Shipowner bankruptcy filings threaten tanker construction plans

Of the three Jones Act tanker projects announced in the past six years, AHL Shipping’s was by far the most ambitious: three state-of-the-art, diesel-electric vessels to be built in modules at several different shipyards.

It has also been the most troubled. In December 2009, the three companies that AHL set up to own the 49,000-dwt product carriers filed for bankruptcy. The lead yard, Atlantic Marine Alabama, stopped work in October. The bank withdrew its financing in November. The charterer, Shell Trading (U.S.), lost interest.

AHL told the bankruptcy court the three vessels were approximately 90 percent, 55 percent and 35 percent complete.

Shell said it pulled out “due to significant delays and costs that had escalated beyond the allowed maximum per vessel.” In an indication that the weak economy may be partly responsible, the company said the 100-plus Jones Act ships and barges it already has on charter currently meet its supply needs.

AHL was a latecomer to the market, announcing its project three years after rival operator Overseas Shipholding Group (OSG) agreed to a multi-ship contract with Aker Philadelphia Shipyard.

OSG settled for a bread-and-butter South Korean design. So did U.S. Shipping Partners (now American Petroleum Tankers), which made a similar deal with General Dynamics Nassco. In both cases, simplicity ruled; propulsion consisted of a single B&W 6S50MC diesel direct-coupled to the shaft.

AHL was thinking bigger. The diesel-electric machinery plant was to consist of three medium-speed diesel gensets ordered from Caterpillar Marine Power Systems, any two of which would supply enough power to operate the vessel.

The modular design was unusual. It reflected a scarcity of shipyard resources in the Gulf, and the project was an example of efficient shipbuilding achieved by subcontracting work to facilities experienced with particular aspects of marine fabrication and outfit.

Drawbacks quickly became apparent. Five months after the keel for the first vessel was laid in Alabama, the yard fabricating the power module and main deck — R&R Marine Shipbuilding in Port Arthur, Texas — was wiped out by Hurricane Ike. Work was shifted to Houma Industries in Louisiana.

AHL says the bankruptcy filings “were a direct result of claimed cost overruns and delays” by Atlantic Marine, which was to build hulls and other modules under a contract worth $124 million.

The yard says AHL was late meeting its contractual obligations. Because of that, it says, Atlantic Marine put in thousands of additional man-hours and incurred tens of millions of dollars in extra expenses.

AHL has expressed optimism about the unfinished vessels, saying that ultimately it wants them built and put to work. The company didn’t respond when asked what might make that possible. AHL said its current vessels are not affected by the bankruptcy proceedings.

Herschel Vinyard, Atlantic Marine’s vice president of government affairs, declined comment.

AHL’s unsecured creditors includes Jamestown Metal Marine Sales, of Boca Raton, Fla., which was building superstructure modules. Another is Ship Construction Strategies of Tampa, Fla., the company of Al Nierenberg, generally considered the mastermind behind the AHL concept.

Peter Meredith

By Professional Mariner Staff