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Quay investment

One logistics operator is taking advantage of Teesside’s geographical advantages and making big investments to service the offshore industry, as BQ discovers.

Teesside offshore support specialist AV Dawson is investing more than £3m to meet increased demand from the oil and gas industries.

The investment – to extend its quayside by 200 metres to allow larger vessels to use its 1,000ft wharf is part of a £10m development of its 80-acre site at Riverside Park in Middlesbrough, which has secured backing from the Government via its Regional Growth Fund.

And it comes on top of an investment of £120,000 this year to increase water depths at the wharf to eight metres. AV Dawson operates a multimodal logistics business and one of its key facilities is its North Sea Supply Base which boasts the largest fabrication halls on the River Tees and which stand 160ft tall and 330ft wide.

It also has heavy lift and loadout quays; a railhead with cargo handling and warehousing; a road transport fleet and a project management team. The fabrication halls and the rest of the North Sea Supply Base are used by companies such as subsea specialists Modus and GEMS which also charter and fit out larger offshore support vessels.

AV Dawson managing director, Gary Dawson says: “The investment will be able to support the ambitions of companies like Modus which look to charter vessels either on a permanent basis or for a project and those vessels may be alongside for up to two weeks being fitted out and made ready.

“We have embarked on an infrastructure improvement plan through to 2014 and the regional growth fund grant which has enabled us to make these investments much sooner than we could otherwise.’’

This investment comes as a result of a strategic decision made more than 10 years ago. AV Dawson was founded in 1938 with £50 capital to buy a horse and cart to deliver coal. It grew into a logistics business based on the Tees, but never took part in the offshore oil and gas boom of the 1970s.

But, in the late 1990s, AV Dawson bought an adjacent 22-acre site from Kvaerner which also brought 200,000sq ft of buildings, including the fabrication halls, which was to become the North Sea Supply Base. “We weren’t involved in project work or offshore oil and gas in any way shape or form, whether it was supplying freight services stevedoring activities or accommodation, until we bought the North Sea Supply Base site in 1998,” says Dawson.

“That gave us the platform to approach these markets and say we have more water, we have big fabrication halls and we have a lay-down area, so that was our first introduction. Until then, more than 80% of our turnover had been in steel and the transport of steel.’’

This reliance on steel prompted the acquisition of the Kvaerner site as part of a strategy of diversification with the plan being to use it to get into the container market. “We had these huge sheds and wondered what on earth we were going to do with them,” says Gary Dawson.

“Then we realised that people wanted fabrication facilities and project accommodation for as little as a month and as long as a year when they were building things. Our ambitions to get into the container world changed focus to utilising the facilities to the best of our ability for whatever projects we could get onto the site.

“Just prior to 1998, oil prices were pretty high and investment programmes were strong, but shortly after buying the facility oil prices went through the floor and so we were concerned about whether or not these sheds could be used for oil and gas. We considered all kinds of options about what we might store in them and what activities might take place in those sheds. Fortunately the markets recovered.’’

AV Dawson invested heavily in the facility’s road, drainage and power infrastructure as well as quayside crainage to make it a multi-user flexible facility. Dawson says: “It is a very easy solution for people now because they can move in and everything is up and running and they can move out again, but what we have actually found is that most people who have moved in have continually come back to us and some who have moved in for a short time have never gone away.’’

The company is on target to see 150 vessels using the site this year, which is almost double the activity two years ago. “We see more cargoes, we see bigger ships and that’s why we are looking to extend the quay and why we have bought additional land to support it with rail freight services and additional warehousing.’’

Offshore related work now represents more than half of AV Dawson’s turnover, having grown from only about 10% four years ago. “It’s a big sea change, if you’ll excuse the pun,’’ says Dawson.

“That’s deliberate and a result of our intention to diversify and to track the growth markets and to attract people to the site who then require our additional services, giving them accommodation and a base to operate from and then providing transport, freight forwarding and ships’ agency and so on.

“Effectively, what we are providing is a platform for companies to have somewhere to either base themselves permanently or to have a project-type facility that they can move in and out of and therefore just have an overhead for the length of the project.’’ AV Dawson boasts 1,000 metres of quay frontage and eight metres depth to cater for the larger offshore supply vessels such as a recent visitor, the 90-metre Maersk Lancer. The craneage can lift 215 tonnes onto a vessel.

“Were our customers to hire a crane in to do a lift of that size, they would be talking upwards of £30,000 for the first day’s crane hire,’’ says Dawson. “A lot of that cost is in the transport and building of the crane and its eventual demobbing but we have it permanently on site, so we can offer much better value for lifting.’’

There are also two Gottwald cranes, which can each lift pieces up to 63 tonnes. AV Dawson sees itself as a port within Teesport, operated by PD Ports, and believes its services are complementary to the main port and, while it may be something of a competitor, it is also a partner and, in the words of Dawson, “adds to the River Tees portfolio’’.

Last year, the company has also acquired a ships agency, Cockfield Knight & Co, which allows it to offer vessel charter, port agency, customs documentation and clearances. The agency is based on site. Companies now operating from AV Dawson’s North Sea Supply Base include project logistics specialist Bertling, which supplies cargo for a long-term oil and gas project in the Caspian Sea; Geotechnical Engineering and Marine Surveys; seabed intervention specialist Modus; pipeline protection specialist Pipeshield; marine engineer Tekmar; and Mech-Tool Engineering. It is to cater for this growing list of customers that AV Dawson is creating more quay space.

“Because we see a growth in the offshore supply side we need to create more quay space to accommodate our conventional business,’’ says Dawson. “That will be able to support the ambitions of people like Modus who look to charter vessels either on a permanent basis or for a project and those vessels may be alongside for up to two weeks, being fitted out and made ready.

“Likewise, when those vessels come back in, there’s a demob, which again can take a week or so and we don’t want them to suffer from congestion and we want them to be able to charter pretty much whatever size vessel they require and not have to move their equipment off-site to mobilise it at a deeper quay somewhere else.’’

Happily for AV Dawson, and for the industry, offshore has – as Gary Dawson points out – remained largely recession-proof. Oil prices have remained high, which has stimulated investment programmes and most of the big energy players are gearing up for renewables which rely on traditional offshore skills and assets.

“We see a massive potential, not only during the installation phase but in the ongoing service and maintenance when it comes to the offshore wind installations, particularly with the Dogger Bank development not too far away now,’’ says Dawson.

“To that end, we are forming additional strategic alliances with people who are already in those markets and I think that’s going to be a key driver for the Tees over the next 10 years.’’ Nothing is likely to happen with the Round 3 offshore wind development at Dogger Bank before 2014, but, AV Dawson is now getting an increasing number of offshore wind-related inquiries.

This is the experience of most port facilities on the east coast and is a reflection of the enormous demands that will be placed on capacity if these thousands of turbines have to be manufactured, installed and then maintained. “People are now starting to talk about what facilities are available, what capacity is there and I think that capacity is going to be in very short supply.

We are full at the moment and I see no reason why we are not going to be full for the next 12 months and then there’s this flurry of new inquiries coming through. “We are looking at a strategic alliance with a Danish company at the moment, which has vast experience in offshore wind related forwarding and transportation and they are looking to support not only the installation of the turbines in the Dogger Bank area but also to support the ongoing maintenance thereafter.

“That’s the big market – once the construction has taken place, how do we look after these things and support them and I think that’s a huge opportunity for us.’’ AV Dawson accepts its facility is not big enough to attract an offshore wind turbine OEM, but it is confident that its tenants and customers will be part of a huge supply chain. Having said all that, the entire renewables sector – wind, biomass, biofuels, syngas and anaerobic digestion – are all based on government subsidies and tariffs.

Dawson says: “While they are popular and current at the moment and there are promises that they will continue for some years – could they be axed? “In reality, yes they could be. If the carbon agenda changes, it could affect those businesses. So there are serious worries about that.” But, the hopes far outweigh the fears and AV Dawson is driving ahead with its ambitious growth plans.

We have invested a huge amount of money throughout the recession period. We have bought three additional sites and have secured a further one in the immediate vicinity. The next five-to-10 years will see us developing that land, putting in additional rail infrastructure, servicing, warehousing and investing in the quayside.

Those are our immediate ambitions. We would like to continue to diversify the services we offer and therefore the markets we can attract with them. “As long as we can continue to keep making the right decisions and support the ambitions of our clients then there is no reason to fear the future.’’