A center of excellence for offshore vessels and drilling units
Canadian shipbuilders have a long track record in building, upgrading and converting some of the world’s most advanced vessels and rigs for the global offshore oil & gas market. Over the past two decades these have included:
- Mobile Offshore Drilling Units
- Pipelaying Vessels
- Subsea Construction Vessels
- Platform Support Vessels
- Offshore Accommodation Vessels
As Canada’s offshore oil & gas activities continue to expand, we must learn from other offshore hydrocarbon producing nations. Developing key domestic industrial and technological capabilities, clusters and an all- Canadian supply chain are essential components in ensuring the maximum domestic value from offshore exploration and production. Along with Canada’s unique challenges to explore and produce in harsh environments comes the potential to develop new technologies for the exploration and production in Arctic conditions.
Tariffs on imported Mobile Offshore Drilling Units (MODU)
The Government’s February budget states Canada’s intention to eliminate tariffs on Mobile Offshore Drilling Units (MODUs) used in offshore oil and gas exploration and development. This will effectively eliminate the construction and repair of MODUs in Canada; another blow to commercial shipbuilding and repair in Canada.
The capital cost of the tariffs represent such a small percentage of the overall cost to the exploration and production programs as to be insignificant; lost in the margins of rounding errors. However, this will have a hundred fold impact on the marine industry as MODUs will likely then be built and repaired offshore making Canada one of the only countries not taking advantage of its shipbuilding industry while developing its offshore natural resources.
It appears to the SAC that Canada chose to believe CAPPs incorrect allegation that we must build MODUs offshore as Canada is incapable of building such units. This is not true, SAC members have always and are still capable today of building MODUs as long as tariffs keep the playing field level, as they do in other hydrocarbon- producing nations. Building MODUs in developing nations where labour is commonly exploited and cost takes priority over the health and safety of shipyard workers is not to encouraged.
While Canada introduces on the one hand, the Defence Procurement Strategy (DPS) to leverage its investment in defence shipbuilding, it takes away on the other hand, the marketplace shipyards will need to transition to after the federal fleet
is rebuilt. This does not represent a coherent maritime policy.