CHEVRON TAKES SECOND SEABULK TANKER:
Seabulk's "HMI Brenton Reef" has been bareboat chartered to Chevron Shipping and renamed "California Voyager". September 30, 2008.
USE OF CCF EXTENDED TO SHORT-SEA SHIPPING:
MARAD has published regulations implementing the extension of applicability of Capital Construction Funds to ships used in short-sea transportation. Read them here. Good news. September 30, 2008.
SECRETARY GATES TALKS SENSE:
I like Secretary Gates. How did the White House manage to appoint such a sensible person to replace wild-man Rumsfeld? Read Gates' speech yesterday at the National Defense University: you can find it here. Here's a key excerpt:
"Given that resources are not unlimited, the dynamic of exchanging numbers for capability is perhaps reaching a point of diminishing returns. A given ship or aircraft – no matter how capable, or well-equipped – can only be in one place at one time – and, to state the obvious, when one is sunk or shot down, there is one less of them."
I hope that the Navy's procurement people were listening. September 30, 2008.
YEAR-END HAND-OUTS:
It's wonderful what a rush of federal spending comes in the last few days of a fiscal year. Yesterday's DefenseLink announced 98 contracts and today's will, no doubt, bring many more. The general philosophy is "Quick, hand out all the left-over money before the taxpayers ask for it back." Read the DefenseLink announcement here. Among yesterday's awards was one to NGSB, valued at $77 million, for planning yard services for CG 47 and DD 963 class ships: note that there are no 963s still in service. September 30, 2008.
END OF AN ERA:
Washington State Ferries (WSF) has sold its four "Steel Electric"-class ferries for scrap. The reported price is about $700,000 for the set, a tiny fraction of the $12 million that WSF was recently trying to sell them for - another example of WSF's not-so-firm grasp of economics. Read the report in the Seattle Times here. Two of these fine 80-year-old boats were built by Bethlehem Steel's San Francisco shipyard and the other two by Moore Dry Dock, in Oakland, all four beginning their service with the Southern Pacific Railroad. There were originally six of them: of the other two, one is currently being restored, under her original name of "Fresno", while the other has been restored, under her original name of "Santa Rosa", and now serves as the San Francisco headquarters of Hornblower Yachts. September 29, 2008.
OCEAN SHIPS TO RUN THE WATSON-CLASS LMSRS:
I admit to missing this announcement . MSC has awarded a contract to Ocean Ships, a first-class, US-owned shipping company based in Houston, the contract to operate the eight "Watson"-class LMSRs. The ships were previously operated by Maersk Line Limited. Read the DefenseLink announcement here and Ocean Ships' announcement here. September 28, 2008.
BOLLINGER WINS FRC CONTRACT:
The Coast Guard has awarded a contract to Bollinger Shipyards for the detail design and construction of the first of a possible 34 fast response cutters, (FRCs). The 153-foot cutter,
the design of which is based on the Damen 4708 patrol boat, will be capable of speeds of more than 28 knots. Read the Coast Guard's announcement here. Read Bollinger's announcement here. Read a Coast Guard fact sheet here. The contract is valued at $88 million, with delivery in the fall of 2010: if all the options are exercised, the total value could exceed $1.5 billion over the next six to eight years, depending on the timing of the exercise of options. The original RFP called for up to 58 boats and 58 is still the number that the Coast Guard says it wants: it must be assumed, therefore, that there will be a follow-up competition in about five years' time for the other 24 boats. This contract may not quite load up Bollinger's Lockport shipyard for the next eight years but it must come pretty close. As a result, we can expect to see Bollinger shift its commercial construction projects - mostly OSVs - to its Amelia shipyard, a move that would also fit well with the coming downturn in tank barge construction. September 26, expanded September 29, 2008.McCAIN CAN FIX THE LCS COST OVER-RUNS:
In this evening's big debate, Senator McCain brought up the LCS program as an example of out-of-control Government spending. I'm not sure that it's an example of out-of-control Government spending so much as of incompetent management, but, whatever, Senator McCain said that he can fix it. Good. I am agog with anticipation. September 26, 2008.
VT HALTER GETS EGYPTIAN FMC CONTRACT:
The Navy has awarded a modification to its contract with VT Halter Marine for the detail design and construction of three fast missile craft for the Egyptian Navy. The value of the mod. is $393 million and this brings the total contract value to $642 million. Completion of the first ship is scheduled for June 2012 and of the third for April 2013. Read the DefenseLink announcement here and ST Engineering's announcement here. September 26,
expanded September 29, 2008.LAUTENBACHER RESIGNS:
Retired VADM Conrad Lautenbacher has resigned as Administrator of NOAA, after seven years of service. Read NOAA's announcement here. A good man, who did an excellent job, he is an example of the kind of relevant political appointment that Presidents can and should make. September 25, 2008.
LCS PROCUREMENT CAP REMOVED:
Authorization bills have much less significance than appropriation bills these days, but the FY09 defense authorization bill that seems to be almost done - finally - includes relaxation of the cost ceiling on the LCS program. This means that procurement of the next flight, which will be of two ships - not three, as I mistakenly said earlier, can now go ahead without the reduced specifications needed to meet the cap. September 25, 2008.
EPA SPILLS OIL IN ELIZABETH RIVER:
The Coast Guard reports that the Environmental Protection Agency's research vessel "Lake Explorer II", spilt 1,400 gallons of diesel oil in the Elizabeth River, in downtown Norfolk VA, yesterday. Read the Fifth District's announcement here. Read the Virginian-Pilot's story here. The "Lake Explorer II" is the former NOAA research vessel "Rude", which was recently acquired by the EPA. September 25, 2008.
VIDEO OF THE LAUNCH OF T-AKE 7:
Click here to see the launch of T-AKE 7 at NASSCO last weekend. Note what appears to be a commendably high degree of completion at this point in the construction cycle. Note also the view of T-AKE 8 that you get at the end of the clip: it looks to be pretty well along, which is consistent with the roughly 5-month interval between ships that NASSCO is maintaining. September 25, 2008.
MARAD PUBLISHES STRATEGIC PLAN:
No fanfare, no speeches, no press releases, but a strategic plan has magically appeared on MARAD's web site. Find it here. At first glance, it seems to be quite good, covering the key issues, clearly defining specific goals and objectives, and even including some key performance measures. Well done, MARAD. September 24, 2008.
CARGO SHIP ON FIRE IN MIAMI RIVER:
The "Mystic", a 32-year-old St. Vincent-flag break-bulk cargo ship, with a cargo of mattresses, caught fire yesterday, with the result that the Coast Guard had to close the Miami River. Read the Coast Guard's press release here and the Miami Herald's story here. Here in Florida, we don't want the energy industry to come anywhere near our coast but we let rubbish like the "Mystic" into our ports. September 24, 2008.
WASHBURN & DOUGHTY BACK IN BUSINESS:
Despite the devastating fire that leveled their shipyard on July 11, Washburn & Doughty have just laid the keels for two new tugs and are essentially back in business, although, obviously, not at full capability or capacity. Read the latest press release here. Good for them. The energy and spirit in our smaller shipyards never fails to impress. September 23, 2008.
AMFELS DELIVERS FOURTH SCORPION JACK-UP:
Keppel Offshore & Marine's shipyard in Brownsville TX, generally known as AMFELS, delivered the fourth of five jack-up drilling rigs, the "Offshore Vigilant", to Scorpion Offshore last week and in doing so secured a nice little early-delivery bonus of $1.35 million. Read Keppel's press release here. (Wouldn't it be neat if we could read about someone getting a bonus for early delivery of a ship to the U.S. Navy?) September 23, 2008.
AKER DELIVERS FIFTH OSG PRODUCT CARRIER:
The fifth of OSG America's series of product carriers, the "Overseas Texas City", was delivered on Saturday by Aker Philadelphia Shipyard. September 23, 2008.
NG SAYS DDG 1000 SUPERSTRUCTURES ON TRACK:
Defense News reports that Northrop Grumman is not happy with suggestions that its composite superstructure construction capability might jeopardize the whole DDG 1000 program, such as it is. Read the story here. September 23, 2008.
NASSCO FLOATS FIRST USS PRODUCT CARRIER:
The first of US Shipping's product carriers was floated out of the big dock at NASSCO's San Diego shipyard on Saturday and the stern part of the hull of the second repositioned. No press releases but here's a photograph. September 23, 2008.
TODD EVERETT TO BUILD CAISSON FOR PSNSY:
The Navy has awarded a contract for the construction of a caisson for the #3 dock at Puget Sound NSY to Todd's Everett shipyard. Read the press release here. The value of the contract is $9 million and delivery is scheduled for March 2010. September 23, 2008.
NASSCO LAUNCHES T-AKE 7:
The seventh of the "Lewis and Clark" class of combat logistics ships, the future USNS "Carl Brashear", (T-AKE 7), was launched on Thursday at NASSCO's shipyard in San Diego. Read the press release here. No pictures for some reason. September 23, 2008.
ADMIRAL LOSES MIND:
Marine Log reports that VADM Bill Gortney, the Commander of Combined Maritime Forces, is suggesting that the shipping industry consider hiring security teams to protect vessels against Somali pirates. Is he out of his mind?
Apart from the cost, the idea of putting armed security personnel on commercial ships in international waters raises more legal issues than anyone could possibly count. An alternative approach would be for commercial operators to install defensive systems that could detect and potentially neutralize unauthorized intruders, but these are way too expensive for all but maybe cruise ships and they also raise all kinds of legal issues.
Let's try to think rationally, please. First, modern-day pirates do not roam the open ocean, they operate in coastal waters, where the local authorities turn a blind eye. The only practical solution that would work within the limits of international law is the deployment of some form of maritime police force, one for each region. There are only two such regions (at present) - the horn of Africa and southeast Asia. This ought to be a U.N. force, of course, but that won't happen, so they should be the responsibility of regional equivalents, such as the OAU and SEATO. NATO and others could help. But, please, please, this is not a job for the US Navy acting alone. September 23, 2008.
NOBLE ORDERS 1+3 NEW DEEP-WATER DRILL SHIPS:
Noble Corporation, one of our best offshore drilling contractors - I would say that even if I didn't own its stock - has ordered a deep-water drill ship, with options for up to three more. Read the press release here. The delivered cost is said to be $585 million, which is certainly on the low side, but may not include the cost of all the OFE. These ships, Noble's first newbuild drill ships, will be built by STX Shipbuilding and will also be STX's first newbuild drill ships. For further insight into Noble's outlook, as expressed in their presentation to the recent Lehman Bros. conference, click here. September 23, 2008.
LCS 1 DELIVERED, SORT OF:
The first littoral combat ship, the future USS "Freedom", (LCS 1), was delivered to the Navy in Marinette WI on Thursday. Congratulations to Marinette Marine, who have obviously done an exceptional job under very trying conditions, worthy of the generally high standard of performance found in our "second-tier" shipyards. Read the Navy's press release here. Note, however, the second sentence of the fourth paragraph: the Navy essentially accepted an incomplete ship and there will be a second INSURV next year after trials in the open ocean. It is still far from clear that either version of the LCS will, in fact, do what it is required to do.
In the mean time, both Marinette and Austal are laying off skilled workers. This is a disaster. One of the facts of life in shipbuilding is that good shipyard workers have no problem finding alternative employment and only a few are available when you want them back. September 19, 2008.
IKE TAKES 3 RIGS, 28 PLATFORMS:
RigZone.com reports that three offshore drilling rigs are missing and presumed lost, and another sustained significant damage. All are jack-ups. The three lost are Ensco 74, Pride Wyoming and Rowan Anchorage: the damaged rig, which lost its derrick, is Ocean Tower. In addition, three semis broke their moorings and are (or maybe were) adrift. Read RigZone's report here. Separately, the MMS reports the loss of 28 of the 3,800 production platforms in the Gulf: read its press release here. All in all, things could have been a lot worse. September 16/17, 2008.
NOT MUCH TALK OF THE FERRY TO NOWHERE:
With all this talk of the "bridge to nowhere", there's been surprisingly little talk of the "ferry to nowhere" that replaced it. It's being built by Alaska Ship & Dry Dock, which has a long and distinguished shipbuilding record, consisting of precisely one boat. It's being paid for by us, via the Office of Naval Research, which never requested the funds but got $84 million for this, courtesy of Senator Ted Stevens. The design is an ice-class version of good old cost-conscious Lockheed Martin's SLICE, configured to carry up to 26 cars and 150 passengers. To put the price tag in perspective, the Hawaiian Superferry, built by Austal USA, carries up to 230 cars and 836 passengers, and only cost $75 million. The route is the 3-mile, 15-minute crossing from Anchorage north and a touch west across Cook Inlet to Port Mackenzie, a community so small that you can't Google it. The contract was signed in August 2005 but delivery is not scheduled until August 2009, almost as long as it takes to build a destroyer. September 16, 2008.
STILL MORE DDG 1000 PROBLEMS:
An article in today's Navy Times raises the possibility that it may not even be possible to build a single DDG 1000, let alone the two - or is it three this week? - that are still planned. Read it here. Good lord, what a screw-up! Come on, Secretary Gates, fire some people. September 16, 2008.
DELUSIONS OF GRANDEUR IN MISSISSIPPI:
The Mississippi State Ports Authority has released some very superficial PR-type materials describing a plan to turn the tiny Port of Gulfport into a major container port. Visit its web site here and see what the local newspaper says here. The consultants involved are normally pretty competent: one can only assume that they put out this rubbish in order to give Governor Haley Barbour what he wants and to ensure that they get retained for the next phase. The local paper is totally deluded: it seems to think that this plan would make Gulfport "one of the largest cargo ports in the world". I'm sure that Singapore, Hong Kong and Rotterdam, to name but three, are quaking in their boots. Among the subjects not addressed are the economics of the project as compared to competing projects; the very existence of any competing projects; the monumental infrastructure requirements; the air quality and other environmental challenges; the draft requirements of future generations of containerships; labor requirements and productivity; and the need for cooperation from and investment by all the other southern and central states. One might have hoped that the State of Mississippi could devote its federal recovery funds to building some housing for its still-displaced citizens before it goes in for boondoggles like this. September 15, 2008.
THE MMS SHENANIGANS:
The press reports about all those parties at the MMS are pretty fuzzy. Here, for your amazement and amusement, is the IG's report. September 12, 2008.
$5.1 BILLION CONTRACT FOR CVN 78:
The Navy has awarded a contract to Northrop Grumman Shipbuilding for the construction of CVN 78, the future USS "Gerald R. Ford". It's valued at $5,114,500,788, with completion due by September 2015. Read the DefenseLink announcement here.
Note that the form of this contract is described as simultaneously CPFF, CPIF and CPAF. I asked the Navy to explain this to me - i.e., which CLINs have which form of contract - but they refused: would someone who's involved please explain? Note also that, although this is the formal contract award, Newport News has already received contract awards totaling $2.8 billion for this program, as shown below, so the grand total to date is pretty close to $8 billion. (You can't really add these figures up, because the contract types differ, the scopes overlap and some funds may not need to be expended, but it gives you a general idea of how much this ship is costing.) Note also that the ship has actually been in production in the yard since 2005. Note also the contract prices of the ten "Nimitz"-class CVNs. September 11, 2008, expanded September 12.| Date | Amount ($million) |
| 9-Jul-03 | 108 |
| 30-Oct-03 | 22 |
| 21-May-04 | 182 |
| 29-Oct-04 | 492 |
| 1-Apr-05 | 51 |
| 7-Jun-05 | 9 |
| 15-Nov-05 | 559 |
| 30-Nov-06 | 754 |
| 11-Jan-08 | 595 |
| Sub-Total | 2,772 |
| 10-Sep-08 | 5,114 |
| Total | 7,886 |
| Pennant | Name | Price ($mm) | Delivered |
| 68 | Nimitz | 450 | 11-Apr-75 |
| 69 | Dwight D. Eisenhower | 550 | 12-Sep-77 |
| 70 | Carl Vinson | 750 | 26-Feb-82 |
| 71 | Theodore Roosevelt | 1,200 | 17-Oct-86 |
| 72 | Abraham Lincoln | 1,550 | 30-Oct-89 |
| 73 | George Washington | 1,550 | 8-Jun-92 |
| 74 | John C. Stennis | 1,850 | 9-Nov-95 |
| 75 | Harry S. Truman | 1,850 | 30-Jun-98 |
| 76 | Ronald Reagan | 2,500 | 30-Jun-03 |
| 77 | George H. W. Bush | 3,800 | Dec-08 |
TRAVELERS WINS FRIEDE CASE:
Ernst & Young has lost its appeal against the award of about $15 million to Travelers Insurance in one of the loose ends from the Friede Goldman Halter bankruptcy, this one relating to performance bonds. Read the decision here. Shipyard managers take note. September 10, 2008.
SEAN CONNAUGHTON TO THE FMC:
The President will nominate the Maritime Administrator to be Chairman of the FMC, a job that will keep him occupied through mid-2012. I thought that he was going after a House seat in suburban Virginia, but I guess not any more. Read the White House statement here. September 10, 2008.
SHIPPING STOCKS IN FREE FALL:
On a day on which the market as a whole took a dive, energy, offshore and shipping stocks led the way, with dry bulk among the biggest losers. So what do the Wall Street wizards know that the rest of us don't? September 9, 2008.
OBAMA SUPPORTS THE U.S. MARITIME INDUSTRY:
Read his endorsement here. This statement was probably drafted for him by the SIU, but it nevertheless says all the right things. What's McCain's maritime policy? He's been pretty negative in the past, but may have changed his mind for the purposes of this election. Personally, I think that the Jones Act is God's will, but I may be wrong. September 9, 2008.
BIDDING FOR DAEWOO OPENED TO OUTSIDERS:
Tradewinds reports that the Korean Government's Financial Services Corporation has done a U-turn and opened the bidding for the state's 50.4% of Daewoo Shipbuilding & Marine Engineering, (DSME), to non-Koreans. What an amazing opportunity for a U.S. corporation! Who will step up? Nah, it will never happen. September 8, 2008.
OFFSHORE OUTLOOK GENERALLY POSITIVE:
Several offshore service and exploration companies made presentations at the Lehman Brothers CEO Energy/Power Conference last week. Not all of them bother to put their presentations on their web sites - goodness, they wouldn't want their stockholders to know what they're telling Wall Street, would they? But most do: click on the name to see the presentation: Tidewater
- Gulfmark - Halliburton - Rowan - ENSCO - Noble - Hornbeck - Dresser-Rand. September 7, 2008.AKER YARDS ASA IS NOW STX EUROPE:
The takeover of Aker Yards ASA by the #4 Korean shipbuilder, STX Shipbuilding, is now complete, the name has been changed to STX Europe and the company's executive management now includes two senior and very experienced guys from STX. This is not technically U.S. news except for the need to point out, once again, that Aker Philadelphia Shipyard is not part of Aker Yards ASA and will continue to go its own way. The Aker in Aker Philly is Aker ASA, which is all the other Aker activities besides the European shipyards. Aker Yards Marine, the very fine Vancouver-based firm of naval architects, is part of Aker Yards ASA, however, and will probably undergo yet another name change, something they should be used to by now. September 4, 2008.
PHILLY KEEPS THEM COMING:
The fifth product carrier for OSG, "Overseas Texas City", has completed its sea trials with a "clean sweep" and will be delivered later this month.. September 3, 2008.
THREE ALASKA GAS PIPELINE PROPOSALS:
There's been a lot of talk recently about an Alaska gas pipeline but there are, in fact, three Alaskan gas pipeline projects. The FERC just gave the Congress a summary report, which you can read here. Note that the Denali Pipeline is the one being pushed by BP and ConocoPhillips, who just happen to control most of the gas; the TC Alaska Pipeline - not my pipeline, of course, in this case TC stands for Trans-Canada - is the one being pushed by Governor Palin as "God's will"; and the AGPA Pipeline is the one that would parallel the TAP line and would result in all the gas being exported, since the concept of Jones Act LNG carriers is totally risible. September 2, 2008.
LIBERTY MAKES AN OFFER FOR ISH:
The wire services report that Liberty Shipping has made an offer to buy International Shipholding for $25.75 a share, about 27% above Friday's closing price of $20.25: this would value the company at about $300 million. ISH's share price promptly jumped to over $24. Would this merger make sense? Sure. The two companies have little in common except that both are US-flag and both are kind of stuck in highly specialized niche markets. Combination represents diversification plus economies of scale for both. September 2, 2008.
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