Teekay, Remora, and Their $55 Million Super-sized “Pallet Truck”

Image (c) Remora AS, click for larger

Unlike cars, ships can’t just pull the e-brake and stop in the middle of the ocean when they rendezvous with another vessel such as an FPSO.  For close quarters operating offshore, being equipped with dynamic positioning is a must, which is why it’s technology commonly found on platform supply vessels, shuttle tankers, anchor handlers, and offshore construction vessels.  Tankers however, operate 99% of the time out at sea, quite independently and free from the risk of imminent, slow-speed collision.  Thus, these ships do not have dynamic positioning systems installed.

Sometimes however, these huge vessels need to get up close to an FPSO to onload oil.  It’s a precarious place where they need to maintain a very close station with another, very expensive ship, while at the same time loading vast quantities of crude oil via a flexible hose.  Last December, over 40,000 barrels of crude oil leaked into the Gulf of Guinea during one such transfer between a tanker and the Shell Bonga FPSO.

Risking any sort of future spill like that is simply not an option for the world’s energy operators.  To help mitigate the risk of close quarter issues with lumbering tankers and motionless, FPSOs, Norway-based offshore marine technology company, Remora AS has developed something very unique.

Remora calls it the HiLoad DP.

It’s kind of like a giant-sized, warehouse pallet truck that’s been super engineered to carefully take control of and maneuver massive tankers with the precision of dynamic positioning.

Here’s how it works:

Seeing quite a bit of potential in this technology, Teekay Offshore Partners (NYSE:TOO) have announced that they entered into an agreement to acquire one of Remora’s 2010-built HiLoad DP units for a total purchase price of approximately $55 million.  In addition, TOO’s parent company, Teekay Corp (NYSE:TK) has agreed to invest $4.4 million to acquire a 49.9 percent stake in Remora AS.

“The purchase of Remora”s innovative HiLoad DP unit compliments Teekay Offshore’s current market leading shuttle tanker solution and broadens the Partnership’s offshore loading service offering,” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC.

All elements of the transaction remain subject to finalizing a 10-year time-charter contract with Petroleo Brasileiro SA (Petrobras) in Brazil.

“In the North Sea, we believe that shuttle tankers will continue to be the most cost-effective solution, but we are seeing a need for new solutions in locations such as Brazil where cargoes destined for long-haul export are on the rise.” Evensen noted.

“Instead of trans-shipping these cargoes into a shore terminal or an FSO, the HiLoad enables conventional tankers to directly load and export the oil to any market. The HiLoad DP uni’s total purchase price of $55 million, which includes the cost to purchase the unit and complete modifications, represents approximately 4.5 times the unit’s expected annual cash flow from operations.”

The acquisition of the HiLoad DP unit and investment in Remora equity are both expected to close in December 2012 and operations are expected to commence at its full time-charter hire rate in December 2013 once modifications, delivery of the HiLoad DP unit to offshore Brazil and operational testing have been completed.

The proposed transaction between Remora and Teekay and Teekay Offshore, including the HiLoad DP Unit acquisition, remain subject to negotiation of definitive documentation and customary closing conditions, including, among others, formal approval by Remora’s shareholders at their Extraordinary General Meeting (EGM) and completion of the charter between Petrobras and Teekay Offshore.

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