A year of blockbuster contracts

1 Sos Overview

Shipyards love contracts for multiple vessels, which mean steady work and a guaranteed order book. Many yards have had their wishes granted in the last few months with blockbuster orders from heavy hitters such as Edison Chouest Offshore, Hornbeck and Harvey Gulf.

The result is a much more positive outlook at this time this year than last. “It’s like night and day right now compared with the last time I talked to you,” Andre Dubroc, general manager at Master Boat Builders in Bayou La Batre, Ala., told American Ship Review. “I didn’t even know where I was going to get the next contract.” On his order books: five 200-foot offshore supply vessels for Abdon Callais Offshore and six for an undisclosed owner.

With memories of Deepwater Horizon receding, the Gulf is back. In June, the Interior Department held its fourth-largest Gulf lease sale ever, receiving 600 bids from 48 companies on 454 tracts and generating $1.74 billion.

Welding at Eastern Shipbuilding Group in Panama City, Fla.

Two years ago, Chouest sent U.S.-flagged workboats out of the Gulf for better opportunities elsewhere; now the company’s vice president of operations, Dino Chouest, said it plans to bring them back. The company also announced that in the next 24 months it expects to add eight 300-foot vessels from its yards in Larose, La., Houma, La., Gulfport, Miss., and Tampa, Fla.

Hornbeck Offshore Services also said it’s bringing workboats back to the Gulf. And it has ordered new 300-footers from two different shipbuilders, Eastern Shipbuilding of Panama City, Fla., and VT Halter Marine of Pascagoula, Miss. Both have firm orders for 10 new boats. When Halter announced its original contract, which was for $353 million for eight boats, its CEO, Bill Skinner, said it was the largest commercial contract in the history of the yard.  

The bow of a new 295-foot OSV dominates the yard at Thoma-Sea Marine in Lockport, La., whose managing director, Walter Thomassie, is a firm believer in diesel-electric propulsion for workboats.

The U.S. shipbuilding industry now accounts for $20 billion in revenue and employs 87,121 workers, according to IBISWorld, an industry research firm based in Los Angeles. Two defense contractors, Huntington Ingalls Industries and General Dynamics, account for the lion’s share. But commercial shipbuilding is healthy.

“For 2013, there’s a lot of reasons to be optimistic,” said Matt Paxton, president of the Shipbuilders Council of America (SCA), which now represents 140 companies, including shipyards and suppliers. “We’ll have an administration either for the long term or a new one.

“On the commercial side of things we want to see more offshore energy development — we think that’s a sector that’s continuing to grow. The 22-odd vessels that are going to service one Shell offshore platform (in Alaska; story, page 16) is very encouraging. We think there’ll be more of that development in 2013 under either administration.”

In the same interview, Paxton’s colleague Joe Carnevale, the SCA’s defense expert, did sound a note of caution.

“There are a dozen things that are uncertain in the financial and tax and governmental business that are just completely open ended,” Carnevale said. “There’s everything from sequestration to the expiration of tax cuts. There’s a whole host of things that no one knows what is going to be the solution, if there is one, in 2013.”

Dual fuel and the ECA   
Harvey Gulf International Marine, of New Orleans, has the industry talking this year with several recent moves.

This spring, it agreed to buy Bee Mar, the offshore operator set up by Bollinger Shipyards of Lockport, La., after the bottom dropped out of the market for the yard’s 234- and 210-foot platform supply vessels. Harvey Gulf picked up 10 boats in the deal.

Harvey Gulf is also building a unique 310-foot construction/supply vessel at Eastern that can also provide anchor handling and towing.

But its most interesting venture is the construction of four 302-foot dual-fuel OSVs at Trinity Offshore in Gulfport. The workboats were designed by STX Marine and are powered by Wärtsilä. Three already have long-term charters.

An automated welding machine at Eastern.

As Harvey Gulf’s CEO Shane Guidry has pointed out, the interest in LNG is fueled in part by stricter emission rules. The acronym to remember is ECA, for Emissions Control Area, which refers to fuel-sulfur content limits under international regulations.

Totem Ocean Trailer Express, which operates two 839-foot roll-on/roll-off trailerships between Tacoma, Wash., and Anchorage, Alaska, has received a conditional waiver from ECA regulations while it looks at converting its vessels to LNG. Several ferry operators have expressed interest in dual fuel. And this summer a new 616-foot diesel electric product carrier, American Phoenix, was surveyed before it left the BAE Systems shipyard in Mobile, Ala., to explore whether it could be converted to LNG in the future.

LNG has several counts against it, notably an uncertain regulatory climate, the volume it occupies compared with diesel, and the lack of shore facilities for fueling. “We need time, because there literally is not the technology here right now to do it — but it’s coming,” said the SCA’s Paxton.

Shell has undertaken to make LNG available to the marine market and has signed an agreement with Wärtsilä to accelerate the development of larger engines that use LNG as a fuel. Ferries are a natural candidate for LNG if a fuel supply can be guaranteed at one end of their route, and a Canadian ferry operator has already ordered an 800 passenger/180 car dual-fuel ferry.  

Repair work is a staple at BAE Systems’ Mobile yard, as it is at the company’s other U.S. shipyards.

One sector of the market that will be affected by ECA is Jones Act containerships. The fleet is aging, and shipyards would love to get their hands on new orders.

One of the large Jones Act operators, Horizon Lines, has shown no indication of building new vessels. But Hawaii-based Matson, which currently has nine ships in operation at any given time, told industry analysts in June as it was being spun off from its parent company that it was looking to build two new containerships within three to five years at a cost of about $200 million each.

Matt Cox, Matson’s CEO, indicated in August that the company’s balance sheet might be strong enough to support new vessel construction without applying for loan guarantees from the Maritime Administration’s Title XI loan guarantee program, which has been stingy with approvals lately.

Crowley Maritime has also expressed interest in building containerships under the right conditions.

Tankers away
Large ship construction has at least one bright spot right now. Aker Philadelphia Shipyard, which suffered a dearth of orders as the recession began, has just delivered Philadelphia, the first of two 46,000-dwt product carriers for Crowley Maritime — sister vessels to the 12 it built for Overseas Shipholding Group. The contract took an interesting form: $90 million on delivery, plus an annual payment based on the vessels’ market performance. Aker said it expects to receive additional payments of more than $35 million per vessel this way.

For Crowley, the purchase marks the company’s re-engagement with Jones Act tankers; it sold its last one last year. Aker is also building two 820-foot, 115,000-dwt tankers, Liberty Bay and Liberty Eagle, for SeaRiver Maritime, Exxon Mobil’s marine affiliate.

If petroleum transportation is a mature business, several yards are interested in building for a new one: offshore wind energy. Weeks Marine of Cranford, N.J., has built a jack-up barge, R.D. MacDonald, to do installation work at wind farms. The barge measures 260 feet by 78 feet and can raise the working deck 60 feet above the water; its legs are 160 feet long. The builder was BAE Systems Southeast Shipyards in Jacksonville, Fla.

Cape Wind, which plans to build America’s first offshore wind farm by erecting 130 wind turbines on Horseshoe Shoal in Nantucket Sound, signed an agreement this summer to base its operational headquarters in Falmouth, Mass. In another indication of interest in offshore wind, Seacor Marine of Houma, La., whose focus is on supporting the offshore oil industry, recently acquired a stake in Windcat Workboats Holdings, which operates 30 wind farm vessels in Europe.

However, plans to develop a wind farm off the Virginia coast took a blow when a partnership that includes Huntington Ingalls Newport News Shipbuilding dropped plans for a 479-foot prototype wind turbine, citing the slow pace of regulatory approvals and an uncertain future for tax credits for offshore development.

The 265-foot AHTS Keith Cowan was rebuilt at Eastern after catching fire during construction in Mobile at the now-defunct Bender Shipbuilding & Repair yard. It is diesel-electric and features DP-2.

Going fishing
One developing market for some shipyards is replacement vessels for the commercial fishing fleet in the North Pacific. “People forget … it’s a $2 billion industry off Alaska,” said the SCA’s Paxton. “They’re rationalized, so these guys are going to build.” By some estimates there is enough work to stretch over 10 to 20 years.

J.M. Martinac Shipbuilding in Tacoma, Wash., is building Northern Leader, a 184-foot longliner, for Alaskan Leader Fisheries. The vessel is designed to reduce waste and maximize the value of the catch by targeting only the fish species it is out to catch. And Alaska Ship & Drydock in Ketchikan, a subsidiary of Vigor Industrial, is building a 136-foot all-steel catcher/processor for Alaska Longline.

Yards in the Pacific Northwest are also benefiting from contracts for vessels for research and oil spill cleanup.

Construction work at Master Boat Builders in Bayou La Batre, Ala.

In this issue we profile Sea Scout, built by All American Marine of Bellingham, Wash., for Louisiana-based C&C Technologies, one of the world’s largest offshore survey companies. The vessel is unusual in having two sets of propulsion engines, one set for getting to work and the other for surveying. All American is also building smaller vessels for Middlebury College, the Los Angeles Port Police and the U.S. Army Corps of Engineers. In Anacortes, Wash., Dakota Creek Industries has contracts totaling $145 million for two Ocean-class research vessels for the U.S. Navy; one will be operated by the Scripps Institution of Oceanography at the University of California San Diego.

On the Great Lakes, Marinette Marine in Marinette, Wisc., is completing Reuben Lasker, a 208-foot fisheries survey vessel for the National Oceanic and Atmospheric Administration and plans to launch Sikuliaq, a 261-foot research vessel for the University of Alaska Fairbanks, on Oct. 13. And JMS Naval Architects has completed the design for a 78-foot fisheries research vessel, Grayling, for the U.S. Geological Survey’s Great Lakes Sciences Center; the construction contract is up for bids.

As for oil spill recovery vessels, the regional consortiums that handle spill response have taken several deliveries this year. On the West Coast, Clean Seas LLC took Ocean Keeper, a 174-footer from Dakota Creek, and a number of 65-foot skimmers from Rozema Boat Works in Mount Vernon, Wash. Clean Gulf Associates, which is based in New Orleans, has taken delivery of the first of three 95-foot vessels with skimming and storage capabilities built by Midship Marine of Harvey, La.

Shipyards are still benefiting from the Maritime Administration’s Small Shipyards Grants Program. This year’s total was $9.98 million, the same as last year and on a par with 2008 (funding reached a high of $17.1 million in 2009). The largest grant, $1.18 million, went to Detyens Shipyards in Charleston, S.C., for two 20-ton tower cranes for a dry dock.

AET Partnership at AET Lightering Service’s headquarters in Galveston, Texas. AET has taken four lightering support vessels from Leevac Shipyards in Jennings, La.

Detyens is a large ship repair company with a focus on commercial work, and although this issue of Professional Mariner deals primarily with new ship construction (tugs are covered in our annual American Tugboat Review, PM #159), it is worth noting that the repair market is strong right now, particularly for Navy work. General Dynamics bought the ship repair division of Earl Industries, which handles Navy work including aircraft carriers in Norfolk, Va., and Mayport, Fla., and BAE Systems San Diego Ship Repair said it plans to sink $15 million into demolishing two old piers to build a new one to take two 600-foot Navy vessels.

Each year, several boats coming out of U.S. yards stand out because they’re so unusual. This year, two passenger vessels in particular are drawing comment: Queen of the Mississippi, a 150-passenger cruise ship designed and built for American Cruise Lines by Chesapeake Shipbuilding in Salisbury, Md., and Hornblower Hybrid, a 168-footer that coincidentally was also built originally at Chesapeake Shipbuilding but refitted at the Derecktor yard in Bridgeport, Conn.

Queen of the Mississippi is powered by two CAT32s working z-drives, but the boat’s most eye-catching feature is a huge paddlewheel. It went into service on the Mississippi this summer as another sternwheeler, American Queen, also returned to the river.

Hornblower Hybrid, a 600-passenger excursion boat for New York harbor, has two 700-hp Scania diesels, but is designed to draw power from hydrogen fuel cells, solar panels and wind turbines. Among its green features: flooring made from recycled materials and countertops made from recycled glass and colored vodka bottles.

By Professional Mariner Staff