New Waterworld Order

Real offshore havens are on the horizon.


Item: Starting in mid-1998, an international corporate alliance led by Boeing will launch commercial satellites from a mobile rocket pad in the Pacific Ocean. Sea Launch, a converted oil rig, will shuttle between its California home port and a launch site about 1,000 miles southeast of Hawaii.

Item: A consortium of Japanese steel companies and shipbuilders recently constructed Mega-Float, a nearly 1,000-foot-long experimental platform in Tokyo Bay. The structure will facilitate research into possible floating airports, shipping terminals, power plants, and other facilities.

Item: The Pentagon is examining the feasibility of vast offshore military bases consisting of interlocking, self-propelled platforms. U.S. Marine helicopters may soon be relocated from Okinawa, Japan, to a stationary platform off the island's coast.

The era of the offshore platform has arrived. Of course, it arrived several decades ago for the petroleum industry, but the broader potential of maritime structures is now coming into view. For a diverse assortment of industries and organizations–and perhaps homeowners, a subject to which I'll return–floating platforms carry enormous potential benefits, from the economic and political to the environmental and aesthetic.

The keynotes of this technology are mobility, flexibility, spaciousness, separateness–and a high degree of freedom from government control. Such freedom may not be the objective of current projects in offshore technology; indeed, such a goal may be explicitly disavowed by companies that set out to develop maritime platforms. But having an address in international waters, or simply the capability to move readily from one harbor to another, inevitably will give a powerful new meaning to "offshore" markets and tax havens.

What might emerge is a free market waterworld. Companies saddled with too much taxation or regulation on land might move (or threaten to move) to the middle of the ocean; less dramatically, they might relocate up the coast, in a different country or state. Even without offshore technology, companies often flee from a hostile business climate to a better one. Floating platforms will make such moves easier, extending mobility to companies, such as utilities and heavy manufacturers, whose fixed presence was once assumed. And even stationary platforms, provided they are sufficiently numerous or scattered, will be difficult for regulators to micromanage from shore.

Consider some of the possibilities: Nuclear or chemical companies will be able to locate their plants miles from residential areas, free from the not-in-my-backyard litigation of environmental and community activists. Real estate developers eager to circumvent zoning regulations will build office parks with unparalleled waterfront views. Railway terminals, once seen as immovable "infrastructure," will be relocated periodically to accommodate shifting markets and demographics. Shipping and port-related industries, long among the most state-controlled and subsidized sectors of the world economy, will be swept by waves of competition.

To sure, all this will take decades. Auto workers will not soon wake up to find General Motors floating in the Atlantic. But the constraining factors for offshore projects are mainly cost and necessity, not engineering. The oil industry has developed increasingly large, sophisticated, and durable platforms in recent years. In the 1970s, drilling in several hundred feet of water was a daunting technological challenge; today, platforms and drilling ships operate in waters 3,000 or more feet deep, even in the midst of icebergs and severe storms. Big Oil is not the only industry pioneering waterworld-type technologies. Gigantic cargo ships now ply the world's trade routes. The very largest are too wide to pass through the Panama Canal and can carry twice as much freight as their counterparts of a decade ago. Cruise ships also have taken a turn toward the bigger and more grandiose. And thanks to satellite communications, offshore platforms and vessels need never be out of touch. In the oil business, vast quantities of data are routinely transmitted among drill rigs, tankers, exploratory ships, and corporate headquarters.

No utopian vision is needed to drive such technological advances. The oil industry's use of offshore platforms was motivated by very practical considerations: Terrestrial oil wells were drying up or becoming entangled in the politics of an unstable Middle East. Similarly, the Mega-Float project arose from Tokyo's chronic land crunch and high real-estate prices, as well as the desire of Japanese steel makers and shipbuilders to find new markets. The U.S. military's interest in the offshore world is fueled by the demands of post-Cold War diplomacy: Countries eager to provide bases for American troops have become harder to find in the absence of an immediate threat, and residents of places like Okinawa are less willing to put up with noisy helicopters overhead.

The Boeing-led Sea Launch Company will provide a dramatic display of offshore capabilities and advantages. The $500 million project comes at a time when a boom in the commercial satellite industry has caused bottlenecks and delays at traditional (mostly government-owned) launch sites such as Cape Canaveral. The oceangoing platform, measuring 430 by 220 feet and equipped with an array of diesel engines, will conduct most of its launches from the equator, where the earth's rotation provides the greatest boost for lifting satellites into high orbits. A separate ship will serve as command center and rocket assembly facility.

Sea Launch, it should be noted, will operate under U.S. regulatory licenses, and company President Allen Ashby downplays any notion that the platform's location in international waters carries political significance. In practice, however, the project will be free of the environmental protests that have confronted rocket launches in Florida, Japan, and elsewhere. Also, Sea Launch, a joint venture that includes Russian and Ukrainian rocket makers, will be shielded from protectionist pressures that elsewhere have hindered international collaboration in the aerospace industry.

With such a diverse range of industrial activities taking shape, can offshore residences be far behind? Might full-fledged communities, perhaps even whole new countries, be formed on platforms? Proposals along those lines have bobbed up occasionally over the years, some with an explicitly libertarian theme. True, no floating housing complex has yet begun construction, let alone been completed–not surprising, since startup costs might well run into the billions. But sooner or later, costs will decline and some critical mass of condo buyers will be achieved. A real Ocean City will come into existence.

Will that be a good thing? Perhaps not. A central virtue of maritime technology is the independence it affords from land-based authority. Less clear is whether offshore communities will have a high degree of freedom internally. Traditionally, ships and offshore platforms (as well as planes, trains, and other mobile or isolated entities) have operated along more-or-less authoritarian lines, often by necessity; there can, after all, be only one captain, at least at any given time. A floating city, especially one that regards itself as sovereign, will have the difficult task of constraining its own command-and-control tendencies.

Be that as it may, offshore technology overall offers vast promise for expanding freedom and prosperity. Putting businesses on platforms is a logical extension of current trends–the rise of the Internet, the invention of new financial instruments–that already have strengthened markets and weakened central authorities. Furthermore, government control need not (and should not) disappear altogether for a thriving ocean-based economy to emerge. Being a few thousand miles from shore confers a certain autonomy, even without a declaration of independence.

Kenneth Silber (ksilberny@aol.com) writes about science, technology, and economics.