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TUGS & BARGES The Patriot is the newest harbor tug to join Marine Towing’s fleet in the Port of Tampa CRUDE OIL REENERGIZES DEMAND FOR TANK BARGES By John R. Snyder, Publisher & Editor-in-Chief T otal crude oil production in the U.S. averaged more than 8.3 million barrels per day in April—the highest monthly average in 26 years. The U.S. Energy Information Agency, which keeps close tabs on the energy picture, says crude oil production will continue to grow this year—to 8.5 million bbl/day and next year to 9.2 million bbl/ day. That’s a level of production that hasn’t occurred in the U.S. since 1972—when Nixon was in the White House, bell-bottoms were all the rage, and the ground had just been broken for Hyundai Heavy Industries’ shipyard in Ulsan, Korea. This sharp increase in crude oil production has sketched a much different U.S. energy picture than back in 2011, when U.S. crude oil production averaged 5.7 million bbl/day, according to the EIA. The prospects of building any additional Jones Act product tankers or Articulated Tug Barge (ATB) units seemed like a pipe dream. But the recent rise in crude oil production has done just that— creating a strong demand for new product and crude oil carriers and tank barges for the coastal and inland markets. Back in March, shipbroker Marcon International, Inc., Coupeville, WA, called the market for double-hull tank barges “red hot.” Marcon pointed out that owners and operators were “realizing their highest utilization rates, and are earning levels not seen in anyone’s memory. Newbuilding continues for inland, coastal and ocean D/H tonnage to meet this continuing, and growing demand, which is a direct result of the incredible boost in the production of oil from tight resources in the U.S. shale plays which have become extremely active in their production levels over the past five years.” This has led to recent orders for new ATB units from Harley Marine Services, Seabulk Tankers, Kirby Offshore and Moran Towing. Harley Marine Services, Seattle, WA, is building two 83,000 coastal 42 MARINE LOG June 2014 tank barges, while Moran has opted for two 150,000 bbl tank barges, one 115,000 bbl tank barge, one 6,000 hp tug and a second 5,300 hp tug—all from Fincantieri’s Bay Shipbuilding facility in Sturgeon Bay, WI. Back in February, Seabulk Tankers signed a contract with Donjon Shipbuilding & Repair, Erie, PA, to build an 185,000 bbl coastal petroleum and chemical tank barge. The barge will become the barge component of an ATB Unit. Donjon expects to deliver the barge in the first half of 2016. The order for Donjon follows the delivery of a 225 ft x 42 ft hopper barge to Sterling Equipment, Quincy, MA, last September. Kirby, meanwhile, has committed to building two ATBs. The 185,000 bbl tank barges are being constructed in Portland, OR, by Gunderson Marine. One of the 10,000 hp tugs has been contracted to be built by Nichols Brothers Boat Builders in Whidbey Island, WA. A contract for the second tug is said to be close to signing. Back in late April, recently elected Kirby President and CEO David Grzebinski said, “consistently strong coastal tank barge demand, utilization and increasing pricing” led to the company exercising its option for the construction of a second 185,000 barrel ATB unit at $75 million, with expected delivery in the first half of 2016. And Kirby is not done. The company’s board of directors approved the construction of two more ATBs, bringing the total to four. Market fundamentals both in the inland and coastal tank market, say investment bankers Cowen & Company, make shares of publicly traded Kirby Inc. a good buy. Cowen & Company notes in its latest analysis of Kirby that “high single digit price increases for contract renewals in the coastal fleet, and spot prices higher than one year rates. Contract renewals for the inland fleet are increasing by low to mid single digits.”

June 2014 Marine Log

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