04 April 2024

In 1948, Bell Helicopters flew the first flight out to an oil platform. A subsidiary company (Petroleum Bell Helicopters) took a Bell 47 ten miles offshore to a Kerr McGee platform carrying tooling that was needed by the oil company. A year later Petroleum Helicopters Inc (PHI) was formed and this year the company celebrates its 75^th anniversary.

The PHI of today looks very different to the company that started out operating three Bell 47s transporting crews for seismic work. The business now operates worldwide and in addition to the energy sector also has air medical, logistics and MRO activities. 

Context Matters

The general North American market comprises of ~8,000 helicopters, which makes it the single largest operating region in the world; Cirium data showing a consistent ~30% – 40% share of the globally installed fleet.   However, on-shore operations, particularly single- and twin-engine emergency medical services (EMS) missions, account for a large share of this fleet, followed by utility, parapublic and corporate/VIP uses.  The US offshore market itself comprises of ~200 – 300 units, which also makes it the largest single country share in the world.

The USA offshore energy sector has evolved dramatically, with thousands of platforms installed to produce oil and gas and an expectation now that thousands of wind turbines will be located offshore in future to produce low-carbon electricity. In 2023, Heliservice USA LLC operated the first flights to a US offshore wind farm and this sector is expected to grow rapidly (link).

Is the US Offshore Crew Transfer Market in Decline?

Until recently, it would have been difficult to argue against the view that the US offshore crew transfer market was in decline. The US offshore platform population peaked in 2001 at just over 4,000 structures, of which some 500 were permanently manned. Subsequent decommissioning of aging fields and structures has seen a reduction in the overall platform population with just under 1,500 remaining. The decline in manned platforms has been less dramatic with 428 still operating as of April 2024. 

Given that many of these structures were installed years before modern helicopter types were available, it is unsurprising that offshore helicopter operations look a little different to other, less mature, regions of the world. Single engine helicopters are not only still used but they account for half of the fleet – for many platforms the helideck size and weight capacity limits simply cannot support larger types. 

Despite the installation of many deepwater platforms over 100 miles offshore, near-shore operations still account for a significant proportion of the 428 permanently manned platforms, with 179 (42%) being located within 20 nautical miles of shore. 

Signs of Life in the Data?

Data from the Helicopter Safety Advisory Conference (HSAC) annual ‘Offshore Helicopter Operations and Safety Review’ show how helicopter use has fallen over time as the platform population has declined. However, in 2022 the data showed an uptick in helicopter usage and the 2023 report is due to be published this Spring. 

Detailed review by LCI Analytics of our own collated flight data suggest an increase in the Heavy segment of over 20% YoY for the number of US Gulf of Mexico (GoM) offshore flights, which, if indicative of a wider trend, should see the HSAC 2023 survey reporting another positive year of growth. 

The offshore wind business, meanwhile, has an impressive project pipeline of over 50GW of capacity. Despite some turbulence in the market in 2023 as a result of supply chain issues there remains a tremendous growth story that should ensure we see at least another 75 years of offshore helicopter operations in the USA. This is a topic we will be returning to in more detail in the future. 

In terms of types and segments, there are a number of older technology helicopters in operation in the USA and we would expect the country (as indeed maybe the case in Europe too) to focus on replacement of older generation helicopters, with emerging markets focused on new growth deliveries.  

The relative financial size and strength of the US operators, coupled with local banks (sometimes, very local) and operating lessors should support the financing of many of the new domestic deliveries.  However, we note that such financial pools are not as broad, nor as deep, as those that exist for the commercial fixed wing markets, so there is plenty of work to be done there. 

Concluding Thoughts

The US market is the largest in the world, both in terms of installed fleet and also offshore operations.  It will account for the lion’s share (~30%) of new helicopter deliveries going forward and, as such, any reports of its demise are greatly exaggerated.

As we look back to where it all began, we offer our congratulations to PHI on their anniversary year. We will follow the evolution of the USA offshore energy sector with continuing interest, and particularly so in this election year.  Please keep an eye out for further Insights from LCI Analytics on this critical issue of the evolving US offshore rotorcraft market.