Maritime Memos                                                                                        May 2010


IN CASE YOU'RE INTERESTED

If, like me, you watched some of those WWII movies on the weekend, possibly for the 57th time, you may like to know that the part of the USS Sea Tiger in "Operation Petticoat" was played by three different submarines - the USS Queenfish, (SS 393), the USS Archerfish (SS 311), and the USS Balao (SS 285): in a startling coincidence, all three were built by Portsmouth NSY and all three ended up being sunk as targets in the 1960s.  And the part of the USS Reluctant in "Mister Roberts" was played by the USS Hewell, (AKL 14), which had started life as an Army boat, the FS 391: she was built in L.A. in 1944, by United Concrete Pipe, and ended up being scrapped in 1973.  Trivia galore on this web site.  May 31, 2010.

JUST WAIT TILL THE RIGS START LEAVING

If the Louisiana politicians are unhappy now about all those unemployed fishermen, how will they feel when the rigs start leaving the Gulf?  That's what will happen next, thanks to this loony moratorium idea.  Read RigZone's excellent analysis hereMay 31, 2010.

CAN NOBODY TALK SENSE ANY MORE?

Although I'm instinctively a liberal, I suddenly find myself agreeing with Rand Paul.  How crazy is that?  But my real irritation is with all these ignorant, self-important, incoherent politicians and media pundits.  Here are some grumpy observations about the Macondo oil spill:

(1) Something happened on the night of April 20 that resulted in the loss of the Deepwater Horizon, including eleven lives, and in a serious oil spill.

(2) We don't know what happened, or why, and we won't know for quite some time.

(3) Endless and largely redundant congressional hearings cannot be expected to reveal the truth: all they do is provide members of the Congress with more opportunities to grandstand.

(4) No agency of the federal government has either the knowledge or the resources to solve this problem.  Don't talk to me about the Army Engineers: it wasn't Katrina that destroyed the 9th Ward, it was the Army Engineers.

(5) The only people who can fix this problem are people who are in the business, i.e., BP, Transocean and their contractors.

(6) The only fix that has a high probability of success is the drilling of a relief well: this is now well along but will take several more weeks.

(7) BP has been very straightforward in acknowledging its responsibility.  Its use of the term "legitimate claims" is entirely reasonable.  Obviously it should not have to honor illegitimate claims.  They have made it clear that the question of legitimacy will be decided by third parties.

(8) Complaints about "finger-pointing" are off the mark.  Until we know what happened and who or what was responsible, the parties involved must, obviously, reserve their rights.

(9) Comparisons with the Exxon Valdez accident are irrelevant and inappropriate.  In that case, there was only one corporate entity involved and the facts were clear from the outset.

(10) Negative comments on BP's concern for safety are border-line slanderous.  Anyone in the maritime industry who has worked with "big oil" or with any of the big offshore contractors, of which Transocean is the biggest, is familiar with the extraordinary emphasis that they place on safety, an emphasis which makes our customers in other market sectors look positively irresponsible.

Grump, grump, let's see if we can plug that well with Chris Matthews.  May 30, 2010.

BIG SPILLS

The hysterical media and even a lot of folks who should know better are awash in hyperbole over the Macondo oil spill.  Let's be clear.  It is not the biggest oil spill in history.  It's not even the biggest accidental oil spill in history: that was the Ixtoc I oil spill off Ciudad del Carmen in 1979, which took over nine months to cap and dumped over three million barrels of crude oil on U.S. beaches.  The biggest oil spill of all was deliberate: in 1991, during the Gulf War, the Iraqi Army opened the valves at the Sea Island crude oil loading terminal and simultaneously discharged several loaded VLCCs into the Arabian Gulf.  The total amount involved was estimated to be 11 million barrels.  May 29, 2010.

INTERESTING STATISTICS

Yes, the oil spill is a disaster for Louisiana fishermen.  But all those whinging politicians down there are beginning to tick me off, even more than usual.  According to federal statistics, there are about 6,000 commercial fishermen in Louisiana.  By contrast, there are about 45,000 people employed in the offshore oil and gas industry in Louisiana, and that doesn't include all those folks working in shipyards and other shoreside operations involved in the offshore biz.  If the politicians had to choose between the two industries, they would not hesitate to turn their backs on the fishermen.  That's entirely hypothetical, of course, but the numbers are interesting, are they not?  May 28, 2010.

ENSCO GOES AFTER SCORPION

Ensco, our fourth largest offshore drilling contractor, has made an offer of NOK 39.50 a share for Scorpion Offshore, topping Seadrill's offer of NOK 36.00.   Read ENSCO's release here.  Scorpion has five Super 116s, all built by Keppel AMFELS in Brownsville TX.  Seems to me that Scorpion would be much better situated as part of ENSCO than in John Fredriksen's engulf-and-devour empire.  May 26, 2010.  Ensco subsequently changed its mind.  May 31, 2010.

CBO BLOWS WHISTLE ON NAVY'S SHIPBUILDING PLAN

A new report from the Congressional Budget Office says that the Navy's latest 30-year plan doesn't provide enough replacement ships to meet the stated goals while the budget doesn't provide enough money to build even the insufficient number of ships specified.  Read the report here.  Somebody in the Navy really needs to get a grip, don't you think?  The Secretary, maybe?  May 26, 2010.

SWIFTSHIPS DELIVERS FIRST IRAQI SWIFTBOAT

Our leading builder of fast patrol boats, Swiftships, has delivered the first of the fifteen 35-meter, 35-knot, $20-million, patrol boats that it is building for Iraq.  Read their announcement hereMay 25, 2010.

MILESTONE FOR AUSTAL

Austal USA has been recognized as the largest manufacturing employer in the Mobile area.  Read their announcement here.  That's not bad for an aluminum boatbuilder who's only been in operation ten years.  May 24, 2010.

HASC NIXES JAX'S CVN

The HASC Sea Power Subcommittee is only one of the players in the defense budgeting game but yesterday it dumped the Navy's plan to base a CVN in Mayport FL.  Read the report in Defense News here.  Not good news for BAE as it buys Atlantic's Mayport operation.  May 21, 2010.

CARRIER COSTS THROUGH THE ROOF

Respected CRS analyst Ron O'Rourke tells DefenseTech that "the estimated costs for CVNs 78, 79 and 80 in the proposed 2011 budget are 10.3%, 13.3% and 26.7% higher than the same estimates in the 2009 budget."  Read the article and the accompanying comments here.  Face it, it's going to be a smaller and/or older Navy, guys.  May 20. 2010.

RIVERHAWK IN THE SCRAPPING BUSINESS?

The Riverhawk yard in Tampa appears to be having a go at ship scrapping.  Here in Florida, where we worry so much about our beautiful coastline?  Wow!  May 20, 2010.

VTHM HIT WITH BIG FINE BY OSHA

VT Halter Marine has been fined $1.3 million by OSHA for the explosion and fire last year that killed two workers and injured two more.  Read OSHA's announcement hereMay 20, 2010.

FERRY TO NOWHERE NOT GOING ANYWHERE

Read the story in the Anchorage Daily News here.  What a great way to spend our taxes.  Could you possibly imagine a more ridiculous vessel?  Hey, Secretary Mabus, how about firing someone at ONR?  May 19, 2010.  Actually, that wasn't a fair comment and I withdraw it.  ONR gets these projects rammed down its throat by the Congress, in the form of earmarks.  There are a bunch of loony boats like this one rotting at piers in Norfolk and San Diego.  May 20, 2010.

IS BAE PAYING TOO MUCH FOR AMH?

The announced price of $352 million for AMH's Florida and Alabama operations suggests that they have a net cash flow of at least $60 million and gross revenues of at least $300 million.  I don't think so.  Plus, the big-ship repair business is not going to grow.  Plus, the Mobile yard needs some CapEx.  Oh well, it's not my money, but it sure makes Signal's acquisition of Bender look like a good deal.  On the other hand, BAE was right not to buy the Boston and Philadelphia operations - I never understood why AMH bought them in the first place - because Boston and Philly are not and never again will be centers of ship repair activity and labor in those cities is expensive.  The good news for AMH's employees is that BAE is a strategic investor and can be expected to do what is needed to make these yards successful: AMH was a financial investor, never in it for the long haul and always on the lookout for a buyer. May 19, 2010.

BAE BUYS ATLANTIC

We have heard so many rumors about BAE buying Atlantic that they became a joke.  But it's true.  BAE Systems has bought Atlantic Marine Holdings for $352 million.  Read the announcement on BAE's web site here.  And here is the memo that Atlantic sent to its employees this morning.  Note that the sale does not include the Boston and Philadelphia operations.  May 18, 2010.

PHILLY DELIVERS PC #9

Aker Philadelphia has delivered the Overseas Martinez, the ninth of the twelve product carriers it is building for American Shipping and OSG.  Read the announcement here.  Like NASSCO, they need a new contract really soon.  May 18, 2010.

LCS 2 IN DRY DOCK TOO

Hardly had I got through making snide remarks about LCS 1 having to go into dry dock already than LCS 2 goes into dry dock too.  Here she is in BAE Norfolk's big dock at the beginning of her IPDA.  May 17, 2010.

CLEANING UP THE OIL SPILL

Check out the Cajun (i.e. common-sense, low-cost) approach hereMay 15, 2010.

HERE'S AN IDEA

Whenever I hear U.S. Rep. Gene Taylor, Chairman of the Sea Power Subcommittee, going on about our need for more surface combatants and amphibious-warfare ships, as he has been doing this week, I wonder if he would be quite so outspoken if he did not have NGSB Pascagoula in his district.  Why is it not a conflict of interest for a member of the Congress to be in a position to influence decisions of national significance when he has such an obvious personal interest in those decisions?  They all do it, of course, that's one of the reasons congressmen are held in such low regard.  So, how about assigning members from agricultural states, say, to the Armed Services Committee and members from defense-heavy states to the Agriculture Committee?  No? Just a thought.  May 14, 2010.

RYERSON BUYS BENDER'S PREFAB SHOP

As expected, Ryerson Corp. bought Bender Shipbuilding's state-of-the-art steel prefabrication shop at today's auction, paying $3.6 million, $2.7 million of which goes to pay off the debt on it.  May 14, 2010.

NASSCO TO LAY OFF 1,150

GD's NASSCO shipyard, the most productive of the "Big Six", is laying off a quarter of its work force.  Read the story in the Times-Union hereMay 13, 2010.

FOSS BEING INNOVATIVE AGAIN

Marine Log reports that Foss Maritime and Cruz Marine have teamed up to build an innovative shallow-draft, harsh-environment tug for service in the Arctic.  Read the story here.  The Dana Cruz was designed by A. G. McIlwain and is being built by Fred Wahl, in Reedsport OR.  See pictures hereMay 13, 2010.

ANOTHER SEMI DOWN

Rigzone reports that the Indian semi Aban Pearl capsized and sank off Venezuela last night.  No news of what happened.  May 13, 2010.

OSG SHUTTLE TANKER TO GO TO WORK FOR BP

The first US-flag shuttle tanker, Overseas Cascade, which has been sitting idle since it was delivered by Detyens, waiting for its Singapore-built FPSO to be ready, has been chartered to BP for service taking off crude from the Macondo well.  May 12, 2010.

SIGNAL TO BUILD POWER BARGES

Signal International has secured a $30 million contract for its Orange shipyard to build two power barges for service in Venezuela.  The client is Waller Marine - old hands at power barges.  Read the announcement hereMay 11, 2010. 

UNDERWRITERS PAY UP ON DEEPWATER HORIZON

Tradewinds reports that the underwriters have already paid up on the loss of the Deepwater Horizon.  Transocean had it insured for $560 million, which was covered by 27 separate underwriters.  May 7, 2010.

KEYSTONE GETS A BARGAIN

AHL's product carrier Anasazi was bought at yesterday's auction by Keystone Shipping, for only $1.2 million, considerably less than her scrap value.  It may not be completely coincidental that their one remaining product carrier, Delaware Trader, OPAs out in 2012.  A long-time family-owned participant in the U.S. market, Keystone is a 37.5% partner in Alaska Tanker Company, which operates BP's four Alaskan-trade ships, manages eight US-flag lakers for Canadian National, seven RRF ro-ros for MARAD, and several other vessels.  May 7, 2010.

MABUS FOLLOWS GATES' LEAD

Following Secretary Gates' strong words on Monday, Secretary Mabus addressed the Navy League yesterday and delivered more on the general theme of getting the Navy's procurement act together.  Read the story in Defense News here.  Maybe these two guys can actually push through some change.  May 6, 2010.

FERRY-TO-NOWHERE IS ONE TERMINAL SHORT OF A SERVICE

Compounding the lunacy that is the Navy-funded $70-million ferry Susitna is the revelation in the Alaska Journal of Commerce that this floating boondoggle does not yet have a terminal at the Anchorage end of its route.  Read the article here.  Brilliant!  May 5, 2010.

AMFELS DELIVERS JACK-UP

One of the only two remaining U.S. builders of offshore drilling rigs, Keppel AmFELS, in Brownsville TX, delivered the first of a new design of jack-up, the Rowan EXL 1, on Saturday.  Read Keppel's press release here.  The design is an enhanced version of LeTourneau's very successful Super 116E, and is designed to drill to 35,000 feet in water depths up to 350 feet.  May 5, 2010.

LCS 1 IN DRY DOCK

Defense News reports that LCS 1 is going into NASSCO's dry dock this weekend for repairs to one of its Rolls Royce waterjets.  Already?  Read the story hereMay 5, 2010.

AHL PRODUCT CARRIER TO BE AUCTIONED THURSDAY

MARAD may have repossessed the other three AHL ships but Bunkers International got the Anasazi arrested and she is to be auctioned at 10 a.m. on Thursday, at the U.S. Courthouse in Jacksonville.  Read the announcement hereMay 4, 2010.

GATES TALKS SENSE TO NAVY LEAGUE

The Secretary of Defense really laid it out today for the armadas of wishful thinkers in the Navy and its cheerleading group, the Navy League.  Read his speech here.   It's worth reading, especially towards the end.  Practically everything comes in for criticism.  He makes it clear that the budget for buying ships is not going to grow and that the ships the Navy is buying now are too complex, too expensive and too many. 

Two key quotes:

"... we have to take a hard look at where it would be necessary or sensible to launch another major amphibious landing again especially as advances in anti-ship systems keep pushing the potential launch point further from shore.  On a more basic level, in the 21st century, what kind of amphibious capability do we really need to deal with the most likely scenarios, and then how much?"

"At the end of the day, we have to ask whether the nation can really afford a Navy that relies on $3 to 6 billion destroyers, $7 billion submarines, and $11 billion carriers."

May 3, 2010.

SKIPPERLINER CLOSES

Skipperliner Industries, of LaCrosse WI, has closed.  Read the story in the LaCrosse Tribune here.  Skipperliner was established in 1971 and specialized in 149-passenger tour boats such as you see in practically every waterfront community.  May 3, 2010.

NGSB SAFETY VIDEO

Click here.  Terrific stuff.  May 1, 2010.

DRILLING RIGS AND COASTAL TANKERS

It's curious to hear so many self-appointed experts comparing the Deepwater Horizon accident to the Exxon Valdez accident: it's understandable, because both involved crude oil and big oil companies (boo, hiss), but they are really not related - offshore drilling and tanker shipping are very different industries.  At the same time, down here in Florida, our politicians rail against the dangers of offshore drilling but blithely accept the risks associated with coastal tanker transportation.  Here are two facts for your amazement.  First, there is not a single refinery anywhere in Florida: as a result, no crude oil has to be brought in but all our petroleum products do, and Florida is the fourth most populous state (and closing in on #3).  In 2008, according to the latest Corps of Engineers data, this involved 42 million short tons of petroleum products being delivered to ten different Florida ports in about 3,700 calls by product carriers or tank barges.  No risk of an accident there, right?  The reality is that both the offshore oil industry and the coastal shipping industry have truly remarkable safety records, but it only takes one isolated incident to create a disaster and destroy that reputation.  May 1, 2010.


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