competitiveness, smaller companies are bought out by larger ones and lower prices are 

negotiated for goods. With the expansion of deepwater exploration, demand for these services 

will increase. 

Workover Services 

Workover services provide repairs and restoration to producing wells to prolong or enhance the 

production of hydrocarbons. There are five general types of tasks for workover service: 

excessive gas production; excessive water production; poor production rate; production of sand; 

and equipment failures. 

With an increase in demand for drilling services, the demand for workovers increases as well. 

Since 2005, many new rigs are being built, with one company expecting to add 200 newly built 

workover and well-servicing rigs to meet the increased demand. 
5

I. DRILLING CONTRACTORS 

A. Description of Industry and Services Provided 

Drilling contractors provide the equipment, personnel, and expertise required to drill for oil and 

gas. They typically own and operate their own equipment, which can consist of onshore drilling 

rigs and offshore vessels, such as submersibles, jack-ups, semi-submersibles and drillships. 

The drilling contractor usually charges a fixed daily rate, or day rate, for the hardware (the rig) 

plus the associated costs of personnel and routine supplies. This cost may include fuel, but 

usually does not cover capital goods such as casing and wellheads; nor does it include special 

services, such as logging or cementing. As a guideline, the day rate can be considered as roughly 

half of the cost of the well (Schlumberger, 2007). 

Other primary contracting methods are footage rates and turnkey operations. Under a footage 

rate agreement, the contractor receives an agreed upon amount per foot of hole drilled 

(Schlumberger, 2007). Under a turnkey arrangement, the drilling contractor is fully responsible 

for the well to some predetermined milestone. This milestone could be the successful running of 

logs at the end of the well or the successful cementing of casing in the well or even the 

completion of the well. The operator owes nothing to the contractor until the specified milestone 

is reached. This type of arrangement puts a considerable amount of risk and potential reward on 

the drilling contractor. The contractor bears all risk of trouble in the well, and in extreme cases, 

may have to abandon the well entirely and start over. In return for assuming such risk, the price 

of the well is usually set higher than the well would cost if it were relatively trouble free. Thus, if 

the contractor is successful in drilling a trouble-free well, the fee added as contingency becomes 

profit (Schlumberger, 2007). 

B. Industry Characteristics 

1. Typical Facilities 

Unless otherwise indicated, the following information is summarized from “Schlumberger Oil 

Field Services Glossary” (Schlumberger, 2007); and “NaturalGas.org” (NaturalGas.org, 2004a, 

2004b, and 2004c). 

Onshore 

There are two main types of onshore drilling. Percussion, or 'cable tool' drilling, consists of 

raising and dropping a heavy metal bit into the ground, punching a hole down through the Earth. 

After a few impacts from the bit, the cable is reeled in and the cuttings are removed from the 

well. The bit is then reeled back to the bottom of the hole and the process is repeated. Due to 

the increasing time required to retrieve and deploy the bit as the well is deepened, the cable tool 

method is limited to shallow depths. Recognized as being the first drilling method used, cable 

tool drilling is now largely obsolete, although it is used in some of the shallow wells of the 

Appalachian Basin. 

Modern drilling activity has shifted mainly towards the more widely used method of rotary 

drilling. This method of drilling works like a screwdriver or hand-held drill, with a sharp, 
6

rotating metal bit used to drill through the Earth's crust. Much more efficient than cable tool 

drilling, it is a nearly continuous process, as well cuttings are removed as drilling fluids circulate 

through the bit and up the wellbore to the surface. The difference in efficiency becomes 

particularly significant as hole depth increases. 

Offshore 

Each type of offshore rig has a specific environment it was created to work in, from the protected 

shallow waters of inland marshes that are only a few feet deep, to hostile oceans in water depths 

thousands of feet deep. Offshore rigs can either be moved from place to place, allowing for 

drilling in multiple locations, or permanently placed. Some of the most common types of rigs 

are described below. 

Moveable Offshore Drilling Rigs 

Source: rigzone.com 

Drilling barges are used mostly for inland, shallow water drilling, 

typically in lakes, swamps, rivers, and canals. These large floating 

platforms must be towed by tugboat from location to location. 

These rigs are kept in still, shallow waters, as they are not able to 

withstand the water movement in large open water situations. 

Source: rigzone.com 

Drillships are self-propelled and typically have a drilling platform 

and derrick located on the middle of the deck. The ‘moonpool’ of a 

drillship is a hole that extends through the ship down through the 

hull, allowing for the drill string to run through the boat and down 

into the water. Drillships are moored either by a standard 

anchoring system or by dynamic positioning of the vessel. 

Dynamic positioning is the use of a computer-operated thruster 

system which keeps the vessel on location without the use of 

anchors. This allows vessels to drift in extremely deep water, often 

more than 6,000 feet deep. 

Source: moc.noaa.gov/gu/ 

visitor/gu0303/rigs.htm 

Jack-ups are used in waters up to 600 feet deep. Once a jack-up rig 

is towed to the drilling site, heavy machinery is used to jack 3 or 4 

‘legs’ down to the seabed. The platform containing the work area 

is then jacked-up above the water’s surface, allowing the working 

platform to rest above the surface of the water. Jack-up rigs are 

suitable for shallower waters – it would be impractical to extend the 

legs in deep water. Because their working platform is elevated 

above the water, these rigs are typically safer to operate than 

drilling barges. 
7

Source: rigzone.com 

A submersible is towed to its location and submerged until it sits on 

the seabed. It consists of a platform with two hulls positioned on 

top of one another. The upper hull contains the living quarters for 

the crew, as well as the actual drilling platform. The lower hull 

works much like the outer hull in a submarine. When the platform 

is being moved from one place to another, the lower hull is filled 

with air, making the entire rig buoyant. When the rig is positioned 

over the drill site, the air is let out of the lower hull, and the rig 

submerses to the sea floor. This type of rig has the advantage of 

mobility, however its use is limited to shallow water areas (usually 

80 feet deep or less). 

Source: rigworker.com/ 

industry/semisub.shtml 

Semisubmersible rigs are the most common type of offshore 

drilling rigs. This rig combines the advantages of submersible rigs 

with the ability to drill in deep water. Semisubmersible rigs use the 

same principle as submersible rigs; through the 'inflating' and 

'deflating' of its lower hull. The main difference is that when the 

air is let out of the lower hull, the rig does not submerge to the sea 

floor. Instead, the rig is partially submerged, but still floats above 

the drill site. The lower hull is filled with water and provides 

stability to the rig when drilling. These rigs are held in place by 

huge anchors, each weighing upwards of ten tons. The anchors, 

combined with the submerged portion of the rig, ensure that the 

platform is stable and safe enough to be used in turbulent offshore 

waters. Semisubmersible rigs can be used to drill in much deeper 

water than the rigs mentioned above. 

Moveable rigs are most often used to drill exploratory wells. If a commercially viable deposit of 

natural gas or petroleum is found, it may be more economical to build a permanent platform 

from which well completion, extraction and production can occur. 

Offshore Drilling and Production Platforms – Permanently placed large drilling platforms are 

expensive and generally require large expected oil and gas deposits to be economical to 

construct. As described below, there are a number of different types of permanent offshore 

platforms, each useful for a particular depth range. See Figure 1 for examples of platforms at 

varying depths. 
8

 Figure 1. Offshore drilling platforms. 

Fixed Platform Rig: Sometimes in shallow water it may be possible to actually attach a platform 

to the seafloor. The fixed platform has 'legs' that extend down from the platform rest on the 

seafloor. These legs are constructed of concrete or steel and their mass is so great, they do not 

need to be attached to the seafloor. These rigs are very stable as there is limited exposure to 

movement due to wind and water forces. These platforms cannot be used in deep water as it 

would not be economical to build legs that long. 

Compliant Towers are similar to fixed platforms. The platform has a narrow tower that is 

attached to a foundation. The tower is flexible, allowing it to operate in much deeper water, as it 

can absorb much of the pressure exerted by the wind and sea.

Seastar Platforms are platforms with a floating rig, like a semisubmersible, but with tension legs 

like a tension leg platform. The Seastar’s lower hull is filled with water when drilling to increase 

the platform’s stability. It also has long, hollow tendons extending from the seafloor to the 

platform that are kept under constant tension. The tension restricts any up or down movement, 

but allows for side-to-side motion, which helps the platform withstand the force of the ocean and 

wind, without breaking off the legs. Typically, Seastar platforms are used for smaller deepwater 

reservoirs, when building a larger platform is not economical. They can operate in water depths 

of up to 3,500 feet. 

Tension Leg Platforms are larger versions of the Seastar platform. The long, flexible legs are 

attached to the seafloor, and allow for significant side to side movement (up to 20 feet). Tension 

leg platforms can operate as deep as 7,000 feet. 

Source: Natural Gas.org, 2004c. 
9

Subsea production systems are located on the sea floor, as opposed to the surface. The well is 

drilled by a moveable rig, and rather than tying the well to a platform, the oil and natural gas is 

transported by riser or undersea platform to a nearby production platform. This format allows 

for one production platform to service many wells. Subsea systems are typically in use at depths 

of 7,000 feet or more, and do not have the ability to drill, only to extract and transport. 

Spar platforms are huge platforms that consist of a large cylinder supporting a typical fixed rig 

platform. The cylinder does not extend all the way to the seafloor, but rather is tethered to the 

bottom by a series of cables and lines. The large cylinder stabilizes the platform in the water, 

and allows for movement to absorb the force of the ocean and wind. 

Offshore Statistics 

According to the ReedHycalog annual rig census, and as shown in Table 1, jack-ups comprise 

almost 60 percent of the global offshore mobile fleet and have the highest utilization rate at 89 

percent. Semisubmersibles comprise 24 percent of the worldwide offshore fleet and have the 

second highest utilization rate, 87 percent. Drill barges account for 6 percent, as do drill ships, 

and submersibles account for only 1 percent of the worldwide fleet (Berkman and Stokes, 2006). 

Table 1 

Worldwide Offshore Fleet by Type 

Number Percent Utilization

Type of Rig of Rigs of Fleet Rate

Jack-ups 385 59% 89%

Semisubmersibles 158 24% 87%

Drill barges 40 6% 48%

Drill ships 37 6% 78%

Drilling tenders 25 4% 76%

Submersible 9 1% 89%

Total 654 85%

 Source: Berkman and Stokes, 2006. 

2. Geographical Distribution 

As shown in Figure 2, the U.S. employs 23 percent of the global offshore mobile fleet. Rigs off 

of South America account for 12 percent and the Middle East accounts for 12 percent. 

Northwest Europe has 11 percent of the world’s offshore fleet, and Southeast Asia and West 

Africa account for about 10 percent and 8 percent, respectively. The remaining offshore rigs are 

working in Mexico, Indian Ocean, Far East, Mediterranean, Black Seas, Caspian Sea, Central 

America, Australia and New Zealand. Rigs offshore of Canada, the Russian Arctic and the 

Baltics account for less than 1 percent (Berkman and Stokes, 2006). 
10

 Figure 2. Worldwide offshore mobile fleet. 

3. Labor Force 

Unless otherwise indicated, the following information is summarized from “Schlumberger Oil 

Field Services Glossary” (Schlumberger, 2007); and the OTS Heavy Oil Science Center 2006 

website (OTS Heavy Oil Science Center, 2006). 

There are a number of specific jobs on an offshore rig. While the operating company usually has 

a representative at the drill site to protect its interests, the positions on the rig are filled by the 

drilling contractor. 

The top representative of the contractor at the site is a “toolpusher.” The toolpusher is 

responsible for supervising the rig, its daily operations and the crews. As long as the rig is 

operating, the “toolpush” is always on call. This position is largely administrative, making sure 

that the rig has sufficient materials, spare parts, and skilled personnel available to continue 

efficient operations. Each morning the toolpusher compiles the results of the past 24 hours of 

drilling into a daily drilling or morning report. The report is phoned back to the drilling 

superintendent at the contractor's office. The report includes the depths, footage drilled, supplies 

used, and other drilling and geological data. 

The next job in the chain of command is the driller, who leads each shift and ensures the 

efficiency of the drilling operation and the safety of the crew. The driller’s role is supervisory, 

but he or she must be capable of performing each job on the rig and maintain control of the 

major rig systems. From the control room, the driller operates the pumps, drawworks, and rotary 

table. It is the driller who operates the drawworks brake, which controls the speed and motion of 

the drilling line and the drillstring. For this reason, the driller is referred to as the person “on the 

brake” (Schlumberger, 2007). 

U. S.

23%

Russian Arctic

0%

Southeast

Asia

10%

Indian 

Ocean

6%

South America

12%

Australia

and New Zealand

2%

Mexico 5%

Northwest 

Europe

11% Baltic

<1%

Far East 4%

Middle

East

12%

West

Africa

8%

Central America

1%

Canada 

1%

Mediterranean 

and 

Black Seas 4%

Caspian 1%

Source: Berkman and Stokes, 2006.
11

The derrickman is second in command after the driller. The derrickman wears a special safety 

harness that enables him to climb to the monkeyboard, a platform near the top of the derrick, and 

reach the drillpipe in the center of the derrick or mast, throw a line around the pipe and pull it 

back to its storage location until it is time to run the pipe back into the well. In terms of skill, 

physical exertion and perceived danger, a derrickman has one of the most demanding jobs on the 

rig crew. On newer drilling rigs, automated pipe-handling equipment allows the derrickman to 

control the machinery without physically handling the pipe. Using an escape line often referred 

to as the Geronimo line, the derrickman can quickly reach the ground during an emergency. 

Between trips, the derrickhand is usually responsible for the mud system, and making sure that it 

meets the specification for drilling a particular part of the hole (Schlumberger, 2007). 

On the derrick floor there are usually two to four roughnecks (rotary or floor helpers), depending 

on the size of the rig. They handle and maintain the drilling equipment. One person is hired to 

maintain the engines. On a typical drilling crew, two roughnecks are responsible for lowering the 

end of the pipe when it is tripping out or in and for attaching each length of new drill pipe as 

needed. The work is heavy and exacting, requiring precise timing and teamwork. Roughnecks 

maintain and repair the rig and equipment, and ensure a safe operating area on the rig floor (OTS 

Heavy Oil Science Center, 2006). 

Other jobs on the rig can include cleaner/painters, roustabouts, riggers, floorhands, crane 

operators, welders, electricians, mechanics, motormen, oilers, engineers, chief engineers, 

warehousemen, medic/safety persons, ballast controlmen, DP operators, barge operators, barge 

engineers, rig managers and rig superintendents. In addition, service and supply companies 

provide specialized tools and services needed during the drilling operations. 

4. Labor Statistics 

The number of jobs in oil and gas drilling can be measured by the “Oil and Gas Extraction” 

series as reported by the U.S. Department of Labor’s Bureau of Labor Statistics. As shown in 

Figure 3, employment in the U.S. oil and gas drilling industry has been decreasing. Since its 

peak in 1982 of 264,500 jobs, employment fell over 50 percent, to its lowest point of 120,100 in 

2003. Some of this decline can be attributed to industry consolidation, the decline of offshore 

drilling, and increasing competition, all of which is discussed later in this chapter. Oil and gas 

drilling employment has increased in recent years, to an annual average of 136,000 in 2005 and 

an average of 147,600 by July of 2007 (U.S. Dept. of Labor, BLS, 2007a). 

Average earnings in the oil and gas extraction industry are significantly higher than the average 

for all industries. The average weekly earnings for production workers in the oil and gas 

extraction sector in 2006 was $920 per week. This translates to almost $48,000 per year. In 

comparison, the average weekly earnings for all workers in private industry in 2006 was $568 

per week, or $29,530 per year. Also, because of their intense working conditions, employees at 

offshore operations generally earn higher wages than their onshore counterparts (U.S. Dept. of 

Labor, BLS, 2007a). 

A description of typical companies and their number of employees is found in the next section. 
12

0

50

100

150

200

250

300

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Number of Employees (thousands)

 Figure 3. Number of employees, oil and gas extraction. 

5. Typical Firms 

RigData (2009) compiles a monthly list of the top 100 drilling companies ranked by footage. 

Table 2 shows the top 25 drillers from this list (from January through July of 2009). As shown 

in the table, the top 25 drillers account for 60 percent of the well footage drilled. The remaining 

40 percent is divided among over 75 smaller companies. 

As shown in Table 2, Helmerich & Payne I.D.C leads the group in 2009 with over 8.4 million 

feet drilled, over nine percent of total footage drilled. Helmerich & Payne owns and operates 

land rigs in the U.S. as well as abroad and has offshore platform rigs which are mostly located in 

the GOM (Helmerich & Payne, 2009). 

Second on the list is Nabors Drilling USA with almost nine percent of total footage drilled. The 

Nabors companies own and operate almost 600 land drilling and 800 land workover and wellservicing rigs in North America. Offshore, Nabors operates 41 platform rigs, 14 jack-ups, and 

four barge rigs in the domestic and international markets. In addition, Nabors markets 25 marine 

transportation and support vessels, primarily in the U.S. Gulf of Mexico (Nabors Industries LTD, 

2007). 

Patterson UTI provides onshore contract drilling services to exploration and production 

companies in North America. The Company owns 336 marketable land-based drilling rigs that 

operate primarily in oil and natural gas producing regions of Texas, New Mexico, Oklahoma, 

Arkansas, Louisiana, Mississippi, Colorado, Utah, Wyoming, Montana, North Dakota, South 

Dakota and western Canada. At the end of 2006, Patterson-UTI had approximately 9,000 fulltime employees (SEC, 2006a). 

Source: U.S. Dept. of Labor, BLS, 2007a. 
13

Table 2 

 Top 25 Drillers Ranked by Footage Drilled (January – July 2009) 

Percent Percent

Footage of Total Average Well of Total

Drilling Company Drilled Footage Footage Starts Starts

1 Helmerich & Payne I.D.C. 8,454,504 9.1% 9,774 939 7.2%

2 Nabors Drilling USA, LP 8,121,720 8.8% 10,887 809 6.2%

3 Patterson-UTI Drilling Company, LLC 5,464,122 5.9% 9,586 584 4.5%

4 Nomac Drilling, LLC 4,166,965 4.5% 7,441 566 4.3%

5 Precision Drilling Oilfield Svcs, Inc. 3,945,843 4.3% 10,636 381 2.9%

6 Ensign United States Drilling, Inc. 3,505,228 3.8% 8,763 417 3.2%

7 Trinidad Drilling, LP 2,053,428 2.2% 10,115 208 1.6%

8 Unit Drilling Company 1,924,106 2.1% 13,179 150 1.1%

9 Pioneer Drilling Company 1,771,241 1.9% 10,934 163 1.2%

10 Scandrill, Inc. 1,695,056 1.8% 12,745 133 1.0%

11 Nabors Well Services Company 1,268,564 1.4% 9,192 153 1.2%

12 Cactus Drilling Company, LLC 1,258,650 1.4% 11,442 110 0.8%

13 Union Drilling, Inc. 1,141,482 1.2% 5,679 216 1.6%

14 Xtreme Coil Drilling Corporation 1,121,491 1.2% 7,843 143 1.1%

15 Saxon Drilling, LP 1,034,649 1.1% 6,426 162 1.2%

16 Desoto Driling, Inc. 955,374 1.0% 4,227 226 1.7%

17 Goober Drilling LLC 930,892 1.0% 7,106 131 1.0%

18 Savanna Drilling LLC 905,809 1.0% 10,657 85 0.6%

19 Capstar Drilling, LP 898,473 1.0% 4,937 182 1.4%

20 Union Drilling Texas, LP 876,100 0.9% 9,734 90 0.7%

21 Bronco Drilling Company, Inc. 859,518 0.9% 9,658 94 0.7%

22 White Mountain Operating 858,260 0.9% 13,623 63 0.5%

23 Felderhoff Brothers Drilling, LLC 850,886 0.9% 9,561 89 0.7%

24 Falcon Drilling Company, LLC 815,035 0.9% 5,470 150 1.1%

25 Key Energy Services, Inc. 794,752 0.9% 12,042 69 0.5%

Total of Top 25 Companies 55,672,148 60.2% 6,313 48.1%

Remaining Companies 36,756,810 39.8% 6,800 51.9%

 Source: RigData, 2009. 

Although it is not shown in Table 2, Diamond Offshore is well known in offshore markets. It 

operates in four continents with a fleet of 30 semisubmersibles, 13 jack-ups and one dynamically 

positioned drillship. Diamond staff consists of approximately 500 shore-based support personnel 

and 3,800 offshore rig personnel (Diamond Offshore, 2007). 

Another offshore leader is ENSCO, one of the leading offshore oil and gas drilling contractors 

with a fleet of 50 offshore drilling rigs. Its fleet includes 44 jackups, one deepwater 

semisubmersible, one barge rig, and four ultra-deepwater semisubmersible rigs under 

construction (ENSCO International, 2007). 
14

GlobalSantaFe owns or operates a fleet of 59 offshore drilling rigs. GlobalSantaFe’s fleet 

includes: 43 cantilevered jackup rigs capable of drilling in maximum water depths of 200 feet to 

400 feet; eight semi-submersible rigs suited for midwater drilling and/or harsh environments; one 

deepwater semi-submersible capable of drilling in water depths up to 5,750 feet; three 

dynamically positioned, ultra-deepwater drillships, two of which are designed for the ultimate 

drilling capability of up to 12,000 feet of water; two ultra-deepwater semi-submersibles, capable 

of drilling in water depths of up to 7,500 feet, in either DP or moored mode; and two semisubmersibles owned by third parties and operated under a joint venture agreement 

(GlobalSantaFe, 2007). 

C. Industry Trends and Outlook 

1. Rig Count 

According to the Baker-Hughes Rig Count, worldwide drilling activity has been increasing since 

the middle of 2002. As shown in Figure 4, the number of active rigs worldwide peaked in 

February 2007 at 3,325 rigs – a 7 percent increase from the previous year’s peak (February 2006) 

and a 190 percent increase from the historic low of 1,156 active rigs in 1999. 

North American rig counts have also been climbing since 2002, reaching a high of 1,771 in June 

2007. This is more than a 6 percent increase since June 2006, and a 257 percent increase since 

the historic low of 496 rigs in April 1999. 

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06

Rigs

Worldwide

North America

International

 Figure 4. Worldwide rig activity. 

Despite the increase in drilling activity worldwide and onshore in the U.S., U.S. offshore 

operations have been decreasing over the past five to six years. In fact, Figure 5 shows that the 

number of active rigs in the U.S. and the Gulf of Mexico has decreased 55 percent since its high 

of 167 rigs in January 2001. 

Source: Baker Hughes, 2007a. 
15

Throughout the first half of 2005, the number of rigs in the Gulf began to increase. This 

increasing trend was halted by the hurricanes of 2005 as shown by the quick downturn in August 

2005. By February 2006, however, rigs had rebounded almost to their pre-2005 hurricane levels. 

Impacts from these hurricanes will be discussed in the next section. 

0

20

40

60

80

100

120

140

160

180

200

Jan-94Jan-95Jan-96Jan-97Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06

Rigs

US Offshore

US Gulf of Mexico

 Figure 5. Active rigs offshore. 

In the deepwater Gulf, production and the number of discoveries have increased substantially in 

recent years. As of March 2006, there were 118 deepwater hydrocarbon production projects 

online (French et al., 2006). 

According to a 2006 BOEMRE report, there are many deepwater prospects waiting to be drilled. 

Many of these prospects might not be drilled because of the limited number of rigs available for 

deepwater drilling in the GOM. Also, as some operators are drilling more often in increased 

depths this will cause rigs to be under contract for longer periods and unavailable for new 

prospects (French et al., 2006). 

Figure 6 shows deepwater rigs operating in the Gulf from 1992 through 2005. The average 

number of rigs increased steadily from 1992 to a peak in 2001. The average number of rigs 

operating in the deepwater GOM decreased from 2002 through 2004, but increased in 2005 

(French et al., 2006). 

Source: Baker Hughes, 2007a. 
16

30

26

30

36

41

33

26

18

14

11

6

3

28 28

0

5

10

15

20

25

30

35

40

45

19921993199419951996199719981999200020012002200320042005

Number of Deepwater Rigs

 Figure 6. Average number of rigs operating in deepwater Gulf of Mexico. 

2. Rig Contractors 

For the past two decades, the number of drilling contractors in the U.S. has been decreasing. 

Because of industry consolidation, the almost 700 rig contractors that existed in 1987 had 

decreased to 179 in 2003. The 2004 and 2005 data show a slight increase to 213 and 226 

contractors. In 2004 this increase was attributed to better data collection and the addition of 

several small companies. However, the addition of 13 companies in 2005 and 31 companies in 

2006 was actually a result of new, small companies entering a rejuvenating industry (Berkman 

and Stokes, 2006) (see Figure 7). 

Source: French et al., 2006. 
17

0

100

200

300

400

500

600

700

800

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Number of Rig Owners

 Figure 7. Drilling contractors, number of rig owners.1

Reasons for merging include access to capital at better rates and more efficient scales of 

operation. A large company has more geographical reach and can realize significant savings 

through lower insurance rates and large-scale purchasing. Also, a larger company will have 

more types of rigs available to meet cyclical markets. 

As consolidations in the industry continued, the big companies got bigger. Figure 8 shows that 

in 2003, at the height of industry consolidation, 63 percent of rig contractors in the U.S. had 

fleets with more than 20 rigs. However, with additional companies entering the market, this 

number fell to 55 percent in 2005. U.S. companies holding 11 to 20 rigs, and those with just one 

rig both saw percentage gains. 

 

1

 Data for 2002 was not collected. 

Source: Berkman and Stokes, 2006. 
18

20 25 28 29

37

50 54 58 62 63 60 55 58

25

22 22 24

18

16

15 12

11 10 11 15 13

20 21 19 19 18

12 10 10 10 11 12 12 11 28 26 26 23 22 18 17 16 13 13 14 13 14

7 6 555 4444 3 3 4 4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19931994199519961997199819992000200120022003200420052006

>20 rigs 11-20 rigs 6-10 rigs 2-5 rigs 1 rig

Percent of Total Rig Fleet

 Figure 8. Drilling contractors, owner fleet size.2

Improved market conditions have not only encouraged new companies to enter the market, but 

the market has tightened, causing utilization rates to increase. Figure 9 shows that rig utilization 

in the U.S. GOM has been high in recent years, averaging 95 percent in 2005. 

Despite these improved market conditions, the number of rigs in the U.S. GOM has fallen 

significantly, which also contributes to higher utilization rates (see Figure 9). Much of this has 

been due to increased competition from overseas prospects and impending expiration of leases in 

the GOM. A migration of rigs out of the Gulf of Mexico has also been supported by longer-term 

contacts that larger oil companies throughout the world are willing to sign. Rigs have been 

moving to places such as the west coast of Africa, Brazil and the Middle East. The number of 

rigs in the GOM fell by 19 from September 2006 to September 2007 (Sridharan, 2007). 

 

2

 Data for 2002 was not collected. 

Source: Berkman and Stokes, 2006. 
19

0

100

200

300

400

500

600

700

800

1980 1984 1988 1992 1996 2000 2004

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Available Active Utilization Rate

Number of Rigs

(Available and Active)

Utilization Rate (%)

 Figure 9. Number of available and active rigs in the U.S. GOM. 

3. Hurricane Impacts 

Hurricanes Katrina and Rita caused a substantial amount of damage to the production platforms 

of the GOM (see Figure 10). It is estimated that 3,050 of the GOM’s 4,000 platforms (or 76 

percent of platforms) were in the direct path of either Hurricane Katrina or Hurricane Rita 

(USDOI, MMS, 2006a). Hurricane Katrina, which was a category 5 hurricane when it entered 

the GOM OCS, destroyed 46 platforms and four drilling rigs, and damaged an additional 20 

platforms and nine drilling rigs. Shut-in production at its peak after Katrina was 95 percent for 

oil production and 88 percent for natural gas. Then, in just three weeks, as the industry was 

recovering, Hurricane Rita hit. Hurricane Rita, which was a category 4 hurricane when it entered 

the GOM OCS, destroyed 69 platforms and four drilling rigs. In addition, 32 platforms and 10 

drilling rigs were damaged (Tubb, 2005). In the days following Hurricane Rita, 100 percent of 

oil production was shut-in as was about 80 percent of natural gas (USDOI, MMS, 2005a and 

2006b). 

In comparison, Hurricane Ivan moved through the GOM as a Category 4 hurricane in September 

2004. Of the 4,000 platforms in the GOM, only 150 facilities were in its direct path. Hurricane 

Ivan resulted in an interruption of more than 10 percent of the Gulf’s production for at least four 

months. This seems pretty minor compared with Hurricanes Katrina and Rita (Drilling 

Contractor, 2005). 

Source: ReedHycalog Rig Census, 2006. 
20

 Figure 10. Hurricanes Katrina and Rita paths, 2005. 

Most of the structures that were lost were built 20 to 30 years ago when there were less stringent 

standards than what is currently in effect (Tubb, 2005). However, there were some exceptions. 

Chevron U.S.A. Production Company’s Typhoon production facility, a SeaStar Tension Leg 

Platform located in 2,100 feet of water, was found upside down after Hurricane Rita. The 

deepwater TLP was less than four years old and produced about 40,000 barrels per day of oil and 

60 MMcf per day of natural gas (Tubb, 2005). Many other mobile drilling units were torn from 

their anchor moorings and became adrift during the hurricanes. Drifting units not only means a 

lost facility, but also potential damage to existing fixed facilities, including underwater pipelines. 

Anchors being dragged across the ocean floor have a good chance of breaking segments of 

pipeline (Tubb, 2005). 

The tropical season of 2005 damaged many production facilities beyond repair. Chevron 

announced that it would sink its $250 million Typhoon oil platform that was damaged by 

Hurricane Rita. The Typhoon platform will be donated to a federal program that uses 

decommissioned platforms and rigs to create new reefs on the seafloor (Bloomberg.com, 2006). 

Hurricanes Katrina and Rita resulted in losses to the industry of $26 billion and $12 billion 

respectively, largely as a result of platform and pipeline damage. The previous year, Hurricane 

Ivan caused an estimated $5.7 billion in losses (Energy Trader, 2007). Recently, it was projected 

that a Category 5 hurricane could cause more than $65 billion in damage to offshore platforms 

and undersea pipelines in the GOM region. This estimate included property damage of $35 

billion and losses associated with business interruption and lost production capacity of $30 

billion (Energy Trader, 2007). 

Source: USDOI, MMS, 2005b. 
21

4. Outlook 

Markets outside the GOM are going strong and rigs continue to leave the Gulf of Mexico. 

Demand is being driven by the Middle East market and markets in the West Africa coast, the 

North Sea, Southeast Asia, the Mediterranean and India remain strong. All of these markets 

have significantly higher rig utilization rates than the GOM and demand is expected to remain 

strong in these areas (Donovan, 2010). While the GOM offers well-to-well drilling programs 

and lowering dayrates, other world markets are offering three to five year contracts and much 

higher dayrates. As stated by Mark Keller, Rowan Companies executive vice president of 

business development, “[j]ackup migration will continue until the U.S. Gulf of Mexico offers a 

more stable work environment (Hsieh, 2007).” 

“Major challenges facing U.S. GOM drilling contractors today are short-term contracts, unstable 

natural gas prices, increased insurance premiums and fleet risk associated with hurricane season. 

A confluence of these dynamics — natural gas prices, majors’ budget shifts, reservoir sizes, 

stability and higher dayrates in other markets, and weather — over the past few years have taken 

its toll on the Gulf of Mexico with both opportunistic mobilizations and deliberate relocations 

(Hsieh, 2007).” 

For example, of Rowan’s 22 jackup rigs, nine are in the GOM. Of the nine, four are idle and one 

is scheduled to come off contract in September 2009 (Rowan Companies, 2009a). Rowan’s 

other jackups have been mobilized to other markets including the Middle East, West Africa and 

the North Sea (Hsieh, 2007; and Rowan Companies, 2009a). Another example of the migration 

is Global SantaFe (GSF). In early 2006, GSF had 10 jackups in the GOM. By mid 2007, two 

were basically destroyed by Hurricane Rita, and five left for long-term contracts with much 

higher rates than could be found in the Gulf. GlobalSantaFe also has four semisubmersibles in 

the Gulf, two of which left the region in 2007 (Hsieh, 2007). 

In September 2009, there were 77 jackups reported in the Gulf of Mexico (RigZone, 2009). 

However, of these 77 rigs, only 12 were actively drilling and five were on workover projects. 

Over 30 percent, or 25 of the GOM jackups were ready stacked, meaning while not in use they 

can be brought back to service easily. Even more rigs however, (28 rigs or 36 percent) were cold 

stacked (RigZone, 2009). These are rigs that are completely shut down and not being actively 

marketed. 

In August 2009, in reporting its second quarter operating results, the Rowan CEO stated that 

"[l]ooking forward, we expect that excess rig capacity will continue to put downward pressure on 

day rates. Though we are seeing signs of a pick-up in drilling demand in certain areas, there are 

still more available rigs than drilling tenders (Rowan, 2009b).” A Rowan Company 

representative also recently stated that the GOM rig market is “definitely continuing to weaken 

(Natural Gas Week, 2009).” 

Some companies like Pride International are attempting to attract operators to employ idle 

jackups by offering incentives like a financial grace period in the event of a hurricane-related 

evacuation (Natural Gas Week, 2009). Should the rig be evacuated during a hurricane, an 

operator using one of Pride’s idle rigs will be exempt from the standing dayrate (Natural Gas 

Week, 2009). 
22

D. Chapter Resources 

Baker Hughes Rig Counts 

North American rig counts are updated weekly; worldwide rig counts are updated monthly. 

http://www.bakerhughes.com/investor/rig/index.htm

ReedHycalog Rig Census 

Annual Census of available and active rigs by U.S. region. U.S. totals are available from 1955 

and historic data for regions is mostly available from 1980. 

http://www.grantprideco.com/

RigData 

Provides monthly statistics for permit counts, rig counts, well starts by depth, well starts by state 

and district, and driller and operating rankings. Custom reports and data sets are available for 

purchase. 

http://www.rigdata.com/c-26-nbspmonthly-statistics.aspx

RigData 

Provides a comprehensive directory of U.S. land and offshore rigs. Entries include driller, rig, 

rig type, horsepower, depth, rating, and work history. The directory is sorted by company and by 

geographic region. 

http://www.rigdata.com/c-66-rigs-drillers.aspx

U.S. Department of Labor, Bureau of Labor Statistics 

The Current Employment Statistics survey provides monthly employment statistics for major 

industrial categories (including oil and gas extraction). These data are available for statewide 

and metro area. 

http://www.bls.gov/data/home.htm

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
23

II. UNDERWATER CONTRACTORS 

A. Description of Industry and Services Provided 

Since the earliest days of the offshore oil and gas industry, there has been a need for underwater 

contractors – particularly commercial divers. Companies that employ commercial divers include 

diving contractors, shipping and marine construction companies, and oil and gas companies that 

operate offshore. The work of the commercial diver can include construction, inspection, search, 

salvage, repair and photography. Commercial divers can perform the following tasks (HRSDC, 

2007): 

• Perform offshore oil and gas exploration and extraction duties such as 

underwater surveys, nondestructive testing, blasting, construction, and repair 

and maintenance of drill rigs and platforms; 

• Operate underwater video, sonar, recording and related equipment for 

scientific or exploratory purposes; 

• Inspect vessels, buoyage systems, pipelines, sluice gates, plant intakes and 

outfalls and other materials, visually and by nondestructive testing; 

• Perform construction duties such as welding and installing pilings for 

cofferdams or footings for piers, and maintain these and drydocks, 

breakwaters, marine ways and bridge foundations using hand and power tools 

and pneumatic equipment; 

• Operate winches, derricks or cranes to manipulate cables and chains to raise 

sunken objects; 

• Set up and detonate explosives to remove obstructions and break up or refloat 

submerged objects; 

• Participate in underwater search and rescue, salvage, recovery and clean up 

operations; and 

• Check and maintain diving equipment such as helmets, masks, air tanks, 

harnesses, gauges, air compressors, diving suits, underwater cutting torches 

and welding equipment. 

Remotely operated vehicles (ROVs) assist and sometimes replace commercial divers underwater. 

An ROV is an underwater robot that allows the vehicle's operator to remain in a comfortable 

environment while the ROV works remotely in a potentially hazardous environment. Although 

regulations vary internationally, generally diving saturation techniques are prohibited in water 

depths of greater than 850 feet. Since a considerable percentage of offshore oil and gas reserves 

are located in water depths in excess of diver depths, the importance of ROV technology is 

significant (Marine Technology Society, ROV Committee, 2006a). 
24

The ROV vehicle is connected by an umbilical cable to the control van and the operators on the 

surface. A handling system is used to control the cable dynamics. Other parts of the ROV 

system include a launch system (such as the A-frame shown in Figure 11 below) and associated 

power supplies. The umbilical carries the power and the command and control signals to the 

vehicle and the status and sensory data back to the operator. In addition, the umbilical may be 

reinforced to have the strength to recover heavy devices or wreckage (The ROV World Portal, 

2006). 

 Figure 11. What is an ROV? 

Modern ROVs cover tasks from inspecting the hazardous inside of nuclear power plants to 

repairing complex deepwater production systems offshore in the oil and gas industry. In general, 

ROVs are used to perform the following (The ROV World Portal, 2006): 

• Diver Observation – act as a dive buddy to ensure diver safety and provide 

assistance. 

• Platform Inspection – from visual inspection to using instruments to monitor 

the effects of corrosion, fouling, locating cracks, estimating biologic fouling, 

etc. 

• Pipeline Inspection – follow underwater pipelines to check for leaks, 

determine overall health of the pipeline and insure the installation is 

acceptable. 

• Surveys – both visual and acoustic surveys are necessary prior to installing 

pipelines, cables and most offshore installations. 

• Drilling Support – everything from visual inspection, monitoring installation, 

operational support and repair when necessary using multiple manipulators. 

Source: Marine Technology Society, ROV Committee, 

 2006b.
25

• Construction Support – a natural follow-on to drilling support. The tasks 

here can become more complex with the use of manipulators and powered 

tools and cutters. 

• Debris Removal – offshore platforms can become a "trash dump" 

underwater. ROVs provide a cost effective method of keeping the area clean 

and safe. 

• Call Out Work – support in many of the previous areas, however, the tasks 

are usually for one or several days for systems not permanently assigned to 

offshore platforms or drill ships. 

• Platform Cleaning – one of the most sophisticated tasks using manipulators 

and suction cups for positioning and 100-horsepower systems driving brushes, 

water jets and other abrasive devices. 

• Subsea Installations – as capability has increased, vehicles have begun to 

support the construction, operation, inspection, maintenance and repair of 

subsea installations, especially in deep water. 

• Telecommunications Support – Inspection, burial or repair–from towed 

plows that bury cables for protection from trawlers and anchors to 

sophisticated vehicles that can locate, follow, retrieve and rebury subsea 

telecommunication cables. 

• Object Location and Recovery – ROVs may have received their highest 

level of recognition from tragedies such as passenger jet crashes and the space 

shuttle disaster. 

Unless otherwise noted, the remainder of this section is summarized from the Marine 

Technology Society, ROV Committee (2006a). 

By far the greatest use of ROVs around the globe is their application in the oil and gas industry 

for the exploration and production of hydrocarbons. Since the mid-1970s, ROV technology has 

been used in the search for hydrocarbons underwater. Today, an estimated 85 percent of the 400 

commercial systems deployed worldwide are used to support hydrocarbon production. The 

highly sophisticated, capable and reliable work class systems routinely undertake operations in 

water depths greater than 7,000 feet.

As described in the Drilling Contractors chapter, there are several standard means of extracting 

hydrocarbons in various water depths – from jackup drilling production rigs in very shallow 

water to subsea completion, tension leg platforms and spars in deep and ultra deepwater. The 

ROV technologies support operations for services such as drilling and completion, 

installation/construction, and inspection/maintenance and repair. 

Over 60 percent of the world’s ROV systems supporting oil and gas production are engaged in 

drilling support operations. Systems are utilized in water depths as shallow as 100 feet on jackup 
26

rigs and as deep as 10,000 feet on semi-submersibles and drillships. This means that the full 

range of ROV systems are engaged worldwide to support these activities. Observation ROV 

systems are typically used in shallow water and when surface trees are utilized. Work class 

ROV systems are used in deeper water, areas of high current, and when intervention tasks 

require the use of manipulators, fluid transfer or load bearing capabilities. 

Installation and construction support is the most demanding service offered by an ROV 

contractor, requiring the most capable equipment and the greatest experience and skill of the 

ROV crew. Installation and construction support is the realm of the work class ROV (see 

descriptions of system categories below). A key element in the development program, ROV 

systems are used before, during and after the installation of platforms, subsea production systems 

and others, and the installation, laying, hook-up and commissioning of flowlines, trunklines, 

export lines, cables and umbilicals. 

B. Industry Characteristics 

1. Typical Facilities – Diving 

Commercial divers must be skilled not only in diving but in performing other work tasks while 

under water, including welding, repairing underwater structures or collecting marine species. 

Some divers have received formal training and are skilled workers in those fields (BC Work 

Futures, 2009). 

The two general categories of commercial diving are surface diving, which is performed at 

shallow water depths, and saturation diving, which requires divers to work for prolonged periods 

of time and at greater depths. While shallow divers must decompress to allow their bodies to 

adjust to pressure changes as they surface, saturation divers, who often live aboard pressurized 

diving vessels at 600 and 1,000 feet below the surface, are not required to undergo 

decompression procedures after each dive (U.S. v. Cal Dive, 2005). 

Saturation diving systems often include one or more saturation chambers and other safety, 

monitoring and life support systems. These systems can be transported from one vessel to 

another. Anchor-and-chain mooring systems and dynamic positioning maintain the diving 

vessel’s position during a saturation dive. 

Pressure-related and gas-related injuries are avoided by strict adherence to safety guidelines. 

Dangers associated with working underwater near heavy construction and oil drilling operations 

include near-zero visibility, waves and currents, darkness, confined spaces and ice (Alberta 

Learning Information Service, 2008). 

In shallower, accessible water, typical diving tasks include surveying, sand bagging, piles 

recovery, pipeline routing, inspecting, anchor recovery and pipeline and cable laying. To position 

a drilling unit, for example, an underwater survey must first be performed. Divers use 

echosounding, side scan sonar and sub-bottom profilers. Later, carrying a metallic rod and/or 

metal detector, a diver will walk the sea floor in semi-circular patterns until the area has been 

completely covered. The drilling unit is positioned according to the diver’s survey (Underwater 

Magazine, 2002). 
27

In shallow water, divers perform pipeline routing and inspections using routine procedures, but 

when pipes are buried beneath sediment deposits and must be tracked, they must employ 

specialized equipment, such as metal detectors and small air dredging systems. The two types of 

pipe located underwater are abandoned pipelines from old oilfields and newer pipelines, which 

require inspection in localized sections. Cable laying is a favorite among divers because of the 

speed at which cable can be buried. Getting the cable to shore requires physical protection (often 

light concrete mattresses) because of shallow water and tidal changes. Typical tasks associated 

with these diving operations include: verifying remote sensing results by inspecting localized 

areas along the proposed cable route, placing and securing concrete mattresses, installing I-tubes, 

and confirming the curve and cable elongation near the I-tubes (Underwater Magazine, 2002). 

2. Typical Facilities – ROVs 

Unless otherwise noted, the text and pictures in this section are from the Marine Technology 

Society, ROV Committee (2006c). 

The ROVs can vary in size from small vehicles with TVs for simple observation up to complex 

work systems, which can have several dexterous manipulators, TVs, video cameras, tools and 

other equipment. Today’s systems can be categorized by size, depth capability, onboard 

horsepower and whether it's all-electric or electro-hydraulic: 

Source: rov.org 

Source: rov.org 

Small Vehicles. These "low-cost" ROVs (LCROV), used typically 

used for inspection and observation tasks, tend to be all electric 

and operate to water depths of up to 984 feet (300 meters). 

Demand has increased for small vehicles, due primarily to 

technical advances that have improved performance, especially at 

greater depths. Today LCROVs account for about 22 percent of all 

ROVs. 

The ROVs in the "low cost" category typically sell for $10,000 to 

more than $100,000. The Quest LCROV (left), Hydrovision’s 

HyBall (left, below), and others like them, cost less than larger 

work class ROVs. Today's LCROVs are used for science, marine 

recreation, search and rescue; dam, waterway and port inspection; 

training, shipping, nuclear inspection and coastal offshore 

inspection and observation tasks. 

Source: rov.org

High Capability Electric ROVs. These are a fairly new class of 

ROV (born less than five years ago). These high capability units 

are small and electric but can cost close to $500,000. These new 

vehicles feature the latest in technology from Brushless DC 

motors (thrusters) to PC-based control systems and fiber optic 

telemetry systems. Electric ROVs can operate at depths of 20,000 

feet (6,096 meters) and require much less power to do so; 

however, due to the electro-hydraulic design of the modern 

manipulator and work systems, these vehicles are not capable of 

performing heavy work. 
28

Source: rov.org

The Perry Tritech Voyager (left), and electric inspection systems 

like it, employ state-of-the-art fiber optic telemetry and control 

systems. For more power and work capacity at depths of up to 

9,842 feet (3,000 meters), one option is the Deep Sea Systems 

International MaxROVER (left, below), which is far less expensive 

to operate than electro-hydraulic systems. 

Military and scientific programs use electric vehicles in part 

because of their quiet operation and because the vehicles meet 

their work requirements, which are less complex than those of the 

oil and gas industry. Work capabilities of the all-electric ROVs 

should continue to expand. 

 

Source: rov.org

Source: rov.org

The Medium Size ROVs are electro-hydraulic vehicles, 20-100 

horsepower, that handle moderate payloads and have limited 

through-frame lift capability. They weigh 2,205-4,410 lb (1,000-

2,200 kg) and have payload capacities of 220-440 lb (100-200 kg). 

Most carry a single manipulator, but larger types can carry two. 

The through-frame lift capability of this class can exceed 992 lb 

(450 kg). With its origins in the early “eye ball” systems used for 

dive observation and inspections, this class of ROVs is the most 

widely used. Developed for work in high current conditions, 

carrying one or two manipulators, these ROVs provide drilling 

support, construction support, pipeline inspection and general "call 

out" work. Early ROVs, like Perry Tritech’s (originally 

AMETEK’s) Scorpio (left) and International Submarine 

Engineering’s Hydra vehicles, continue to be used today. 

Vehicles of the same horsepower that have been built using the 

latest technology, providing greater reliability and efficiency, 

include the Perry Tritech Viper, Super Scorpio and Scorpio Cobra. 

These vehicles can operate at 3,281-foot (1,000-meter), the depth 

at which, until recently, the majority of drilling support has taken 

place. 

Source: rov.org

Large, Work Class Vehicles are used in deepwater operations to 

8,202 feet (2,500 meters). Vehicles in this class are 100-250 

horsepower and have through-frame lift capabilities to 11,025 lb 

(5,000 kg). It is this feature that distinguishes large from medium 

class ROVs. Large, work class vehicles, such as Perry Tritech's

TRITON XL (left), weigh 4,410-14,333 lb (2,000-6,500 kg). 

These powerful ROVs, dubbed by the industry as "heavy work 

class vehicles," perform subsea tie-in operations on deepwater 

installations and carry large, diverless intervention systems. 

Vehicles in this class can reach 8 feet (2.4 meters) or more in 

height after installation of a tool package. 
29

The new generation of large work class ROVs operates at 9,842 

feet (3,000 meters). Constructed on smaller frames, these ROVs 

provide the same power and lift capabilities of the large systems. 

Use of advanced technology keeps umbilical size to a minimum. 

Unlike “ultra deep” diving ROVs, which carry minimal power to 

minimize umbilical size, this new class carries between 75-100 

horsepower. This work class is capable of performing heavy work 

at great depths. Because exploration is taking place in depths to 

12,000 feet (3,658 meters) and production in depths of over 6,000 

feet (1,829 meters), continued advancement in technology is 

required to meet the needs of the industry. 

Source: rov.org

The Ultra-Deep Vehicle class consists of special-built ROVs that 

operate at 13,123 feet (4,000 meters) and beyond, tend to be lower 

in power to keep umbilical sizes small, and are used primarily for 

deep ocean research, search and salvage missions. For observing 

or attaching a salvage line, these ROVs do not require a large 

amount of power. Many ultra-deep systems, such as Monterey Bay 

Aquarium Research Institute's (MBARI’s) Tiburon (left), are 

designed for scientific research and allow for long-term 

observation in the very deep ocean. The military has developed 

ultra-deepwater vehicles for missions including assets salvage. 

Source: rov.org

Towed Systems are vehicles towed behind ships and boats to 

perform underwater tasks. Typically, the vehicle is launched and 

towed at the desired depth by varying the length of the 

electromechanical cable. Today’s fiber optic tow cables provide 

broad bandwidth for the transmission of data from sensors and 

TVs. 

Many towed vehicles, whether conventional towed systems or 

sleds, which hold either a magnetometer or fluxgate gradiometer 

for locating metallic objects, are capable of locating cables or 

pipeline on the seabed, buried or unburied. Seatec’s unique design 

(left) uses spinning rotors on the tow body to allow the vehicle to 

be guided along a pipeline. 

Search and survey is a primary use of towed vehicles. Systems 

designed to survey the seafloor for mapping, search and salvage, 

route survey, pipeline survey, environmental survey, and more, 

range in size and weight from very small, shallow water bodies to 

large full ocean depth systems. Surveying equipment on board the 

towed system includes TV cameras, film cameras, digital cameras, 

laser imaging systems, side scan sonars, swath bathymetry sonars, 

multibeam sonars, sub-bottom profilers and magnetometers. 
30

Source: rov.org

Source: rov.org

Bottom Crawlers and Plows. Bottom crawlers, primarily used 

for cable laying and burial, are usually tracked vehicles, or in 

some cases, employ an Archimedes screw. Perry Tritech’s Gator

(left) and other cable burial vehicles carry one of four tools for 

burying cable, depending on soil condition: water jets, chain 

trencher, wheel trencher or plow. These systems can be operated 

remotely or from a diver station onboard the vehicle. Crawlers are 

also used for sediment preparation, pipeline trenching and 

dredging. 

Plows, which represent a large class of technologically 

sophisticated vehicles, are designed to work in varying soil 

conditions around the world. Weighing up to 80 tons (81,280 kg), 

resisting tow forces to 250 tons (254,000 kg) and capable of 

shallow water work to 4,921 feet (1,500 meters), plows vary 

greatly in size and design. Soil Machine Dynamics (SMD) Ltd.'s 

line of ploughs (left) illustrates the size of such systems. 

Source: rov.org

Untethered, Autonomous Underwater Vehicles. Autonomous 

Underwater Vehicles (AUVs) are unmanned, untethered vehicles 

that house operations equipment and power sources onboard. The 

offshore oil and gas industry is considering the use of AUVs, such 

as the Hugin, used by Norway’s Statoil, to lower the cost of 

operations in many areas. 

Development of AUVs began in the early 1960s, with vehicles 

such as Rebikoff’s SEA SPOOK and the Applied Physics 

Laboratory, University of Washington’s SPURV (Self-Propelled 

Underwater Research Vehicle). Many early AUVs were large, 

inefficient and expensive. While advanced technology was applied 

to ROVs in the early 1980s, AUV technology lagged behind. 

Currently, more than 60 AUVs are under development or are 

operational in at least 12 countries. In the U.S., the military has 

invested hundreds of millions of dollars in AUV development. 

Japan plans to employ an AUV to reach the depths of the Mariana 

Trench, while the Jet Propulsion Laboratory, U.S. (JPL) is creating 

AUVs capable of boring through the ice and gathering data from 

the seas of other planets and moons. Technological breakthroughs 

from scientists at Florida Atlantic University, Massachusetts 

Institute of Technology and Woods Hole Oceanographic 

Institution are expected to reduce the high cost of AUV 

development. 
31

3. Geographical Distribution 

Unless otherwise noted, the text in this section is from the Marine Technology Society, ROV 

Committee (2006d). 

There are several spots around the world where the majority of diving and ROV operations 

occur. They are primarily tied, of course, to the production of oil and gas. It is estimated that 

nearly 400 work class ROVs are in operation at this time servicing the oil and gas industry. The 

following bullets discuss the level of ROV activity around the world. 

• Europe – Because the North Sea is a treacherous work environment with cold 

waters and severe wind and current conditions, it is an area of high ROV 

activity. 

• Asia - Much activity stretches from Western Australia (Asia Pacific) to 

Malaysia and the South China Sea. 

• South America - The majority of ROV operations in South America are 

occurring off Brazil, mainly in the oil rich Campos Basin. Petrobras continues 

the move to deeper water in the Campos Basin in depths up to 6,562 feet 

(2,000 meters). 

• North America – As companies in the GOM are move into deeper waters, 

their reliance on ROVs increases. 

• Arctic – ROVs assist with major developments in the icy deepwaters of the 

Barents Sea and Kara Sea. 

• Africa - West Africa is a major hot spot with new leases available in water 

over 2,500 meters. 

• Other - Other areas where ROVs are required are off Newfoundland, Alaska, 

the Caspian Sea off Azerbaijan, Trinidad, the West Coast of California, off 

Australia in the Indian Ocean, the Bass Strait in the Tasman Sea and the 

Mediterranean Sea off Egypt. 

Three major diving and ROV contractors have locations throughout the GOM. In addition to the 

three companies shown in Table 3 below, a number of smaller companies have locations in 

places such as Mobile, Alabama; Gulf Shores, Alabama; Belle Chasse, Louisiana; Galliano, 

Louisiana; Harvey, Louisiana; and Slidell, Louisiana (Atlantic Communications, 2006). 
32

Table 3 

 Location of Major Diving and ROV Contractors 

 Source: SEC, 2006h; SEC, 2006i; SEC 2006j. 

4. Labor Force 

The Bureau of Labor Statistics provides labor statistics for a generalized category of 

“commercial divers.” The BLS estimates that 2,680 commercial divers are employed in the 

U.S., with the highest concentration located in Florida, Virginia and South Carolina. According 

to 2006 salary estimates, commercial divers had average annual earnings of $45,410 (U.S. Dept. 

of Labor, BLS, 2007b). 

The BLS breaks out employers of commercial divers into five categories: other support services, 

other heavy and civil engineering construction, highway, street and bridge construction, support 

activities for water transportation and amusement parks and arcades. 

Often divers have to piece together short periods of work for a number of employers or work on 

contracts. For example, construction divers rarely have a project that supplies more than 90 

consecutive days of work. Therefore, self-employment is quite common among commercial 

divers. 

All three major diving companies report that the ability to attract and retain skilled employees is 

an important factor in their success. Global Industries, Ltd. reports that their ability to expand 

operations is impacted by their ability to increase their labor force. The demand for skilled 

workers in the underwater construction industry is high, and supply is limited. As a result of the 

cyclical nature of the oil and gas industry as well as the physically demanding nature of the 

work, skilled workers may choose to pursue employment in other fields. A significant increase 

in the wages paid or benefits offered by competing employers could result in a reduction in one 

company’s skilled labor force, increases in employee costs, or both. If either of these events 

occurs, Global Industries’ operations and results could be materially adversely affected (SEC, 

2005g). 

Helix

Energy Global

Solutions Industries Oceaneering

Louisiana

Carlyss

Port of Iberia

Fourchon

Morgan City

New Orleans

Texas 

Houston

Dallas
33

5. Typical Firms 

The underwater contracting industry is divided into two segments, large corporations operating 

in all water depths with their own support fleet of vessels, and small organizations targeting 

surface diving projects, with some ownership of vessels. 

The Atlantic Communications’ Gulf Coast Oil Directory lists a total of 46 Diving and ROV 

contractors in its directory. Of these 46, 26 are reported with a range for the number of 

employees. As shown in Figure 12, the majority of companies (17 companies) in the GOM area 

are smaller with a range of 1 to 25 employees. Only two companies, Helix Energy Solutions 

Group Inc and Oceaneering International have over 500 employees. 

0

2

4

6

8

10

12

14

16

18

1 to 25 26 to 100 101 to 250 251 to 500 501-1000

number of companies

number of employees

 Figure 12. Number of employees at GOM-based diving and ROV contractors. 

There are three major competitors in the U.S. GOM. These companies are Helix Energy 

Solutions Group Inc. (formerly Cal Dive Inc.), Global Industries, Ltd, and Oceaneering 

International, Inc. (SEC, 2006i). 

The companies report that the marine contracting industry is highly competitive. Price is a 

factor, however, the ability to deploy modern equipment and techniques, acquire specialized 

vessels, attract and retain skilled personnel, and demonstrate a good safety record is also 

important (SEC, 2005g and SEC, 2005h). Competition for ROV services has historically been 

based on equipment availability, location of or ability to deploy equipment, quality of service 

and price. The ability to develop improved equipment and techniques and to attract and retain 

skilled personnel is also an important competitive factor in the ROV market (SEC, 2006j). 

Helix Energy Solutions Group Inc. is the market leader in the diving support business in the 

GOM OCS. Their services include construction, inspection, maintenance, repair and 

decommissioning. Helix owns a fleet of 26 vessels, including 23 surface and saturation diving 

Source: Atlantic Communications, 2006. 
34

support vessels capable of operating in water depths of up to 1,000 feet, as well as three shallowwater pipelay vessels (SEC, 2006i). In August 2005, Helix acquired five diving support vessels, 

two shallow water pipelay vessels and a portable saturation diving system from Torch Offshore. 

In November 2005, Helix acquired all of Stolt Offshore’s assets operating in the GOM. Stolt 

Offshore was previously Helix’s major competitor in the GOM. In January 2006, Helix also 

acquired Stolt’s shallow water pipelay vessel (SEC, 2005h). 

Oceaneering International owns the largest and most technically advanced fleet of ROV’s in the 

world. Oceaneering owns 186 work-class ROV’s and estimates that it has a market share of 36 

percent. Oceaneering’s major customers accounted for 23 percent of consolidated revenue. Four 

of their top five customers are oil and gas exploration and production companies. The other topfive customer was the U.S. Navy (SEC, 2006j). 

In March 2004 it was estimated (most recent estimate) that approximately 435 work- and heavy 

work-class ROV systems were active in the world (see Table 4), representing approximately $1.5 

billion in capital assets. The majority of these systems are owned by seven major commercial 

operators (totaling approximately 405 systems). Another 30 systems are operated by smaller 

companies, academia, and other non-commercial organizations (Marine Technology Society, 

ROV Committee, 2006e). 

Table 4 

Work Class ROV Systems Operating Worldwide 

 Source: Marine Technology Society, ROV Committee, 2006e. 

The health of the ROV industry is closely tied to the level of activity in the offshore oil and gas 

industry. The majority of work class ROV systems are employed by offshore hydrocarbon 

exploration and production companies. The second most significant market is the support of 

installing and maintaining undersea cable systems. The split between these two markets can be 

difficult to define because of the dual use of many systems. However, it is estimated that of the 

400 commercial systems deployed, about 85 percent is for hydrocarbon production and 15 

percent is for undersea cable support (Marine Technology Society, ROV Committee, 2006e). 

Oceaneering International, Inc. 152

Subsea 7 (Halliburton/Subsea) 78

Stolt (Stolt/Comex/Seaway) 35

Sonsub (Saipem) 59

Fugro (ex Racal/Thales) 36

Canyon (Cal Dive) 23

Technip-Coflexip 22

Others- Approximate number of specialty systems, plus 

systems operated by smaller companies.

30

Total Systems 435

Work Class ROV Systems Operating Worldwide
35

C. Industry Trends and Outlook 

1. Trends 

The underwater contracting industry is “substantially dependent on the condition of the oil and 

gas industry, and in particular, the willingness of oil and gas companies to make capital 

expenditures for offshore exploration, drilling and production (SEC, 2006i).” The level of these 

capital expenditures by and large is dependent upon the forecast of oil and gas prices. The 

factors that influence oil and gas prices include but are not limited to (SEC, 2006i): 

• worldwide economic activity; 

• economic and political conditions in the Middle East and other oil-producing 

regions; 

• coordination by OPEC; 

• the cost of exploring for and producing oil and gas; 

• the sale and expiration dates of offshore leases in the United States and 

overseas; 

• the discovery rate of new oil and gas reserves in offshore areas; 

• technological advances; 

• interest rates and the cost of capital; 

• environmental regulations, and 

• tax policies. 

During the year 2005, Helix Energy Solutions Group’s revenues increased 47 percent to $799.5 

million. Of the $256.1 million increase, 50 percent (126.4 million) was generated by the 

Company’s Deepwater Contracting segment. Its Shelf Contracting segment generated almost 40 

percent of that increase. The Company attributes the increase in the Deepwater Contracting 

segment to improved market demand resulting in significantly improved utilization rates and 

contract pricing. The increase in the Shelf Contracting segment’s revenues can also be attributed 

to improved market demand, but mostly as a result of damages to structures sustained from 

Hurricanes Katrina and Rita (SEC, 2005h). 

Helix Energy Services experienced even larger increases in 2006. Revenues increased by 71 

percent compared to 2005. Their Contracting Services revenues increased primarily due to 

improved market demand and the addition of acquired vessels. Shelf Contracting revenues 

increased because of acquired vessels in addition to improved market demand – much of which 

was the result of damages from the 2005 hurricanes. This resulted in improved utilization rates 

and increased pricing for services (SEC, 2006i). 
36

Oceaneering also saw increased revenues in 2005 and 2006. About 90 percent of Oceaneering’s 

revenue is from services provided to the oil and gas industry. In 2005, revenue increased by 28 

percent (SEC, 2005i). The Company’s ROV business accounted for 41 percent of this increase. 

The Company attributes this increase to increased utilization rates and a larger average workclass fleet size (SEC, 2005i). 

In 2006, Oceaneering increased its revenue by 28 percent. Thirty percent of this increase was in 

the ROV segment. This increase was primarily a result of an improvement in average pricing 

and growth in days on hire for the work-class fleet. The Subsea Projects segment continued to 

benefit from increased demand, which resulted in improved rates and high utilization for 

Oceaneering’s seven vessels and diving assets (SEC, 2006j). 

Oceaneering is anticipating that ROV demand will continue and in 2006 it invested in a new 

generation Saturation Diving System (SAT) (Natural Gas Week, 2005; and SEC, 2006j). The 

three-man SAT system was built in response to the demand for underwater construction and 

repair work in the GOM following Hurricanes Ivan, Katrina and Rita. The ROVs and SAT 

system can also be used to replace aging infrastructure in the GOM. Also in response to 

increasing demand to support deepwater drilling and future construction and maintenance work, 

the company added 82 ROVs to its fleet from 2007 through 2009 (SEC, 2009b).3

 The company 

expects its operating income to increase through 2010 (SEC, 2009b). 

2. Hurricane Impacts 

In addition to the steady work created by increased offshore activity, as well as removal work, 

the hurricanes of 2004 and 2005 provided a boom for underwater contractors. 

In 2004, Hurricane Ivan mangled miles and miles of seafloor pipe. In 2005, after Hurricanes 

Katrina and Rita, companies like Helix and Oceaneering were in high demand inspecting and 

repairing damage (Elliot, 2005). Helix’s fleet of shallow and deepwater dive support and 

construction vessels had been fully utilized prior to the hurricane (Spencer, 2005). After 

Hurricane Katrina, shares for Helix (then Cal Dive International) jumped $3.02, nearly 6 percent. 

Shares of Global Industries based in Carlyss, Louisiana, increased nearly 13 percent (Ivanovich, 

2005). 

John Huff, of Oceaneering International, said his company began to see an increase in demand 

for both subsea projects and ROV almost immediately after Hurricane Katrina. “We've deployed 

all our available ROV equipment in the (Gulf) and we're trying to bring in additional equipment 

from our worldwide system (Spencer, 2005).” 

For Global Industries, Ltd., revenues in its Global Divers and Marine Contractors Division 

increased 70 percent for the GOM. Revenues in its Offshore Construction Division in the GOM 

increased 147 percent in 2005 from $65.1 million to $160.6 million. Activity and pricing had 

already begun to improve in the fourth quarter of 2004 after Hurricane Ivan and continued to 

increase during the first two quarters of 2005. Demand for the services of the Company’s Gulf 

of Mexico segment increased even further during the third and fourth quarters of 2005 due to the 

effects of Hurricanes Katrina and Rita, and the Company initiated numerous projects for 

 

3

 During this time, 20 units were disposed. 
37

hurricane repairs on a day-rate basis during these quarters. The number of diver-days increased 

64 percent in 2005 and utilization of Global Industries’ six major construction vessels in the Gulf 

of Mexico during 2005 was 74 percent compared to seven vessels achieving 20 percent in 2004. 

(SEC, 2006h). 

3. Outlook 

In June 2009, Oceaneering International reported that over the past few years, it has had a high 

level of demand due to high prices for oil and gas as well as the damage caused by the 2004 and 

2005 hurricanes. Oceaneering started experiencing a decline in hurricane-related repair work 

during the first half of 2008 as work was completed, but then experienced yet another increase at 

the end of 2008 after Hurricanes Gustav and Ike. The damage repair work from the 2008 

hurricanes continued into 2009. Oceaneering expects its ROV and subsea operating income to 

increase through 2010, due to increases in days on hire (SEC, 2009b). 

According to a 2007 report by energy-analysts Douglas-Westwood, since 2002 expenditure on 

work-class ROV operations has more than doubled, and further strong growth is expected over 

the next five years – leading to a total market of some US$1.46 billion per year by 2011. “We 

estimate that, in 2006, some US$827 million was spent on the operation of work-class ROV 

units worldwide – an increase of some 86 per cent on the 2002 value. We forecast that this will 

increase by a further 76 per cent to a 2011 value of US$1,458 million – a [sic] more than a 

tripling of the market over the 10 year period. Regionally, we expect North America and 

Western Europe to account for the largest proportion of ROV activity – some 50 percent of the 

total units we expect to operate in 2007 are associated with these regions (Offshore Shipping 

Online, 2007).” 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

U.S. Department of Labor, Bureau of Labor Statistics 

Occupational Employment Statistics summary is available annually for selected occupations. 

http://www.bls.gov/oes/

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
39

III. MUDS, DRILLING FLUIDS AND LUBRICANTS

A. Description of Industry and Services Provided 

Drilling mud, also called drilling fluid, is a mixture of natural clays and heavy minerals, and 

small amounts of other chemicals suspended in water or an organic liquid. Mud is an essential 

part of any oil and gas production operation and is used primarily to lubricate, clean and cool the 

drill bit during operations. However, drilling mud also serves other purposes as well, including: 

1) as a transfer medium for removing cuttings produced by the drill bit at the bottom of the hole 

and carrying them to the surface; 2) as a method of maintaining hydrostatic equilibrium that 

prohibits fluids and gas in the formation from entering the well bore (which causes the well to 

flow, kick or blow out); and 3) as a support of the wall of the hole, which helps prevent the hole 

from collapsing. In short, there would be no drilling without these important fluids. 

Mud is pumped down a hole where it is applied to the drill bit, and then is pumped back up the 

hole in the annular space between the drill string and the sides of the hole to the surface. Metal 

cuttings are carried to the surface and are then filtered out and the mud enters a mud pit, where it 

is treated and is re-used. Offshore facilities have drilling mud transported to their rigs via 

offshore supply vessels (OSVs). 

The efficiency of a drilling fluid depends on physical properties such as density (weight), 

viscosity, plastic viscosity, yield point, gel strength, solid contents, and sand. Wells in the GOM 

are considered “deep wells” if they are drilled beyond 15,000 feet, where high pressures, high 

temperatures, and high flow rates are the norm and require drilling fluids able to withstand these 

enormous pressures. (IPAA, 2004) 

Drilling muds are made of bentonite and other clays, and/or polymers, mixed with water to the 

desired viscosity (Wills, 2000). Three types of drilling muds are used offshore: water-based 

drilling mud (WBM), oil-based drilling mud (OBM), and synthetic-based drilling mud (SBM). 

The OBMs are best for drilling, but have the potential to cause damage to marine communities. 

WBMs and cuttings are less toxic for the environment and until recently were the only types of 

drilling wastes permitted for ocean discharge in U.S. waters. The down side of WBMs is that 

they do not work well, particularly when drilling a very deep or deviated well. SBMs were 

developed to combine the favorable drilling properties of OBMs with the low toxicity of WBMs. 

In its liquid phase, SBMs are a synthetic organic chemical (usually an ester or olefin), which do 

not pose as serious environmental concerns as OBMs (Battelle.org, 2004). 

The SBMs have only been used in the last 15 years, primarily in the Gulf of Mexico and the 

North Sea, and though their cuttings are discharged into the ocean, the drilling mud itself is 

recycled. Research and development of these materials is focused on improving the synthetic 

drilling fluids to withstand high solids content and temperatures while meeting environmental 

discharge standards (Battelle.org, 2004). 

Over the years individual drilling companies have devised formulations of muds to deal with 

specific types of drilling. These mud "recipes" are based on long experience, arcane knowledge 

and special skills, and are closely guarded secrets, making it difficult to determine if particular 

types of muds are hazardous. However, each product must have on file with the government a 
40

Material Safety Data Sheet in which hazardous ingredients, physical data, reactivity data, health 

hazard, first aid requirements, etc. are included (Wills, 2000). 

It may vary greatly, but the cost of the drilling fluid is typically about 10 percent of the total cost 

of well construction. Good mud engineers are essential, their competence has a large impact on 

the cost of a drilling project. (Brandt/EPI, 1996). Use of drilling muds is as important for 

offshore production as it is onshore. Once the drilling bit encounters sediments it is essential that 

muds be employed (see Figure 13). 

 Figure 13. Mud injection process. 

B. Industry Characteristics 

1. Typical Facilities 

Waste Disposal 

In both onshore and offshore applications it is essential that drilling muds are cleaned and that 

unusable wastes are disposed of properly. Generally, the cost of treating and discharging drilling 

wastes is lower than the cost of hauling them back to shore or applying other management 

options. The cost of transporting wastes is eliminated when wastes are discharged. When 

offshore discharge is an option approved by the regulatory agency, most operators choose that 

option (USDOE, DWMIS, 2007a). 

In early offshore oil and gas development, for the most part, drilling wastes were discharged 

straight from the platforms to the ocean. However, during the 1970s and 1980s, evidence began 

to mount that some of these discharges could have damaging effects on local ecology, 

Source: USDOE, DWMIS, 2007b. 
41

particularly in shallow water. Limited environmental damage was likely to occur from WBMs, 

but when operators were using OBMs on deeper sections of wells, the resulting cuttings piles 

created impaired zones beneath and adjacent to the platforms. Piles of these oil-based cuttings 

affected the local ecosystem by (1) smothering organisms; (2) direct toxic effect of the drilling 

waste; and (3) anoxic conditions caused by microbial degradation of the organic components in 

the waste (USDOE, DWMIS, 2007a). The current regulations lessen the impacts of permitted 

discharges. Although WBMs and limited amounts of SBMs retained on cuttings can still be 

discharged, discharges of OBMs have been outlawed completely (USDOE, DWMIS, 2007a). 

Usually, the most affected area is the seafloor immediately below the rig (see Figure 14). The 

impacts are short-term (a few years) as the accumulated drill cuttings break-up and spread out 

with time, while components of drilling fluids, such as mineral oil, can decompose and dissipate 

in the environment (CNSOPB, 1998). 

 Figure 14. Typical dispersion of ocean discharge. 

Once released into the water, fine particles from the discharges become suspended and move 

with the water, following the currents. The farther the discharge moves, the more dilute and less 

harmful it becomes. Studies examining the effects of exploratory drilling on the U.S. portion of 

Georges Bank found that small amounts of some drilling muds (in particular the weighting agent 

barite) had been transported as much as 60 km from the well site (CNSOPB, 1998). Sea scallops 

and other filter feeding organisms are particularly sensitive to fine particles (CNSOPB, 1998). 

By 1996, a number of international agreements had been made that outlawed the discharge of 

OBMs containing diesel or mineral oils. This was the result of findings that large areas of 

seabed around hundreds of offshore installations had been adversely impacted by oil based muds 

and cuttings (OSPAR. 1992. PARCOM Decision 92/2 on the Use of Oil-based Muds. See also: 

OSPAR. 1996. PARCOM Decision 96/3 on a Harmonized Mandatory Control System for the 

Use and Reduction of the Discharge of Offshore Chemicals; OSPAR. 1997. PARCOM Decision 

97/1 on Substances/Preparations Used and Discharged Offshore; OSPAR. 1999. List of 

Substances / Preparations Used and Discharged Offshore Which Are Considered to Pose Little 

or No Risk to the Environment (PLONOR)) (Wills, 2000). 

Source: CNSOPB, 1998. 
42

In the late 1970s the U.S. Environmental Protection Agency (USEPA) began to restrict ocean 

discharges of drilling muds and cuttings through the Clean Water Act, Effluent Limitation 

Guidelines, and National Pollutant Discharge Elimination System (NPDES) permits. This 

included the prohibition of the discharge of OBMs and OBM wetted-cuttings. In 1993, the 

USEPA adopted enhanced national discharge standards that established additional requirements 

for wells drilled in federal waters at least 3 miles from shore and prohibited discharges within 

states’ territorial seas (with the exception of Alaska) (USDOE, DWMIS, 2007a). 

Synthetic-based muds (SBMs) were developed and promoted to offer drilling performance 

similar to that of OBMs, but much closer to WBMs in terms of environmental impact. The 

USEPA’s discharge regulations of 1993 did not consider SBMs. Consequently, there was 

considerable uncertainty about the use and discharge of SBMs offshore. Various federal 

agencies and numerous companies and industry associations worked together following an 

innovative expedited rulemaking process to finalize new effluent limitations guidelines (ELGs) 

for SBMs in 2001. Those guidelines were included in NPDES permits to allow for discharge of 

SBM cuttings, subject to various restrictions, but prohibit the discharge of drill muds themselves 

(USDOE, DWMIS, 2007a). SBMs are expensive so they are cleaned and recycled. SBMs use 

results in far less wastes and allows for faster drilling. Based on the scientific evidence, the 

discharge of very low quantities of SBMs adhered to the cuttings allowed by the current 

regulations appears to have minimal and brief impact on the ocean environment (USDOE, 

DWMIS, 2007c). 

Treatment Processes Prior to Discharge 

Solids-control equipment is used to remove drill cuttings from the fluid system once it is brought 

to the surface, allowing the drilling fluid to be cleaned and recirculated. Solids are normally 

separated from the drilling fluid using one or a combination of the following: balanced elliptical 

and linear-motion shale shakers, desanders, desilters, hydroclones, mud cleaners and centrifuges 

(see Figure 15). Each successive shale shaker uses finer mesh screen to collect smaller and 

smaller particles. The liquid mud passes through the screens and is returned to mud pits on the 

platform for reuse. If the recycled mud still has fine particles that could interfere with drilling 

performance, the muds are treated using mud cleaners or centrifuges to remove the remaining 

particles (USDOE, DWMIS, 2007b). 
43

 Figure 15. Shale shaker. 

If the solid cuttings that are collected by the shakers meet the discharge standards then they are 

generally discharged. However, if the cuttings do not meet the discharge standards they are 

collected and returned to shore or injected for disposal (see Table 5) (USDOE, DWMIS, 2007a). 

Table 5 

Summary of U.S. Offshore Requirements for Drilling Wastes

 Baseline Requirements 

• No discharge of free oil (using a static sheen test) or diesel oil 

• Acute toxicity must have a 96-hour LC50 > 30,000 ppm 

• Metals concentrations in the barite added to mud must not exceed: 

o 1 mg/kg for mercury 

o 3 mg/kg for cadmium 

• No discharge of drilling wastes allowed within 3 miles of shore (except for Alaskan facilities in 

the offshore subcategory) 

 Additional Requirements for Synthetic-Based Muds (SBMs) 

• SBMs themselves may not be discharged 

• Cuttings coated with up to 6.9% SBMs may be discharged 

o Ester SBMs can have up to 9.4% SBM on cuttings 

• Polynuclear aromatic hydrocarbon (PAH): 

o Ratio of PAH mass to mass of base fluid may not exceed 1 x 10-5 

• Biodegration rate of chosen fluid shall be no slower than that for internal olefin 

o Base fluids are tested using the marine anaerobic closed bottle test 

• Base fluid sediment toxicity shall be no more toxic than that for internal olefin base fluid 

o Base fluid stocks are tested by a 10-day acute solid-phase test using amphipods 

(Leptocheirus plumulosus) 

o Discharged cuttings are tested by a 4-day acute solid-phase test using amphipods 

(Leptocheirus plumulosus) 

• No discharge of formation oil 

o Whole muds are tested onshore by GC/MS analysis 

o Discharged cuttings are tested for crude oil contamination by fluorescence method 

• Conduct seabed survey or participate in industry-wide seabed survey 

 Source: USDOE, DWMIS, 2007a.

Source: USDOE, DWMIS, 2007a. 
44

Technology does exist to contain contaminated drill cuttings in underground reservoirs. This can 

be done either by installing equipment on each rig, platform or drill ship, or by shipping the 

wastes to a port for onshore re-injection. Or, operators can consider alternative disposal methods 

such as treatment, recycling, incineration and/or landfill onshore. Efforts are being made to 

reduce the volume of drilling wastes produced and to minimize their effects on the sea. Among 

these efforts include: using less toxic alternatives, including less reliance on SBM and more 

effective WBM; shipment of wastes ashore; and re-injecting cuttings offshore in an injection 

well (Wills, 2000). 

Cuttings Re-Injection (CRI) 

Cuttings re-injection is a form of waste disposal where drill cuttings and other wastes are mixed 

into slurry filled with water and pumped down an injection well at a high pressure. The 

hydraulic pressure can be used to help make the injection easier by breaking down particles. 

Re-injection of drill cuttings normally begins by collecting the wastes and transporting them to a 

processing station where they are milled and sheared in water. The resultant slurry is then 

pumped, usually by batch nature, at low rates (2.0 – 8.0 barrels/minute) into a disposal well. 

Sequential annulus injection is a method used where cuttings from the well being drilled are 

injected into the annulus of the most recently completed well (Orszulik, 2008). This method can 

be advantageous, mostly because of its flexibility and because it does not require drilling a 

dedicated disposal well. However, in general these wells are often ruled out because of their 

high cost (Wills, 2000). 

2. Geographical Distribution 

Drilling fluids suppliers can be found wherever drilling activity is taking place, and near all onshore supply bases along the Gulf Coast. 

3. Labor Force 

The drilling fluids industry employs many workers as laborers as well as specialized workers 

such as drilling fluids or mud engineers, who often work for the company selling the chemicals 

for the job and are specifically trained with those products. Independent mud engineers are still 

common as well. A mud engineer has a general salary of $57,000 (USD) (OilCareer.com, 2007). 

Mudloggers monitor gas from the mud and collect wellbore samples to be analyzed by 

geoscientists to gain more information about rock structures and the presence of hydrocarbons. 

Entry-level salaries for mudloggers range from $30,000 (USD) to $45,000 (USD) with average 

salaries for experienced personnel ranging from $45,000 (USD) and $55,000 (USD) for onshore 

positions, and up to $70,000 (USD) for offshore experience (Nova Scotia Department of Energy, 

2007). 

In offshore drilling, with new technology and high total day costs, wells are being drilled 

extremely fast. Having two mud engineers makes economic sense to prevent down time due to 

drilling fluid difficulties. Two mud engineers also reduce insurance costs to oil companies for 

environmental damage that oil companies are responsible for during drilling and production. 
45

4. Typical Firms 

The Atlantic Communications’ Gulf Coast Oil Directory lists a total of 61 Drilling Mud and 

Services companies in its directory. Of these 61, 39 report their number of employees. As 

shown in Figure 16, the majority of companies (23 companies) in the GOM area are smaller with 

a range of 1 to 25 employees. Only two companies, Cabot Specialty Fluids and Halliburton, are 

reported as having over 500 employees. 

0

5

10

15

20

25

1 to 25 26 to 100 101 to 250 250 to 500 500 to 1000 1000+

number of companies

number of employees

 Figure 16. Number of employees at GOM-based drilling mud and services 

 companies. 

The drilling fluids, or muds, industry has always been very competitive, and the market is driven 

by price and performance. As shown in the figure above, the majority of competitors in the 

GOM are smaller, private companies. There are however, large integrated major companies such 

as Cabot, Halliburton, and Newpark Resources. Generally, competition is based on several 

factors, including well site engineering services, product quality and availability, technical 

support, service response, and price. 

Perhaps the largest company in this segment is Halliburton, a $13.5 billion conglomerate of 

which fluid services is just one of six business units. Based in Houston, the Fluid Systems 

division had revenues exceeding $3.5 billion in 2006 with $1.8 billion attributed to the North 

America market (SEC, 2006k). 

The Specialty Fluids Business of Cabot Corporation produces and markets cesium formate as a 

drilling and completion fluid for high pressure and high temperature oil and gas well operations. 

Cesium formate is rented to customers for use in drilling operations on a short-term basis. After 

completion of a job, the customer returns the fluid to Cabot and it is reprocessed for use in 

subsequent well operations. Any fluid that is lost during use is paid for by the customer. The 

rates to be charged for the rental and any loss are negotiated and agreed to prior to the beginning 

Source: Atlantic Communications, 2006. 
46

of the job. Usually, approximately 15 percent of the cesium formate used in an operation is lost 

(SEC, 2006l). 

Newpark Resources is a diversified oil and gas industry supplier with three operating segments, 

including fluid systems. Its customers are primarily major and independent oil and gas 

exploration and production (E&P) companies. During the year ended December 31, 2006, 

approximately 43 percent of Newpark’s revenues were derived from its 20 largest customers. 

No one customer accounted for more than 10 percent of its consolidated revenues. Typically, 

Newpark performs services either under short-term standard contracts or under longer term 

service agreements. As most agreements with Newpark’s customers are cancelable upon short 

notice, its backlog is not significant (SEC, 2006m). 

Like other competitors, all of these companies have large research and development practices to 

continuously improve existing drilling fluids, and to produce new products that improve drilling 

efficiency and meet environmental regulations. 

C. Industry Trends and Outlook 

1. Trends 

As noted by Newpark Resources in its recent annual SEC filing, several factors drive demand for 

services, including: (i) supply, demand and pricing of oil and gas commodities which drive E&P 

development activity; (ii) a trend toward deeper and otherwise more complex drilling that drives 

drilling fluid consumption and increasing technical requirements; (iii) the continued trend of 

E&P development into more environmentally sensitive areas; and (iv) the use of increasingly 

complex drilling techniques that tend to generate more waste. Demand for most services is 

related to the level, type, depth and complexity of oil and gas drilling (SEC, 2006m). The most 

widely accepted measure of activity is the Baker Hughes Rotary Rig Count, which as shown in 

Figure 4 has been rising since early 2002 in response to strengthening oil and gas prices. Figure 

5, however, shows that drilling in the GOM has decreased in recent years. 

In 2006, Newpark reported revenues from its fluid systems division of $481 million ($302 

million from U.S. sales), up from $384 million in 2005. Newpark reported that the revenue 

growth was due to new market penetration and servicing of more complicated wells that generate 

higher revenues and improved margins (SEC, 2006m). 

Halliburton’s North America revenue for 2006 grew $1.6 billion compared to 2005. This growth 

was primarily led by production enhancement services, where it helps customers optimize the 

production rates from the wells by providing stimulation services. Despite having downsized its 

GOM operations due to its downturn in 2002-2003, Halliburton continues to have a significant 

presence in the region and is positioned to meet increasing customer demand. As a result, 

revenue from the Gulf of Mexico in 2006 was up 32 percent year-over-year, which contributed to 

a 152 percent increase in operating income in the Gulf of Mexico (SEC, 2006k). 

Halliburton’s Fluid Systems segment operating income increase compared to 2005 resulted from 

54 percent growth from Baroid Fluid Services and 43 percent growth in operating income from 

cementing services. Baroid Fluid Services operating income benefited primarily from increased 

activity and improved pricing in the United States and increased activity in Asia. Cementing 
47

services results increased predominantly in the United States due to increased activity and new 

contracts along with increased activity in Europe (SEC, 2006k). 

2. Hurricane Impacts 

As in every other offshore drilling and production segment, the 2005 hurricanes affected the 

drilling muds industry due to well shut-ins and damaged infrastructure. In the case of 

Halliburton, the hurricane related delays cost about $33 million of lost operating income (Kelly, 

2005). Much of the increased activity in 2006 was the result of repair work to existing wells, as 

well as new drilling operations in the GOM. Other drilling fluid companies were also impacted, 

but most are operating at or near pre-storm levels. 

3. Outlook 

As in other exploration and production-associated segments, the drilling fluids business is 

subject to the cyclical nature of the oil and gas industry as a whole. With current high oil and 

gas prices and the move to deepwater wells, the demand for drilling fluid business is great and, 

ever-tightening restrictions associated with OBM, WBM, and SBM intensify the search for 

better, more environmentally friendly muds. 

In its 2008 SEC filing, Halliburton reviewed the downturn in drilling and production activities in 

North America. The filing discusses falling rig counts and cuts in capital expenditures 

(especially related to conventional and shallower drilling activity) (SEC, 2008a). Falling natural 

gas prices, excess equipment supply and customer requests for discounts on work are all signs of 

market weakness. Halliburton also expects “severe margin contraction to occur worldwide 

starting in the first quarter of 2009.” 

Similarly, in a 2009 quarterly filing, Newpark Resources explained that the current economic 

environment, the instability of credit markets and declines in oil and gas prices have significantly 

impacted drilling activity. This decline has negatively impacted Newpark’s operating results. 

Newpark expects this trend to continue for the remainder of 2009 and 2010. In response to these 

declines in activity and increased price competition, Newpark has attempted to cut costs by 

reducing their workforce, capital expenditures, discretionary spending and salaries (including the 

temporary elimination of 401(k) matching for U.S. employees) (SEC, 2009c). 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp
48

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
49

IV. AIR TRANSPORT 

A. Description of Industry and Services Provided 

The offshore oil and gas industry depends on support from helicopter transportation services to 

move equipment and personnel. Helicopters can provide a cost effective method of transporting 

workers and supplies to and from specialized vessels, drilling rigs, production platforms and 

pipeline terminals. Generally used to reach platforms of intermediate to long distances from the 

shoreline, they are used for both routine excursions and time sensitive operations. Helicopters 

may also be tasked to patrol pipelines for signs of leaks or damage. 

B. Industry Characteristics 

1. Typical Facilities 

Most service providers maintain a mix of small, medium and large sized aircrafts to meet the 

diverse needs of the offshore industry. A few people making a short, daytime trip in good 

weather to a small production site would need only a small helicopter carrying four to seven 

passengers, whereas shift change crews, trips to distant locations, bad weather, international 

markets or large loads would require the use of medium sized craft carrying up to 13 passengers 

or even larger ones holding up to twenty-five. As production activity moves ever farther 

offshore, into the deepwater of the Gulf of Mexico, the need for medium and large helicopters 

will continue (SEC, 2006b). 

The following descriptions provide some examples of the helicopters available to service the 

Gulf. Unless otherwise noted, the pictures and descriptions of the following helicopters are from 

the PHI, Inc website (PHI, Inc., 2006). 

Small-Sized Helicopters 

Smaller sized helicopters include the 

Boelkow BO-105 which have a range of 

330 miles, an average cruise speed of 135 

miles per hour and a capacity of four 

passengers and one pilot. 

The Bell 407 is also a smaller sized 

helicopter. It has a range of 375 miles and 

an average cruise speed of 150 miles per 

hour. It has a capacity of 1 passenger and 

one pilot. 
50

Medium-Sized Helicopters 

The Sikorsky S-76 is medium sized 

helicopter with a range of 450 miles, an 

average speed of 160 miles per hour and a 

capacity of 12 passengers and two pilots. 

The Bell 412 is medium sized helicopter 

with a range of 335 miles, an average 

speed of 135 miles per hour and a 

capacity of 13 passengers and two pilots. 

Large-Sized Helicopters 

The Bell 214-ST is a large size helicopter. 

It has a range of 450 miles and an average 

cruise speed of 155 miles per hour. The 

Bell 214-ST has a capacity of 18 

passengers and two pilots. 

The Sikorsky S-92 is a large size 

helicopter. It has a range of 516 miles, an 

average cruise speed of 175 miles per 

hour and a capacity of 19 to 24 passengers 

and two pilots. 

2. Geographical Distribution 

Helicopter service providers typically have large fleets that are geographically dispersed along 

the Gulf shore to allow for quick service to all locations in the Gulf. Figure 17 shows the 

locations in which the largest three providers operate. Almost any location in the Gulf of 

Mexico can be reached by any one of these locations. 
51

State/City PHI OLOG ERA State/City PHI OLOG ERA

Alabama 14 New Iberia

1 Theodore 15 New Orleans

Louisiana 16 Schriever

2 Abbeville 17 Patterson

3 Boothville 18 Venice

4 Cameron Texas

5 Creole 19 Corpus Christi

6 Fourchon 20 Freeport

7 Galliano 21 Fulton

8 Harahan 22 Galveston

9 Houma 23 Port O'Connor

10 Johnson's Bayou 24 Rockport

11 Lafayette 25 Sabine

12 Lake Charles 26 Sabine Pass

13 Morgan City

 Figure 17. Locations of major helicopter service providers. 

3. Labor Force 

The Bureau of Labor Statistics includes labor information for helicopter pilots in the general 

category of “aircraft pilots and flight engineers.” This would include pilots for commercial 

airlines as well as those involved in other commercial tasks such as dusting crops, testing 

aircraft, flying passengers and cargo to areas not served by regular airlines, directing firefighting 

efforts, tracking criminals, monitoring traffic, and rescuing and evacuating injured persons. For 

our purposes this category of labor statistics is too broad. 

We can, however, look at the last five years of employment by the Gulf region’s two largest 

helicopter service companies – PHI, Inc., and Bristow Group (formerly Offshore Logistics). As 

shown in Figure 18, employment at these companies has remained relatively stable. At the end 

of 2006, PHI, Inc. employed about 2,126 full-time employees. This includes approximately 525 

pilots and 1,373 aircraft maintenance and support personnel (SEC, 2006d). Approximately 3,600 

of Bristow Group’s 4,160 employees are employed in its Helicopter Services segment. About 

300 of these are pilots in Bristow’s North American business unit (SEC, 2007a). Pilots 

employed by PHI and Bristow Group are represented by the Office & Professional Employees 

International Union. 

Source: PHI Inc., 2006; Offshore Logistics, 2005a; SEC, 2005a; SEC, 2005d. 
52

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2001 2002 2003 2004 2005 2006

Pilots Maintenance & Support Personnel

PHI, Inc

Number of Employees

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2001 2002 2003 2004 2005 2006

Bristow Group Inc

(formerly Offshore Logistics)

Number of Employees

 Figure 18. Number of employees at GOM helicopter service companies. 

The helicopter service industry is very capital intensive and most providers express concern 

regarding maintaining a qualified staff which includes pilots and mechanics. As noted in 

Bristow Group’s recent Form 10-K, “[o]ur ability to attract and retain qualified pilots, mechanics 

and other highly-trained personnel is an important factor in determining our future success. For 

example, many of our customers require pilots with very high levels of flight experience. The 

market for these experienced and highly-trained personnel is competitive and will become more 

competitive if oil and gas industry activity levels increase” (SEC, 2006b). 

4. Labor Requirements 

Unless otherwise indicated, the following information is from the Stan Grossman’s article: Life 

of a Pilot Offshore Flying in the Gulf of Mexico (Grossman, 2004). 

At a minimum, employment as helicopter pilot in the offshore industry requires an FAA 

Commercial Rotorcraft-Helicopter certificate with an Instrument rating in Helicopters and a 

Class 2 medical certificate. In addition, most operators require 1000-1500 flight hours as pilot in 

command (PIC) in helicopters. Additional flight experience, turbine time, and professional 

certifications such as airline transport pilot (ATP) increase the value of the pilot. Companies 

contracting for services may offer bonus pay for some of these qualifications. 

Salaries and benefits for offshore helicopter operators are based on experience, the size of the 

craft, and the size of the company. The larger companies start new pilots in the upper $30,000 to 

mid $40,000 range. Top salary for most small ship pilots is around $65,000. Medium ship 

captains generally top from $75,000 to $85,000, or compensation may be per diem, with 

overtime pay for holidays and remaining overnight offshore. There is no single standard benefits 

package for this occupation, and initial contracts may include a training time with a required 

period of employment that follows. 

5. Typical Firms 

Industry consolidation has resulted in a small number of large helicopter service providers. The 

Gulf is served primarily by three large operators: Bristow Group (formerly Offshore Logistics); 

PHI, Inc. (formerly Petroleum Helicopters, Inc.); and Seacor (formerly ERA Aviation). These 

top three providers account for nearly 80 percent of the aircraft available in the Gulf. Figure 19 

Source: SEC 2000; 2001a&b; 2002a&b; 2003a&b; 2004a&b; 

 2005a,b&c; 2006b&d. 
53

shows the estimated market share based on the number of aircraft available in the Gulf region. 

Other competitors in this region are smaller, privately-owned entities or subsidiaries of larger 

companies. This includes Evergreen, Houston Helicopters and Rotorcraft Technologies. 

 

PHI

34%

Bristow Group

31%

Seacor

14%

Other

21% PHI

34%

Bristow Group

31%

Seacor

14%

Other

21%

Figure 19. Market shares of major helicopter service providers in the Gulf. 

Most service providers have a few companies that will make up a large share of their customer 

base as oil and gas companies tend to select one service provider for all of their Gulf Coast 

helicopter needs. For example, Bristow Group’s annual report explains that 18 percent of their 

Helicopter Services’ revenues were from Shell Oil Company in fiscal year 2007. During their 

fiscal year ending in March 2007, their top ten customers accounted for more than 55 percent of 

gross revenue (SEC, 2007a). PHI’s largest customer provides the company with 17 percent of its 

operating revenues (SEC, 2006d). And, ERA Aviation’s (now part of Seacor) ten largest 

customers account for 46 percent of its operating revenues (SEC, 2006c). The loss of any one 

customer could materially affect any company’s operations. 

In this highly competitive business, most contracts are awarded through competitive bidding 

(SEC, 2007a and 2006d). In addition, companies are selected for their services (in addition to 

rates) because of their ability to serve (number of helicopters in the fleet), their safety record, 

their reliability, and from past business relationships. Additional competitive pressure stems 

from most oil and gas companies’ ability to provide their own aircraft services. But, in an effort 

to reduce costs in the previous era of lower oil prices, companies turned to outside contractors to 

provide the specialized services such as helicopter transportation. 

The industry is both very concentrated and specialized. The specialization is recognized through 

revenues obtained from providing helicopter services to producers in the Gulf. For example, PHI 

Source: Offshore Logistics, Inc., 

 2005b. 
54

operates approximately 152 owned, leased and customer-owned aircraft from several bases in the 

Gulf of Mexico region (SEC, 2006d). Approximately 60 percent of their 2006 operating revenue 

was attributable to helicopter support for offshore oil and gas exploration and production 

companies – particularly in the Gulf of Mexico (SEC, 2006d). As the Gulf has matured, 

helicopter service providers have attempted to diversify through additional industries as well as 

locating globally. Other services provided by most in the industry include: certain oil and gas 

support services, helicopter repair services, medical services, recreation/sightseeing tours, and 

firefighting and forestry services. 

C. Industry Trends and Outlook 

1. Trends 

As in most oil and gas support service industries, demand for helicopter services is substantially 

dependent on activity levels and transportation needs in the offshore oil and gas industry. These 

companies’ revenue and profitability are therefore largely dependent upon the levels of activity 

in oil and gas exploration, development and production. 

To meet the demands of deepwater (travel farther and faster, carry more personnel, all-weather 

capabilities, and the need for lower operating costs), the offshore helicopter industry has 

purchased new helicopters over the past 5 years. For example, Bristow recently acquired fifteen 

new medium-sized helicopters from Sikorsky Aircraft Corporation. Of these fifteen, six were 

delivered in fiscal year 2004, four in fiscal year 2005, two in the first half of 2006 and one in 

2007. In addition, the contract with Sikorsky was amended to acquire 32 additional medium 

sized helicopters between 2007 and 2013 (SEC, 2005a). PHI has also taken delivery of new 

aircraft. In 2008, PHI took delivery of one transport category aircraft, four medium aircraft and 

four light aircraft for service in its Oil and Gas segment. And, as of December 31, 2008, PHI had 

orders for five additional transport category aircraft (SEC, 2008b). 

Oil and gas companies are continually seeking to implement measures aimed at greater cost 

savings, including efforts to improve cost efficiencies with respect to helicopter transportation 

services. For example, new technologies may permit companies to reduce staffing levels on both 

old and new installations. This would reduce the frequency of transportation of employees by 

increasing the length of shifts offshore. “The continued implementation of these kinds of 

measures could reduce the demand for helicopter services and have a material adverse effect on 

our business, financial condition and results of operations. The current global financial crisis and 

economic downturn could lead our customers to implement greater cost saving measures (SEC, 

2009d).” 

Despite these cost saving efforts, PHI’s operating revenues for oil and gas over the past couple 

years has been steadily increasing. In 2005, operating revenues for domestic oil and gas were 

$39.5 million higher than in 2004. Revenues increased again in 2006 by $28.4 million (SEC, 

2005c and 2006d). These increases were attributed to increases in flight hours in the GOM and 

an increase in contracted aircraft (SEC, 2005c and 2006d). The increased activity was directly 

related to increased exploration and production activity by customers in the GOM. Additional 

demand was also caused by the 2005 hurricanes as customers experienced logistical challenges 

repairing offshore facilities. 
55

PHI’s revenues increased again in 2008, by $63.1 million or 14 percent (over 2007). This was 

primarily due to an “increase in contracted medium and heavy aircraft, which primarily serve the 

Gulf of Mexico deepwater market and attract higher rates, increased flight hours, and also due to 

the adverse affect of the pilots’ strike on 2007 operating revenues (SEC, 2008b). 

2. Hurricane Impacts 

All three GOM dominant offshore helicopter companies saw an increase in operations and 

revenues in the months after Hurricanes Katrina and Rita. In December 2005 and again in 

March 2006, Bristow Group stated that current activity levels in the GOM are at or near all-time 

highs and the Company believes that the impact of hurricanes Katrina and Rita will continue to 

result in higher activity levels as operators repair facilities and work to bring production back on 

line (SEC, 2005b and 2006b). Seacor’s operating revenues in the GOM region increased $46 

million as compared to the prior year’s quarter. Demand for offshore support vessels was 

stronger, in response to both higher levels of exploration and production activity, and the 

continuing requirements for offshore support vessels to support the reconstruction of offshore 

installations damaged during the storms. 

Impacts from the 2005 hurricanes resulted not only in increased hours for helicopter companies, 

but also in significant damage. Bristow Group suffered a total loss of its Venice, Louisiana 

shorebase facility due to Hurricane Katrina. And, Hurricane Rita severely damaged the 

Company’s Creole, Louisiana base and flooded its Intracoastal City, Louisiana base. Bristow 

Group recorded a $0.2 million net gain ($2.8 million in probable insurance recoveries offset by 

$2.6 million of involuntary conversion losses) during fiscal year 2006 related to property damage 

to these facilities. The Company reopened its Intracoastal City, Louisiana base in December 

2005, its Venice, Louisiana base in March 2006 and its Creole, Louisiana base in April 2006 

(SEC, 2006b). 

PHI, Inc. was also affected by both hurricanes. Hurricane Katrina caused substantial flooding at 

PHI’s Boothville, Louisiana base. This facility was out of service until late 2006. Other PHI 

bases incurred some damage, most of which had been repaired as of December 31, 2005, and are 

back in service. Hurricane Rita destroyed PHI’s base in Cameron, and caused flooding and wind 

damage at other bases. Most of this damage has been repaired and bases are back in service. 

PHI estimates that their insurance claim related to all damage will be approximately $8.5 

million, and expects that substantially all costs incurred will be covered by insurance (SEC, 

2006d). 

3. Outlook 

Although helicopter companies have been experiencing a growth in revenues due to increases in 

deepwater drilling and impacts of hurricanes offshore, the companies note that things may be 

slowing down. As stated by Bristow Group in its 2009 annual report, “our industry has 

historically been cyclical and is affected by the volatility of oil and gas price levels. There have 

been periods of high demand for our services, followed by periods of low demand for our 

services. Changes in commodity prices, including the approximate $100 decline in the spot price 

of crude oil at one point during fiscal year 2009, can have a dramatic effect on demand for our 
56

services, and periods of low activity intensify price competition in the industry and often result in 

our aircraft being idle for long periods of time (SEC, 2009d).” 

Bristow Group also noted that “the U.S. Gulf of Mexico and the North Sea are mature 

exploration and production regions that have experienced substantial seismic survey and 

exploration activity for many years. Because a large number of oil and gas prospects in these 

regions have already been drilled, additional prospects of sufficient size and quality could be 

more difficult to identify. In addition, the U.S. government’s exercise of authority under the 

Outer Continental Shelf Lands Act, as amended, to restrict the availability of offshore oil and gas 

leases could adversely impact exploration and production activity in the U.S. Gulf of Mexico. If 

activity in oil and gas exploration, development and production in either the U.S. Gulf of Mexico 

or the North Sea materially declines, our business, financial condition and results of operations 

could be materially and adversely affected. We cannot predict the levels of activity in these 

areas (SEC, 2009d).” 

PHI has also noted that the GOM is a mature area “which may result in a continuing decrease in 

activity over time (SEC, 2008b).” And although PHI’s revenues have been on the rise, in early 

2009 PHI noted that oil and gas prices “declined substantially in the second half of 2008, and 

while we have not experienced any substantial adverse effect to date, we may in the future (SEC, 

2008b).” 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
57

V. WATER TRANSPORTATION 

A. Description of Industry and Services Provided 

According to the Offshore Marine Service Association (OMSA), representing more than 250 

member companies, including about 100 firms that own and operate marine service vessels, there 

are some 1,200 offshore supply vessels operating in the GOM. Of these vessels, some 850 are 

considered offshore supply vessels (OSVs), the subject of this chapter. These vessels provide 

every pipe, wrench, computer, barrel of fuel, and gallon of drinking water to rigs and platforms, 

and transport thousands of workers to and from the offshore facilities (Offshore Marine.org, 

2007). 

OSVs primarily serve exploratory and developmental drilling rigs and production facilities, and 

support offshore and subsea maintenance activities. Besides transporting deck cargo, OSVs also 

transport liquid mud, potable and drilling water, diesel fuel, dry bulk cement and personnel 

between shore bases and offshore rigs and facilities (SEC, 2006o). 

Vessel operators employ roughly 12,000 crewmembers. “The transportation link provided by 

OMSA member vessels has helped make the offshore energy sector a major engine of the U.S. 

economy. According to one oil and gas industry study, offshore oil and gas activities help 

support some 6,000 companies and generate an estimated payroll of $1.2 billion 

(OffshoreMarine.org, 2007).” 

Like all sectors of the GOM oil and gas production industry, the water transportation segment is 

dependent upon the business environment, in this case, the level of offshore exploration and 

drilling activities. The demand for water transportation services is also affected by present and 

future expectations of oil and gas commodity prices; customer assessments of offshore prospects 

compared to land-based opportunities; customer assessments of costs, geological opportunities 

and political stability; world-wide demand for oil and gas; ability of OPEC to set and maintain 

production levels and pricing; the level of production of non-OPEC countries; the relative 

exchange rates for the U.S. dollar; and various government policies regarding exploration and 

development of their oil and gas reserves. Demand for OSVs influences day-rates and utilization 

rates (SEC, 2006q). 

B. Industry Characteristics 

1. Typical Facilities 

Offshore supply vessels are typically made up of six primary types of vessels: tug; marine 

platform supply vessel (PSV); anchor handling, towing, and supply vessel (AHTS); mini-supply 

vessel (MSV); fast support vessel (FSV); and liftboat. A seventh category, floating, production, 

storage and offloading (FPSO), is also included in this section because BOEMRE did approve 

the use of FPSOs in the GOM some four years ago. BOEMRE approved a conceptual plan to 

allow the use of FPSOs by a consortium of companies in late 2006. 
58

Source: SeacorMarine.com, 2007. 

Tugs are like tow trucks. These steel-hulled vessels can be 

70 feet to 140 feet long and are small in stature when 

compared to large supply boats. However, they have 

powerful engines that allow the tug to tow and position nonself-propelled offshore equipment such as mobile offshore 

drilling units, barges and production platforms 

(OffshoreMarine.org, 2007). 

Source: SeacorMarine.com, 2007.

Anchor handling, towing, and supply vessels (AHTSs) tow 

rigs from one location to another and are equipped with 

powerful winches which are used to lift and position the rig’s 

anchors. Many also carry moderate amounts of supplies. 

Older AHTSs tend to range 80 feet to 300 feet long, while 

newer deepwater vessels tend to range from 250 feet to 600 

feet. 

Source: SeacorMarine.com, 2007.

Utility boats are typically used to support production 

operations, providing storage space, emergency standby, and 

transporting personnel between platforms. Utility boats 

range from 96 to 175 feet long and can have space for several 

hundred tons capacity. They also have a smaller passenger 

area for up to 36 offshore workers (OffshoreMarine.org, 

2007). 

Source: SeacorMarine.com, 2007.

Typical marine platform supply vessels (PSVs) range in 

length from 190 feet to over 300 feet. These vessels provide 

the support needed for deepwater drilling and production 

operations. They also have the capability of handling the 

more typical construction and maintenance tasks of standard 

offshore supply vessels (SeacorMarine.com, 2007). 

Source: SeacorMarine.com, 2007.

Fast support vessels (FSVs) serve as crew boats and high 

volume cargo demands, including drilling mud, chemicals, 

and other deck cargos. FSVs range in length from 130 feet to 

190 feet. Crewboats are the shuttle buses of the offshore oil 

industry, carrying workers to and from offshore facilities. A 

typical crewboat can carry 36 to 149 offshore workers 

(OffshoreMarine.org, 2007). 
59

Source: Aries Marine Corporation, 

2007. 

Liftboats are the trucks of the offshore fleet. These 

self-elevating, self-propelled vessels are equipped with 

at least one crane and a large open deck space. Leg 

lengths greater than 100 feet make these ships ideal for 

shallow water production areas. Worldwide, the fleet 

consists of some 235 vessels of various sizes and 

capabilities (Liftboat.com, 2007). 

Source: Conley Corporation, 2007. 

The FPSOs are a type of floating tank system designed 

to take all of the oil or gas produced from a nearby 

deepwater platform, process it, and store it until the oil 

or gas can be offloaded onto waiting tankers, or sent 

through a pipeline. FPSOs are widely used around the 

world as an alternative to expensive pipelines. 

2. Geographical Distribution 

Virtually all of the water vessel transportation providers are located along the coast near 

producing regions, with senior offices often headquartered in Houston, and a few port facilities 

in east Texas. Louisiana shipyard/port facilities include Port Fourchon, Houma, Morgan City, 

Lake Charles, Patterson, Golden Meadow, Amelia, and Lafayette (see Figure 20). As operations 

continue to expand in deeper water, new port facilities will be needed (Figure 21). 

 Figure 20. Existing deepwater structures and corresponding 

 service bases. 

Source: French et al., 2006. 
60

Figure 21. Pending plans and corresponding service bases. 

3. Labor Force 

The Bureau of Labor Statistics does not provide specific labor information for OSVs. There are 

ship captains, crew, cooks, and others occupations aboard ships, but current labor statistics do 

not have a category specific enough to include only the offshore industry. For our purposes this 

category of labor statistics is too broad. Most companies in this segment are not under collective 

bargaining agreements, though some maritime unions have targeted GOM employees. 

Crew sizes range from three to more than a dozen workers, and include at least a captain, mate, 

and deckhand. Many vessels also have one or more engineers who are responsible for 

maintaining the engines as well as loading, transfer and discharge of bulk cargo, fuel and water. 

Able-bodied seamen assist with vessel operations and maintenance. According to the Offshore 

Marine Service Association there are some 12,000 workers associated with this segment 

(OffshoreMarine.org, 2007). 

Mariners are required to complete significant training for all aspects of their jobs. However, new 

requirements were implemented in 1995 with the new amendments to Standards for Training, 

Certification, and Watchkeeping (STCW-95). All mariners working on vessels greater than 200 

gross tons and candidates for licenses and documents must take courses, pass examinations, and 

demonstrate their skills aboard vessels (STCW, 2007). 

Due to the hard work and long hours, turnover among mariners, especially at the lower levels, is 

high. Workers are typically paid by the day, and many work 12-hour shifts each day. Because 

of fatigue-related accidents the Coast Guard issued a policy letter in 2002 stating that mariners 

are not permitted to work more than 12 hours in a 24-hour period, except in an emergency 

(USDOT, Coast Guard, 2007). 

4. Typical Firms 

There are several competitors in this segment and the most important factors are pricing and 

equipment availability. Further, contracts tend to be short-term due to the nature of drilling 

Source: French et al., 2006. 
61

activities. The largest companies in the GOM market include Seacor Holdings with 78 supply 

vessels operating in the GOM; Hercules Offshore, Inc operates 45 liftboats; Tidewater currently 

has 40 vessels in the GOM, six of which are deepwater; Trico Marine operates 11 supply vessels; 

and Hornbeck Offshore Services operates 42 new generation (i.e. deepwater) OSVs, one AHTS 

and one multi-purpose support vessel (SEC, 2008c, 2008d, 2009e, 2008e, and 2008f). In 

addition, Hornbeck has three multi-purpose support vessels on order for 2009 delivery (SEC, 

2008f). Foreign competition is not allowed in the GOM as prohibited by the Jones Act. Under 

the Jones Act of 1920, any maritime vessel that is involved in coastwise trade in the U.S. must be 

U.S. built, U.S. owned, and U.S. crewed (Barrett, 2005). 

Industry operational costs primarily depend upon the size and asset mix of the entire fleet. Costs 

are typically broken down into “daily running costs” and “fixed costs.” Daily running costs are 

primar ily comprised of wages paid to marine personnel, maintenance and repairs and insurance. 

Two significant maintenance and repair costs are drydock and main engine overhaul costs. 

Drydockings are regularly performed in accordance with applicable regulations, and main engine 

overhauls are typically performed in accordance to planned maintenance programs (SEC, 

2006e). 

For boats to get work they must be certified seaworthy. Certification requires that older vessels 

be drydocked and inspected twice every five years (SEC, 2006o). 

C. Industry Trends and Outlook 

1. Trends 

The oil and gas exploration and production business is cyclical, and is driven largely on the price 

of the commodities. In times of high prices there is typically a corresponding increase in drilling 

activity. Figure 22 shows the cyclical nature of the industry, and that the number of working 

vessels corresponds with the number of active rigs. As shown, the number of working vessels in 

the GOM peaked in early January 2001 and has steadily decreased until late 2004, when prices 

rose and the prospects for deepwater drilling became more concrete. When times are difficult, 

such as in the late ‘90s, industry consolidation occurs along with a significant amount of 

mergers. 
62

0

50

100

150

200

250

300

350

0

20

40

60

80

100

120

140

160

Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05

Rig Count Boats Working

Number of Rigs

Number of Boats

Figure 22. GOM rig and working boat counts, 1995 to 2004. 

Figure 23 and Figure 24 show that day rates and utilization rates rose from mid-2004 to mid2006, particularly for the larger AHTS and supply vessels – reflecting the move to deeper water. 

Day rates for AHTS vessels increased $9,450 in June 2004 to $60,000 in October 2005. These 

rates increased to their high of $75,000 in December 2006. Utilization rates increased from 75 

percent to 99 percent over the same period. 

Supply vessels over 200 feet saw average day rates jump from $3,875 in June 2004 to over 

$13,800 in June 2006. Similarly, utilization rates increased from 75 percent to 99 percent over 

the same period. Following the hurricanes of 2005 the utilization rates for all OSVs (large and 

small) were over 94 percent, while the day rates remained strong through 2006. At the end of 

2008 however, day rates and utilization began to fall. For large supply vessels (over 200 feet), 

day rates have fallen from their high of $11,540 in November 2008 to $4,500 in June 2009. 

Utilization of these vessels has decreased from 99 percent to 86 percent over the same period. 

Source: Barrett, 2005. 
63

$0

$10

$20

$30

$40

$50

$60

$70

$80

$0 

$5 

$10 

$15 

$20 

$25 

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

Supply - Under 200' Supply - 200' and over Crewboats - Under 125'

Crewboats - 125' and over AHTS - Under 6,000 HP AHTS - Over 6,000 HP*

Average Day Rate – Supply and Crewboats

(thousand $)

Average Day Rate -AHTS (thousand $)

Figure 23. OSV day rates. 

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

Supply - Under 200' Supply - 200' and over

Crewboats - Under 125' Crewboats - 125' and over

AHTS - Under 6,000 HP AHTS - Over 6,000 HP*

Utilization Rate (%)

Figure 24. OSV fleet utilization rates. 

Utilization rates for vessels are typically quite high. As seen in the figures above, utilization 

rates for the new generation, deepwater capable boats command higher day-rates, as well as 

Source: Workboat.com, 2009. 

Source: Workboat.com, 2009. 
64

being in greater demand. Newer vessels see utilization in the mid 90 percent range, whereas 

older vessels typically have utilization in the 70 percent range (Barrett, 2005). 

Shallow well drilling activity in the Gulf of Mexico is typically more sensitive to fluctuations in 

commodity prices, particularly the price of natural gas. Accordingly, decreases in oil and natural 

gas prices (actual or anticipated) generally result in reduced offshore drilling activity and lower 

demand for the conventional 180 foot OSVs that serve the shallow well market. This causes a 

corresponding decline in OSV day-rates and utilization rates in that market (SEC, 2006o). In 

contrast, the larger capital commitments and longer lead times and investment horizons 

associated with deepwater developments make it less likely that an operator will abandon such 

projects in response to a short-term decline in oil or natural gas prices. Therefore, OSVs that 

serve the deepwater markets experience less volatility in their day-rates and utilization rates and 

are, therefore, generally less sensitive to short-term commodity price fluctuations (SEC, 2006o). 

When the market softens, older OSVs are often taken out of commission, or cold-stacked, which 

allows them to be brought back on line relatively quickly. The cold-stacked vessels are almost 

exclusively the oldest vessels. Most of the replacement, or newer vessels, are new generation 

vessels capable of operating in both shallow and deepwater areas. Many of the cold-stacked 

vessels never make it back into operation and are either salvaged or used for parts for other 

vessels. So, while there are over 850 OSVs in the GOM region, at any given time (dependent 

upon market conditions) there may be anywhere from 200 to 350 actual OSVs operating (SEC, 

2006o). 

Further, U.S. Coast Guard regulations limit liftboat operations to seas of five feet or less, and 

offshore conditions from November to March each year negatively affect the utilization rates of 

some vessels, particularly liftboats (SEC, 2006o). 

The Market for New Generation OSVs 

The useful life of OSVs is considered to be 20 to 25 years. The average age of conventional 

(180 feet or less) OSVs was 26 years as of December, 2005, meaning that a significant 

transformation from older, smaller vessels to newer larger deepwater vessels is taking place 

(SEC, 2006o). 

With the transition to deeper water operations, a new generation of all types of vessels began 

coming on line in 1999 (see Figure 25). Traditional OSVs typically are not larger than 180 feet 

and have limited capacity and range capabilities. Newer vessels are designed with larger 

capacities, including greater liquid mud and dry bulk cement capacities, as well as larger open 

deck areas (SEC, 2006o). Because deepwater projects are distant from shore-based support 

infrastructure, these features are essential to providing effective servicing. 

OSVs operating in the deepwater markets are generally required to have dynamic positioning, or 

anchorless station-keeping capability, because most offshore facility’s safety procedures 

preclude OSVs from tying up to deepwater installations. This also allows vessels to continue to 

operate in adverse weather conditions. These new generation vessels have advanced designs that 

allow for much quicker loading and unloading operations, and newer, more efficient, engines and 

controls result in greater fuel efficiency (SEC, 2006o). 
65

0

5

10

15

20

25

30

35

40

45

1992 1994 1996 1998 2000 2002 2004

Average Number of Deepwater Rigs Operating

 Figure 25. Average number of deepwater rigs operating. 

The capabilities and capacities of larger new generation OSVs have resulted in average 

utilization rates for these OSVs working in the GOM of approximately 95 percent since 1999. In 

contrast, the average utilization rate for the conventional 180 foot OSV fleet over the same 

period has been approximately 63 percent. Additional utilization for new generation OSVs has 

come from increasing demand for these vessels in support of conventional shelf drilling projects. 

The average day rates for new generation OSVs were generally double the average day rates of 

conventional 180 foot OSVs, leading many to conclude that the demand for these newer vessels 

has outpaced the supply (SEC, 2006o). 

2. Hurricane Impacts 

The hurricanes of 2005 caused significant damage to a few port facilities along the Gulf coast. 

According to the BOEMRE, the hurricanes destroyed over 100 platforms and damaged a further 

50. With much of the GOM production out of commission, supply vessels working repairs were 

kept very busy. In fact, some operators say that the recent strong demand for OSVs has been for 

construction needs. Most vessel operators believed it would take at least another year or two to 

repair all the damage from the hurricanes (Greenberg, 2007). 

Trico Marine Services reported that for its GOM supply vessels, average day rates increased 71 

percent for the year ended December 31, 2006, compared to the same period in 2005. Utilization 

also increased 6 percent for these vessels during the year ended December 31, 2006, compared to 

the same period in 2005, inclusive of their stacked vessel fleet. The increase in both day rates 

and utilization was a result of the increased demand due to decreased vessel supply and work 

related to assessment and repair of damage from hurricanes in 2005 (SEC, 2006p). 

Source: French et al., 2006. 
66

3. Outlook 

Until the latter part of 2008, the offshore oil and gas industry was operating at high levels in 

response to higher oil and gas prices. However, the drop in oil and gas prices in late 2008 and 

2009 has reduced offshore activity. As shown in Figure 23 and Figure 24, OSV companies have 

experienced significant declines in utilization and day rates in the GOM. 

Revenues for Hercules Offshore’s domestic liftboats decreased from $43.0 million or 31 percent 

in 2008. “This decrease resulted primarily from lower average dayrates, which contributed $34.5 

million of the decrease, and fewer operating days, which contributed $8.5 million of the 

decrease. Operating days decreased to 10,343 in 2008 from 11,265 in 2007 due primarily to 

lower customer activity in the Gulf of Mexico in 2008 as compared to the 2007. Average 

utilization also declined to 65.5% in 2008 from 67.3% in 2007 (SEC, 2008d).” 

Some OSV companies have responded to slowing market conditions by focusing more on 

international markets and mobilizing vessels to other regions with stronger exploration and 

production activity. Following the departure of drilling rigs to other regions, in 2007 Tidewater 

relocated 16 vessels to international locations where they would be contracted for longer-term 

work at higher rates. In 2008, the Company moved another seven vessels out of the GOM (SEC, 

2009e). Similarly, Trico Marine redeployed a portion of its GOM fleet to other areas, primarily 

West Africa and Mexico where it entered into longer-term contracts albeit at marginally lower 

average day rates (SEC, 2008e). 

Companies have also responded to the slowdown by reducing their supply of vessels. In 2009, 

Tidewater cold-stacked one of its 180 foot supply vessels (Greenberg, 2009). Seacor Holdings 

has cold-stacked 15 of its GOM vessels and will “continue to monitor market conditions and will 

cold-stack additional vessels as it deems appropriate ... The number and type of vessels 

operated, their rates per day worked and their utilization levels are the key determinants of 

[Seacor’s] operating results and cash flows. Unless a vessel is removed from operational service, 

there is little reduction in daily running costs and, consequently, operating margins are most 

sensitive to changes in rates per day worked and utilization (SEC, 2008c).” 

Many OSV companies expect activity to decrease further in 2009 (SEC, 2008c, 2008f, 2009f). 

In its 2008 annual report, Hornbeck Offshore Services noted that “the expected weakness in the 

overall economy and any continued lack of liquidity in the credit markets is affecting the 

spending patterns of our customers and is likely to weaken demand for our services. The extent 

of such weakened demand and how long it may last is not known. In addition, lack of liquidity 

and low oil prices may impact the continued viability of projects contemplated by our customers. 

(SEC, 2008f).” 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 
67

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html

Workboat.com 

Provides daily news reports and a weekly newsletter for the commercial marine industry. It also 

provides historic industry statistics on day rates and fleet utilization. 

http://www.workboat.com/
69

VI. GEOPHYSICAL SERVICES

A. Description of Industry and Services Provided 

Offshore oil and gas activities are supported by a diverse and considerable array of geophysical 

service companies that range from small, one-man seismic brokers to large full-service 

companies offering a wide range of services. These services range from acquiring to processing 

to selling various types of seismic data, as well as conducting shallow hazard site surveys and 

providing reservoir seismic services. As described in further detail below, some of these services 

are performed offshore, while others are provided onshore at the geophysical service company’s 

headquarters or satellite offices. 

The majority of exploration and production companies used to have proprietary seismic 

databases. However, they have long since sold them to seismic data brokers (such as SEI) 

because their databases were small and didn’t compare in coverage to the extensive regional 

group surveys of the 1990’s which overshot areas with older data. Therefore, most major and 

independent oil and gas companies currently lack in-house seismic crews and instead rely on 

geophysical service companies to acquire seismic surveys. 

Geophysical service companies levy a licensing fee on all E&P companies for access to the 

geophysical data they have procured – the E&P companies in essence ‘buy’ a licensing 

agreement with the geophysical service company through which they access geophysical data for 

their prospecting needs. These ownership rights are non-exclusive; more than one company can 

access the same data sets. The Bureau of Ocean Energy Management, Regulation and 

Enforcement requires that seismic acquisition companies submit copies of all offshore seismic 

data acquired on federal leases. 

Seismic Surveys 

2-Dimensional Surveys 

Seismic data are images created from reflected seismic rays (sound waves). Sound waves are 

generated from a source, penetrate the earth’s surface, are reflected from subsurface features 

such as faults or stratigraphy, and then travel back to receivers (such as hydrophone streamers 

being towed behind a marine vessel). The receivers record the sound wave’s travel time, which 

is then used to estimate the depth of the feature that generated the reflection. This technique is 

called reflection seismology and depending on the arrangement of the sources and receivers, the 

data acquired is classified as either 2- or 3-dimensional seismic. 

Begun in the 1960s, 2-dimensional (2-D) seismic data acquisition is defined by sources and 

receivers laid out in straight lines (see Figure 26). There are typically significant gaps of 1 

kilometer or more between adjacent lines (Schlumberger, 2007). Overlapping lines allow inlinecrossline tying of the data, necessary for interpreting the seismic data and mapping subsurface 

structures. 
70

Figure 26. Two-dimensional seismic data set-pp. 

The 2-D data is still used for general prospecting but 3-dimensional (3-D) data provides higher 

resolution. An example of a 2-D seismic line is shown in Figure 27 below. 

Figure 27. Two-dimensional seismic data. 

In the Gulf of Mexico, geophysical service companies acquire 2-D surveys using large vessels 

that tow a single source array and streamers (seismic cables on which are located the receivers) 

behind it. Airguns, which use bubbles of compressed air to generate seismic waves, are used as 

the source (USDOI, GS, 2007). More details will be provided later in this chapter. 

It is no longer common for geophysical service companies to acquire large 2-D ‘speculative’ 

seismic surveys, known in the industry as ‘spec’ surveys, and sell by them to interested parties. 

With the advent of 3-D seismic, 2-D seismic has become old technology and its utility is limited. 

3-Dimensional Surveys 

The advent of 3-D seismic surveys in the 1970s was a revolution in seismic technology. Energy 

propagates outward spherically, not in straight lines, so by designing a survey such that receivers 

are located all around the source, a 3-D subsurface volume is acquired. The concept was not 

new to geophysics, but its implementation was limited by computing power and costs until the 

first 3-D survey in 1967 (SPE, 1999). 

Source: Schlumberger, 2007. 

Source: RockWare Inc., 2007. 
71

The 3-D seismic surveys are more expensive than 2-dimensional seismic but yield much higher 

quality results. The 3-D image is more accurate, provides denser spatial coverage, and any 

desired vertical-section or horizontal slice such as Figure 28 below can be extracted from the 3-D 

volume for various analyses. 

Figure 28. Interactive 3-D volume slicing of seismic data. 

The 3-D seismic data greatly enhances the value of seismic data as a tool for exploration, 

development, and production functions. Slicing the 3-D volume is important not only for 

stratigraphic mapping, as shown in Figure 28, but for providing greater understanding of a 

reservoir’s fault networks. Besides increased mapping utilities, 3-D data also allows for imaging 

to characterize and model the reservoir (see Figure 29 below). This 3-D visualization adds visual 

cues such as transparency, opacity, shading, perspective, and discontinuity, all of which enable 

3-D seismic interpretation to be more accurate, efficient, and complete (SPE, 1999). With 3-D 

visualization, critical information is more easily communicated between team members and to 

upper management in an exploration and production company. 

 Figure 29. 3-D visualization using 3-D seismic data. 

4-D (‘Time-Lapse’) Surveys 

The 4-dimensional (4-D) surveys allow geoscientists to monitor production-related changes 

within the field, such as reservoir fluid flow, pore fluid pressure changes, reservoir saturation 

Source: AGM, 2007. 

Source: NaturalGas.org, 2004d. 
72

changes, and temperature changes. This type of reservoir surveillance results in effective field 

management by reducing operating costs and maximizing recovery rates. Better decisions can be 

made for infill drilling locations, draining bypassed reserves, and establishing optimal waterflood 

patterns. Differences between predicted and actual field performance are used to continually 

update the reservoir model and revise depletion rates (AAPG, 2004d). 

Shallow Hazard Site Surveys 

Shallow hazard site surveys are conducted within offshore lease blocks to detect and map 

potential hazards at seabed installation or drilling rig sites, and along pipeline and cable 

corridors. Hazards can be mapped using a variety of techniques such as echosounder, side scan 

sonar, magnetometer, sub-bottom profiler, and high resolution seismic data (Geo-Marine 

Technology, 2007). The BOEMRE requires these surveys for drilling in all offshore lease 

blocks. 

Seafloor geologic hazards include fault scarps, gas vents, unstable slopes, and reefs. Subsurface 

geologic hazards include faults, gas-charged sediments, abnormal pressure zones, and buried 

channels. Man made hazards include pipelines, wellheads, shipwrecks, ordnance, 

communication cables, and debris from previous oil and gas activities (USDOI, MMS, 1998). 

Shallow hazard site surveys are important in mitigating potential problems such as shallow 

blowouts and lost circulation. 

Vertical Seismic Profile (VSP) Surveys 

The VSP surveys are measurements taken inside a wellbore using geophones or receivers inside 

the wellbore and a seismic source at the surface near the well (Schlumberger, 2007). In marine 

environments, this source is generally an airgun. VSP’s can provide detailed information 

regarding the subsurface area near the wellbore, as geophones are very closely spaced on the 

downhole arrays. VSP’s are typically used to create velocity models needed for seismic reprocessing. They can also be integrated with 3-D seismic data for time-depth correlation that 

enables detailed descriptions of formation properties in the wellbore’s vicinity (Baker Hughes, 

2007c). 

Seismic Data Processing 

Seismic Data Processing involves using a variety of complicated algorithms to improve the 

overall quality, or signal to noise ratio, of the seismic data. Seismic data is collected in time and 

in most cases, must be converted accurately to depth. There are a variety of processing methods 

available from geophysical service companies. These include, but are not limited to: velocity 

modeling, pre-stack time migration, pre-stack depth migration, post-stack migration, AVO 

(amplitude variation with offset) processing, post-stack inversion, and full wave processing (Ion, 

2007; TGS-NOPEC, 2007). Clients choose their processing preference based upon their 

objectives. Processing times can vary from several weeks to several months, depending on the 

size of the survey being processed and the techniques required to process it. Most geophysical 

service companies that offer these types of services have high-end computer processing facilities 

onsite and periodically meet with the client at these facilities during the processing period to 

exchange ideas and information. 
73

Petroleum Geo-Services (PGS), a large geophysical firm, provides seismic data processing 

services for its own acquisition operations and also for third parties. Generally, PGS will 

compete for data processing contracts on a competitive bid basis. These contracts typically 

provide for the customer to pay a set fee per square kilometer processed for a prescribed set of 

processing procedures. 

Seismic While Drilling 

Seismic While Drilling (SWD) is a new technology that allows seismic data to be collected at the 

bit while drilling. The SWD tool uses a conventional seismic source (in offshore environments, 

an airgun is mounted on a drilling rig or a boat) and the signal is received by a downhole LWD 

(logging while drilling) tool equipped with geophone receivers. The geophones are in 

communication with a MWD (measurement while drilling) mud system that transmits the 

waveform data to the surface. It isn’t yet possible to send this data uphole in real-time due to 

bandwidth and transmission speed limitations; however, scientists are working to overcome this 

obstacle (AAPG, 2004a). 

B. Industry Characteristics 

1. Typical Facilities 

Seismic surveys are conducted using large seismic exploration vessels. An increasing number of 

seismic surveys are conducted further from shore, in deeper waters and potentially rougher seas 

such as the Gulf of Mexico and the North Sea. Industry has responded by equipping vessels with 

different types of proprietary technologies, such as WesternGeco’s Q-Marine technology and 

Petroleum Geo-Services’ Ramform technology. Marine surveys can take several months or up to 

half a year to conduct. PGS’s Ramform vessels can acquire anywhere between 50-100 sq km in 

a single day (PGS, 2007). 

The geophysical industry’s largest players own and operate their own seismic acquisition 

vessels. In general, fleet size is small and even large companies such as PGS own 11 3-D vessels 

at most. PGS owns and operates the most modern fleet in the geophysical services industry. 

According to its 2006 Annual Report, the company holds virtually every streamer towing record 

in the world. Their 12-vessel fleet consists of 5 classic streamer vessels capable of towing 4 to 8 

streamers and 6 Ramform vessels capable of towing 20 streamers spaced 37 to 50 meters apart. 

The operational efficiency of the Ramforms means that PGS is one of the only companies that 

regularly offer 12 or more streamers as a standard acquisition configuration (PGS, 2006).

Recently, on January 15, 2007, two of the largest firms, Veritas DGC and Compagnie Generale 

de Geophysique (CGG), merged to form CGGVeritas. The merger created a company with the 

largest fleet of 20 seismic vessels in the industry. The variety of vessels offers flexibility in 

terms of streamer capacity and acquisition configurations (CGGVeritas, 2007). 

One of the remaining major firms, WesternGeco, has a fleet size on the order of 7 vessels (SEC, 

2006u). WesternGeco owns and operates 7 Q-Marine seismic vessels such as the one depicted in 

Figure 30 below (SEC, 2006u). The newest vessel was launched in 2007, and will begin work 

immediately with a high-specification 4-D survey in the North Sea (Rigzone, 2007). 
74

 Figure 30. Q-Marine seismic vessel. 

Onshore Processing Centers 

After acquisition, seismic data is processed onshore at a company’s high end processing 

facilities. Most firms have anywhere from 5 to 15 data processing centers located worldwide. 

Typically a firm will have a larger number of smaller processing centers scattered around the 

globe anchored by a few major processing centers in energy hubs such as Houston, southeast 

Asia, and the UK. For example, PGS owns and operates 17 seismic data processing centers 

worldwide, with the major processing centers located in Houston, London, Lysaker, Cairo, Rio 

de Janeiro, and Perth (PGS, 2006). 

Now that CGG and Veritas have merged, they have an advantage of having the largest number of 

processing centers of their competitors. They operate 29 local centers, 15 of which are dedicated 

centers that bring processing facilities within their client’s premises. They also operate four 

visualization centers that allow large volumes of 3-D data to be viewed and interpreted. Their 

reservoir teams mainly operate from Houston, London and France. Six of their processing 

centers are internationally located, and they recently built a hub in Southeast Asia (SEC, 2006t). 

Another major firm, WesternGeco, operates the world’s most extensive seismic data processing 

center in Houston. The center was recently expanded and houses the most advanced seismic 

technology (SEi Companies, 2004). 

2. Geographical Distribution 

According to Atlantic Communication’s Gulf Coast Oil Directory, there are 254 geophysical and 

seismograph service companies registered with operating bases in a Gulf of Mexico state. All of 

these companies, with the exception of one, are located in Texas or Louisiana. Texas is home to 

93 percent of these registrations. Sixty-five percent of the companies based in Texas are located 

in Houston, partially indicating the impact the industry has within this city. 

Source: WesternGeco, 2007b. 
75

3. Labor Force 

The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) provides labor statistics for 

the generalized category of ‘environmental scientists and geoscientists.’ However, this category 

does not provide a breakdown that includes geophysicists, geophysical data processors, and 

seismic crew employees of geophysical service companies working aboard seismic vessels, and 

no specific BLS employment characteristics for geophysicists exist (U.S. Dept. of Labor, BLS, 

2007c). 

According to Atlantic Communication’s Gulf Coast Oil Directory, of the 254 registered 

geophysical and seismograph service companies operating in the Gulf of Mexico region, of the 

firms reporting labor statistics, the majority are small companies with 25 employees or less. 

Figure 31 displays this labor breakdown for Gulf of Mexico geophysical service companies. 

Only a very small percentage of firms employ more than 1,000 people. Of the five GOM states, 

Texas has the largest concentration of labor associated with the geophysical services industry by 

far; 100 percent of the companies with greater than 100 employees are located in Texas, the 

majority of those in Houston (Atlantic Communications, 2006). 

4%

17%

15%

2% 4%

58%

< 25 employees

< 100 employees

< 250 employees

< 500 employees

< 1000 employees

> 1000 employees

 Figure 31. Distribution of labor among geophysical service companies 

 registered within the five GOM states. 

According to Table 6 below, in September 2007, there were a total of 24 seismic crews operating 

in the Gulf Coast region, with 12 of those 24 located offshore (World Oil Magazine, 2007). 

Source: Atlantic Communications, 2006. 
76

Table 6 

 U.S. Geophysical Activity in Terms of Active Seismic Crews 

Regions Sept. 2007 Aug-07 Sept. 2006

Rocky Mountains 7 6 9

Mid-Continent 22 20 15

Southwest 11 12 12

Gulf Coast 12 12 9

Offshore 12 12 7

Others 9 8 11

Total 73 70 63

U.S. Geophysical Activity

Seismic Crews W orking

 Source: World Oil Magazine, 2007. 

Large companies such as PGS and CGG Veritas are capable of sustaining large workforces. 

Typically, these workforces are mobile and spread worldwide, in basins with high oil and gas 

activity. In 2006, PGS employed 3,168 people, using 8 to 11 crews in its offshore operations 

(PGS, 2006). According to the CGG Veritas 2006 Form 20-F, CGG had more than 4,500 

employees in 2006, up from 3,600 in 2004, and Veritas employed an average of about 2,800 

people (SEC, 2006t). 

Many companies such as PGS also have one seafloor seismic crew that uses a cable laying 

vessel, a source vessel, and a receiving vessel to perform seafloor seismic or ocean bottom cable 

acquisition where conventional streamer seismic is impossible to acquire (SEC, 2006t). Factors 

limiting the acquisition of conventional streamer seismic data range from economic limitations to 

access limitations. 

4. Typical Firms 

The geophysical services industry consists of hundreds of small firms and several major global 

players. The latter include Compagnie Generale de Geophysique Veritas (CGGVeritas), 

WesternGeco, Petroleum Geo-Services (PGS), Input/Output, and TGS-NOPEC Geophysical 

Company. Most of these companies have worldwide operations with offices in key energy hubs 

such as Oslo, London, Houston, and Singapore. 

Marine seismic acquisition services are provided on a contract basis as well as a multi-client 

basis, however it is typical for the majority of a seismic fleet’s active vessel time to be allocated 

to contract work (SEC, 2006t). This proved true for Veritas DCG in 2005, when the majority of 

the increase in its revenues resulted from contract marine shoots. Furthermore, the majority of 

Veritas DCG’s revenues came from activity within the Gulf of Mexico (as opposed to the North 

Sea, offshore Brazil, and West Africa), underscoring the basin’s excellent exploration potential 

and drilling advances within the exploration and production industry in general (SEC, 2006v). 

As of 2006, Veritas had shot 6,300 sq km of 2-D seismic data and 93,700 sq km of 3-D seismic 
77

data in the Gulf of Mexico, highlighting the significance of the Gulf of Mexico as a multi-client 

market (SEC, 2006v). 

WesternGeco, which, as of April 2006, is owned 100 percent by Schlumberger, is by far the most 

dominant player in the industry. WesternGeco boasts the most extensive seismic crews and data 

processing centers, as well as the world’s largest multi-client seismic library. WesternGeco’s 

activity has been increasing as the industry has recently experienced a resurgence, a growth that 

Schlumberger expects to continue. Their revenues have increased significantly since 2005, due 

to the increase in exploration activities needed by oil companies, and from increasing acceptance 

of the company’s proprietary Q-Technology (SEC, 2006u). 

PGS, another dominant player, also holds a large market share in the industry, exceeding 25 

percent (PGS, 2006). In 2004, CGG gained market share in depth imaging for the Gulf of 

Mexico based on its proprietary WaveVista depth migration technology that is suited for 

complex wavefronts associated with high velocity layers, such as salt in the Gulf of Mexico 

(CGG, 2004). It should be noted that the global nature of large firms such as WesternGeco and 

CGGVeritas translates into a revenue mix derived from both domestic and international 

operations. 

The large firms all have extensive multi-client libraries of offshore 2-D and 3-D seismic data 

available for purchase on a non-exclusive basis. In 2006, PGS had the world’s largest multiclient library, and they had just been rewarded a contract within the Gulf of Mexico to survey an 

area covering 9,345 sq km (PGS, 2006). After the beginning of 2007, with their merger, 

CGGVeritas boasts 293,700 km of 2-D seismic data and 315,000 sq km of 3-D seismic data 

(CGGVeritas, 2007). Their recent merger allows them to cover greater breadth of area. For 

instance, CGG’s library covered the Central and Eastern Gulf of Mexico, while Veritas’ data was 

positioned in the Western and Central Gulf. In their 2006 Annual Report, the company stated 

that they plan to further develop their library to increase their competitive presence and to 

provide opportunities for future sales (SEC, 2006t). 

C. Industry Trends and Outlook 

1. Trends 

The geophysical services industry provides services directly for the exploration and production 

companies, and as such, is dependent upon oil and gas activity in the Gulf of Mexico. The 

industry is influenced by many factors, the most significant being drilling activity, current and 

projected oil and gas prices, technological advances, reserve replacement rates, and government 

regulations. 

One well known indicator of industry activity is the Seismic Crew Survey produced by the 

World Geophysical News (WGN). Figure 32 shows that the index has been increased steadily 

between 2003 and mid-2008. And, although the total number of seismic crews has continued to 

increase through 2008 and 2009, the number of crews actually working has decreased. In 

August 2009, the seismic crew count in the U.S. was 60 crews working and 23 available (totaling 

83 crews). This is a decrease from the previous year when there were 72 crews working and 

only 7 available (SEC, 2009). 
78

0

10

20

30

40

50

60

70

80

90

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

Available Working 

Number of Seismic Crews

Figure 32. Seismic crew survey. 

Marine seismic surveys fall into one of two categories: surveys performed for a client on a 

contractural basis, or multi-client surveys, where the geophysical service company may license 

the data to multiple clients. The majority of data acquisition costs are tied to logistical issues 

such as positioning and moving streamer cables (AAPG, 2004b). 

The seismic industry relies heavily upon technology, therefore any firm that can distinguish itself 

with new advancements gains an edge over the competition. One of the recent trends have been 

toward Controlled Seismic Electromagnetic Imaging (CSEMI), a tool with the ability to 

distinguish between hydrocarbon and water filled reservoirs, as hydrocarbons have more 

resistivity. PGS recently went public with their development of a marine vibrator as an 

alternative to using the conventional airgun. Vessels are continually changing as well, with 

Veritas CGG and PGS among other strong companies trending toward using solid streamers. A 

revolutionary project is being carried out by Fairfield at the Atlantis field in the Gulf of Mexico. 

The new surveying technology, called the Z 3000 system, is perfect for the niche market of 

difficult geology such as the subsalt environment in the Gulf of Mexico. It can be used for 4-D 

time-lapse surveys, and has nodes depth-rated to 3000m typically distributed about 400m apart, 

which is a much larger distance than typical receiver spacing on OBC operations (McBarnet, 

2006). 

The industry is trending towards more vertical integration as it realizes the value-add association 

with delivering not only high quality acquisition services, but also high quality processing and 

imaging. Geophysical companies used to simply collect the data; now they acquire data, process 

data, and provide reservoir imaging services such as Amplitude Variation with Offset (AVO) and 

Hybrid Inversion to assist E&P companies in hydrocarbon exploration (WesternGeco, 2007b). 

Source: SEG, 2009. 
79

2. Hurricane Impacts 

The 2005 hurricanes did not have much physical impact on the geophysical services industry. 

With the majority of work done in offices and data centers, there were no reports of company 

assets or properties being damaged or destroyed. None of the major geophysical service 

companies reported any impact from the hurricanes. However, with the increase in work 

received by most GOM service companies in the clean-up and aftermath of Hurricanes Katrina 

and Rita, no doubt the geophysical services felt the increase as well. 

3. Outlook 

The geophysical service industry is a key component within the energy economy at a time when 

there is increasing exploration in deep and complex environments requiring high quality and 

high-resolution seismic images. The industry is a cyclical one, driven by many factors, among 

them the exploration opportunities in deepwater basins such as the Gulf of Mexico, deepwater 

drilling technology improvements allowing E&P companies access to even deeper waters, the 

capital expenditures of E&P companies for new seismic data, and continually improving 

processing algorithms through focused R&D work. 

In the very recent past, the industry has experienced tough times, such as the 1998 price crash, 

from which it has slowly rebounded. Geophysical service companies worldwide have been 

experiencing improvements in pricing and demand since 2004. Large firms such as PGS expect 

seismic contract prices to increase due to the high industry capacity utilization of seismic fleets 

worldwide. In their 2007 2nd Quarter Report, CGGVeritas stated the industry will be driven by 

high-resolution 3D seismic offshore exploration as the oil industry moves to deeper-water areas 

(SEC, 2007b). In 2005, Veritas Chairman and CEO Thierry Pilenko commented: 

"Sustained strong demand combined with relativity low reserve replacement 

continues to support increased geophysical activity and pricing worldwide. This 

is particularly evident in contract marine acquisition, which drove our solid 

performance for the third fiscal quarter. Looking ahead to fiscal 2006, we believe 

that the market conditions will remain buoyant and are feeling good as we enter 

our planning process for our next fiscal year (Veritas DGC, 2005).” 

While company CEO’s and industry analysts expect the industry to continue these 

improvements, many believe the industry will improve greatly in the U.S. Gulf of Mexico, 

particularly in the Outer Continental Shelf, in deeper waters, where the BOEMRE and industry 

believe lie the largest remaining reserves (AAPG, 2004c). 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, and email addresses all organized alphabetically by industry categories. Also 

included is "Company Detail" information such as company size, revenue, areas operated in last 

12 months, operations onshore or offshore, and stock information for publicly traded companies. 

http://www.oilonline.com/store/directory.asp
80

Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html

 
81

VII. DREDGING 

A. Description of Industry and Services Provided 

Dredging is the removal of sediments shoals from navigation channels, and is the primary 

activity that assures safe and efficient navigation. Proper depth in navigation channels allows 

ships to move safely through harbors and provides turning basins and adequate water depth 

alongside terminal facilities. To maintain this depth, several hundred million cubic yards of 

sand, gravel and silt must be dredged from waterways and harbors each year. However, this 

maintenance and improvement process is challenging and controversial because ports are located 

in or near some of the nation’s most environmentally-sensitive areas – valuable wetlands, 

estuaries and fisheries. And dredging may release toxins from sediments to the water column. 

Other reasons for dredging include coastal and beach restoration, environmental remediation, 

land reclamation, pipeline trenching and even equipment recovery. 

B. Industry Characteristics 

1. Vessels and Methods 

According to one dredging company, “the U.S. dredging market consists of three primary types 

of work: capital, beach nourishment, and maintenance (SEC, 2006s).” Most of the dredging 

projects that are undertaken in the U.S. are associated with federal navigation projects (classified 

as maintenance or capital) that are carried out by the U.S. Army Corps of Engineers (USACE) 

and cost is shared with a local sponsor, most often the local port authority. 

Capital dredging is dedicated primarily to port expansion, specifically for the purpose of 

deepening channels for larger ships and supplying land fill for additional facilities. Other 

purposes include dredging for marine structures such as jetties and trench digging for pipes, 

tunnels, and cables (SEC, 2006s). 

When substantial shoreline assets are threatened by shoreline erosion, beach nourishment 

projects are often implemented. Beach nourishment is fundamentally the transporting of ocean 

floor sands to the shoreline. These projects usually occur in the fall and winter months to 

minimize environmental impacts and are generally a more acceptable solution to jetties or the 

relocation of assets (SEC, 2006s). 

Maintenance dredging is essentially the re-dredging of existing waterways that have accumulated 

sediments. In order to sustain the same level of navigability, maintenance drilling is usually 

required every one to three years to deal with natural sedimentation (SEC, 2006s). 

There are two primary types of dredging techniques used by the industry: mechanical and 

hydraulic. States generally have not included preferred dredging techniques and or best 

management practices in their formal policies; however, there are specific techniques and 

practices for some. Requirements are generally formulated on an individual item basis given the 

techniques’ dependence on hydrology, chemical composition of sediments, and the type of 

species that inhabit the area (Lukens, 2000). 
82

Mechanical dredging involves the use of heavy equipment at the shoreline and may or may not 

involve draining a lake (see Figure 33). Several types of mechanical dredges are used. Dipper 

dredges and clam shell dredges are the two most common. Mechanical dredges are rugged and 

capable of removing hard-packed materials or debris. They can be worked in tight areas and are 

efficient when large barges are used for long-haul disposal. Mechanical dredges have difficulty 

retaining loose, fine materials in buckets, do not dredge continuously like pipeline dredges, and 

may need added controls when handling contaminated sediments. Mechanical dredges place the 

material into barges for transport to the placement location (SEC, 2006s). 

 Figure 33. Mechanical dredge. 

Hydraulic dredging involves a dredge that floats on the water and pumps the material through a 

temporary pipeline to an off-site location, often several thousand feet away (see Figure 34). This 

dredge acts like a giant floating vacuum removing sediment very precisely (Dredge America, 

2007). Both dredges are used to deepen and widen channels filled with sediment and deposit the 

sediment in an approved location. Mechanical dredges shovel or scoop up bottom materials and 

place them on a barge or scow. Hydraulic dredges use pumps to remove a mixture of water and 

sediment (“slurry”) from the channel bottom. The Hopper Dredge is an ocean-going vessel used 

to dredge sediment from the bottom of a deepwater channel or coastal harbor. Dredged material 

is stored in "hopper bins" inside the ship before disposal in the open sea or other location (SEC, 

2006s). 

Source: JF Brennan, 2007. 
83

 Figure 34. Hydraulic dredge. 

Vessels commonly used to dredge sediment from the bottom of shallow rivers or calm coastal 

waters are called pipeline dredges. Dredged material is pumped from the river or ocean bottom 

and through a floating pipeline to shore. This dredged material is often used to restore eroded 

beaches (USEPA, 2007a). 

There are a number of federal and state agencies involved in overseeing dredging activities in the 

United States. Under the Clean Water Act (Section 404) the USACE manages the program that 

directs dredging and disposal of dredged material from navigation improvement and 

maintenance programs (USACE, 2007). The USACE is responsible for developing and 

maintaining Federal navigation channels. Through the Water Resources Development Act 

biennial legislation, the USACE continues to be responsible for maintaining 25,000 miles of 

navigation channels throughout the U.S. There are 400 major and minor ports in the U.S. that 

rely on these navigation channels. Annual maintenance performed by the USACE on these 

channels results in the removal of 300 million cubic yards of material annually on average 

(Lukens, 2000). An additional 100 million cubic yards are removed annually by private entities 

(Lukens, 2000). 

The USACE is also responsible for permitting non-federal dredging activities under Section 404 

of the Clean Water Act, Section 103 of the Marine Protection, Research and Sanctuaries Act 

(MPRSA), and the River and Harbors Act (RHA). 

The U.S. Environmental Protection Agency (USEPA) oversees and develops the environmental 

criteria by which the USACE evaluates proposed disposal of dredged material. The USEPA also 

designates and monitors ocean-dredged material disposal sites. A USACE permit is required 

when dredged sediments are disposed of in the ocean, inland, or near-coastal waters. If dredged 

material is disposed of on land various Federal, state and local regulations may apply (USEPA, 

2007b). 

The Federal government’s actions are closely intertwined with state actions concerning dredging. 

For instance, Section 307 of the Coastal Zone Management Act (CZMA) provides states with 

Source: Ellicot, 2007. 
84

federally approved coastal management programs, the authority to review all federal activities 

that affect any land or water use or natural resource of the coastal zone for consistency with state 

Coastal Management Plan (CMP) enforceable policies. This federal consistency provision 

applies to all federally authorized navigation projects and to private dredging projects that 

require certain permits. The net result is that all federal and private dredging projects must 

address state coastal management policies in their project development, design and permitting 

process. Only states with coastal management plans fall under this requirement, which includes 

34 states and territories (Lukens, 2000). 

The driving force behind dredging has been recreation and commerce, though post-2005 

hurricane studies have found that restoring beaches, wetlands and barrier islands can play a 

pivotal role in deflecting the most devastating effects of large storms. Ports that want to grow 

and expand their capabilities look to deepen their navigational channels that connect them to the 

sea so that deeper draft vessels carrying more cargo can make their way to the port. In terms of 

the GOM oil and gas industry the move towards deeper drilling requires larger vessels, thus 

dredging is essential for the existing ports servicing the oil and gas industry. As the size of a 

vessel increases, it can handle more cargo and the costs of transporting commodities decrease 

(Lukens, 2000). 

Beneficial Uses of Dredged Material 

Dredged materials have traditionally been viewed as a waste and are for the most part are 

disposed of in facilities similar to landfills. At the same time, sand was “mined” or dredged from 

offshore sites for the sole purpose of beach nourishment and erosion control. “Beneficial use, or 

re-use as some may refer to it, is the practice of taking material dredged from a channel to 

maintain its depth or deepen it, and then using that material for another purpose, such as beach 

nourishment or wetlands creation (Lukens, 2000).” 

Dredged sediment represents one of the most important resources for building wetlands. 

Beneficial use is any use which would protect, enhance, or provide a platform for the restoration 

of vegetated wetlands. Such uses could include the impacting of some vegetated wetlands if the 

long-term result is the protection or net gain of vegetated wetlands. Where applicable, dredged 

sediment is re-deposited in areas to restore wetlands and beaches (Lukens, 2000). 

The State of Louisiana requires that dredged material resources be used for beneficial programs 

and it is required for permitting activities. Some states have different definitions of beneficial 

use. For example, Louisiana’s definition is aimed at wetland creation/protection. Mississippi’s 

definition includes beach replenishment, construction, sanitary landfill, and agricultural soil 

improvement (Lukens, 2000). 

It has been the policy of the USACE that, as long as the effort to achieve beneficial use is within 

the project’s base plan or Federal standard costs, the USACE can and will make beneficial use of 

dredge material resources. If, however, the cost exceeds the federal standard or base plan, 

beneficial use will not be made unless additional funding from some other authority and/or 

source can be found to cover those costs which exceed the base plan costs (LCWC, 1998). 
85

Beneficial use of dredged material is vital in the restoration of beaches and wetlands following 

major storms, and is particularly important to the State of Louisiana, whose low-lying beaches, 

wetlands and barrier islands offer dwindling protection against these storms as millions of tons of 

materials are annually lost due to weather (see Figure 35). Storms drive high wave energy and 

overwash events that erode and breach the barrier shoreline, which result in the deterioration of 

dunes and damage or destroy coastal navigation, protection, and restoration projects (LCWC, 

1998). 

 Figure 35. Beach restoration project. 

Louisiana loses about 25 square miles of coastal wetlands each year; or the equivalent to one 

acre every 25 minutes (LA Coast.gov, 2009). Scientists estimate that the state will lose another 

700 square miles in the next 50 years (USACE, 2004a). 

In Louisiana, on an annual basis, 60-90 million cubic yards of material are removed from 

federally maintained navigation channels. To date, approximately 7,500 acres of vegetated 

wetlands have been created by beneficial placement of dredged material resources. According to 

the Coast 2050 report it is estimated that up to 6 square miles of subaerial wetlands could be 

created each year off the coast of Louisiana out of dredged material, compared to the 

approximate annual loss of 30 square miles each year (LCWC, 1998). 

The USACE and state of Louisiana have used dredged material resources to create over 7,000 

acres of subaerial land which has become vegetated wetlands. This usage has occurred in 

conjunction with maintenance dredging of federally maintained navigation channels, as well as 

through jointly-funded efforts utilizing USACE authorities matched by the state (LCWC, 1998). 

The state of Louisiana has stated its policy with respect to beneficial use of dredged material 

resources to be “the Secretary of the Department of Natural Resources shall insure that whenever 

use or activity requires that dredging or disposal of 500,000 cubic yards or more of any water 

bottom or wetland within the coastal zone, the dredged material shall be used for the beneficial 

purposes of wetland protection, creation, enhancement or combination thereof.” R.S. 

49:214:32(F) (LCWC, 1998). 

Source: Navarre Beach, 2007. 
86

The Louisiana Coastal Plan has implemented a program plan recommending the authorization of 

$100 million in additional funding needed to make up the difference between the Federal 

standard costs and the actual costs of using dredged materials for beneficial use. Based on the 

request, and a 10-year period of implementation, the program goals will create, restore, nourish 

and provide protection to coastal wetlands and coastal wetland features (USACE, 2006). 

Following the devastating hurricanes of 2005 the Louisiana Legislature passed Senate Bill 71, 

which became known as Act 8 following the governor’s signature. This Act created the Coastal 

Protection and Restoration Authority (CPRA) and charged it with coordinating the efforts of 

local, state and federal agencies to achieve long-term, comprehensive coastal restoration and 

hurricane protection. Along with this effort, Congress directed the ACE to develop its own 

Louisiana Coastal Protection and Restoration report (CPRA, 2007). 

The CPRA report listed several recommendations that rely heavily on the beneficial use of 

dredged materials, among those include continued navigation channel dredging, marsh 

restoration, barrier shoreline restoration, ridge habitat restoration, and shoreline stabilization 

(CPRA, 2007). 

The report warns that if sustainability is not restored to the coastal ecosystem that land will 

continue to be lost at a rapid rate, and critical infrastructure will be damaged or destroyed. 

Pipelines, offshore support centers, and other facilities constructed for inland conditions will be 

subject to the open water of the GOM. Shipping will be similarly affected. As wetlands become 

waterlogged and disappear, storm surges will batter south Louisiana’s waterways and ports, 

disrupting commerce and increasing maintenance costs (CPRA, 2007). 

2. Geographical Distribution 

Virtually every port must be dredged for maintenance purposes, including offshore oil and gas 

supply ports. Most of the shipyards and ports for the oil and gas industry are found in East Texas 

and along the Louisiana coasts, including Port Fourchon, Houma, Morgan City, Lake Charles, 

Patterson, Golden Meadow, Amelia, and Lafayette (see Figure 36). 

 Figure 36. Existing deepwater oil and gas supply ports. 

Source: French et al., 2006. 
87

As operations continue to expand to deeper water, new port facilities will be needed, and older 

facilities will require significant dredging to remain competitive (see Figure 37). 

 Figure 37. Proposed deepwater oil and gas supply ports. 

3. Labor Force 

Dredging labor statistics for GOM oil and gas falls within the classification of “All Other Heavy 

Construction” within the North America Industry Classification System (NAICS), which 

represented 140,202 employees in 2002. The Gulf States’ total number of employees in 2002 for 

this classification was 21,027. Louisiana and Texas contributed to more than 80% of that figure 

(USDOC, Bureau of the Census, 2002d). 

Dredging projects involve ship captains, crew, engineers, welders, heavy equipment operators 

and others. Dredge operators alone make up more than 1900 employees in the United States. 

Within the industry classification of “Other Heavy Construction,” dredging operators represented 

370 employees. Louisiana was identified as one of the top five states with the highest 

concentration of workers in this classification (USDOC, Bureau of the Census, 2002d). 

Most dredging companies are not under collective bargaining agreements, though some are, and 

maritime unions have targeted others. Dredges fall under most Coast Guard regulations and are 

therefore required to complete significant training for all aspects of their jobs. However, new 

requirements were implemented in 1995 with the new amendments to Standards for Training, 

Certification, and Watchkeeping. All mariners working on vessels greater than 200 gross tons 

and candidates for licenses and documents must take courses, pass examinations, and 

demonstrate their skills aboard vessels (STCW, 2007). 

Due to the hard work and long hours, turnover among mariners, especially at the lower levels, is 

high. Workers are typically paid by the day, and many work 12-hour shifts each day. Because 

of fatigue-related accidents the Coast Guard issued a policy letter in 2002 stating that mariners 

are not permitted to work more than 12 hours in a 24-hour period, except in an emergency 

(USDOT, Coast Guard, 2007). 

Source: French et al., 2006. 
88

4. Typical Firms 

U.S. dredging operations are dominated by four companies with Great Lakes Dredge & Dock 

Company (with 27 dredges), C.F. Bean, Baltimore Dredge Enterprises, and Weeks Marine being 

the largest. There are numerous smaller companies. Great Lakes is the industry leader in the 

U.S. with 36 percent market share (SEC, 2006s). Weeks Marine is the largest provider of 

dredging services in the Gulf of Mexico, where two-thirds of all U.S. dredging occurs. The 

company moves more sediment annually than any other U.S. dredging contractor (Weeks 

Marine, 2007). C.F. Bean is the U.S. subsidiary of Royal Boskalis Westminster, the largest 

dredging organization in the world. 

The largest dredge manufacturer in the U.S. is Baltimore Dredge Enterprises and its operating 

entity Ellicott Dredges, which has designed and manufactured over 1,300 dredges, and has 

served customers in over 70 countries (Ellicott, 2007). 

The typical dredging company is made up of a fleet of dredges and support ships and the largest 

companies in the U.S. are usually headquartered along the Northeastern coast and Great Lakes. 

With operations throughout the U.S. and, in many cases, around the world, these companies’ 

dredges are found wherever the work is. The USACE is the largest user of dredges, and 

competitively bids the work. 

Dredging contracts are most often obtained through competitive bidding and the terms are 

specified by the company soliciting the bid. The nature of the project or services will dictate the 

type of equipment, labor and material that will be needed. All of these inputs will affect the cost 

of the contract (SEC, 2006s). 

The dredging industry operates under the control of several relevant laws and statutes, including 

the Dredging Act, the Jones Act, and the Shipping Act, which provide a significant barrier to 

entry with respect to foreign competition. Together they prohibit foreign-built, chartered or 

operated vessels from competing in the U.S. Other laws and regulations include environmental 

rulings such as the Clean Water Act, Clean Air Act, and others. The Marine Protection, 

Research, and Sanctuaries Act (also called the Ocean Dumping Act) governs transportation of 

dredged material for the purpose of disposal into ocean waters. Section 404 of the Clean Water 

Act (CWA), governs the discharge of dredged or fill material into U.S. waters (USEPA, 2007b). 

Many projects, such as beach nourishment projects with offshore sand borrow sites, dredging 

projects in exposed entrance channels, and dredging projects with offshore disposal areas, are 

restricted by federal regulations to be performed only by dredges or scows that have U.S. Coast 

Guard certification and a load line established by the American Bureau of Shipping. The 

certifications indicate that the dredge is structurally capable of operating in open waters. 

As with all industries there are legal issues that can hamper business greatly. One of the many 

legal challenges stemming from Hurricane Katrina includes class action suits alleging that 

dredging of the Mississippi River Gulf Outlet in New Orleans caused the destruction of the 

Louisiana wetlands, which had provided a natural barrier against storms and hurricanes. The 

suits allege that the loss of these natural barriers contributed to the failure of levees. Virtually all 

of the dredging companies who conducted work in the area were included in these lawsuits. 
89

C. Industry Trends and Outlook 

1. Trends 

In 1994, over 30 percent of the U.S. Gross Domestic Product (GDP) was comprised of foreign 

trade, 95 percent of which passed through U.S. ports (USDOT, Maritime Administration, 1994). 

International trade now accounts for 25 percent of GDP and U.S. ports are responsible for 99 

percent of the country’s overseas cargo. Imports and exports are valued at $5.5 billion that move 

through U.S. ports every day (AAPA, 2006). Consumers are benefiting from the amount of 

goods being imported, with lower inventory costs, more efficient shipping costs and cheaper 

foreign prices. In the last 20 years, inventory costs alone dropped from 25 percent to only 14 

percent. In 2006, the port-related jobs accounted for 8.4 million workers, who earned and spent 

$314.5 billion. By the year 2020, U.S. foreign trade in goods may grow to reach as much as onethird of the GDP (AAPA, 2006). All of these factors make shipping and navigation a top priority 

for the U.S. government and private interests. 

Improving and maintaining navigation channels is critical to sustaining the rapidly growing 

marine transport industry. Bottlenecks can occur when channels are not deep enough for ships to 

safely navigate and dock at berths. Unless ports are dredged, cargo cannot move in the most cost 

effective way through the intermodal transportation chain. Also, as ship sizes and volumes of 

cargo increase, so must the intermodal transfer operations to foreign ports. 

The depth at federal channels was rated below average by 42 percent of the strategic ports. Fully 

50 percent of the strategic ports also rated the depth of private channels and berths below 

average. Conditions at non-strategic ports were ranked better by two and 12 percent, 

respectively. Maintenance dredging of federal channels was ranked below average by nine 

percent of the strategic ports and 30 percent of the non-strategic ports (USDOT, Maritime 

Administration, 2005a). 

Below average depths at our deepwater ports have the potential to have a dramatic impact on 

shipping in the U.S. As the larger container ships currently being built enter into service over the 

next 4-5 years, the scope of the problem could widen to affect even more deepwater ports. 

Potentially, insufficient depth and dredging of all our deepwater ports can cause overcrowding at 

the deepest ports while shallower ports are under-utilized. The 2004 Infrastructure Report’s 

evaluation of depth, including dredging, confirmed this finding when it stated, “Lack of adequate 

deepwater capacity could result in newest generation container ships making primary calls at 

foreign ports. U.S. ports would then either be served after ships have been partially discharged 

abroad or by feeder. This would result in added time/cost to inter-regional shipments and could 

reduce the overall efficiency of import/export shipping to the rest of the U.S. (USDOT, Maritime 

Administration, 2005a).” 

Maintenance dredging is one of the most important infrastructure challenges for many ports. 

Several ports expressed concern that the USACE has not received adequate funding to handle 

needed (and congressionally-authorized) maintenance and improvement dredging projects. For 

example, the Gulf Intracoastal Waterway System was specifically mentioned as an area needing 

attention. Some U.S. ports are already operating at maximum draft levels. At least one port in 

the U.S. South Atlantic has limited berthing hours to high tide. To maintain navigation in 2003, 
90

the Corps removed approximately 250 million cubic yards (190 M cubic meters) for a total cost 

of $900 million (USACE, 2004b). However, the USACE is faced with a growing backlog of 

projects. 

Capital expenditures on dredging were 13.3 percent of total port expenditures in the U.S. for 

2006, the second highest expenditure category behind Specialized General Cargo facilities. The 

Gulf Coast region accounted for 28 percent of dredging expenditures, exceeded only by the 

South Atlantic which was 33.2 percent of dredging expenditures. The North Atlantic region 

accounted for 21.1 percent (USDOT, Maritime Administration, 2009). Projected expenditures 

for dredging are expected to drop to just over 10 percent for 2007 through 2011 (USDOT, 

Maritime Administration, 2009). 

Table 7 

Public Port Capital Dredging Expenditures by Region, 2006 

Percent

Improvement Maintenance Total of Total

(%)

North Atlantic 2,816 $ 27,630 $ 30,446 $ 21.1%

South Atlantic 32,978 $ 14,804 $ 47,782 $ 33.2%

Gulf 11,969 $ 28,340 $ 40,309 $ 28.0%

South Pacific 13,499 $ 2,980 $ 16,479 $ 11.4%

North Pacific 1,018 $ 8,032 $ 9,050 $ 6.3%

Total 62,280 $ 81,786 $ 144,066 $ 100.0%

Percent of Total 43.2% 56.8% 100.0%

------ (thousand $) ------

 Source: USDOT, Maritime Administration, 2009. 

2. Hurricane Impacts 

Storms and hurricanes take a tremendous toll on shorelines, wetlands, and barrier islands each 

year. Barrier islands in particular play a vital role in protecting the Gulf coast’s shoreline, 

particularly in Louisiana where millions of tons of materials are annually lost due to weather. 

Storms drive high wave energy and overwash events that erode and breach the barrier shoreline, 

which result in the deterioration of dunes (see Figure 38). Coastal navigation, protection, and 

restoration projects are damaged or destroyed during these storms. 

Scientists and engineers continue to study the effects of large storms and hurricanes and look for 

ways to rebuild or restore these areas in a manner that is more permanent and environmentally 

responsible. Dredging is the primary method of restoring beaches, wetlands and barrier islands 

and will continue to play a very important role in restoring and strengthening at-risk structures. 
91

Hurricanes often displace sediment requiring the re-dredging of ship channels. Hurricane Rita 

deposited approximately 8 million cubic yards of sediment into the Galveston ship channels, 

costing $17.3 million to remove. Port Fourchon was operating with a 21-foot draft after 

sustaining severe damage. Sunken vessels were not immediately removed unless they blocked a 

vital channel. The Corps of Engineers determined what restrictions applied when channel depths 

did not meet previous standards, and often resolution was found on a case-by-case basis. 

(USACE, 2008). 

 Figure 38. Before and after photo of Katrina damage 

 to Chandeleur Islands off coast of Louisiana. 

3. Outlook 

The future for dredging companies appears to be secure for a number of reasons. First of all, the 

newest generation of cargo ships is much larger than ever, forcing most U.S. ports to upgrade 

and deepen port facilities, which includes significant dredging. This holds true for offshore oil 

Source: Tihansky, 2005. 
92

and gas supply ports, as deepwater drilling requires larger support ships. This is especially true 

along the GOM. Second, due to natural sedimentation, active navigation channels require 

maintenance dredging every one to three years, thus creating a recurring source of dredging that 

is often non-deferrable. Third, there is a substantial need for beach nourishment as beach erosion 

is a continuous problem, and there is a growing awareness as to the importance of beachfront 

property to the tourism industry. Beach nourishment projects are typically funded by federal, 

state and local monies. With the intensity of the GOM storms over the last few years the beach 

nourishment segment of dredging is expected to continue to grow. For instance, the Louisiana 

Coastal Area Ecosystem Restoration Study estimates that for the island chain of Isle Derniere, 

about 0.5 million cubic yards of sand will be needed for maintenance per year if the chain is 

restored (USACE, 2004b). Finally, the renewed interest in LNG provides significant 

opportunities for dredging as well, particularly with private companies who are developing LNG 

properties. 

The positive outlook for the industry has to be tempered with negative funding developments 

regarding the USACE, the largest employer of contracted dredging services. Due to budget 

constraints, and new regulations, the Corps has been hampered in getting projects out to bid. 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
93

VIII. CATERING AND PERSONAL SUPPORT SERVICES 

A. Description of Industry and Services Provided 

There are over 4,000 offshore Gulf of Mexico oil and gas structures, with over 800 of them 

permanently manned – all depending upon support from a variety of service companies for their 

provisions (USDOI, MMS, 2007a). Provisions include all of the supplies necessary for 

continuing operations. This section will focus on a broad definition of provisions that includes 

food management (i.e. procurement, storage, preparation, and cleanup); accommodation 

management (housekeeping and laundry); as well as other related services such as security, 

medical services, potable water, waste management, entertainment and more. Some companies 

provide all of these services, while others may specialize in one or two. Some provision 

companies have a worldwide presence and have thousands of employees, while others are very 

small, and may operate only in one region with a handful of employees. The larger companies 

tend to be publicly-traded and have many divisions covering the entire range of products and 

services required in the offshore industry. Most, however, are privately-held. 

While no region-specific sales data is publicly-available, Sodexho estimates that facilities’ 

management (including catering, laundry, etc.) for remote sites is a $14 billion/year business 

worldwide (SEC, 2006n). Daily operating costs vary greatly among the manned platforms in the 

GOM, depending upon the number of workers present. Larger facilities have a full service 

kitchen (see photo). 

Most offshore platforms are built to be in operation for 20 to 25 years, so it is imperative that 

safety and comfort needs are met, and kept up-to-date (Barrett, 2005). Good food and 

accommodations also serve as an enticing recruitment for an industry beset by substantial skilled 

labor shortage and its cyclical nature. 

Many provision companies provide the all-important “way in” to the offshore oil and gas 

industry by offering entry-level opportunities. Some of the most experienced industry 

employees got their start working for a provision company. 

B. Industry Characteristics 

1. Typical Facilities 

Food Management 

Everyone has to eat, and providing good meals to very remote areas is of paramount concern for 

all companies operating in the offshore oil and gas industry. Often one of the primary benefits 

(and recruiting tools) of working long shifts away from one’s family is the reputation of good 

food served aboard offshore facilities. Companies operating facilities in the GOM are 

responsible for providing living accommodations and meals to its workers. These companies 

often contract with onshore supply companies to provide all of the provisions used offshore, 

including potable water (see Figure 39). 
94

Figure 39. Typical kitchen facility on large offshore platform. 

Rig catering departments are composed of various positions, mainly utility, galley hands, cooks, 

stewards, etc. and are led by a camp boss. The number on board each rig or vessel depends on 

its size, and can range from two or three to several dozen people. 

However, older offshore supply vessels (OSVs) which deliver supplies to the facilities rarely 

have cooks and the crews often rely on their provisions, though some contracts require an onboard cook. Newer generation OSVs, especially deepwater vessels, usually have galleys. 

The Camp Boss and cooks normally are responsible for ordering provisions, which is done 

primarily by computer. The order is filled at the onshore facility and delivered by truck to the 

OSVs, which deliver the provisions on a weekly, or more often, basis. 

Food is brought to the rigs via ships, which, on average, re-supply the vessels weekly. Provisions 

are typically ordered well in advance, and in most cases, arrive in bulk. During transportation 

supplies are stored in refrigeration and freezer units, as needed. Food is prepared on site, usually 

via two 12-hour shifts, though work schedules vary from company to company (USDOI, MMS, 

2004b). 

According to 46 U.S.C. 10303(a), “seamen shall be served at least three meals a day that total at 

least 3,100 calories, including adequate water and adequate protein, vitamins and minerals in 

accordance with the United States Recommended Daily Allowance (U.S. Code, 2006).” 

Personnel working offshore on floating platforms are considered mariners, or seamen, and thus 

fall under the above regulation. This provision is most often easily met as meals prepared 

offshore are comparable to fine quality restaurants in many cases. 

Source: Global Careers Network, 2007. 
95

Accommodation Management 

Research has shown that the physical and social environment of offshore accommodations can 

make an important contribution to the quality of life and stress levels of offshore workers. Two 

factors appear to be especially important – privacy and recreational facilities. Many offshore 

facilities provide small, shared quarters with up to eight people to a room, while some companies 

provide two person quarters. By nature, cabins are small, with few luxuries. However, a 

concentrated effort by many companies to provide recreational facilities such as gyms, 

tv/computer rooms, and other facilities has taken place (Shrimpton and Storey, 2001). 

The shortage of skilled labor has also forced energy companies to improve living conditions. 

Facilities have evolved from drafty trailers and communal showers to more worker-friendly 

housing. Of course, accommodations vary from company to company and location to location. 

Offshore companies provide all accommodations and services while employees are working. 

Some of the newer, larger facilities include gyms and other entertainment opportunities. The 

larger facilities often have a separate hotel platform (or Floatel) (Carroll, 2007a and 2007b). 

Accommodation management includes laundry and housekeeping services, including 

maintenance of living quarters. Several companies, such as Taylors International Services, Inc., 

also offers clients consultation services on the design and layout of galley and living quarters. 

Since space on offshore facilities is always at a premium it is important to make the most 

efficient use of the available space. These modern accommodations drive operating costs up 

substantially, but the industry has no choice as new safety regulations and labor shortages require 

the investment. 

Figure 40 shows a two-person cabin aboard the “Offshore Olympia” accommodation barge. The 

500-person floatel can be moored alongside a deepwater production facility. Gymnasiums and 

other entertainment offerings are often found aboard such vessels. 

 Figure 40. Offshore accommodations. 

Figure 41 shows another picture of the deepwater accommodation barge “Offshore Olympia,” 

which is positioned next to a deepwater production facility. In the event of an approaching storm 

the barge can be moved quickly out of the way. 

Source: Barges.com, 2007. 
96

Figure 41. Offshore floating accommodations (Floatel). 

Other Management Services 

Other services often provided by provision companies include security, medical services, waste 

management, entertainment, and others. One of the most critical services provided is that of 

potable water transportation and waste management. 

Abundance of potable water is a serious issue in the offshore industry, and most employers 

maintain robust supplies, especially bottled water. However, the great majority of the potable 

water is transported in tanks aboard the OSVs, which lack of inspections and lax oversight has 

resulted in communication of diseases. In 2004 Congress passed the Coast Guard and Maritime 

Transportation Act, which included a section (214) on Potable Water which amended 46 U.S. 

Code 3305(a) to read “the inspection process shall ensure that a vessel subject to inspection . . . 

has an adequate supply of potable water for drinking and washing by passengers and crew.” 

This Act also mandated that the nation’s 5,200 towing vessels be inspected (U.S. Congress, 

2004). 

Many platforms and some OSVs do install water purification equipment to ensure the safety of 

drinking water. Additionally, some facilities may have desalinization equipment on board. 

However, many older, smaller OSVs (including tugs and barges) do not provide such equipment. 

Water tanks aboard OSVs are most often filled with potable water from public sources and the 

water is potable and safe. Problems are most often incurred as the result of water stored in tanks 

that may not be regularly cleaned or inspected.4

The Environmental Protection Agency also has authority to establish regulations to protect 

human health from contaminants in drinking water under the Safe Drinking Water Act (SDWA) 

(Bryant, 2005). 

 

4

 Note: Mobile platforms and jackup rigs are considered to be vessels, which means that on-board personnel are 

considered mariners when underway, and are under the jurisdiction of the U.S. Coast Guard, which places additional 

requirements such as licenses and more training on crews. 

Source: Barges.com, 2007. 
97

Waste disposal is also of paramount concern as several federal and state laws require the safe 

disposal of offshore wastes that are returned to land for disposal. Many of the offshore supply 

companies transport the wastes in special tanks on OSVs from the offshore site to onshore 

transfer facilities. From there the wastes are transferred to another transportation mode and sent 

to a final point of disposition (USDOI, MMS, 2004a). 

Wastes from offshore facilities include solids (such as drill cuttings, pipe scale, produced sand, 

etc.), drilling muds (oil and water-based), fluids, naturally-occurring radioactive materials (tank 

bottoms, pipe scale, etc.), industrial hazardous wastes (solvents and other chemicals), machine 

oil, diesel, and municipal solid waste (USDOI, MMS, 2004a). 

Under certain conditions wastes may be discharged into the sea, but must be virtually free of 

hydrocarbons and any other chemicals that could be harmful to marine life. Produced water is 

the most abundant waste stream and can be discharged after appropriate treatment measures have 

been taken. Water-based drilling muds that are made from clean barite, without certain chemical 

additives, and have not encountered hydrocarbons are also dischargeable under proposed 

regulations. And, under most circumstances, once domestic and sanitary sewage from rig 

employees has been treated, it can also be discharged into the sea (USDOI, MMS, 2004a). 

2. Geographical Distribution 

Along the coast there are many onshore facilities that support the offshore industry. Exploration 

and production in the GOM are concentrated in three areas: Western, Central and Eastern Gulf 

regions. Located adjacent to these regions are hundreds of contractors operating ports, crew 

bases, and other supporting industries. Provision providers typically have offices in all offshore 

port and service facilities along the Gulf coast, with largest facilities found in Port Fourchon, 

New Iberia, Lafayette and Houston areas (see Figure 42). 

The Port of Iberia is the Gulf Coast’s largest shallow water draft port, with more than 100 

companies housed at the port that employ over 5,000 workers (Port of Iberia, 2007). Port 

Fourchon, Louisiana, is the most significant deepwater port and houses over 250 companies. In 

addition to its huge domestic hydrocarbon significance, Port Fourchon is land base for the 

Louisiana Offshore Oil Port (LOOP), which handles about 13 to 15 percent of the nation’s 

foreign oil and is connected to 50 percent of U.S. refining capacity. LOOP is the only U.S. 

deepwater port capable of offloading very large crude carriers (VLCCs) and ultra large crude 

carriers (ULCCs). The Bureau of Ocean Energy Management, Regulation and Enforcement 

projects that the Port will service 47 percent of pending deepwater projects, and no other port is 

currently servicing more than 14 percent. 

As deepwater exploration and production escalates more supply bases will emerge, and those 

facilities capable of meeting deepwater needs (i.e., facilities with deepwater port capabilities) 

will benefit from the expansion (see Figure 43). 
98

 Figure 42. GOM existing supply bases and ports. 

 Figure 43. Future sites of GOM supply bases and ports. 

3. Labor Force 

Rig catering departments are often composed of various positions, mainly utility, galley hands, 

day and night cooks, head cooks and a camp boss. The number of catering staff on the rig 

usually depends on the size of the vessel and can range from 2 to 3 people to several dozen. 

Source: French et al., 2006. 

Source: French et al., 2006. 
99

Wages have risen since highly-skilled workers are in short supply during times of high oil and 

gas prices, and the remoteness of many facilities. Service workers (catering & service personnel 

etc.) earn approximately $290 to $320/day ($38,500 to $42,500/year). Workers normally work 

seven 12-hour shifts per week. The employer supplies working clothes and board, food, laundry, 

etc. are all free within the installation. Food is of international standard and American A-type 

(i.e., an abundance of meat dishes, fruits, etc.), though with more workplace diversity, other 

types of food are prepared. Accommodations facilities meet hotel standards, taking in 

consideration available conditions (Global Careers Network, 2007). 

The catering crew is made up of a Steward, which typically assists in the kitchen, cleans living 

accommodations and provides laundry services. This is typically an entry-level position. Entrylevel positions start at $700 to $1,000 per week. Dishwashers and BR hands (who wash dishes, 

sweep and mop floors, put up inventory and do general house-cleaning in the living quarters) 

earn $700 per week (Global Careers Network, 2007). 

The key member of the team is the Cook/Baker, many of which have culinary training today. 

Some companies consider cooks, particularly night cooks, as an entry-level position. General 

duties include serving the meals, preparing baked goods, cleanup and maintaining the galley. The 

average annual salary for cooks ranges from $39,000 to $45,000 (Global Careers Network, 

2007). 

The Camp Boss is responsible for the overall job performance of the catering company while on 

site. The general duties of the Steward usually consists of cooking, controlling inventory, food 

and labor costs, ordering groceries, providing customer satisfaction, and managing personnel. 

This person is often responsible for conducting safety meetings for the catering staff. The 

average annual salary for a Camp Boss is $55,500 (Global Careers Network, 2007). 

4. Typical Firms 

There are 23 catering companies listed in Atlantic Communications’ Gulf Coast Oil Directory. 

Some of the largest food management companies with operations in the GOM include Delta 

Catering, Sodexho Alliance (via Delta Catering, and Energy Catering Services, Inc.), the Craig 

Group, Compass Group (via Eurest Support Services), Sunoco, Trinity Catering, and Taylor’s 

International. All have offices, or affiliates, working in the GOM. 

The Catering and Marine Division of the Craig Group serves all facets of the offshore and 

onshore industries supplying more than 50 percent of the offshore installation in the North Sea, 

with operations in 116 countries, including offices in Houston and New Iberia, Louisiana. 

Delta Catering, of Harahan, Louisiana, works exclusively in the Gulf of Mexico region and 

focuses its efforts on servicing a small number of customers. Delta, along with Energy Catering 

Services, Inc., is now part of Sodexho Alliance, a $14 billion worldwide company. One of their 

biggest clients is ConocoPhillips, which operates the Magnolia Blossoms deepwater rig that 

houses 92 people. The company provides meals, as well as laundry and cleaning services. The 

Sodexho crew consists of 12 cooks, galley hands, and others. 

Other firms include Eurest Support Services, Sunoco, and Taylor’s International. Eurest Support 

Services, a division of the Compass Group, is the leading provider of specialist foodservice and 
100

related support services in the offshore industry. Sunoco, of Houma, Louisiana, is a private 

company that provides catering, housekeeping and grocery sales exclusively for the offshore 

industry. Taylor’s International, of Lafayette, Louisiana, is an international company with over 

10,000 employees in 25 countries (Offshore Guides, 2007). 

C. Industry Trends and Outlook 

1. Trends 

Like most offshore service industries, the catering business tends to be cyclical, depending upon 

the price of oil and gas, which drives exploration efforts, and the extent of economic growth, 

which drives consumption through changes in the construction market. Trends are influenced by 

factors such as the local population, wholesale food costs, and fuel costs. Population proves to 

be of major importance paying particular attention to potential worker shortages as a result of 

hurricanes (Papillon, written communication, 2008). 

2. Hurricane Impacts 

As with all offshore workers, provision workers are removed from the platforms before storms 

approach the area. Onshore supply bases are occasionally struck by hurricanes and operations 

may be affected, but are restarted as soon as possible, or are moved to other locations. After 

Hurricane Katrina, the Louisiana Restaurant Association reported substantial increases in food 

costs, water, electricity, and insurance. This service industry met these challenges while 

attempting to keep menu items at an affordable price (Papillon, written communication, 2008). 

A few of the onshore facilities were damaged during Hurricanes Rita and Katrina, but were back 

in operation shortly. As with other supply-based industries revenues increased in the months 

following the hurricanes as many workers were employed in reconstruction efforts. 

3. Outlook 

As in most all oil and gas support service industries, demand for provisions is substantially 

dependent on activity levels in the offshore oil and gas industry. During slow times provision 

staffs may be cut, but will not be entirely eliminated. Wherever there are workers present there 

will be a need for provisions, and it is unlikely - given the harsh working conditions, remoteness, 

and employee and employer needs - that food and accommodation quality will suffer. However, 

due to high operating costs and competitiveness of the provision industry, it is likely that larger 

companies will continue to expand and diversify their operations by buying smaller provision 

companies. Also, larger companies have the ability to negotiate lower prices for bulk goods. 

As deepwater exploration and production expands, and new supply bases are built in and around 

ports with deepwater capabilities, the provisions industry will expand as well. 
101

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
103

IX. WORKOVER SERVICES

A. Description of Industry and Services Provided 

Quite often producing wells need to be repaired or stimulated to restore, prolong or enhance the 

production of hydrocarbons. The process of performing major maintenance or remedial 

treatments to an oil or gas well is known as a workover. There are six general types of problems 

that may call for a service or workover contractor: 

Unless otherwise noted, the following descriptions are taken from Van Dyke (1997). 

Excessive gas production. In wells with a gas-cap drive, the natural gas expands as liquids flow 

out. At first perforations in the casing are far below the gas cap, but over time the gas cap 

expands below the perforations. When this happens the well starts producing a lot of gas with 

the liquids. This excessive gas production depletes the gas, driving the oil out of the reservoir. 

Excessive water production. In reservoirs with water drive, water is abundant, and it can bypass 

the oil as it moves to the wellbore. As the hydrocarbons are pumped out, the water level rises 

and will reach the perforations in the bottom of the wellbore – much in the same way the gas cap 

reaches down to the perforations. Both these conditions result in a well that produces a lot of 

water and little oil. Ideally, a production well is to have a water-oil ratio of zero – meaning that 

no water is produced with the oil. As the water-oil ratio increases, the cost of producing the well 

rises. For the most part, excessive water production occurs because of fingering, fractures, or a 

poor cementing job around the production casing. Fingering occurs when the water moves 

through sections of the reservoir in “fingers” because of differing permeabilities in the reservoir. 

Fractures may also provide natural channels from a water-saturated reservoir to an oil-producing 

reservoir. 

Poor Production Rate. There are a number of problems that can cause a well to produce below 

its full potential. Some are natural, such as reservoirs that have low permeability, low waterdrive or gas-drive pressures, or oil that is too viscous to flow easily. Problems can also be 

created during the drilling and completion phase of the well. Sometimes drilling fluid can make 

the formation impermeable next to the wellbore. Or, perforations can plug with casing debris, 

cement, and clay from the drilling mud and reduce the producing rate. 

Production of Sand. Wells drilled through sandstone in which the sand grains are not fully 

cemented produce sand with hydrocarbons. Those that produce sand most often are the 

unconsolidated reservoirs, buried in basins adjacent to the Gulf of Mexico and the Pacific Coast. 

Since this is a major production area, sand production is one of the major reasons for workovers, 

particularly offshore. Sand causes severe problems in a well because it can block almost any 

point in the flow stream. It can also destroy production equipment through abrasion. The 

amount of damage generally depends on the flow rate – the faster the reservoir fluid flows, the 

more sand it can carry and the more damage the sand will inflict, like sandblasting paint off a 

wall. 

Equipment Failure. Mechanical failures of well equipment are common. Equipment failures 

can be divided into two groups: equipment malfunctions, and equipment leaks. Malfunctions 
104

mostly occur in artificial-lift equipment such as beam pumps, submersible pumps, and gas-lift 

valves. Pumps and valves can wear out from prolonged use, and need to be replaced 

periodically. Downhole equipment leaks usually occur in the tubing, the casing, or the packer. 

Natural gas often contains carbon dioxide and compounds of sulfur, such as hydrogen sulfide. 

These compounds combine with water to form acids that are highly corrosive to metal and 

rubber. Corrosive fluids can eat holes in the tubing, casing, or packer seal. In addition, tubing 

can develop a leak as the sucker rod string moves up and down inside it. Rod couplings, which 

are the widest part of the string, may rub against the side of the tubing. 

When a well’s production slows or stops, the oil company, or lease operator, analyzes the well to 

decide the best course of action. The right decision can save a company millions of dollars. 

There are three possible courses of action: (1) work on the well; (2) abandon the well; or (3) do 

nothing. An investigation includes a study of the well’s mechanical history, geologic data and 

reservoir conditions, past performance, and well servicing and workover histories (Van Dyke, 

1997). 

B. Industry Characteristics 

Before the 1950s, a permanent derrick was built at each well for drilling and maintenance of the 

well throughout its life. Today’s rigs however, are moved to a new site when drilling is finished. 

The well is left with only a wellhead and sometimes a pump. Service and workover companies 

must bring the equipment they need to work in the well. The amount and type of equipment they 

need depends on the job. One job may require a light-duty rig and a couple of workers. Another 

may need a somewhat larger rig with a tall mast and a crew of several workers (Van Dyke, 

1997). 

1. Typical Facilities 

Unless otherwise noted, the following descriptions are taken from Van Dyke (1997). 

Offshore wells drilled by mobile rigs that have moved on require ships or barges to deliver 

service and workover rigs to the well. Some workover barge rigs have carefully designed hulls 

to support light-duty drilling machinery (Van Dyke, 1997). 

The surface of a fixed offshore platform, which sits above the water, provides the foundation for 

a platform rig. The platform either stands on the ocean floor or is a moored floating structure. 

Platform rigs are built on the fixed platform. Drilling, well servicing, and workover machinery 

modules are transported to the platform, where the rig is assembled and installed (SEC, 2005e). 

A jack-up rig is a mobile drilling and workover platform capable of elevating or lowering itself 

to the ocean floor. Its legs are lowered to the ocean floor to serve as a temporary foundation until 

the proper support structure can sustain the hull, which holds drilling or workover equipment, 

crew quarters, loading facilities, storage areas, the helicopter landing, etc. (SEC, 2005e). Jack-up 

rigs are generally subject to a maximum water depth of approximately 200 to 300 feet; although 

some may drill in water depths exceeding 400 feet. The length of the rig’s legs and the operating 

environment determine the water depth limit of a particular rig. Jack-ups generally operate with 

crews of 15 to 40 persons (SEC, 2005f). The hull can be lowered into the water, where it floats, 
105

and its legs are jacked vertically in order for the hull to be towed to another drilling site (SEC, 

2005e). 

Many jack-up rigs can perform drilling or workover operations over a preexisting structure by 

way of the cantilever design (see Figure 44), which extends the platform further out from the 

hull. Slot-type jack-up rigs, primarily used for exploratory drilling, designate a slot in the hull for 

drilling operations (SEC, 2005f). 

 Figure 44. Cantilever jack-up rigs: Pride Kansas, Pride Mississippi and Pride 

 Missouri. 

2. Geographical Distribution 

Workover and well servicing rigs are located all over the world, wherever oil and gas wells are 

producing. In addition, most workover and well servicing rigs can be moved between well sites 

and between geographic areas of operation. 

There are 88 companies listed in the Workover & Well Services section of The Atlantic 

Communications’ Gulf Coast Oil Directory. Of these, 25 report operations or involvement in the 

offshore GOM region. The locations of these 25 companies are displayed in Figure 45. 

Source: Pride International, Inc., 2006. 
106

Figure 45. Locations of workover and well services companies. 

3. Labor Force 

As discussed in the Drilling Contractor chapter, the number of jobs in oil and gas drilling can be 

measured by the “Oil and Gas Extraction” series as measured by the Bureau of Labor Statistics. 

As shown in Figure 46, employment in the U.S. oil and gas drilling industry has been decreasing. 

Since its peak in 1982 of 264.5 thousand jobs, employment has fallen over 50 percent, to an 

average of 136 thousand jobs in 2005 (U.S. Dept. of Labor, BLS, 2007a). Some of this decline 

can be attributed to industry consolidation, the decline of offshore drilling, and increasing 

competition. However, a good portion of this change is attributable to increased labor 

productivity in oil and gas production activities. 

Source: Atlantic Communications, 2006.
107

0

50

100

150

200

250

300

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Number of Employees (thousands)

 Figure 46. Number of employees, oil and gas extraction. 

A typical service or workover crew is led by a rig operator or crew chief, who is in charge of one 

or two floor hands and a derrickhand. The floorhands work on the rig floor. The derrickhand 

handles the upper end of the tubing or work string as it is being hoisted out of or lowered into the 

hole (Van Dyke, 1997). 

4. Typical Firms 

Companies providing workover service range from large international companies like 

Halliburton and Pride International offering a wide range of drilling and other oilfield services to 

smaller locally owned companies such as Hydraulic Well Control LLC of Houma, Louisiana and 

Owl Creek Well Service Inc. of Dubach, Louisiana. 

Drilling companies compete primarily on a regional basis, and competition may vary 

significantly for region to region. Most workover and well servicing rigs can be moved from one 

region to another in response to changes in levels of activity, and this can result in an oversupply 

of rigs in an area. In many markets, the number of rigs available for use exceeds the demand for 

rigs, resulting in price competition. Most drilling and workover contracts are awarded on the 

basis of competitive bids, which also results in price competition. The land drilling market is 

generally more competitive than the offshore drilling market simply because there are larger 

numbers of rigs and competitors (SEC, 2005e). 

Drilling companies report that price and availability and condition of equipment are the most 

significant factors in determining which contractor is awarded the job. Other factors include the 

availability of trained personnel possessing the required specialized skills; the overall quality of 

service and safety record; and domestically, the ability to offer ancillary services. In 

Source: U.S. Dept. of Labor, BLS, 2007a. 
108

international markets, experience operating in certain environments and customer alliances also 

have been factors in contractor selection (SEC, 2005e). 

One company, Nabors Industries, Ltd. is the largest land drilling contractor in the world. They 

are also one of the largest land well-servicing and workover contractors in the U.S. and are a 

leading provider of offshore platform workover and drilling rigs in the U.S. Nabors’ customers 

include major oil and gas companies, foreign national oil and gas companies and independent oil 

and gas companies. Nabors reports that beginning in late 2004 and throughout 2005, as a result 

of increasing demand for drilling services, its customers began to enter into longer term contracts 

with durations ranging from one to three years. Under these contracts rigs are committed to one 

customer over that term. Increasingly, these contracts are been signed for three-year terms for 

newly constructed rigs. Contracts relating to offshore drilling and land drilling in Alaska and 

international markets generally provide for longer terms, usually from one to five years. 

Offshore workover projects are often on a single-well basis. Drilling contracts are generally 

awarded through competitive bidding, although contracts are occasionally entered into by direct 

negotiation. The contract terms and rates may differ depending on a variety of factors, including 

competitive conditions, the geographical area, the geological formation to be drilled, the 

equipment and services to be supplied, the on-site drilling conditions and the anticipated duration 

of the work to be performed (SEC, 2006f). 

In recent years, most drilling contracts have been daywork contracts. A daywork contract 

generally provides for a basic rate per day when drilling (the dayrate for providing a rig and 

crew) and for lower rates when the rig is moving, or when drilling operations are interrupted or 

restricted by equipment breakdowns, adverse weather conditions or other conditions beyond the 

company’s control. In addition, daywork contracts may provide for a lump sum fee for the 

mobilization and demobilization of the rig, which in most cases approximates our incurred costs. 

A daywork contract differs from a footage contract (in which the drilling contractor is paid on 

the basis of a rate per foot drilled) and a turnkey contract (in which the drilling contractor is paid 

for drilling a well to a specified depth for a fixed price) (SEC, 2006f). 

C. Industry Trends and Outlook 

1. Trends 

As with drilling contractors, the market for workover rigs is highly cyclical. Operating results 

are impacted by the level of energy industry spending and the level of industry spending is 

affected by price, company expectations about products, government regulations and many other 

factors (SEC, 2005f). The workover and well servicing industry is one measure of the overall 

health of the oil and gas industry. The workover rig count is a measure of the industry's 

investment in the maintenance of its oil and gas wells. A low level of workover activity can be 

indicative of deferred maintenance. The situation is similar to the aging apartment building that 

no longer justifies major renovations and is milked as long as it produces a positive cash flow. 

When operators are in a weak cash position workovers are delayed as long as possible (WTRG 

Economics, 2006). 

The most recent workover rig count indicates a steady increase in the employment of the 

workover rig and well servicing industry. As shown in Figure 47, the rig count for workover rigs 
109

in the Gulf of Mexico and Southeast U.S. has been steadily increasing. The total U.S. workover 

rig count has increased 60 percent since its 2002 low and 22 percent since the beginning of 2005. 

Workover rig counts for the Gulf of Mexico and Southeast have increased 77 percent since 

March of 2002. These rigs have increased 6 percent since the beginning of 2005. 

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jan00Jul00Jan01Jul01Jan02Jul02Jan03Jul03Jan04Jul04Jan05Jul05Jan06Jul06Jan07

0

100

200

300

400

500

600

Total US

Southeast and Gulf of Mexico

Rig count (total US)

Rig count (GOM and Southeast US)

 Figure 47. Gulf of Mexico and Southeast workover rig count (2000 to present). 

Figure 48 shows that in recent years, the total U.S. workover rig count has maintained its growth, 

increasing about 10 percent per year between 2003, 2004 and 2005. In 2006, the rig count was 

even higher, 16 percent higher than the 2005 annual average. Rig counts for the first half of 

2007 however, were lower (approximately four percent lower than the 2006 average). A similar 

trend is also reflected in Figure 49, which shows the workover rig counts for the Southeastern 

U.S. and Gulf of Mexico. Here, the number of workover rigs in 2006 is almost 70 percent higher 

than the beginning of 2003. The more recent count for the first half of 2007 is lower than 2006 

as well as 2005. 

Source: Baker Hughes, 2007b. 
110

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

rig count

2003

2004

2005

2006

2007

 Figure 48. Total U.S. workover rig count (2003 to present). 

100

150

200

250

300

350

400

450

500

550

600

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

rig count

2003

2004

2005

2006

2007

 Figure 49. Gulf Coast workover rig count (2003 to present). 

2. Hurricane Impacts 

Hurricane Ivan in 2004 and Hurricanes Katrina and Rita in 2005 destroyed and damaged a large 

number of production platforms in the GOM. One of Nabors Super Sundowner platform 

workover rigs was significantly damaged during Hurricane Katrina (SEC, 2005e). Pride 

International did not report damage to any specific rigs, but does report that after the terrorist 

attacks on September 11, 2001, and the hurricanes in the Gulf of Mexico in 2004 and 2005, 

Source: Baker Hughes, 2007b. 

Source: Baker Hughes, 2007b. 
111

insurance underwriters have increased insurance premiums for many of the coverages 

historically maintained and have issued general notices of cancellation and significant changes 

for a wide variety of insurance coverages. The oil and natural gas industry in the Gulf of Mexico 

suffered extensive damage from those hurricanes and as a result, insurance costs will increase 

significantly as current policies end. In addition, underwriters have imposed an aggregate limit 

for damage due to named wind storms in the U.S. Gulf of Mexico (SEC, 2005f). 

Also as a result of the hurricanes, in May 2006, the BOEMRE issued interim guidelines for 

jackup rig fitness requirements for the 2006 hurricane season, effectively imposing new 

requirements on the offshore oil and natural gas industry in an attempt to increase the likelihood 

of survival of jackup rigs and other offshore drilling units during a hurricane (SEC, 2005f). The 

new BOEMRE requirements have resulted in some jackup rigs operating in the U.S. Gulf of 

Mexico being required to operate with a higher air gap during hurricane season, which reduces 

the water depth in which they can operate. The guidelines also provide for enhanced information 

and data requirements from oil and natural gas companies operating properties in the U.S. Gulf 

of Mexico. Implementation of new BOEMRE guidelines or regulations can increase costs and 

limit the operational capabilities of offshore rigs (SEC, 2005f). 

3. Outlook 

Expectations about future prices have historically been a key driver for drilling demand; 

however, the availability of quality drilling prospects, exploration success, relative production 

costs, the stage of reservoir development and political and regulatory environments will affect oil 

and gas company drilling programs (SEC, 2006g). The decline in natural gas and oil prices has 

impacted companies spending plans for exploration and production which in turn, affects the 

drilling companies. Nabors Industries’ U.S. offshore operating revenues decreased 13 percent in 

the first half of 2009 as compared to the first half of 2008 (SEC, 2009g). The company noted 

that activity levels and decreased demand has decreased substantially due to uncertainty in 

financial markets and the decline in prices (SEC, 2009g). 

Volatile energy prices lead to fluctuations in oil and gas company spending for drilling services. 

However, variations in these markets impact drilling companies differently depending on the 

length of contracts. For example, contracts in the shallow waters of the GOM are shorter term, 

so a decline in market conditions will impact revenues and cash flows for those operations. 

Contracts in deepwater and in international markets are longer term, so changes in market 

conditions will have a delayed impact (SEC, 2008g). 

Pride International expects “the decline in crude oil prices that began in late 2008, following the 

onset of the global financial crisis, deteriorating global economic fundamentals and the resulting 

decline in crude oil demand in a number of the world’s largest oil consuming nations, is expected 

to have a negative impact on 2009 offshore activity (SEC, 2008g).” Lower prices have resulted 

in companies reducing their expenditures for drilling activity. However this decline is expected 

to be more pronounced in exploration activities, which are shorter term projects (SEC, 2008g). 

Deepwater drilling however, is expected to be more stable, particularly for projects that are 

already under development. Pride International noted in its 2008 annual report that “typically, 

utilization for the industry’s deepwater fleet has remained high even during market downturns 
112

due to the advanced technical features of the rigs and the limited supply of rigs capable of 

addressing the increasingly complex drilling projects of our clients (SEC, 2008g). 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

Baker Hughes Rig Counts

North American workover rig counts are updated monthly by region. 

http://www.bakerhughes.com/investor/rig/index.htm

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html

U.S. Department of Labor, Bureau of Labor Statistics 

The Current Employment Statistics survey provides monthly employment statistics for major 

industrial categories (including oil and gas extraction). These data are available for statewide 

and metro area. 

http://www.bls.gov/data/home.htm
113

X. ENVIRONMENTAL CONSULTING AND MITIGATION 

A. Description of Industry and Services Provided 

The environmental consulting industry is comprised of companies that provide advice and 

technical assistance to businesses, government agencies and other organizations regarding 

environmental issues. These companies typically identify problems, measure and evaluate risks, 

and recommend solutions on environmental issues ranging from the control of environmental 

contaminants to site remediation and environmental engineering services (USDOC, Bureau of 

the Census, 2002a). 

These firms advise clients on how to efficiently control emissions, clean up contaminated sites, 

establish recycling programs and comply with government environmental laws and regulations. 

A real estate developer, for example, might hire an environmental consulting firm to help design 

and develop property without damaging natural habitats, such as wetlands. A manufacturing or 

utilities firm might hire environmental consultants to assess whether the firm is meeting 

government emissions standards. Government agencies contract work out to environmental 

consulting firms to assess contamination in a particular geographic area or to evaluate the costs 

and benefits of new regulations. In the oil and gas industry, environmental consulting firms may 

be contracted to perform environmental impact assessments, consult on pipeline design, assist 

with permitting and/or regulatory compliance, monitor air emissions or respond to oil spills. The 

services of an offshore environmental consultant are required in the case of a sale of a lease, 

platform or other assets, to determine the environmental status of each site. 

A typical consulting assignment in the offshore production industry may consist of an 

environmental impact study concerning the concentration of cuttings found at the base of 

platforms. In early offshore oil and gas development, drilling wastes were generally discharged 

from the platforms directly to the ocean. However, during the 1970s and 1980s, evidence began 

to mount that some of these discharges could have damaging effects on local ecology, 

particularly in shallow water. Limited environmental damage was likely to occur from waterbased drilling muds (WBMs), but when operators were using oil-based drilling muds (OBMs) on 

deeper sections of wells, the resulting cuttings piles created impaired zones beneath and adjacent 

to the platforms. Piles of these oil-based cuttings can affect the local ecosystem by (1) 

smothering organisms; (2) direct toxic effect of the drilling waste; and (3) anoxic conditions 

caused by microbial degradation of the organic components in the waste (USDOE, DWMIS, 

2007a). The current regulations lessen impacts of permitted discharges. Although WBMs and 

limited amounts of synthetic-based drilling muds (SBMs) retained on cuttings can still be 

discharged, discharges of OBMs have been outlawed completely (USDOE, DWMIS, 2007a). 

Usually, the most affected area is the seafloor immediately below the rig. The impacts are shortterm (a few years) as the accumulated drill cuttings break-up and spread out with time, while 

components of drilling fluids, such as mineral oil, can decompose and dissipate in the 

environment (CNSOPB, 1998). 

Once released into the water, fine particles from the discharges become suspended and move 

with the water, following the currents. The farther the discharge moves, the more dilute and less 
114

harmful it becomes. Studies examining the effects of exploratory drilling on the U.S. portion of 

Georges Bank found that small amounts of some drilling muds (in particular the weighting agent 

barite) had been transported as much as 60 km from the well site (CNSOPB, 1998). Sea scallops 

and other filter feeding organisms are particularly sensitive to fine particles and mineral oil from 

drilling muds (CNSOPB, 1998) (see Figure 50). 

Figure 50. Typical dispersion of cuttings from drilling operations. 

Typically hired by a prospective buyer of a property, environmental consultants conduct an audit 

of the property during the due diligence process. The audit typically consists of a search of the 

site’s records of state and federal regulations compliance, and, if necessary, hires divers to 

investigate the underwater conditions near the platform. In cases where the audits find situations 

that were not reported, or were under-reported, they tend to be used by the buyer to negotiate 

price and any cleanup procedures that must be completed prior to sale. Of particular concern are 

the waste management practices of the offshore company, including disposal of hazardous 

wastes. Due to the high costs of transporting wastes to shore (in some cases as high as $4,000 

per drum), one of the primary jobs of some environmental consultants is to devise a plan to 

properly dispose of the wastes and ensure that the plan is implemented properly. 

Another primary task is to devise, implement and oversee the platform’s Oil Spill Prevention, 

Control, and Countermeasure, or SPCC Plans, as required by the Oil Pollution Act (OPA) of 

1990. This plan lists all of the arrangements (including names and contact information of 

companies specializing in oil spill recovery) that the owner of the platform must have in the case 

of an oil spill, from recovery of the oil to equipment required on board (USEPA, 2007c). 

Other duties of environmental consultants include the monitoring of BOEMRE Incident of NonCompliance (INCs) reports, permitting, air and water regulatory compliance, as well as working 

on a diverse range of projects many of which include measuring an environment's physical and 

biological attributes, studying the design of structures built for the marine environment, 

environmental management and planning, discharge strategies, environmental impact studies, 

Source: CNSOPB, 1998. 
115

rehabilitation projects, environmental audits, and resource inventories. Environmental 

monitoring is becoming mandatory for developments, therefore consultants are generally 

required to design and implement monitoring studies and need to have skills necessary to design 

cost-effective and statistically valid programs. Also, knowledge of law, conventions and 

liabilities relating to coastal and offshore areas is becoming increasingly important with the 

increase in demand for environmental consultants in government bodies (AMSA, 2007). 

B. Industry Characteristics 

1. Typical Facilities 

Environmental consulting firms are characterized by a core group of experienced environmental 

professionals who are well trained, and who keep abreast of the latest technologies, government 

regulations, and management and production techniques. Organizations generally hire these 

consultants as a cost effective alternative to developing in-house expertise. 

The environmental consulting industry is dominated by a small number of large firms (and their 

subsidiaries). However, most individual consulting offices are small shops employing only a 

handful of people, sometimes fewer than 10 individuals (ECO, 2007). Many of these smaller 

firms are pursuing niche markets with more defined areas of expertise and experience. These 

may include wetlands delineation, ecological restoration, and geographic information systems. 

2. Geographical Distribution 

Figure 51 shows the geographic distribution of environmental consulting companies in the 

United States. The number of environmental consulting companies generally mimics the 

underlying population of the United States. California, New York and Texas firms comprise the 

bulk of the domestic companies. Many of the offshore environmental consultants have offices 

near offshore production areas such as Houston, Lafayette, New Orleans, Lake Charles, and 

Baton Rouge, though it is not uncommon for offices to be located further inland. The greatest 

concentration in Louisiana tends to be found in New Orleans and Lafayette. 
116

0

100

200

300

400

500

600

700

800

900

CA

NYTX

PA

NJ

VA

CO

OH

FL

MD

MA

IL

WA

NC

TN

Number of Companies

Figure 51. Geographic distribution of environmental consulting firms in the U.S. 

3. Labor Force 

According to the Bureau of Labor Statistics (BLS), environmental scientists held approximately 

73,000 jobs in the U.S. in 2004. About 44 percent of these scientists were employed by state and 

local governments, 15 percent in management, scientific, and technical consulting services, 14 

percent in architectural, engineering and related services and 8 percent in the Federal 

Government. About 4,000 were self-employed (U.S. Dept. of Labor, BLS, 2007c). 

Many environmental scientists earn degrees in life science, chemistry, geology, geophysics, 

atmospheric science, or physics and then, either through further education or through their 

research interests and work experience, apply their education to environmental areas. Others 

earn a degree in environmental science. A bachelor’s degree in environmental science offers an 

interdisciplinary approach to the natural sciences, with an emphasis on biology, chemistry, and 

geology (U.S. Dept. of Labor, BLS, 2007c). 

According to the BLS, the median annual earnings of environmental scientists were $51,080 in 

2004. The middle 50 percent earned between $39,100 and $67,360. The highest 10 percent of 

earns more than $94,460. 

The BLS expects that overall employment of environmental scientists will grow faster than the 

average for all occupations through 2012. Job growth will be driven by public policy, which 

forces companies and organizations to comply with environmental laws and regulations, 

particularly those regarding ground-water contamination, clean air, and flood control. 

Source: USDOC, Bureau of the Census, 1997. 
117

4. Typical Firms 

According to the 2002 Economic Census, there are 8,536 environmental consulting firms in the 

U.S. This is a 27 percent increase since the last census in 1997. These firms earned over $6.9 

billion in revenue in 2002, over a 45 percent increase since 1997 (USDOC, Bureau of the 

Census, 2002b). As shown in Table 8, the majority of environmental consulting firms have only 

one to four employees. New firms can enter the industry quite easily. Licensing, certification, 

and large capital outlays seldom are necessary for an individual to become a consultant, and the 

work can be quite lucrative for those with the right education, experience, and contacts. As a 

result, many wage and salaried environmental consultants eventually leave established firms to 

go into business for themselves and also develop more specialized methods to environmental 

problems. 

Table 8 

Environmental Consulting Firms by Employment (2002) 

Paid Annual Payroll

Employees (thousand $)

No employees 30 0.4% - $ 5,154 

1 to 4 employees 3,791 44.4% 7,854 $ 305,302 

5 to 9 employees 1,302 15.3% 8,586 $ 365,501 

10 to 19 employees 810 9.5% 10,785 $ 478,633 

20 to 99 employees 594 7.0% 21,735 $ 1,089,234 

100 to 400 employees 40 0.5% 6,379 $ 292,073 

not operated for entire year 1,969 23.1% 1,880 $ 134,745 

All Establishments 8,536 100.0% 57,219 $ 2,670,642 

Size of Establishment Establishments 

(Number)

Establishments 

(Percent of total)

 Source: USDOC, Bureau of the Census, 2002c. 

The Atlantic Communications’ Gulf Coast Oil Directory lists a total of 251 companies in the 

Environmental Services section of its directory. Some of these companies, however, provide 

more environmental services rather than consulting. Of these, only 52 report a range for their 

number of employees. As shown in Figure 52, the majority of these companies in the GOM area 

are smaller with a range of 1 to 25 employees. Sixteen companies reported having less than 250 

employees, one was between 250 and 500 and 6 companies have more than 1,000 employees. 

These larger companies are mostly more diversified, integrated companies like Newpark 

Resources. The environmental service provided by Newpark is the processing and disposal of 

exploration and production waste (SEC, 2006m). 
118

0

5

10

15

20

25

30

35

1 to 25 26 to 100 101 to 250 251 to 500 501-1000 1000+

number of companies

 Figure 52. Number of employees at environmental services companies. 

There are numerous consulting and engineering firms that offer many of the same services. 

These firms range in size from small local companies, to large national firms with integrated and 

diversified services (SEC, 2006w). Environmental consulting and services is a highly 

competitive industry, but no one company dominates the market. Competitive factors include 

reputation, performance, price, geographic location and availability of skilled technical personnel 

(SEC, 2006w). In addition, firms may face competition from the use by their clients of in-house 

staff. 

C. Industry Trends and Outlook 

1. Trends 

Background 

“The environmental industry in the United States began with municipal management of water 

systems, sanitary engineering, and waste collection during the late 1800s. The main impetus for 

these functions was the need for basic environmental infrastructure and a growing popular 

demand for the protection of public health (Berg et al., 1998).” However, the environmental 

consulting industry, as it stands today, began to take shape as recently as the 1970s with a host of 

new environmental compliance legislation. 

In 1970, the U.S. Environmental Protection Agency (USEPA) and the Council for 

Environmental Quality were created as part of the National Environmental Policy Act. 

Additional legislation, such as the Clean Air Act and Clean Water Act stimulated demand for 

environmental consulting services. Initial clients for these firms were mainly municipalities 

concerned with landfills and sewage problems as well as manufacturers concerned with 

complying with government air pollution standards. These problems were usually solved 

Source: Atlantic Communications, 2006. 
119

through large-scale public sector projects, most notably, the designation of “Superfund” sites 

designed to remediate areas deemed extremely hazardous to public health (Berg et al., 1998). 

In the 1980s, the passage of the Resource Conservation and Recovery Act (RCRA) and the 

Comprehensive Environmental Resource Compensation and Liability Act (CERCLA) launched a 

new era of environmental policy development focused on pervasive yet unseen toxic and 

hazardous waste. Policies and regulations under these new laws attempted to impose a “polluter 

pays” approach by assigning a clearer chain of liability for pollution and contamination. This 

system depended on private-sector industries to acquire the products and services needed for 

regulatory compliance (Berg et al., 1998). “This stimulated tremendous growth in the demand 

for environmental products and services, and more revenues for the emerging environmental 

industry, as companies sought to avoid fines, shutdowns, and the wrath of environmentally 

sensitive consumers and public officials” (Berg et al., 1998). 

The primary regulation that drove much of the growth of the industry was in response to the 

National Oil and Hazardous Substances Pollution Contingency Plan, more commonly known as 

the National Contingency Plan (NCP), which is the Federal Government’s blueprint for 

responding to oil spills and hazardous substance releases (USEPA, 2007b). 

The first National Contingency Plan was developed and published in 1968. This NCP was arose 

in response to a massive oil spill from an oil tanker off the coast of England. More than 37 

million gallons of crude oil were spilled into the water, causing massive environmental damage. 

U.S. officials developed the NCP as a coordinated approach to cope with potential spills in U.S. 

waters. This was the first comprehensive system of accident reporting, spill containment, and 

cleanup. It also established a response headquarters, a national reaction team, and regional 

reaction teams (USEPA, 2007e). 

Over the years, Congress has broadened the scope of the NCP. The Clean Water Act of 1972 

required a revision to include a framework for responding to hazardous substance spills as well 

as oil discharges. Superfund legislation passed in 1980 required another broadening of the NCP 

to cover releases at hazardous waste sites requiring emergency removal actions. Additional 

revisions have been made to the NCP to keep pace with the enactment of legislation. The most 

recent were finalized in 1994 to reflect the oil spill provisions of the Oil Pollution Act of 1990 

(USEPA, 2007e). 

The Exxon Valdez oil tanker spill in Alaska in March, 1989 led to the Oil Pollution Act (OPA) of 

1990, which streamlined and strengthened USEPA’s ability to prevent and respond to 

catastrophic oil spills. An oil tax finances a trust fund to provide the finances clean up spills 

when the responsible party is incapable or unwilling to do so. The OPA also requires oil storage 

facilities and vessels to submit plans detailing how they will respond to large discharges. Just as 

the USEPA has published regulations for aboveground storage facilities, the Coast Guard has 

done so for oil tankers. Area Contingency Plans are also required to prepare and plan for oil spill 

response on a regional scale (USEPA, 2007d). Many firms, especially smaller, boutique 

companies resulted from the OPA, though the overall rate of growth of the industry continued to 

decline. 
120

Recent Trends 

According to the Environmental Business Journal, the U.S. environmental consulting and 

engineering industry had one of its best years in a decade in 2006. And although growth slowed 

marginally from 8 percent to 7.2 percent in 2006, it would have qualified for the best growth rate 

since 1990 if not for the 8.0 percent growth in 2005. However, despite a third consecutive year 

of relative prosperity, executives are somewhat more cautious about the prospects for sustained 

growth for 2007, with real estate markets, federal spending and the economy overall as principle 

factors of concern. Certain practice areas seem to be immune, but executives are advised to view 

markets cautiously when considering long-range plans (Environmental Business Journal, 2007). 

2. Hurricane Impacts 

More than 193,000 barrels of oil spilled along the Louisiana coastline in August 2005 from the 

impacts of Hurricane Katrina (PBS.org, 2005). This was the largest oil spill in the state's history 

and the biggest since the Exxon Valdez crashed off the coast of Alaska in 1989. “The oil, 

released from ruptured pipelines, sunken boats and disabled refineries, along with toxic 

chemicals from industrial plants, bacteria from damaged sewage systems and small amounts of 

lead and arsenic, flowed into ground water, drinking water and the Gulf of Mexico (PBS.org, 

2005).” 

The storm flooded five Superfund sites in Louisiana, Mississippi and Alabama. The flooding of 

these severely polluted industrial sites scheduled for federal cleanup, released some of the 

nation's worst toxic materials. The industrial corridor along the Mississippi River between New 

Orleans and Baton Rouge also flooded. This led to speculation about the number and types of 

toxic chemicals that may have been leaked by hundreds of industrial facilities in the area. The 

true environmental impact on the Gulf Coast from Hurricane Katrina has yet to be determined 

(PBS.org, 2005). 

Environmental consulting and service companies were called upon for most of the clean-up 

efforts. Revenue for one company, CH2M HILL increased $239.9 million or 20.7 percent for 

the year ended December 31, 2006 compared to 2005. This increase in revenue was primarily 

due to work associated with the Hurricane Katrina relief and cleanup efforts (SEC, 2006x). 

USESGRoup/U.S. Environmental Services a 24-hour emergency environmental cleanup 

company specializing in excavating contaminated soils and hazardous waste management, 

reported a 64 percent leap in its 2006 revenue. The company, based in New Orleans, posted 

$108 million in 2006, compared to $66 million in 2005 and $35.8 million in 2004 (Penix, 2007). 

3. Outlook 

A substantial portion of environmental consulting and services business is generated either 

directly or indirectly as a result of federal, state, local and foreign laws and regulations related to 

environmental matters. Changes in environmental regulations could affect the consulting 

business more significantly than they would affect some other engineering firms. Accordingly, a 

reduction in the number or scope of these laws and regulations, or changes in government 

policies regarding the funding, implementation or enforcement of such laws and regulations, 

could significantly reduce the size of the consulting market and limit opportunities for growth. 
121

In addition, any significant effort by government agencies to reduce the role of private 

contractors in regulatory programs, including environmental compliance projects, could have the 

same adverse effects (SEC, 2006x). 

Activity relative to the oil and gas industry will be driven primarily by the economy, continued 

demand for energy (domestic and imports), and the additional infrastructure build-outs necessary 

to support the market. A large portion of the environmental consulting work over the next 

several years will be a function of the development of pipeline and storage assets. These assets 

were initially being developed to support offshore GOM activities. However, a considerable 

amount of activity during the 2004-2007 time period was associated with support activities for 

LNG regasification terminals. This activity began to slow significantly in 2007. 

However, additional pipeline and storage activity has occurred from 2005 to current in the 

onshore areas of Texas and Louisiana. These activities were associated with bringing new gas 

production from the Barnett Shale eastward. This activity should continue with the development 

of resources discovered in the Haynesville Shale area of north Louisiana. Environmental 

consulting firms will be called upon to assist in a wide range of permitting and mitigation 

activities. The entire infrastructure under development, or proposed to be developed will need a 

wide range of environmental land use, as well as air and water permits. 

Demand for environmental services is driven by a combination of regulatory requirements and 

economic factors. There is much new regulatory focus on emissions, climate change and air 

quality. Climate change initiatives at the state level, and ultimately the federal level, will sustain 

market growth for air services beyond the mid-term (SEC, 2006w). 

D. Chapter Resources 

Atlantic Communication’s Gulf Coast Oil Directory 

Includes a wide range of data from company name, address, web and email addresses to contact 

names with titles, direct phone numbers, and email addresses all organized alphabetically by 

industry categories. Also included is "Company Detail" information such as company size, 

revenue, areas operated in last 12 months, operations onshore or offshore, and stock information 

for publicly traded companies. 

http://www.oilonline.com/store/directory.asp

Environmental Business Journal 

Annual review of the U.S. environmental consulting and engineering industry. Includes revenue 

and growth statistics, company profiles and executive perspectives. This is a subscription based 

publication. 

http://environmental-industry.com/ebanreofuenc.html

U.S. Census Bureau, Economic Census 

The Economic Census profiles American business every 5 years and provides industry statistics 

by state or NAICS category. 

http://www.census.gov/econ/census02/
122

U.S. Department of Labor, Bureau of Labor Statistics 

The Current Employment Statistics survey provides monthly employment statistics for major 

industrial categories (including oil and gas extraction). These data are available for statewide 

and metro area. 

http://www.bls.gov/data/home.htm

U.S. Securities and Exchange Commission 

Quarterly and annual reports of operations for publicly traded companies are filed with the 

Securities and Exchange Commission. 

http://www.sec.gov/edgar/searchedgar/companysearch.html
123

REFERENCES 

AGM. 2007. 3-D seismic interpretation. Internet website: 

http://www.austingeo.com/recon%20features/3-D%20Seismic%20Interpretation. htm. 

Alberta Learning Information Service. Occupational Profiles: Commercial diver. 2008. Internet 

website:http://www.alis.gov.ab.ca/occinfo/Content/RequestAction.asp?aspAction=GetHT

MLProfile&format=html&occPro_ID=71002394&SNT_ID=25. 

American Association of Petroleum Geologists (AAPG). 2004a. Effective SD provides direction 

to drill bit. Explorer. March 2004. 

American Association of Petroleum Geologists (AAPG). 2004b. Players look for their niche. 

Explorer. March 2004. 

American Association of Petroleum Geologists (AAPG). 2004c. Seismic looking for a new 

image. March 2004. 

American Association of Petroleum Geologists (AAPG). 2004d. 4-D gives reservoir 

surveillance. December 2004. 

American Association of Port Authority (AAPA). 2006. America’s ports today. Internet 

website: http://aapa.files.cms-plus.com/PDFs/Americas_Ports_Today.pdf. 

Aries Marine Corporation. 2007. Liftboats. Internet website: http://ariesmarine.com. 

Atlantic Communications. 2006. Gulf coast oil directory. 2006 Edition. Vol. 54, No. 1. 

Australian Marine Sciences Association (AMSA). 2007. Careers in marine science, 

environmental consulting. Internet website: 

https://www.amsa.asn.au/pubs/CIMS/enviro_consult.php. 

Baker Hughes. 2007a. Baker Hughes rig count. Internet website: 

http://www.bakerhughes.com/investor/rig/. 

Baker Hughes. 2007b. Workover rig count. Internet website: 

http://www.bakerhughes.com/investor/rig/rig_wo.htm. 

Baker Hughes. 2007c. Baker atlas. Internet website: 

http://www.bakerhughes.com/bakeratlas/geophysical/3d_vsp_index.htm. 

Barges.com. 2007. Offshore Olympia. Internet website: 

http://www.barges.com/offoly.htm#photos. 

Barrett, D. 2005. The offshore supply boat sector. Fortis Bank. February 10, 2005. 
124

Battelle.org. 2004. Drilling offshore for oil and gas – muddy issues. Environmental Updates 

Winter 2004. Internet website: 

http://www.battelle.org/Environment/publications/EnvUpdates/winter2004/article1.stm. 

BC Work Futures. 2009. Occupational Outlooks for NOC 7382. February 2009. Commercial 

divers. http://www.workfutures.bc.ca/wfa/viewProfileDetails.do. 

Berg, D., G. Ferrier, and J. Paugh. 1998. The U.S. environmental industry. U.S. Department of 

Commerce. Office of Technology Policy. September 1998. 

Berkman, S. and T. Stokes. 2006. Record number of newbuilds joins the right fleet. World Oil 

Magazine. Vol. 227, No. 10. October 2006. 

Blenkey, N. 2007. New frontiers; offshore service vessels. Marine Log. April 1, 2007 

Bloomberg.com. 2006. Chevron to sink typhoon platform damaged by hurricane, 

Bloomberg.com, May 9, 2006. Internet website: 

http://www.bloomberg.com/apps/news?pid=10000081&sid=aSVk.YXxRtvA&refer=aust

ralia#. 

Brandt/EPI. 1996. The handbook on solids control and waste management. Conroe, TX: 

Brandt/EPI Technical Group. 1996. 

Bryant, D. 2005. Potable water. Maritime Reporter and Engineering News. August 2005, in 

GMCA News, September/October 2005, Number 34, pp. 13-14. 

Canada-Nova Scotia Offshore Petroleum Board (CNSOPB). 1998. Exploring for offshore oil 

and gas. Georges Bank Review. November 1998. 

Careers in Oil and Gas. 2006. Internet website: 

http://www.careersinoilandgas.com/video/contractstills.cfm. 

Carroll, J. 2007a. Soft living amid the hard labor. Red Orbit. February 26, 2007. 

Carroll, J. 2007b. Roughnecks get maids as Shell, Exxon battle oil worker shortage. 

http://www.bloomberg.com/apps/news?pid=20601109&sid=aiSAexDTqf5I&refer=exclu

sive. February 22, 2007. 

CGGVeritas. 2007. CGGVeritas Marine fleet: upgrade and renewal. September 26, 2007. 

Internet website: http://www.cggveritas.com/default.aspx?cid=1255&lang=1 . 

Compagnie Generale de Geophysique (CGG). 2004. The CGG Group 2004 annual report. 

Internet website: 

http://www.cggveritas.com/data//1/rec_docs/113_Annual_Report_2004.pdf. 
125

Coastal Protection and Restoration Authority (CPRA). 2007. Integrated ecosystem restoration 

and hurricane protection: Louisiana’s comprehensive master plan for a sustainable coast. 

April, 2007. 

Conley Corporation. 2007. Offshore photo gallery. Internet website: 

http://www.conleyfrp.com/gallery/gallery.htm. 

Diamond Offshore. 2007. Overview. Internet website: 

http://www.diamondoffshore.com/ourCompany/ourcompany_overview.php. 

Dredge America. 2007. Hydraulic dredging: least invasive and most cost-effective. Internet 

website: http://www.dredgeamerica.com/hydraulic-dredging.html. 

Drilling Contractor. 2005. Hurricanes impact U.S. Gulf drilling activity, but market conditions 

are strengthening. November/December 2005. Internet website: 

http://drillingcontractor.org/dcpi/dc-novdec05/Nov05-hurricanes.pdf. 

Donovan, M. Modest recovery possible in offshore rig market. Offshore. February 2010. 

Ellicott. 2007. Internet website: http://dredge.com/index.html. 

Elliott, A.R. 2005. Undersea Repair Firm Profits in the Abyss. Investor’s Business Daily. 

October 18, 2005. 

Energy Trader. 2007. Study: Category 5 could tally $65 bil in damages. Energy Trader. 

September 7, 2007. 

Environmental Business Journal. 2007. Annual review of the U.S. environmental consulting & 

engineering industry. February 2007. Internet website: http://environmentalindustry.com/ebanreofuenc.html. 

ENSCO International. 2007. Our operations. Internet website: 

http://www.enscous.com/default.aspx?id=127. 

Environmental Careers Organization (ECO). 2007. Career tips. Internet website: 

http://www.eco.org/site/c.dnJLKPNnFkG/b.1060927/k.8D09/Career_Tips/apps/nl/newsle

tter.asp. 

French, L.S., G.E Richardson, E.G. Kazanis, T.M. Montgomery, C.M. Bohannon, and M.P. 

Gravois. 2006. Deepwater Gulf of Mexico 2006: America’s expanding frontier. U.S. 

Department of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, 

New Orleans, LA. OCS Report MMS 2006-022. 

Geo-Marine Technology. 2007. Hazard surveys. Internet website: 

http://www.geomarinetech.com/HazardSurveys.htm. 

Global Careers Network. 2007. Offshore oil industry, salaries and benefits. Internet website: 

http://www.gloca.net/oil/salaries.htm. 
126

GlobalSantaFe. 2007. Overview. Internet website: 

http://www.globalsantafe.com/fleet/ovrvw.html. 

Greenberg, J. 2006. Hot spot: day rates are stronger than ever, but rig shortages loom. 

Workboat. May 1, 2006. 

Greenberg, J. 2007. OSV day rates: rates dip, rigs leave; at a glance. Workboat. May 1, 2007. 

Greenberg, J. 2009. Idle time: offshore slowdown continues as jackup rig count hits 33-year 

low. Workboat. May 1, 2009. 

Grossman, S. 2004. The life of a pilot offshore flying in the Gulf of Mexico. Internet Website: 

http://www.justhelicopters.com/Articles/detail.asp?iData=23&iCat=639&iChannel=2%2

0&nChannel=Articles. 

Hsieh, L. 2007. A new Gulf of Mexico. Drilling Contractor, Special Marine Edition. May/June 

2007. 

Human Resources and Skills Development Canada (HRSDC). 2007. Commercial divers. 

Internet website: http://www5.hrsdc.gc.ca/NOCCNP/app/checkversion.aspx?lc=e&level=6&noccode=7382. 

Independent Petroleum Association of America (IPAA). 2004. Testimony of William Griffin 

before the Subcommittee on Energy and Mineral Resources Oversight Hearing. U.S. 

Congress. Advances in Technology: Innovations in the Domestic Energy and Mineral 

Sector. July 14, 2004. Internet website: 

http://www.ipaa.org/issues/testimony/WilliamGriffin.php. 

Ion. 2007. Processing. Internet website: http://www.iongeo.com/Processing/Marine/. 

Ivanovich, D. 2005. Not everyone loses when a storm hits. Houston Chronicle. August 30, 

2005. 

JF Brennan. 2007. Brennan, full service marine contractor. Internet website: 

http://www.jfbrennan.com/. 

Kammerzell, J. 2004. Business briefs. Offshore. March 2004. 

Kelly A. 2005. Halliburton earnings reflect benefits of increased pricing power. Oil Daily. 

October 26, 2005. Internet website: 

http://www.accessmylibrary.com/coms2/summary_0286-15273240_ITM. 

Kelly, P.L. 2000. Contract drillers see new investments in rigs begin to stir. WorldOil.com. 

December 2000. Internet website: 

http://www.worldoil.com/magazine/MAGAZINE_DETAIL.asp?ART_ID=1225&MONT

H_YEAR=Dec-2000. 
127

LACoast.gov. 2009. Factoids about Louisiana’s coastal wetlands. Internet website: 

www.lacoast.gov/education/factoid%20old.htm

Liftboat.com. 2007. What is a liftboat? Internet website: http://liftboats.com/whatis.htm

Louisiana Coastal Wetlands Conservation and Restoration Task Force and the Wetlands 

Conservation and Restoration Authority (LCWC). 1998. Coast 2050: Toward a 

sustainable coastal Louisiana. Louisiana Department of Natural Resources. Baton 

Rouge, LA 

Lukens, J.L. 2000. National coastal program dredging policies, an analysis of state, territory, 

and commonwealth policies related to dredging and dredged material management. 

Technical Document 00-02. Volume 1, April 2000. Coastal Programs Division, Office 

of Coastal & Coastal Resource Management, National Ocean Service, National Oceanic 

& Atmospheric Administration, U.S. Chamber of Commerce. 

Marine Technology Society. ROV Committee. 2006a. Commercial – offshore. Internet 

website: http://www.rov.org/educational/pages/Commercial-Offshore.html. 

Marine Technology Society. ROV Committee. 2006b. What is an ROV? Internet website: 

http://www.rov.org/educational/pages/whatis.html. 

Marine Technology Society. ROV Committee. 2006c. Education section table of contents. 

Internet website: http://www.rov.org/student/education.cfm. 

Marine Technology Society. ROV Committee. 2006d. Where are they working? Internet 

website: 

http://www.rov.org/educational/pages/WHERE%20ARE%20THEY%20WORKING.htm

l. 

Marine Technology Society. ROV Committee. 2006e. ROV background. Internet website: 

http://www.rov.org/info.cfm. 

Marron, J. 2006. Global competition, expiring leases tighten Gulf of Mexico rig availability. 

Inside F.E.R.C.’s Gas Market Report. March 24, 2006. 

McBarnet, A. 2006. Technology horizon in view. Offshore Engineer. January 11, 2006. 

Nabors Industries LTD. 2007. About Nabors. Internet website: 

http://www.nabors.com/Public/Index.asp?Page_ID=3. 

NaturalGas. org. 2004a. Onshore drilling. Internet website: 

http://naturalgas.org/naturalgas/extraction_onshore.asp. 

NaturalGas.org. 2004b. Rotary drilling. Internet website: 

http://naturalgas.org/naturalgas/extraction_rotary.asp. 
128

NaturalGas. org. 2004c. Offshore drilling. Internet website: 

http://naturalgas.org/naturalgas/extraction_offshore.asp. 

NaturalGas. org. 2004d. Exploration. Internet website: 

http://www.naturalgas.org/naturalgas/exploration.asp. 

Natural Gas Week. 2005. Oceaneering adds six ROVs to fleet in enriched capex plan. Natural 

Gas Week. October 3, 2005. 

Natural Gas Week. 2009. Rig contractors navigate choppy jackup market; dayrates slashed. 

Natural Gas Week. July 6, 2009. 

Navarre Beach Leaseholders and Residents Association, Inc. (Navarre Beach). 2007. Beach 

restoration. Internet website: http://www.navarrebeach.org/Beach%20Restoration.htm. 

Nova Scotia Department of Energy. 2007. Career programs. Internet website: 

http://www.gov.ns.ca/energy/AbsPage.aspx?siteid=1&lang=1&id=1268. 

Offshore Guides. 2007. Catering companies. Internet website: 

http://www.offshoreguides.com/cptron/contact_catering.htm. 

Offshore Logistics, Inc. 2005a. Bristow Group Inc. Internet website: http://www.olog.com/page 

21.php. 

Offshore Logistics, Inc. 2005b. Above and beyond. Presented at Burkenroad Reports 

Investment Conference, New Orleans. April 22, 2005. Internet website: 

http://www.olog.com/clientFiles/olog/files/Olog-Company-Update-22-April-2005.pdf. 

Offshore Marine Service Association. 2007. Mission. Internet website: 

http://www.offshoremarine.org/mission.html. 

Offshore Shipping Online. 2007. Work class ROV operations to be US$1.46 billion market by 

2011. Internet website: http://www.oilpubs.com/oso/article.asp?v1=6212. 

OilCareer.com. 2007. Offshore oil rig jobs. Internet website: http://www.oilcareer.net/jobsother.html. 

Oilfield-Auction.com. 2006. New 300C Carrier Workover Rig API 4-E. Internet website: 

http://www.oilfield-auction.com/classifieds/300_double_drum_workover_rig.htm. 

Orszulik, S. 2008. Environmental Technology in the Oil Industry. Hampshire: Springer 

Publishing. 2008. 

OSPAR. 1992. PARCOM Decision 92/2 on the Use of Oil-based Muds. 

OSPAR. 1996. PARCOM Decision 96/3 on a Harmonized Mandatory Control System for the 

Use and Reduction of the Discharge of Offshore Chemicals. Oslo. 
129

OSPAR. 1997. PARCOM Decision 97/1 on Substances/Preparations Used and Discharged 

Offshore. Brussels. 

OSPAR. 1999. List of Substances / Preparations Used and Discharged Offshore Which Are 

Considered to Pose Little or No Risk to the Environment (PLONOR). 

OTS Heavy Oil Science Center. 2006. Drilling. Internet website: 

http://www.lloydminsterheavyoil.com/drilllaunch.htm. 

Papillon, E. 2008. Written communication. Louisiana Restaurant Association. Email 

correspondence. November 12, 2008. 

PBS.org. 2005. Rebuilding the Gulf Coast. October 14, 2005. Internet website: 

http://www.pbs.org/newshour/local/gulfcoast/background/environment_longterm.html. 

Penix, M. 2007. Environmental services revenue crack $100m. New Orleans City Business. 

March 19, 2007. 

Petroleum Geo-Services (PGS). 2006. Annual report. Internet website: 

http://www.pgs.com/upload/40374/PGS_Annual2006_web.pdf. 

Petroleum Geo-Services (PGS). 2007. Ramform. Internet website: 

http://www.pgs.com/Geophysical_Services/Marine/Acquisition/Streamer_Seismic/Resou

rces/Ramform/. 

PHI, Inc. 2006. The total helicopter company. Internet website: 

http://www.phihelico.com/Default.htm. 

Port of Iberia. 2007. Fast facts. Internet website: 

http://www.portofiberia.com/fastfacts01.html. 

Pride International, Inc. 2006. Rig fleet, U.S. Gulf of Mexico. Internet website: 

http://www.prideinternational.com/rigfleet/gom.htm. 

ReedHycalog Rig Census. 2006. Internet website: www.grantprideco.com/. 

RigData. 2009. Statistics. Internet website: http://www.rigdata.com/c-7-rig-countstatistics.aspx. 

Rigzone.com. 2007. WesternGeco expands Q-Marine fleet. Internet site: 

http://www.rigzone.com/news/article.asp?a_id=46260. 

Rigzone.com. 2009. Rig data: worldwide offshore rig fleet information. Internet site: 

http://rigzone.com/data/

RockWare Inc. 2007. RockWare releases RockWare Visual Seismic 2.0. Internet website: 

http://www.rockware.com/press/PRrvs20.html. 
130

The ROV World Portal. 2006. ROV world - subsea information portal FAQ. Internet website: 

http://rovworld.com/phpnuke/faq-8-About+ROV's+&+AUV's.html. 

Rowan Companies, Inc. 2009a. Offshore rig fleet. Internet website: 

http://www.rowancompanies.com/fw/main/Offshore-Rig-Fleet-25.html. 

Rowan Companies, Inc. 2009b. Rowan reports second quarter 2009 operating results. Internet 

website: http://www.rowancompanies.com/fw/main/Investor-News-45.html

Schlumberger. 2007. Oilfield glossary. Internet website: 

http://www.glossary.oilfield.slb.com/default.cfm. 

Seacor Marine.com. 2007. Seacor Marine. Internet website: http://www.seacormarine.com. 

SEi Companies. 2004. The source, mixing oil and water, Texas style. Internet website: 

http://www.seicompanies.com/vision/newsletters/SourceQ1.pdf. 

Shrimpton, M. and K. Storey. 2001. Effects of offshore employment in the petroleum industry: 

A cross-national perspective. U.S. Dept. of the Interior, Minerals Management Service, 

Herndon, VA. OCS Study MMS 2001-041. 57 pp. 

The Society of Exploration Geophysicists (SEG). 2009. Seismic crew survey. Internet website: 

http://www.seg.org/business/crewSurvey/index.shtml. 

Society of Petroleum Engineers (SPE). 1999. JPT Online, frontiers of technology - seismic 

technology. February 1999, Vol. 2. Internet website: http://www.spe.org/speapp/spe/jpt/1999/02/frontiers_seismic.htm. 

Spencer, S. 2005. Service companies see long-term gains from post-Katrina work. Platts 

Oligram News. September 9, 2005. 

Sridharan, V. 2007. Rig owners leave Gulf for longer-tern deals: other economic environs are 

better for them. The Dallas Morning News. September 16, 2007. 

Standards of Training, Certification and Watchkeeping (STCW). 2007. Frequently asked 

questions. Internet website: http://www.stcw.org/faqs.html. 

Sun Machinery. 2006. Drilling rigs. Internet website: http://www.sunmachinery.com/. 

TGS-NOPEC. 2007. Seismic data processing. Internet website: 

http://www.tgsnopec.com/data_solutions/imaging_solutions.asp. 

Tihansky, A. 2005. Before-and-after aerial photographs show coastal impacts of Hurricane 

Katrina. Sound Waves Monthly Newsletter. U.S. Geological Survey. September 2005. 

Tubb, R. 2005. MMS director overviews impact of Hurricanes Katrina and Rita. Pipeline & 

Gas Journal. November 1, 2005. 
131

Underwater Magazine. 2002. Case studies: Offshore oil and gas support. March/April 2002. 

Internet website: http://underwater.com/archives/arch/022.04.shtml. 

U.S. Code. 2006. Shipping. 46 U.S.C. 10303, April 20, 2006. Internet website: 

http://law.onecle.com/uscode/46/10303.html. 

U.S. Congress. 2004. Coast Guard and Maritime Transportation Act of 2004. Public Law 108-

293, p. 118 Stat 1028. August 9, 2004. Internet website: 

http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=108_cong_public_laws&docid=f:publ293.108.pdf. 

U.S. Dept. of the Army. Corps of Engineers (USACE). 2004a. Louisiana coastal area (LCA) 

ecosystem restoration study factsheet. September 28, 2004. Internet website: 

http://www.lca.gov/lcaFactSheet1103new9-29-04.pdf. 

U.S. Dept. of the Army. Corps of Engineers (USACE). 2004b. Louisiana coastal area – 

Louisiana. Ecosystem restoration study. Final. Volume 1: LCA Study, main report. 

November 2004. 

U.S. Dept. of the Army. Corps of Engineers (USACE). 2006. Louisiana coastal area (LCA) 

ecosystem restoration study, beneficial use of dredged material program factsheet. 

August 2006. Internet website: http://www.lca.gov/budmat_8_06.pdf. 

U.S. Dept. of the Army. Corps of Engineers (USACE). 2007. Dredging. Coastal & Hydraulics 

Laboratory. Internet website: 

http://chl.erdc.usace.army.mil/chl.aspx?p=s&a=ResearchAreas;2. 

U.S. Dept. of the Army. Corps of Engineers (USACE). 2008. Navigation update. Internet 

website: http://www.hq.usace.army.mil/cepa/katrina/navigation.html (accessed December 

8, 2008). 

U.S. Dept. of Commerce (USDOC). Bureau of the Census. 1997. NAICS 541620. Geographic 

distribution - environmental consulting services: 1997. Internet website: 

http://www.census.gov/epcd/ec97/industry/E541620.HTM. 

U.S. Dept. of Commerce (USDOC). Bureau of the Census. 2002a. 2002 NAICS Definitions. 

541620 Environmental consulting services. Internet website: 

http://www.census.gov/epcd/naics02/def/ND541620.HTM. 

U.S. Dept. of Commerce (USDOC). Bureau of the Census. 2002b. 2002 economic census, 

professional, scientific, and technical Services. Internet website: 

http://www.census.gov/econ/census02/data/us/US000_54.HTM#top. 

U.S. Dept. of Commerce (USDOC). Bureau of the Census. 2002c. Sector 54: Professional, 

scientific, and technical services, subject series – estab & firm size: employment size of 

establishments for the United States: 2002. Internet website: 

http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-

fds_name=EC0200A1&-_skip=800&-ds_name=EC0254SSSZ2&-_lang=en. 
132

U.S. Dept. of Commerce (USDOC). Bureau of the Census. 2002d. Industry statistics sampler, 

other heavy and civil engineering construction. Internet website: 

http://www.census.gov/econ/census02/data/industry/E237990.HTM. 

U.S. Dept. of Energy. Drilling Waste Management Information System (USDOE, DWMIS). 

2007a. Fact sheet – discharge to ocean. Internet website: 

http://web.ead.anl.gov/dwm/techdesc/discharge/index.cfm. 

U.S. Dept. of Energy. Drilling Waste Management Information System (USDOE, DWMIS). 

2007b. Fact sheet – drilling practices that minimize generation of drilling wastes. 

Internet website: http://web.ead.anl.gov/dwm/techdesc/drilling/index.cfm. 

U.S. Dept. of Energy. Drilling Waste Management Information System (USDOE, DWMIS). 

2007c. Fact sheet – using muds and additives with lower environmental impacts. 

Internet website: http://web.ead.anl.gov/dwm/techdesc/lower/index.cfm. 

U.S. Dept. of the Interior. Geological Survey (USDOI, GS). 2007. Woods Hole science center 

seismic profiling systems. Internet website: 

http://woodshole.er.usgs.gov/operations/sfmapping/airgun.htm. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 1998. Notice to 

lessees and operators of federal oil, gas and sulphur leases in the Outer Continental Shelf, 

Gulf of Mexico OCS Region. Shallow Hazards Requirements. NTL No. 98-20. 

Effective date: September 15, 1998. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2004a. OCS-related 

infrastructure in the Gulf of Mexico fact book. OCS Study MMS 2004-027. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2004b. Labor 

migration and the deepwater oil industry. Access Number 30951-16804. July 2004. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2005a. Hurricane 

Katrina/Hurricane Rita evacuation and production shut-in statistics report as of Monday, 

September 26, 2005. The News Room. Release #3361. September 26, 2005. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2005b. Hurricanes 

on the OCS: Powerful new lessons. MMS Ocean Science. Volume 2, Issue 6. 

November/December 2005. Internet website: 

http://www.gomr.mms.gov/homepg/regulate/environ/ocean_science/mms_ocean_05_nov

_dec.pdf. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2006a. Impact 

assessment of offshore facilities from Hurricanes Katrina and Rita. The News Room. 

Release #3418. January 19, 2006. 

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2006b. Hurricane 

Katrina/Hurricane Rita evacuation and production shut-in statistics report as of Monday, 

June 19, 2006. The News Room. Release #3528. June 21, 2006. 
133

U.S. Dept. of the Interior. Minerals Management Service (USDOI, MMS). 2007a. Proposed 

final program outer continental shelf oil and gas leasing program, 2007-2012. April 

2007. 

U.S. Dept. of Justice v. Cal Dive International, Inc., Stolt Offshore S.A., Stolt Offshore, Inc., and 

S&H Diving, LLC (U.S. v. Cal Dive). 2005. 1:05CV0241. District of Columbia. 

U.S. Dept. of Labor. Bureau of Labor Statistics (BLS). 2007a. Current employment statistics 

survey. Internet website: http://www.bls.gov/data/home.htm. 

U.S. Dept. of Labor. Bureau of Labor Statistics (BLS). 2007b. Occupational employment and 

wages, May 2006. 49-9092 Commercial Divers. Internet website: 

http://www.bls.gov/oes/current/oes499092.htm. 

U.S. Dept. of Labor. Bureau of Labor Statistics (BLS). 2007c. Environmental scientists and 

hydrologists. Internet website: http://stats.bls.gov/oco/ocos050.htm. 

U.S. Dept. of Transportation (USDOT). Coast Guard. 2007. Marine safety manual. 

http://www.uscg.mil/hq/g-m/nmc/pubs/msm/v3/c26.htm, pg. 26-3. 

U.S. Dept. of Transportation (USDOT). Maritime Administration. 1994. Report to the Secretary 

of Transportation, the dredging process in the United States: An action plan for 

improvement. December 1994.

U.S. Dept. of Transportation (USDOT). Maritime Administration. 2005a. Report to Congress 

on the performance of ports and the intermodal system. June 2005. 

U.S. Dept. of Transportation (USDOT). Maritime Administration. 2005b. U.S. public port 

development, expenditure report, 2005. U.S. Dept. of Transportation, Maritime 

Administration, Office of Ports and Domestic Shipping. 

U.S. Dept. of Transportation (USDOT). Maritime Administration. 2009. U.S. public port 

development expenditure report, 2006 & 2007-2011. U.S. Dept. of Transportation, 

Maritime Administration. February 2009. 

U.S. Environmental Protection Agency (USEPA). 2007a. Dredging. Gulf of Mexico Program. 

Internet website: http://www.epa.gov/gmpo/edresources/dredging.html. 

U.S. Environmental Protection Agency (USEPA). 2007b. Dredged material management. 

Ocean Regulatory Programs. Internet website: 

http://www.epa.gov/owow/oceans/regulatory/dumpdredged/dredgemgmt.html. 

U.S. Environmental Protection Agency (USEPA). 2007c. Oil program. Internet website: 

http://www.epa.gov/region09/waste/sfund/oilpp/index.html. 

U.S. Environmental Protection Agency (USEPA). 2007d. Exxon Valdez. 

http://www.epa.gov/oilspill/exxon.htm. 

 
134

U.S. Environmental Protection Agency (USEPA). 2007e. National contingency plan overview. 

Internet website: http://www.epa.gov/oilspill/ncpover.htm. 

U.S. Securities and Exchange Commission (SEC). 2000. Petroleum Helicopters Inc., Form 10-

K, Fiscal year ended December 31, 2000. 

U.S. Securities and Exchange Commission (SEC). 2001a. Offshore Logisitics, Inc., Form 10-

K, Fiscal year ended March 31, 2001. 

U.S. Securities and Exchange Commission (SEC). 2001b. Petroleum Helicopters Inc., Form 

10-K, Fiscal year ended December 31, 2001. 

U.S. Securities and Exchange Commission (SEC). 2002a. Offshore Logisitics, Inc., Form 10-

K, Fiscal year ended March 31, 2002. 

U.S. Securities and Exchange Commission (SEC). 2002b. Petroleum Helicopters Inc., Form 

10-K, Fiscal year ended December 31, 2002. 

U.S. Securities and Exchange Commission (SEC). 2003a. Offshore Logisitics, Inc., Form 10-

K, Fiscal year ended March 31, 2003. 

U.S. Securities and Exchange Commission (SEC). 2003b. Petroleum Helicopters Inc., Form 

10-K, Fiscal year ended December 31, 2003. 

U.S. Securities and Exchange Commission (SEC). 2004a. Offshore Logisitics, Inc., Form 10-

K, Fiscal year ended March 31, 2004. 

U.S. Securities and Exchange Commission (SEC). 2004b. Petroleum Helicopters Inc., Form 

10-K, Fiscal year ended December 31, 2004. 

U.S. Securities and Exchange Commission (SEC). 2005a. Offshore Logisitics, Inc., Form 10-

K, Fiscal year ended March 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005b. Bristow Group, Inc., Form 10-K, 

Fiscal year ended March 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005c. PHI, Inc., Form 10-K, Fiscal year 

ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005d. SEACOR Holdings Inc., Form 10-K, 

Fiscal year ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005e. Nabors Industries Ltd., Form 10-K, 

Fiscal year ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005f. Pride International, Inc., Form 10-K, 

Fiscal year ended December 31, 2005. 
135

U.S. Securities and Exchange Commission (SEC). 2005g. Global Industries Ltd., Form 10-K, 

Fiscal year ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005h. Helix Energy Solutions Group Inc, 

Form 10-K, Fiscal year ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2005i. Oceaneering International Inc., Form 

10-K, Fiscal year ended December 31, 2005. 

U.S. Securities and Exchange Commission (SEC). 2006a. Patterson-UTI Energy, Inc., Form 10-

K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006b. Bristow Group, Inc., Form 10-K, 

Fiscal year ended March 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006c. SEACOR Holdings Inc., Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006d. PHI, Inc., Form 10-K, Fiscal year 

ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006e. SEACOR Holdings Inc., Form 10-Q, 

Quarterly period ended March 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006f. Nabors Industries Ltd., Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006g. Pride International, Inc., Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006h. Global Industries Ltd., Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006i. Helix Energy Solutions Group Inc, 

Form 10-K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006j. Oceaneering International Inc., Form 

10-K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006k. Halliburton Company. Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006l. Cabot Corporation. Form 10-K, 

Fiscal year ended September 30, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006m. Newpark Resources, Inc. Form 10-

K, Fiscal year ended December 31, 2006. 
136

U.S. Securities and Exchange Commission (SEC). 2006n. Sodexho Alliance, SA. Form 20-F, 

Fiscal year ended August 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006o. Hornbeck Offshore Services, Inc. 

Form 10-K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006p. Trico Marine Services, Inc. Form 10-

K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006q. Tidewater Inc. Form 10-K, Fiscal 

year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006r. Hercules Offshore, Inc. Form 10-K, 

Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006s. Great Lakes Dredge & Dock 

Corporation. Form 10-K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006t. Compagnie Generale de GeophysiqueVeritas, Form 20-F, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006u. Schlumberger N.V. (Schlumberger 

Limited) , Form 20-F, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006v. Veritas DGC Inc., Schedule 14A. 

October 4, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006w. TRC Companies, Inc. Form 10-K, 

Fiscal year ended June 30, 2006. 

U.S. Securities and Exchange Commission (SEC). 2006x. CH2M HILL Companies, Ltd. Form 

10-K, Fiscal year ended December 31, 2006. 

U.S. Securities and Exchange Commission (SEC). 2007a. Bristow Group, Inc., Form 10-K, 

Fiscal year ended March 31, 2007. 

U.S. Securities and Exchange Commission (SEC). 2007b. CGGVeritas, Form 6-K, For the 

month of August, 2007. 

U.S. Securities and Exchange Commission (SEC). 2008a. Halliburton Company. Form 10-K, 

Fiscal year ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2008b. PHI, Inc. Form 10-K, Fiscal year 

ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2008c. Seacor Holdings Inc. Form 10-K, 

Fiscal year ended December 31, 2008. 
137

U.S. Securities and Exchange Commission (SEC). 2008d. Hercules Offshore, Inc. Form 10-K, 

Fiscal year ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2008e. Trico Marine Services, Inc. Form 

10-K, Fiscal year ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2008f. Hornbeck Offshore Services, Inc. 

Form 10-K, Fiscal year ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2008g. Pride International, Inc. Form 10-K, 

Fiscal year ended December 31, 2008. 

U.S. Securities and Exchange Commission (SEC). 2009a. Oceaneering International. Form 10-

Q, For the quarterly period ended June 30, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009b. Oceaneering International. Form 10-

K, Fiscal year ended December 31, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009c. Newpark Resources, Inc. Form 10-

Q, For the quarterly period ended June 30, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009d. Bristow Group Inc. Form 10-K, 

Fiscal year ended March 31, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009e. Tidewater Inc. Form 10-K, Fiscal 

year ended March 31, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009f. Trico Marine Services, Inc. Form 10-

Q, For the quarterly period ended June 30, 2009. 

U.S. Securities and Exchange Commission (SEC). 2009g. Nabors Industries Ltd. Form 10-Q, 

For the quarterly period ended June 30, 2009. 

Van Dyke, K. 1997. A primer of oilwell service, workover and completion. Austin: Petroleum 

Extension Service, The University of Texas at Austin. 

Vertias DGC. 2005. Veritas DGC 3rd quarter fiscal results. Internet website: 

http://www.b2i.us/profiles/investor/ResLibraryView.asp?BzID=881&ResLibraryID=998

3&CName=Veritas+DGC+Inc&sm_quote_field=VTS. 

Weeks Marine. 2007. Navigation infrastructure. Internet website: 

http://www.weeksmarine.com/dredging/navigation.html. 

WesternGeco. 2007a. AVO and inversion. Internet website: 

http://www.westerngeco.com/content/services/dp/reservoir/avo.asp. 

WesternGeco. 2007b. Featured vessel – Western Monarch. Internet website: 

http://www.westerngeco.com/content/services/marine/western_monarch.asp. 
138

Wills, J. 2000. A survey of offshore oilfield drilling wastes and disposal techniques to reduce 

the ecological impact of sea dumping – environmental effects of drilling waste 

discharges. M.Inst.Pet., for Ekologicheskaya Vahkta Sakhalina (Sakhalin Environment 

Watch). May 25, 2000. 

Workboat.com. 2009. Industry stats. Internet website: http://workboat.com/news/dayrates.asp. 

World Oil Magazine. 2007. Industry at a glance. Vol. 228 No. 10. October 2007. 

WTRG Economics. 2006. Oil price history and analysis. Internet website: 

http://www.wtrg.com/prices.htm.