AS OIL RIGS SCATTER, WORKBOAT OWNERS DIVERSIFY

AS OIL RIGS SCATTER, WORKBOAT OWNERS DIVERSIFY

When Bill Hidalgo ordered four new vessels for his offshore drilling workboat fleet 18 months ago, he demanded certain changes in their design that defied tradition.

As vice president and general manager of Oil and Gas Rental Services Inc., Morgan City, La., Mr. Hidalgo had built his business around serving the needs of the offshore energy industry for supplies and transportation. But he ordered these boats built deeper and longer than usual, even if that increased the cost.Reviewing that decision today, he considers it money well spent. In contrast to the grim economic situation facing workboat competitors, all four of his new boats are busy. One of them works outside the petroleum industry, carrying containers regularly on the 1,200-mile voyage from Florida to Puerto Rico.

The global changes in the offshore industry have made the future uncertain for the maritime businesses that serve it. Mr. Hidalgo's diversification represents just one of several responses that are certain to emerge as this important branch of the maritime business struggles to survive.

Mr. Hidalgo's four new boats each can hold 36 40-foot containers and three 20-footers or combinations of boxes with those dimensions. He predicted they all may be carrying cargo instead of oil well supplies before their service ends.

"The key is to look for ways to diversify," said Mr. Hidalgo, explaining the dilemma in his business these days and his decision to commission boats with a versatile design.

Always dependent on offshore drilling and well-acquainted with the cycles that rock that industry, the nation's workboat sector views its current crisis in a different light, said Bob Alario, president of the Offshore Marine Service Association, a New Orleans-based trade group representing that sector.

He and other experts suspect a fundamental change is under way, reflecting the same developments transforming domestic offshore drilling itself. Day and utilization rates for rigs have become more attractive in foreign fields. So, the rigs might remain abroad rather than return to the Gulf of Mexico when conditions improve.

"The business is sick," said John P. Laborde, chairman, president and chief executive officer at Tidewater Inc. Thanks to its Jan. 17 merger with Zapata Gulf Marine Corp., Tidewater now boasts the world's largest offshore energy workboat fleet of 580 vessels.

Mr. Laborde cited that merger as his company's response to the new environment and added: "The major oil companies have lost the incentive to look for new reserves in the United States. There may be a fundamental change at work."

A recent survey by Offshore Data Services counted some 55 boats without work in the 240-vessel Gulf of Mexico fleet. In general, day rates have declined about a third from last year, with expectations of further decline.

Diversification, mergers and bankruptcy loom as the three choices in the 1990s for an industry that shrank by half in the 1980s, said Mr. Alario. His trade group represents 270 companies, including about 100 that constitute 95 percent of the world's offshore energy marine fleet.

"Some companies like Tidewater believe consolidation is the only way to survive," said Mr. Alario. "There is a lot of shopping going on. People are looking to shore up their defenses."

Besides diversifying into freight work, most boat owners also have investigated opportunities to follow the oil rigs overseas. About 65 percent of Tidewater's fleet works overseas, said Mr. Laborde.

While predicting increased movement of workboats to Africa and elsewhere, Mr. Hidalgo also warned that migration may not be as easy as it was for the rigs. Local competitors are already in place to supply the rigs coming from the Gulf of Mexico.

And other forms of diversification may be easier said than done. Ralph McInvale, general manager at Houston's Kilgore Marine Inc., said, "The oil and gas supply boat is a one-trick pony. It requires a lot of modification to do anything else. So you'll see more and more of us looking for work overseas."

Besides the low prices for gas, Mr. Alario blames the situation on several other factors, including increased costs from new environmental regulations and user fees. All things combined threaten "to suffocate the industry," he warned, and added, "All these stars have come into alignment, and they are not stars of good fortune."