After decades of hovering just above the level of irrelevancy – not to mention insolvency – the global commercial rotorcraft industry is entering a new golden era of design, production and sales thanks to the oil and gas industry. More specifically, the explosion in unconventional exploration from deep-water offshore platforms is the catalyst to this shift.
The boost couldn’t be happening at a better time for the helicopter makers, whose survival over the past fifty years owes almost entirely to the sale, maintenance and constant updating of military helicopters. Today, in light of spiraling national debts, skyrocketing social costs, and stagnant economic growth, most governments in the western world are sharply reducing their military budgets and cutting way back on expensive new equipment like tanks, missiles, fighter jets and, you guessed it, helicopters.
For a company like U.S.-based Bell Helicopter Textron, where historically as much as 80 percent of its production went to militaries around the world, the explosion of demand for a largely new class of helicopters to support deep water offshore exploration and drilling operations is literally a life-saver. This year, about 40 percent of Bell’s production will come from its commercial operations, and, once its new 525 Relentless super-medium helicopter designed expressly for offshore oil rig support operations enters service in late 2015 or 2016, the company’s military/commercial split is expected to move toward 50/50, and perhaps eventually move further in favor of the commercial side.
New Helicopters Focus on Commercial Market
Bell and two competitors, Airbus Helicopters (formerly known as Eurocopter) and AgustaWestland are all bringing to the market what aviation analyst Richard Aboulafia calls “oil and gas machines.” Each of the new aircraft can be – and some will be – configured to serve the VIP, national security, firefighting, and even search-and-rescue and medevac markets. But make no mistake about it; the future success of the big new helicopters is tied directly to the price of oil and natural gas.
“There’s lots of new competitors in that segment,” says Aboulafia, who tracks aviation manufacturers at the Teal Group in Fairfax, VA. “If oil remains at $100 a barrel, there’ll probably be enough demand to support all of them. And if prices go higher without triggering a major global economic slowdown, there’ll definitely be enough demand to support all of them. But if oil goes to $40 a barrel again, there’ll be carnage in the helicopter manufacturing industry.”
The three important new entries into the super medium class that are clearly aimed at the oil and gas market are:
- The Airbus EC-175, a 16-passenger aircraft that received certification in January. Airbus, which has helicopter production facilities in both France and the U.S., aims to get its fair share of the North American, North Sea and Middle Eastern offshore vertical aircraft support market. The company is also moving aggressively to dominate the young but fast-growing Chinese and Asian energy exploration market. It and its Chinese partner, Avicopter, have an agreement to co-produce 1,000 EC-175 variants over the next 20 years.
- The AgustaWestland AW189 is a 19-passenger AW189 “oil and gas machine” certified in February. Two already have been delivered to customers and the company expects to deliver 15 by the end of this year. It is a civilian development of the AW149 military helicopter, which was itself an enlarged development of the successful civilian-market medium lift AW139, already popular with helicopter operators serving closer-in offshore rigs.
- Bell’s new 525 Relentless is slated for first flight later this year, and certification in late 2015 or early 2016. At 19 seats in standard configuration, it is Bell’s largest product ever and its first aircraft in more than 35 years that’s not a direct derivative of one of its military products like UH-1 Huey that came to be the definitive icon of the Vietnam War. Bell already has booked an order for 10 of its oil and gas machines from Abu Dhabi Aviation, and is widely expected to win big orders from the team of big helicopter fleet operators, mostly from North America, who played key roles in helping define the 525’s longer range/heavier lift mission requirements and design parameters.
Additionally, AgustaWestland expects certification later this year of its new medium twin, the AW169. The 10-passenger AW169 is aimed more pointedly at the VIP, government, EMS, search and rescue, law enforcement and shuttle markets. But the high degree of cockpit commonality it will have with the somewhat larger (and older) AW139 and much larger AW189 means it will fit nicely into the fleet of an operator that wants to field a family of AW models to support multiple offshore – and onshore – oil and gas operations. Pilots trained on one can be easily qualified to fly the other two. That means, for example, an offshore support operator can opt to use the same pilot to fly the smaller, less expensive AW139 or AW169 to support offshore platforms when the extra seats offered by the hulking AW189 aren’t really needed.
There are several other new entrants in the light helicopter class now reaching or soon-to-reach the market that are also contributing to the rotorcraft industry’s new Golden Era. Those are meant primarily as replacements for the world’s existing and rapidly-aging fleet of light helicopters. But clearly, the rotorcraft industry is linking its future success to that of the oil and gas industry.
Unconventional Drilling Techniques Behind Boom in Helicopter Demand
Unconventional drilling techniques have made it technically possible to reach vast deposits of hydrocarbons that previously were too difficult and expensive to tap. Those new drilling techniques also lowered the previously prohibitively high costs associated with drilling in much deeper waters at the same time that global demand is pushing energy prices higher. As a result platforms are blossoming much farther out into the Gulf of Mexico and other deeper water fields around the globe.
In particular there’s huge potential for helicopter sales in the Eastern hemisphere. BP’s Energy Outlook 2030 forecasts that the Asia Pacific market will become the largest consumer of oil and natural gas by 2020, soaking up about 30 percent of global production. Accordingly, Asian exploration and production is booming, especially in deep water fields off both Malaysia and China, where BP expects about 400 new helipad-equipped deep water platforms to be erected in the next six years.
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