Tuesday, May 16, 2023

The IEA Says Russia Isn’t Cutting Oil Production As Promised

By Tsvetana Paraskova - May 16, 2023

In February, Russia said that it would cut its oil production by 500,000 bpd, a cut that was called into question when Russian exports climbed.
The International Energy Agency says that Russia hasn’t cut its oil production by 500,000 bpd and may even be looking to boost output.
Russian oil export revenues are estimated to have increased by $1.7 billion month-on-month in April but were down by 27% compared to a year ago.

Russia has failed so far to cut its oil production by 500,000 barrels per day (bpd) as promised, and it may even be looking to boost output to compensate for lost revenues, the International Energy Agency (IEA) said on Tuesday.

Russian crude oil and oil product exports continue to prove resilient, with exports hitting in April the highest level since the invasion of Ukraine, at 8.3 million bpd, the IEA said in its closely-watched Oil Market Report.

The record exports contrast with expectations that Russia would lower supply to the market now that it has promised to cut output until the end of the year.

Russia warned in February that it would cut its crude oil production by 500,000 bpd due to EU import bans and price caps on its crude oil and oil products. Initially, Russia said this lowered production would apply to March. But Deputy Prime Minister Alexander Novak announced partway through March that the cuts would be extended until the end of 2023.

“By our estimates, Moscow did not deliver its announced 500 kb/d supply cut in full. Indeed, Russia may be boosting volumes to make up for lost revenue,” the IEA said in Tuesday’s report.

Russian oil export revenues are estimated to have increased by $1.7 billion month-on-month to $15 billion in April, but they were down by 27% compared to a year ago, while tax receipts from the oil and gas sector were down by 64% year-over-year, the agency added.

“Russia seems to have few problems finding willing buyers for its crude and oil products, frequently at the expense of fellow OPEC+ members in the two-tier market that has emerged since the embargoes came into force,” the IEA noted.

Tanker-tracking data monitored by Bloomberg showed on Monday that Russia’s crude oil exports by sea rose in the four weeks to May 12 to a new record-high and are now estimated to have increased by 10% from early April. Crude on vessels departed from Russia’s oil export terminals and en route to international markets hit another record at 3.61 million barrels per day (bpd) in the four weeks to May 12, according to the data reported by Bloomberg’s Julian Lee. That’s the highest volume of Russian seaborne crude oil exports since Bloomberg started detailed tracking of the cargoes at the beginning of 2022.

By Tsvetana Paraskova for Oilprice.com

BSEE: Workers Hauled into Air by Taglines Four Times Since November

After a series of offshore accidents in which riggers were hauled into the air by tangled taglines, the Bureau of Safety and Environmental Enforcement has issued a warning to operators about the hazards of lifting operations. None of the accidents resulted in injury, but they had high potential to cause harm to personnel.

According to BSEE, there have been four separate tagline incidents on the U.S. OCS since last November. The incidents varied in severity, but in the worst case, the rigger ended up dangling from a tagline about 20 feet off the deck.

In the first incident, a deckhand on an OSV got his leg tangled in a tagline after unhooking a load. The crane operator began raising the hook, and the deckhand's leg was raised about two feet off the deck before the operator stopped. The deckhands crewmates helped support him while the crane whip lowered again.

In the second, after a series of lifts aboard an offshore platform, workers were sending a bundle of taglines up to the top deck on the crane hook. One of the riggers got tangled in a tagline as the bundle went up, and he was lifted about 8-10 feet over the top of a shipping container. He was able to grab and hang onto one of the lines, and the safety flagger spotted him before the situation could get any worse. The crane operator lowered him back down without any further incident.

The third incident occurred in December. After taking aboard a bundle of pipe from an offshore platform, a deckhand on an OSV attached taglines onto the crane hook to return lines back up. When the taglines were lifted, he got tangled in them and was hoisted about five feet off the deck. He landed on a bundle of pipe and was able to free himself without injury.

In January, a worker on a rig stepped onto a coiled tagline as a welding machine was being lifted into the air. He grabbed the tagline while entangled, and he was lifted 20 feet off the deck before the crane operator stopped the lift. He was lowered back onto the deck without harm.

To reduce risk, BSEE advised the use of push-poles, tangle-free taglines, and taglines that are just the right length. It recommended against taking a wrap around any other material to control a swaying load, a standard practice for deck operations. It also reiterated standard guidance: stay out of the bight, wear gloves, inspect the condition of the line, do not walk under the load, check your rigging before the lift, and hold a toolbox talk before operations begin.

BSEE did not address workers' access to adequate means to cut themselves free from entanglement. Knives are essential safety equipment for mariners; however, they are often banned on offshore rigs by company policy and may not be available to personnel for their intended purpose - self-rescue in the event of a line-handling emergency, particularly entanglement.

Unavailability of edged tools has proven to be a serious safety hazard offshore. In 2010, a liferaft of survivors from the Deepwater Horizon blowout in 2010 was nearly lost in the fire because no one aboard had a knife to quickly cut the raft's painter line.

KiwiRail Signs On to Inflatable-Lifeboat Revolution

Viking Lifecraft — Viking LifeCraft in heavy-weather testing (Viking)

New Zealand ro/pax ferry operator KiwiRail will be the first passenger vessel owner to install and use a new form of lifesaving device, the Viking LifeCraft.

KiwiRail carries about 800,000 passengers per year across the Cook Strait between New Zealand's North Island and South Island. It is in the process of ordering two replacement vessels for the route from Hyundai Mipo, which is currently working on the detailed design. KiwiRail and Hyundai Mipo settled on LifeCraft as the primary evacuation system for the new vessels, which will be the first to carry the novel device.

LifeCraft marries four 200-person inflatable survival craft with marine evacuation system (MES) slides and all-electric propulsion (courtesy of Torqueedo). Its launch operations are automated and digitized, including function checks, simplifying drills and procedures. All the components fit into a single unit, which can be fitted on deck or built into the side of the hull.

KiwiRail's new Interislander design, with no sign of orange lifeboats amidships (KiwiRail)

The compactness of the LifeCraft unit is among its most attractive attributes for shipowners. Emergency survival craft are critical equipment, but thanks to advances in overall maritime safety, the overwhelming majority of passenger vessels will never encounter a situation where lifeboats are required. For the full lifespan of most passenger ships, the boats wait on their davits, taking up prime real estate amidships. Inflatable designs come in a much more compact package, freeing up valuable deck space for revenue-generating use or passenger amenities.

"The integration of safety systems is paramount in the ship-design process, which means that it at times will be a priority at the expense of aesthetics or comfort. This system makes this trade-off irrelevant by offering a solution that – apart from being a state-of-the art safety system – also is both practical, light, and visually appealing,” said Anders Ørgård, CEO of design company OSK-ShipTech, which is working on the new KiwiRail ferries.

A competing inflatable lifeboat design, the Survitec Seahaven, may soon be installed on Norwegian Cruise Line's next series of newbuilds. In April 2022, Survitec announced a partnership with NCL, consultancy Maritime Advisors Ltd. and a leading shipbuilder to design Seahaven into a cruise ship, freeing up valuable lifeboat deck space and speeding up evacuation.

Crew safety

As a bonus for the crew, automated inflatable lifeboat systems increase seafarer safety by eliminating the hazards of the mandatory lifeboat drill, which all too often ends in a dangerous fall from height. At one point in the 2010s, lifeboat drills accounted for one sixth of all seafarer fatalities, according to UK P&I - and the problem has not gone away.

Last week, the Container Ship Safety Forum called for the adaptation of passenger-vessel MES systems like Seahaven and LifeCraft for cargo vessels, citing the dangers of conventional lifeboat launch procedures.

“Everyone knows we have a problem. . . . Launching a lifeboat is too dangerous,” said Aslak Ross, Chairman of the CSSF. “[Marine Evacuation Systems] should also be made available to cargo vessels without delay. It is long overdue to change the current environment and innovate to eliminate the risk of lifeboat accidents. We need approved systems that can be fitted to newbuildings – we need to safeguard our seafarers."

Nor-Shipping & Norwegian Energy Partners 1st Offshore Wind Conference

Nor-Shipping and Norwegian Energy Partners

Accelerating, enabling and supporting the rapid development of offshore wind will be front of mind at the First Nor-Shipping Offshore Wind Conference, with a diverse array of industry leaders centre stage to discuss the latest demands, innovations and segment trends. Taking place on 7 June at the main Nor-Shipping exhibition facilities in Lillestrøm, Norway, the breakthrough initiative is a collaboration between Nor-Shipping and Norwegian Energy Partners (NORWEP).

Powerful participants

The half day conference, running between 12.00 and 16.00, will mix networking and knowledge sharing with a lively mix of presentations and panel discussions.

Participants span a broad spectrum of offshore wind development, support and service, including names such as: Stuart Fitzgerald, CEO, Seaway7; Mikkel Gleerup, CEO, Cadeler; Alexandra Koefoed, CEO, Fred. Olsen Windcarrier; Kent Vinkel, CEO, Windspider; Hugo Bouvy, Managing Director, DEME Offshore; Tone Lunde Bakker, CEO, Export Finance Norway; and many more.

The need for such an event, says Jon Dugstad, Director Wind, NORWEP, is crystal clear.

Pathways to success

He comments: “The ambition, and opportunity, with offshore wind is growing all the time, but we need to secure the pathways for translating that into business, and energy, reality. This conference will address key issues and trends, engaging global business leaders and experts to assess the optimal ways to unlock value.

“We’ll be looking at the crucial role maritime has to play in enabling developments – highlighting critical offshore competencies and assets, such as those offered by NORWEP members – assessing how to get the supply chain primed for a rapidly progressing industry. The latest technologies, sustainability issues, capacity questions and the drives for efficiency will all be under the spotlight. We believe there’s something for everyone with an interest in this essential renewable energy sector.”

Crucial role

Key sessions will invite the experts to consider how maritime can meet the demands of a segment that wants to go “higher, further, faster, more!”, trailblazing solutions for installation and operations, how to minimise the industry’s carbon footprint, and the role Norway has to play in supporting the industry, in Europe and beyond. Clarksons and Global Centres of Excellence; Ocean Technologies and Maritime Cleantech are also collaborating on the initiative.

[By: Nor-Shipping]

“Offshore wind has a crucial role to play in delivering secure, sustainable energy supplies to power a greener tomorrow,” comments Sidsel Norvik, Director, Nor-Shipping. “But to achieve our aims we need to foster the right relationships and really understand the complex, evolving demands of a variety of stakeholder groups. That’s why working in #PartnerShip, the main theme of Nor-Shipping 2023, is central to success here.

“With this is mind we’re delighted to join with NORWEP on this first-of-its-kind endeavour, cementing strong links between our traditional maritime audience and our growing base of energy partners and supporters. The high quality line-up of speakers, and the fact that tickets are selling out so fast, is a testimony to just how strongly people support this drive. It’s going to be a fantastic event, for a segment with truly outstanding potential. See you there!”

Save the dates

Nor-Shipping runs from 6-9 June, bringing the global maritime and ocean industries together at venues across Oslo and Lillestrøm.

In addition to 22,000m2 of exhibition space, a host of social, networking and knowledge sharing activities are planned, including the Ocean Leadership Conference, the Blue Talks, the first Offshore Aquaculture Conferences, the 2nd Maritime Hydrogen Conference, The Nor-Shipping BBQ, the Fourth International Autonomy Summit, the AfterWork@AkerBrygge social scene, and much more.

For the full Nor-Shipping 2023 programme, and all ticket details, please see www.nor-shipping.com.

Bilge Water Leaks Forced Two Carriers to Return to Port Last Year

USS Nimitz under way with a full air wing on deck — USS Nimitz under way (USN)

The U.S. Navy has concluded its inquiry into drinking water-contamination incidents aboard two aircraft carriers last year and found that both were caused by bilge water leaking into the potable water tanks.

On Sept. 16, while the USS Nimitz was operating off the coast of Southern California, crewmembers reported a fuel-like smell and taste in the ship’s drinking water. The engineering department shut down access to the ship's potable water and began testing the tank, and the ship headed back into San Diego. Once alongside the pier, the ship was connected up to the city water main so that the crew would have access to clean fresh water.

Eleven crewmembers developed symptoms that could have resulted from drinking JP-5 in water, including headaches, rashes and diarrhea. All were treated and were cleared to return to duty by October 5.

On inspection at Air Station North Island, four of the ship's 26 tanks were found to have levels of JP-5 above the Navy's health action level, and these tanks were isolated until they could be cleaned.

After two weeks of flushing her potable water system, Nimitz put back out to sea. After exercises, she sailed to Bremerton, Washington, arriving on October 28. On arrival the four isolated tanks were cleaned, repaired and returned to service.

The investigation determined that the contamination had occurred years earlier, during Nimitz's last deployment, and the fuel had been sitting in the water tanks ever since. Bilge water containing JP-5 leaked into an unused water tank through a deteriorated gasket on the tank top at some point in 2020-2021, while Nimitz was operating in the Pacific and the Mideast, according to the Navy.

The carrier USS Abraham Lincoln had a related problem at about the same time and place. On September 21, 2022, just after getting under way from San Diego, Lincoln's engineering team found that the water from one tank tasted abnormal. They took the tank offline and tested it for chlorine levels; finding that chlorination levels were normal, they put it back in service.

Six hours later, engineering crewmembers reported an off taste and color in the ship's drinking water. The engineering officer of the watch ordered all tanks in use to be valved off and tested.

The next day, after more testing, the crew found that three tanks were contaminated with E. Coli and coliform bacteria. The tanks were isolated from the rest of the drinking water system, and the crew was provided with bottled water.

After the incident, investigators determined that bacteria-laden bilge water got into a potable water tank through a hole in a corroded vent pipe. The pipe was repaired and all of the affected tanks were cleaned and inspected after Lincoln returned to port. No crewmember illnesses were reported in connection with the contamination.

Seawing Kite Achieves Traction in Ongoing Sea Trials Aboard Ro-Ro

wind assisted propulsion — After initial flight trials, Airseas reports it has now been able to develop traction from the Seawing (Airseas)

The French company Airseas, which was created with technologies from the aviation industry’s Airbus, reports it has achieved a key milestone in the testing of its wind propulsion system known as the Seawing. As part of the ongoing sea trials aboard an in-service Ro-Ro, they successfully delivered the first traction from the kite system to the vessel.

The engineers explained that the system for the first time was positioned after earlier flight tests. After lowering it to the correct angle for propulsion, they achieved traction sufficient to provide wind-assisted propulsion to the Ville de Bordeaux, a 5,200 dwt cargo Ro-Ro which is operated by Louis Dreyfus Armateurs and chartered by Airbus. The ship is sailing transatlantic between France and the U.S. Gulf Coast transporting components for Airbus.

Airseas reports the tests show that the system is working as designed. Previously, the company had said their research showed that the Seawing would have a pulling power of up to 100 tons meaning it can contribute to propulsion for a ship of over 200,000 tons and over 1,000 feet in length. They project fuel savings on average of 20 percent by deploying the kite sail.

“We are immensely proud of the technical achievements that we have accomplished so far in our sea trials, and there is more to come,” said Vincent Bernatets, CEO and Co-Founder of Airseas.

The initial installation began in late 2021 after six years of development since having been spun off from Airbus. Testing began in late 2022 with the team having both a 250 m2 version of the wing and a 500 m2 version while the commercial concept calls for a 1000 m2 parafoil, to fly at altitudes of nearly 1,000 feet capturing the stable higher altitude winds to assist vessel propulsion.

During the first tests, they validated the systems including the launch, take-off, ascent, descent, and landing. The system is fully automated. They reported that the Seawing was flying more than 650 feet above sea level. Having demonstrated the ability to generate traction, the tests are now working on the automation system and the flights.

The company is also working with Japanese shipping company K-Line, which has announced plans to also begin testing the system this year. K-Line installed the system on one of its bulkers and also reported plans to outfit it on a new vessel next year. K-Line has an initial contract for five vessels and based on the outcomes of the tests has a 20-year agreement that calls for installing the Seawing on 51 vessels.

Airseas reports that it is working to scale up operations including plans for a commercial factory that they expect to open in 2026. Their goal is to have the system broadly commercially available by 2031.

New Ro-Ros Built in China to Transport Larger Wind Farm Components

ro-ro wind farm components — New Ro-Ros specifically designed to transport larger wind farm components (deugro)

The challenges of handling the transportation of wind turbines and their components are increasing due to the demand as well as the larger sizes of the new equipment. Wind turbine manufacturer Siemens Gamesa Renewable Energy and freight forwarder deugro are expanding their relationship with shipping company Amasus Offshore for a new generation of vessels to meet these future demands.

The companies report since 2016 they have been using Ro-Ro heavy load carriers to transport the wind turbine materials. They report the approach reduces the risk, loading time, and costs through the use of the Ro-Ros outfitted with a unique gantry system.

Siemens Gamesa and deugro entered into a long-term charter agreement for two new vessels that will expand these capabilities that will be operated by Amasus Offshore. According to the companies, the ships, which will be built at Jiangsu Zhenjiang Shipyard in China and are scheduled for delivery in the spring and summer of 2025, are customized for transporting offshore wind turbine components.

The ships, which will be named Rotra Futura and Rotra Horizon, will be larger than the existing ships Rotra Mare and Rotra Vente, and expand the concepts pioneered with the earlier class to provide capabilities for larger components for wind farms. Each of the new ships will be approximately 550 feet long and have a beam of 85 feet.

Deckhouse was moved forward on the new class to eliminate line-of-sight limitations and easier cargo loading (deugro)

“In Rotra Futura and Rotra Horizon, we will have the right assets in place to meet future challenges and to perform essential operations,” said Thomas Mortensen, Head of Offshore Project Transportation at Siemens Gamesa. “This new combined fleet will ensure that we have a strong foundation from which we can execute and deliver in line with our operational expectations.”

To accommodate the increased size and weight of the next generation of offshore wind turbine components, the new ships will also be Ro-Ros outfitted with a gantry system. Unlike the older class, the deckhouse and accommodations will be placed forward to optimize cargo intake and operational flexibility without line-of-sight limitations. The vessels will have a stern Ro-Ro ramp, the gantry system, and three Liebherr cranes, allowing stowage of blades in three tiers, while providing flexibility in cargo composition and method of loading.

Consideration was also included in the design to enhance the environmental performance of the ships making them IMO Tier 3 compliant. Energy consumption will be reduced with an aerodynamically and hydro-optimized hull shape, a low-resistance special hull coating, and a Wärtsilä diesel engine with a 15 percent lower consumption and carbon footprint compared to today’s standards. There will also be an efficient power train with a hybrid propulsion system, an exhaust gas cleaning system, and waste heat recovery.

Rotra Mare is one of the two vessels currently employed and which were recently modified for larger wind components (Amasus Offshore)

The current agreement from the three companies is employing the Rotra Mare (9,200 dwt) built in 2009 which is now 500 feet in length after having been expanded in 2022. Also employed is the Rota Vente (8,800 dwt) built in 2016 which is 464 feet in length. A year ago, both vessels underwent modifications to prepare them to also handle the larger components for wind farms. The cover over the cargo area was removed and sponsons around the hull as well as modifications to the bow and Ro-Ro ramped were made to the Rotra Vente. Both vessels returned to service transporting equipment for Siemens Gamesa and deugro under the trilateral agreement with Amasus Offshore.

NOAA Finds Three New Gas Seeps South of Aleutian Islands

Little is known about the seabed off Alaska, which has the least-surveyed waters of any U.S. state - but NOAA is beginning to change that this summer. Through a series of survey voyages along the Aleutians, it is mapping out the bottom, with particular attention to the Aleutian Trench - a deep trough extending from Russia to the Kenai Peninsula to the south of the Aleutians. On the first voyage, the survey vessel Okeanos Explorer discovered previously unknown gas seeps along the trench, located at a depth of 1.4 miles.

While checking the data collected by the ship’s sonar, watchstanders aboard Okeanos Explorer noticed a "noodle-like" line extending from the seafloor. Based on data and exploration experience from other missions, NOAA believes that these are the signatures of sonar pings reflecting back from bubbles near the seafloor. This would suggest the presence of a previously unknown subsea gas seep.

Cold gas seeps are found in every ocean basin and are indicative of a subsea petroleum deposit. Aside from any possible commercial potential, they are often inhabited by unusual marine life, like specially-adapted tube worms that rely on symbiotic bacteria to process hydrogen sulfide. Seeps often occur when a large reservoir of gas is squeezed from below by tectonic activity, according to NOAA.

As of May 15, the Okeanos Explorer's team has found at least three gas seeps that were previously unmapped.

The survey is the first of six voyages planned through September. The program is focused on unexplored areas off Alaska, particularly off the Aleutians. It also includes ROV/AUV dives at deep-sea coral and sponge ecosystems, exploration of hydrothermal vents, and new visits to seamount, fracture and rift zones, according to NOAA.

Japanese Projects Achieve Stable Combustion on Ammonia-Fueled Engines

Two independent Japanese research projects supported by the government’s research organization NEDO both reported significant progress in testing the world’s first ammonia-fueled engines. After successful land-based tests, they are moving forward with the development of the systems with the first project expected to install its first demonstration engine in 2024 while other elements of the projects expect to complete working engines between 2025 and 2027.

The New Energy and Industrial Technology Development Organization (NEDO) is providing funding and sponsoring the projects to develop ammonia and hydrogen fuel technologies. As both can be produced from renewable resources and produce no CO2 emissions during combustion they are seen as leading contenders as future fuels for the maritime industry and other heavy industrial manufacturing operations.

One project was initiated by NYK Line in October 2021 to develop a four-stroke ammonia-fueled engine that will be used to power the A-Tug project, a demonstration using ammonia to fuel an NYK tug. Shin-Nippon Kaiyosha will be responsible for the operation of the tug, which is scheduled to be outfitted with the ammonia engine in mid-2024 at the Nihon Shipyard.

A 280 mm bore version of the four-stroke engine was successfully demonstrated on land for the first time last month. They are reporting that they were able to achieve stable combustion using an 80 percent co-firing ratio for ammonia. During the test, the mixing ratio was increased and they also tested the exhaust gas after-treatment devices and the fuel supply system.

The consortium for the project, which consists of NYK Line, IHI Power Systems, Nihon Shipyard, Japan Engine Corporation, and ClassNK, reports for the first time they were able to achieve stable, integrated operation of the systems. Further, tests showed that there were virtually no unburnt ammonia or N2O emissions and that there was no ammonia leakage during the operation or shutdown. While ammonia is seen as a promising alternative, leakage and handling are concerns due to its toxicity.

Based on the progress made with these tests, the consortium also reports that efforts are beginning to develop a 250 mm bore auxiliary engine to be used on ocean-going vessels. The research project calls for installing the auxiliary engine on an ammonia-fueled gas carrier scheduled for delivery in October 2026. The ship is currently under development by NYK, Nihon Shipyard, Japan Enginem IHI Power Systems, and ClassNK.

Japan Engine also reported successful tests on its project for a large, low-speed two-stroke ammonia-fueled engine (J-ENG)

Japan Engine is separately reporting in April that they were also able to demonstrate a large low-speed two-stroke engine and that they have started for the first-time ammonia co-firing operation. The engine is being tested at Mitsubishi Heavy Industries’ Research and Innovation Center in Nagasaki. The test engine they reported is newly equipped with the “stratified injection system” using J-ENG’s technology.

Over the next year, they will continue tests under various conditions on the two-stroke engine, and at the same time, they will study the fuel supply systems. They believe that it will contribute to the development of ammonia fuel supply facilities on board ships. J-Engine will also proceed to develop, design, and manufacture a full-scale ammonia-fueled engine. They expect demonstrations to proceed for about six months being completed in September 2025.

They are also reporting that operation tests have begun at J-ENG’s plant in Akashi City on a hydrogen fuel injection device. Testing is expected to continue for more than one year. Currently, the plan calls for verification testing of a full-scale hydrogen-fueled engine to begin in 2026. They are scheduled to complete the test in March 2027.

The project organizers believe they have made critical progress in the development of ammonia-fueled engines. They look to build on these successes to strengthen the international competitiveness of the Japan maritime cluster, with the aim of building the world's first ammonia-fueled ships and achieving safe navigation, including by contributing to the development of international rules.

The Japanese are competing with other leading engine manufacturers, which are also working on testing for ammonia-fueled engines. Wärtsilä reported in July 2021 that it had achieved a 70 percent ammonia mix in its tests. They were aiming for developing a 100 percent ammonia-fueled engine targeting tests as early as this year. There is a growing expectation in the shipping industry that ammonia-fueled engines will appear by mid-decade, while New York-based startup Amogy announced in March 2023 that it expects to conduct the first demonstrations of an ammonia-fueled tug before the end of this year.

Vice files for Chapter 11 bankruptcy

Amelia Pollard and Graham Starr, Bloomberg News

VENICE, CA - FEBRUARY 01: Vice Media offices display the Vice logo at dusk on February 1, 2019 in Venice, California. Vice Media announced it is cutting 250 jobs globally, about ten percent of its workforce. (Photo by Mario Tama/Getty Images) , Photographer: Mario Tama/Getty Images North America

Vice Media LLC filed for bankruptcy protection and struck a deal to sell itself to creditors, punctuating a precipitous fall for the media upstart that once boasted a US$5.7 billion valuation.

The developments cap a tumultuous few months for the firm, which began as an alternative magazine in Montreal nearly three decades ago and captured the attention of young viewers globally with documentary-style videos. It shared a Pulitzer Prize in 2020 and multiple Emmy wins for Vice News Tonight.

Its rapid downfall underscores the challenges facing digital media companies, which are struggling as advertisers cut spending during an uncertain economy and route marketing toward tech platforms from Facebook and Google to TikTok.

The Brooklyn-based company listed both assets and liabilities in the range of more than $500 million to as much as $1 billion in a Chapter 11 petition filed in Southern District of New York. In a separate statement, Vice announced it reached a deal with creditors including Fortress Investment Group, Soros Fund Management and Monroe Capital to purchase its assets for $225 million and assume significant liabilities. The agreement, however, allows for rival bidders to emerge.

“We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business,” said Bruce Dixon and Hozefa Lokhandwala, co-chief executive officers. “We look forward to completing the sale process in the next two to three months.”

Fortress Credit Corp. ranked among the biggest secured creditors, with claims totaling about $475 million, the filing on Monday showed. Vice secured commitments for debtor-in-possession financing from its creditors, including consent to use more than $20 million of cash to keep its operations going for now.

Vice secured a $450 million investment from private equity firm TPG in 2017, which valued the firm at $5.7 billion. The figure was startling for a media upstart, especially while so many of its industry peers struggled to generate profits. Other investors have included Walt Disney Co. and Fox Corp.

In the filing, Vice estimated it has more than 5,000 creditors and that it would have funds for distribution to unsecured creditors.

Its bankruptcy filing is a milestone for the digital media arena. In February, Vice said Nancy Dubuc was leaving the company after five years as chief executive officer, and then in late April Vice shuttered its flagship TV news show and laid off more than 100 staff.

Vice News Tonight started in 2016 as a newscast on HBO and won acclaim for its coverage of a white nationalist rally in Charlottesville, Virginia. HBO ended that partnership in 2019. Recently, the show aired on Vice TV, the company’s cable channel.

This year, BuzzFeed Inc. shut down its news operation and online publisher Insider Inc. said it’s cutting about 10 per cent of staff.

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