Peter Armstrong
Former Vice President of Business Development
HB Rentals
View from the Top

Farstad Alliances Identify Industry Leader

Wed, 01/20/2016 - 12:42

Q: How have you diversified your client base in Ciudad del Carmen and Villahermosa?

A: Transferring our capabilities to Mexico’s onshore sector is a diversification effort. We have one service center in Ciudad del Carmen that will easily service and support the country’s southern region, as well as a number of centers in southern Texas that could service northern Mexico, should opportunities arise. Given the expansion of the country’s pipeline network, we believe this is a real possibility. We opened our Ciudad del Carmen service facility in 2013, and previously, we supported the local offshore industry for decades from Louisiana and Texas. We achieved a strong volume of rental business in the offshore market to the point where it was advantageous to expand the Ciudad del Carmen facility with the goal of increasing the service level for our rental base of offshore accommodation installations. Once we established our local base of operations we developed more products for the Mexican market and started using them in the onshore market as well. Since then, we have continued to leverage and expand.

Q: Which creative solutions have you developed as a response to the challenging market environment?

A: One example of our capabilities is the Farstad project. The company took a calculated risk in winning the inspection, maintenance, and repair bid to bring one of its vessels from port in Norway to Mexico, and contacted us, among other offshore accommodation providers, so that the vessel could be modified with a TLQ installation upon its arrival. For this to be possible, we asked them to divert the Far Sentinel to Newcastle, England, which is near our Aberdeen facility, to carry out a site survey. We quickly gathered the necessary technical information and transferred it to our US facilities as the vessel was sailing to dock at the Port of Fourchon, Louisiana, where there are several offshore accommodation suppliers. Farstad interviewed a number of companies and eventually selected us, after undergoing a lengthy qualification process. We carried out the installation for the Norwegian company in the US port, which is typically a challenge when a vessel is under contract and adhering to a strict schedule. The Far Sentinel project is not an isolated case, and it highlights the importance of successful project management in the execution of offshore projects.

Q: What kind of projects do you hope to be working on in Mexico when industry activity regains momentum?

A: One of the benefits for any company when going through a cycle like this is that it is forced to look more broadly and understand what the market opportunities might be. One of the strongest markets we have identified in the long- term might be offshore wind. This development is already relatively strong in the North Sea and is now beginning to grow in popularity in the eastern US. We believe it is only a matter of time before it arrives to Mexico, as the country is interested in renewable energy. Pipeline construction is another opportunity that we are actively investigating, along with the maritime industry in general, and we have already undertaken a variety of projects in this market. As Mexico goes through the transformation of deregulation, we believe the country will receive significant economic investment, which goes hand in hand with innovation. The key market driver will be cost of production, and in this regard, Mexico is competing with Saudi Arabia, Russia, Venezuela, and all other NOC markets. In order to compete in the global market, Mexico has to embrace new technologies and lower its production cost.

Q: What could your expertise bring to the deepwater segment?

A: Although there are only a handful of competitors in the offshore accommodation industry, the deepwater sector has an even more limited number of temporary accommodation providers, given the strictness of the regulations and the more challenging risk factors. We believe HB Rentals is one of the strongest, if not the strongest, when it comes to deepwater support capability. One of the aspects that makes the offshore market easier to support is there are only a finite number of companies that have the expertise to service it, regardless of the specific geographic region. As new regions and basins open up with the various rounds in Mexico, the large international vessel and oil field service companies will incorporate us into projects as part of their strategic supply chain.