September 2015 Marine Log

Ferries To Cuba: Turning Opportunity Into Reality

arine oG M L Reporting on Marine Business & Technology since 1878

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SEPTEMBER 2015

GREAT MAKEOVER Capital flows into Great Lakes-Saint Lawrence LNG: Time to move forward with infrastructure Coast Guard seizes $1 billion worth of coke Changes to CCF could make it more flexible

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contents

September 2015 Vol. 120, NO.9

6 departments 2 Editorial Opportunity set to dock in Cuba

6 Update

28

The expansion of the Panama Canal will alter global shipping patterns, improve transit time and increase the flow of commodities

features 15 LNG

23 Great lakes

Uncertain Future for Marine LNG

Great Lakes Seaway System: A Vital Economic Driver

By 2018, more than 150 vessels worldwide will be burning LNG as fuel—not a large number when you consider the size of the global fleet.

John E. Graykowki explores the reluctance to fully embrace LNG as a marine fuel, and what the industry (and regulatory bodies) can do to accelerate the move towards LNG

17 Ferries

The Way to Cuba

The OFAC has issued a guidance for vessel transportation to and from Cuba raising a number of questions for operators hoping to start up operations—Will ferry service be possible between the U.S. and the island? What impact will it have on the ferry (and even cruise) industry?

Plus: Washington’s “New Course” on Cuba Generates Excitement from Ferry Operators

To ensure and maintain efficient shipping systems are in place in the Great Lakes region, $7 billion is being spent on new ships, terminals, ports, and infrastructure improvements

•U lstein launches first OCV for Island Ventures II LLC • Settlements reached with MOL in class action antitrust suit •U SCG makes history with drug busts worth $1 billion astern to build four inland •E towboats for Latin America •C hallenge to Jones Act on interstate trade impairment fails • The impact of the Tianjin port explosion

14 Washington President pushes for speedier icebreaker acquisition

28 panama canal

35 Newsmakers

Doubling Capacity

U.S. Coast Guard names VADM Charles Michel its new Vice Commandant

An inside look at the Panama Canal’s Expansion—the expansion will enable the canal to handle 98% of the world’s containership fleet

32 Opinion

Making Financing More Flexible

Clayton Cook discusses how removing a provision from the Capital Construction Fund would make the program more flexible for Offshore Support Vessel construction

36 Tech News MAN power for world’s largest cutter-suction dredger

37 Contracts Kvichak wins contract for NYPD patrol vessel

40 Marine salvage ASA welcomes membership beyond North America September 2015 MARINE LOG 1

editorial

Opportunity set to dock in Cuba As a child, I can clearly remember the TV images of rickety boats crammed with people fleeing from Cuba. What amazed me was the ingenious way these boats were cobbled together from various scraps of wood, barrels, car parts, tires, and plastic. They tended to be more debris than boat. How could anyone trust their lives on the open ocean for 90 miles in these floating scrap heaps?

That desperation to escape Cuba (and Syria, where thousands try to flee to the safety of European shores) still exists today.

About 25,000 Cubans arrived without travel visas in the U.S. by land or sea during the last fiscal year. The day before President Obama announced the policy shift towards Cuba last year, the Cuban Coast Guard reportedly sunk a boat full of Cuban refugees headed for Florida.

But relief is on the way. Recent decisions by the Office of Foreign Assets Control (OFAC) of the Treasury Department does

open the door to regular air and sea travel to Cuba from the U.S., albeit with a number of restrictions still in place. As maritime attorneys Michael O’Neill, Darrell Conner, and Sarah Mosen Beason of K&L Gates write this month in “The way to Cuba,” the U.S. ban on tourism travel to Cuba is still in place, but there is momentum in Congress to lift the ban.

There is an opportunity, however, for operators to provide licensed ferry services for specific types of travel. Thus far, seven operators have received licenses, including Carnival Cruise Lines’ new “responsible travel” brand, Fathom.

Of course, before any of the ferry operators land in Cuba, they’ll need authorization from the Cuban authorities. If you’re interested in opportunities in Cuba, now is “the time to actively plan and strategically position” for your company’s future.

This month, we also take a look at the

John R. Snyder, Publisher & Editor jsnyder@sbpub.com

Great Lakes-Saint Lawrence Seaway System, which provides direct access into North America’s “bread basket” and is responsible for facilitating about $35 billion in trade annually. The biggest issues the bi-national waterway system faces are rooted in regulations and policy.

As Stephen Brooks, President of the Marine Chamber of Commerce, points out, the biggest issues faced are the lack of icebreaking capability available from the U.S. and Canadian Coast Guards to keep ships moving and the vexing issue of ballast water management.

And in “Doubling Capacity,” Panama Canal Administrator Jorge L. Quijano provides an update on the Panama Canal Expansion, which appears ready for its grand opening in April of next year. When complete, the wider locks will be able to handle about 98 percent of the world’s containership traffic.

Maritime Trivia Trivia Question #29: W ho was known as the “Heroine of Cape Horn?”

The first sailor or lubber who correctly answers the Maritime Trivia question will receive a color J. Clary collector print. Email your guess to marineart@jclary.com

August’s trivia question: Why did homeward bound homesick sailors dangle a line overboard?

It was a symbolic offering for wives and sweethearts to “pull the ship home.”

ur Drydock yo ship here!

Customer before company Employee before owner Family before self Safety above all

detyens.com 2 MARINE LOG September 2015

MarineLoG SEPt 2015 Vol. 120, NO. 9 ISSN 08970491 USPS 576-910 PRESIDENT Arthur J. McGinnis, Jr. amcginnis@sbpub.com

INTERNATIONAL SALES DIRECTOR Louise Cooper lcooper@sbpub.com

PUBLISHER & Editor-in-chief John R. Snyder jsnyder@sbpub.com

NATIONAL SALES DIRECTOR Jeff Sutley jsutley@sbpub.com

Managing Editor Shirley Del Valle sdelvalle@sbpub.com

REGIONAL SALES Manager Ian Littauer ilittauer@sbpub.com

CONTRIBUTING EDITOR William B. Ebersold wbeber@comcast.net

SALES REPRESENTATIVE KOREA & CHINA Young-Seoh Chinn jesmedia@unitel.co.kr

CONTRIBUTING EDITOR Paul Bartlett pbmc@gotadsl.co.uk WEB EDITOR Nicholas Blenkey nblenkey@sbpub.com Creative Director Wendy Williams wwilliams@sbpub.com art Director Sarah Vogwill svogwill@sbpub.com Marketing Director Erica Hayes ehayes@sbpub.com

CLASSIFIED SALES Jeanine Acquart jacquart@sbpub.com Conference Director Michelle M. Zolkos mzolkos@sbpub.com COLUMNISTS/contributors John E. Graykowski, Maritime Industry Consultants Michael J. O’Neil, Darrell L. Conner and Sarah Moser Beason, K&L Gates LLP Jorge L. Quijano, Panama Canal Authority H. Clayton Cook, Cook Maritime Finance Paul Hankins, ASA

Production Director Mary Conyers mconyers@sbpub.com

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Danish Maritime Technology Conference 7-8 October 2015, Copenhagen Join in-depth sessions with the top-tier of the maritime industry.

Discuss core challenges and see new solutions and technologies!

You will meet

• MAN Diesel & Turbo • Alfa Laval • Hempel • VIKING Life-Saving Equipment • Wärtsilä Danmark • FORCE Technology • Søby Yard • University of Southern Denmark • Emerson Process Management Marine Tank Management – Damcos • Inrotech • Maersk Maritime Technology and more

Wednesday 7 October 2015

Thursday 8 October 2015

• How to Improve Energy Efficiency and Reduce Emissions • Energy Efficiency in Utilizing NEW Generation of Waste Heat Recovery Systems • The Why and How Hull Coating Can Improve Your Bottom Line • Taking the Lead in Global Emission Control • Operate with Greater Precision – Fuel Efficiency • Intelligent and Mobile Welding Technology for Shipbuilding • The Regulatory Minefield - Compliance and Enforcement

• Process Optimisation • Ship Owners Agreements - Servitization Optimized • Creating the LNG Infrastructure • Saatsea - Your Efficient STWC Solution • The World’s Largest Battery Driven Ferry • Robotisation in a Smart and Competitive Way • Nadiro - a New Level of Lifeboat Safety

Maritime Growth Areas - Meeting the Infrastructure Needs of the Future

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It is free of charge due to support from The Danish Maritime Fund and is held at Danish Maritime Fair as part of Danish Maritime Days.

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UPDATE The 160m Island Venture is the largest offshore vessel yet built by Ulstein

Unveiling a Giant Ulstein launches first OCV for Island Ventures II LLC The first of two giant SX165 design offshore construction vessels ordered by Edison Chouest Offshore and Island Offshore through Island Ventures II LLC has been launched at Norway’s Ulstein Verft.

Measuring about 160 m long, with a beam of 30 m, the Island Venture (Yard No. 302) is the shipbuilder’s largest offshore vessel thus far.

Last November, the vessel received a redesign during the engineering phase that increased both its length and beam, and resulted in a larger deck area and greater tank capacity. It has a deadweight of 14,000 tonnes. The vessel was originally designed to be 145.7 m x 28 m.

The change didn’t wreak too much havoc, however, since Ulstein was up to the task of making large changes.

“Ulstein Verft has a unique position by the in-house multidisciplinary know-how of ship designs and a large technical department. This gives our customers added value in which it enables us to take on such major

change orders,” says Ulstein Verft Project Manager, Per Svein Brekke.

While the vessel is jointly owned by Norway’s Island Offshore and U.S.-based Edison Chouest Offshore, it will be managed by Chouest and carry the Edison Chouest colors and logo.

The second vessel in the series will be built in the U.S. at Edison Chouest’s LaShip shipyard, Houma, LA. The vessel’s modular design enables for large sections of the ship to be built at a separate facility and then be put together at the Ulsteinvik Shipyard. For instance, the vessel’s steel volume is about 8,800 tonnes—of that, Ulstein Verft’s department in Vanylven produced 1,520 tonnes.

At the time of the redesign, Ulstein said the shipbuilders were “getting to practice big scale Lego construction in the dock hall.”

The SX165 design was developed by Ulstein Design & Solutions. Delivery is expected during the fourth quarter of 2015.

biz notes Engineering giant and Ezra combine forces Singapore’s Ezra Holdings has inked a binding MOU that will see Japanese engineering giant Chiyoda Corporation invest in Ezra’s Subsea Services business, Emas AMC, to form Emas Chiyoda Subsea—a 50:50 joint venture. The partnership is expected to create an opportunity for Emas AMC to expand its subsea-to-surface offerings and provide more value to clients and partners. For Chiyoda, the deal means a rapid expansion of its Offshore & Upstream business.

“With the establishment of Emas Chiyoda Subsea, we are in a position to provide comprehensive services to our clients, from early phase concept study to EPCI, throughout the lifecycle of any offshore oil and gas project,” says Chiyoda President and CEO Shogo Shibuya.

“This JV,” adds Lionel Lee, Group CEO and Managing Director of Ezra, “will allow us to realize our vision of being a trusted partner and leader in the subsea construction business. It will enable us to undertake large complex EPCI projects, as well as full field developments, which combine onshore and offshore facilities.”

Ezra says the transaction implies a total value for the JV of about $1.5 billion. Part of the deal will require Chiyoda to pay Ezra a cash consideration of $150 million and subscribe to new shares in Emas Chiyoda Subsea for a cash consideration of $30 million for 50% ownership in Emas Chiyoda Subsea.

Settlements reached with MOL in class action antitrust suit Dallas and New Orleans-based trial law firm Burns Charest LLP reports that a settlement has been reached with Japan’s Mitsui O.S.K. Lines, Ltd. (MOL) in a major class-action antitrust lawsuit filed by individual consumers and auto, truck and equipment dealerships against more than a dozen international companies accused of artificially driving up shipping costs.

This is the second significant settlement in the Vehicle Carrier Services Antitrust Litigation following an agreement reached in July with Kawasaki Kisen Kaisha, (K-Line). Following the K-Line settlement, Dallas attorney, Warren T. Burns of Burns Charest LLP, interim co-lead counsel for the end-payor plaintiffs, says, “This is a very significant and 6 MARINE LOG September 2015

substantial first step to assure that American consumers are compensated for the conspiracy to fix the price of international car-shipping services.” The lawsuit notes that the market for transporting new vehicles for sale in the U.S. is almost $1 billion annually.

While the financial terms of both settlements remain confidential, they are expected to become public in documents seeking court approval.

Regarding the most recent settlement with MOL, Burns says, “This is the second major settlement in a month, demonstrating the strength of our clients’ claims. This should send a strong signal to the remaining defendants that it is time to resolve this case.”

Last month, the defendants asked U. S.

District Judge Esther Salas of Newark to dismiss the lawsuit by arguing that the 1984 Shipping Act pre-empts state antitrust laws that protect indirect purchasers against pricefixing. Burns argued on behalf of all indirect purchasers that state antitrust laws complement the Shipping Act, and that Congress did not intend to bar such state claims.

Additional defendants, among others, include NYK Line of Japan and Chileanbased Compania Sud Americana de Vapores (CSAV), both of which previously pled guilty to participating in the conspiracy that is still being investigated by the federal government.

The case is In Re: Vehicle Carrier Services Antitrust Litigation, No. 13-cv-3306 (MDL No. 2471).

Inland • Coastal • Offshore • Deepsea

USCG makes history with drug busts worth $1 billion

Just call them the Drug Busters.

Fiscal year 2015, which runs from October 1 to September 30, has proven to be the most successful year in U.S. counter drug operations in the Eastern Pacific.

The U.S. Coast Guard recently announced that the agency has seized 66,000 pounds of cocaine worth $1.01 billion wholesale in the region—more than FY 2012, 2013 and 2014 combined, and the largest known cocaine offload in Coast Guard history.

This total includes a recent seizure of 21,000 pounds of cocaine by the crew of the 418ft USCGC Stratton from two different semi-submersible vessels.

“This is about more than just trying to keep drugs off U.S. streets,” says Admiral

Zukunft. “The cultivation, trafficking, and distribution of narcotics fuels violence and instability throughout the Western Hemisphere, leaving a path of destruction directly to the door step of the U.S. We must continue to make progress in our effort to combat transnational organized crime networks to ensure safety and security in our hemisphere.”

Transnational organized crime groups are vying for control of illicit trafficking routes and power in numerous Latin countries, resulting in increased violence and instability—and has led to record high homicide rates in Central and South America, as well as the Caribbean.

According to DEA estimates, more than 66,000 pounds of cocaine is equal to about 33 million lines of cocaine or 336 million hits of crack. The drugs were seized in 23 separate interdictions by U.S. Coast Guard cutters and Coast Guard law enforcement teams operating from U.S. Navy vessels in known drug transit zones near Central and South America.

Once the suspect vessel is located, the U.S. Coast Guard Guardsmen lead a team on board to perform search, seizures and arrests.

Eastern to build four inland towboats for Latin America Eastern Shipbuilding Group, Inc., Panama City, FL, has won a contract to build four 134 ft, ABS classed, inland river, triple screw towboats for IWL River, Inc. IWL River is an affiliate of Impala Terminals Colombia— a logistics provider along Colombia’s Magdalena River, a principal waterway in the South American country, and helps transport/export up to two million metric tonnes of dry cargo a year to international markets.

Design and detailed engineering is being provided by CT Marine of Portland, ME. The four towboats, will feature a retractable pilot house, and will provide service in the inland waterways of Latin America for Impala Terminals.

The towboats will be powered by three Caterpillar 3512C, IMO II, 1,280 hp engines generating 1,600 rev/min.

The vessels will be fitted with three Reintjes, WAF665 reduction gears and two Caterpillar C6.6 125 kW, IMO II, 220volt, 3-phase diesel generators.

September 2015 MARINE LOG 7

UPDATE CHALLENGE TO Jones Act on interstate trade impairment fails The Jones Act is always a hot topic but recently the debate over the Cabotage law was rekindled when Puerto Rico announced it would default for the first time in the island’s history. The island became part of the U.S. in 1898, and has been a U.S. commonwealth since 1952.

The Act, established in 1920, was partially blamed (by some) for Puerto Rico’s debt crisis, since the island can only send and accept shipments from U.S.-flag vessels—driving up shipping rates and transport costs.

In fact, when news of Puerto Rico’s default hit the press, so too did a myriad of op-eds urging Puerto Rico’s exemption from the

Jones Act, including a piece in the New York Times, “Free Puerto Rico, America’s Colony”

by Nelson A. Denis. In it, Denis states that between 1970 through 2010, the Jones Act has cost the island $29 billion. “If the Jones Act did not exist, neither would the island’s debt, and tens of thousands of maritime jobs would shift to the island…,” says Denis.

This past July, another island belonging to the U.S., this one a state, saw a challenge to the Jones Act fail in court. According to reports from Charlie Papavizas, Esq., Partner, Winston & Strawn LLP, on the maritime attorney’s blog MaritimeFedWatch, the case was brought by six individuals and

Hawaiian challenge to Jones Act fails

one corporation in Hawaii who had certain shipper interests. The plaintiffs argued that the Jones Act impaired interstate trade and therefore violated the U.S. constitution.

The U.S. District Court in Hawaii ultimately dismissed the case, concluding that the challengers lacked standing. The U.S. Court of Appeals affirmed the decision, and, more importantly, concluded that the constitutional challenge would not have prevailed anyway—the court said that stating that Jones Act is a “restraint of trade” is irrelevant because the Commerce Clause of the U.S. Constitution gave Congress broad authority to impose such a restraint. The appellate court also noted that there was no proof that shipping rates to Hawaii would decline even if the Jones Act were repealed.

The case is similar to one brought in Louisiana in 2012 against a private defendant seeking to enforce Jones Act citizenship requirements. That case was dismissed.

The Jones Act will be a major topic of discussion at our upcoming Marine Log All About Marine Conference and Expo. The two-day conference will cover four tracks: The Jones Act; LNG; The Environment; and Shipyards. www.marinelog.com/events

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8 MARINE LOG September 2015

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The impact of the Tianjin port explosion on the supply chain and vessel traffic were suspected by prosecutors of “approving Ruihai’s bid to build the hazardous chemical warehouse in the port despite knowing the location broke safety regulations.”

The Wall Street Journal reports, that in a notice, released on China’s Supreme People’s Procuratorate’s website, “investigators found that municipal officials with regulatory powers over hazardous-chemical operations ‘hadn’t taken their duties seriously and issued business permits illegally’ and failed to properly supervise Ruihai.”

A series of deadly explosions rocked the port complex in Tianjin, China on August USCG Response: Following the incident, 12, killing 145 people, injuring hundreds, and the U.S. Coast Guard (USCG) and Customs displacing thousands in the area.

Considered the gateway to China’s capital, and Border Protection (CBP) announced that Beijing, Tianjin is the second largest Vehicle they would be monitoring vessel traffic and cargo departing the port complex in TianProcessing Center in China for importing and exporting cars. According to officials, jin due to concerns over U.S. port-bound vessels carrying potentially hazardous ash, the explosion happened in a warehouse debris, and/or residues on either the ship operated by logistics company Rui Hai itself or the cargo it is carrying.

International Logistics Co. Ltd. Reports The USCG Marine Safety Information indicate that the warehouse stored dangerous chemicals, including sodium cyanide, Bulletin said the representatives of impacted vessels (including those carrying cargo sodium nitrate and potassium nitrate. that was in Tianjin) should be prepared to At press time, the BBC was reporting that eleven officials, including Wu Dai, the head demonstrate to the relevant USCG Captain thePage Port (COTP) and the CBP authorities of Tianjin’s Commission, 3370 Clark CTransportation marine ad_Layout 1 4/7/15 12:10ofPM 1

the actions that have been taken to ensure that no hazardous conditions exist onboard their vessels or with their cargo as a result of the explosions.

The COTP has the authority to deny a vessel entry into a U.S. port or direct vessel movement to a safe location should the agency determine the vessel poses an unacceptable risk to the safety of the port or the environment.

Supply Chain Disruption: It is also believed that the explosions could lead to massive supply chain disruptions according to attorneys Holman Fenwick Wilan LLP. Entire supply chains could be affected by the closure of industrial and processing facilities within the port. Major companies such as Motorola, Toyota, Samsung, CocaCola and Bridgestone have facilities near the explosion zones—and 285 of the Fortune Global 500 companies reportedly have an office in Tianjin.

Loss of revenue could be incurred should importers and exporters loose access to the port or if cargo is diverted elsewhere.

For m ore i n f or m a t i on , v i s i t w w w. mar inelog .com

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September 2015 MARINE LOG 9

UPDATE biz notes Tidewater earnings get shaken up Shak y oil market conditions are proving to be challenging for offshore operations. Offshore service vessel owner, New Orleans-based Tidewater Inc., has reported a first quarter net loss for the period ending on June 30, 2015. The loss was valued at $15.1 million, or $0.32 per common share, on revenues of $304.8 million.

Tidewater says, the net loss is the result of “write-offs of unreimbursed and/or potentially unrecoverable costs related to cancelled vessel construction contracts and a vessel construction project that is the subject of an on-going arbitration proceeding.”

Tidewater operates a fleet of over 300 offshore support vessels worldwide.

The down-trodden market, however, isn’t souring Tidewater’s plans for fleet renewal. During FY 2015, the operator added nine new vessels to its fleet and is due to add another 24 vessels over the next two fiscal years.

China takes giant leap in unmanned ship realm Unmanned ships may soon become reality. China’s Maritime Safety Administration’s (MSA) research project on the development of unmanned ships recently won unanimous approval from the Acceptance Expert Group.

Set up in 2012, the Unmanned Multifunctional Maritime Ships Research and Development Project realizes all-day networked sea supervision, intelligent search and rescue, motorized multipoint coverage by shore-vessel based detection, and control platform managing unmanned search and rescue vessels on a low-cost basis—effectively improving efficiency during operations.

The use of the ships will reduce crew costs, improve work conditions, increase safety, and help optimize fleet performance.

10 MARINE LOG September 2015

Inland • Coastal • Offshore • Deepsea

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Cable ferry moves closer to beginning operations BC Ferries’ crews are currently undergoing extensive training and familiarization on the newest member in the operators growing fleet—the 150-passenger, 50-vehicle Baynes Sound Connector.

The 78.5 m cable ferry will operate with one drive cable and two guide cables on the Baynes Sound between Buckley Bay and Denman Island. Built by Seaspan Shipyards, North Vancouver, BC, Canada, the ferry will be one of the longest cable ferries in the world when it enters service later this fall, traveling about 1,900 m (1.9 km) at speeds of up to 8.5 knots.

Before entering service the Baynes Sound Connector will need to receive certification from Transport Canada and classification society Lloyds Register.

BC Ferries expects the use of the cable ferry to lead to savings of over $80 million over its projected 40-year service life—that estimate is based on requiring a smaller crew, lower fuel consumption, lower maintenance costs and more reliable service.

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Six MSC ships to be managed by Crowley Crowley Maritime Corp.’s Global Ship Management Group has been awarded a technical management contract by the U.S. Navy’s Military Sealift Command (MSC) for six MSC Prepositioning Ships (MPS). The ships are positioned around the world to support the Army, Nav y, Ai r Force , Ma r i n e Co r p s , a n d Defense Logistics Agency.

Under the contract, Crowley will provide full turnkey operation services and management of the fleet—this includes crewing, as well as scheduled and unscheduled repair and drydocking—to five of MSC’s 14 Bobo Class Ships and the USNS Gunnery Sgt. Fred W. Stockham. The purpose of the MPS is to preposition U.S. Marine Corps vehicles, equipment, and ammunition, with the ships in each squadron providing supplies to support about 17,000 personnel for 30 days.

September 2015 MARINE LOG 11

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UPDATE Strategic alliance for the future of shipping Fincantieri Marine Group LLC, Washington, DC, and naval architectural firm Gibbs & Cox, Inc., Arlington, VA, are joining forces to develop and shape the future of shipping. The two have formed a joint strategic initiative that will focus on the development of innovative ship concepts, as well as improve the affordability and production of efficiency features.

Dr. Giuseppe Bono, CEO of Financtieri, says, “Our aim is to develop concepts that completely fulfill the evolving needs of the customer while accounting for producibility considerations early in the design stage.”

“This initiative,” says Rick Biben, CEO of Gibbs & Cox, “...will be able to develop concepts that account for the needs of programs throughout the lifecycle of the vessels.”

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Coast Guard celebrates major anniversary This past August 4th marked the 225th anniversary of the United States Coast Guard. To celebrate the event, the U.S. Postal Service dedicated a U.S. Coast Guard Forever stamp during a ceremony at the Coast Guard’s Douglas A. Munro Headquarters.

“Stamps tell America’s story and it is a great honor for the Coast Guard to be memorialized on our 225th anniversary in the Forever Stamp collection,” says U.S. Coast Guard Commandant Admiral Paul Zukunft.

Admiral Zukunft adds that the dedication also honors the thousands of “Coast Guard men and women who’ve gone to sea—and sometimes paid the ultimate price—in boats, cutters and aircraft so that others may live.”

The U.S. Coast Guard’s roots date back to the first formative years of the United States. On August 4, 1790, President George Washington signed the Tariff Act. The Act authorized the construction of 10 cutters to enforce the federal tariff and trade laws. The Revenue Marine, the forerunner of the Coast Guard, was suggested by then Secretar y of the Treasur y Alexander Hamilton. Hamilton believed the use of boats would help secure revenue against contraband.

At the dedication ceremony, the Postmaster General Megan Brennan said, “The Coast Guard is truly a symbol of safety to all Americans. Those who live in a coastal community, or spend time on our water ways and shores, know that the Coast Guard does whatever it takes to ensure that they are safe and protected.

The stamp, which honors the Coast Guard’s role in protecting the security of the nation and advancing U.S. maritime interest, will feature two Coast Guard icons: The cutter Eagle, a three-masted sailing ship known as “America’s Tall Ship,” and the MH-65 Dolphin helicopter, one of the Coast Guard’s rescue aircraft.

INTERFERRY CONFERENCE 40th ANNUAL OCTOBER 3 -7, 2015

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Conference Sessions Spouse Tour #1 Networking Reception

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Technical Tour Post Tour commences

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Fire Safety • Electric Ferries • Innovation

Robert Almström – Stena RoRo, Sweden Topic: BIMCO’s New Time Charter Party for the RoPax Trade

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Peter De Keyzer – BNP Parabas Fortis, Belgium Topic: Economic Outlook for the World Economy

Is There a Future for Fast Ferries?

Michael Grey – Maritime Journalist, UK

The Impact of Environmental Regulations in Northern Europe

Tim Reardon – UK Chamber of Shipping, UK Topic: Ferries and Borders

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inside washington

President pushes for speedier icebreaker acquisition While visiting Alaska to discuss the impact of climate change, President Obama proposed speeding up the acquisition and construction of U.S. Coast Guard polar icebreakers to meet the nation’s needs to operate in the Arctic regions.

Ice retreating in the Arctic region has made it possible for more commercial activity to take place—opening up new northern shipping routes, offshore oil and gas development, eco adventure tourism, minerals exploration, and fishing. Right now, however, the U.S. is woefully underprepared to support the increase in marine activity. As we highlighted last month in Inside Washington and in our maintenance feature, “Icing Repair” (ML August 2015, p.

21), the U.S. Coast Guard is badly in need of icebreaking capability. The U.S. only has five icebreakers, one of which, the Polar Sea, is inactive.

The operational Polar icebreaking fleet currently comprises the Coast Guard cutter Polar Star, a 399-foot-long heavy icebreaker and the Coast Guard cutter Healy, a 420-foot-long medium icebreaker

commissioned in 2000. Polar Star underwent a three-year reac tivation and returned to operations in late 2013.

C o m m i s s i o n e d d u r i n g T h e Fo rd Administration in January 1976, The Polar Star entered caretaker status in July 2006, when it was laid up with problems with its electric motors, as well as some other issues. The Polar Star did undergo a major refit and was reactivated in December 2012, but its sister, the Polar Sea, remains inactive and in need of a major overhaul— which would cost upwards of $100 million just to squeeze another 7 to 10 years of service life out of her.

Since its reactivation, the Polar Star has completed two Operation Deep Freeze deployments to resupply McMurdo Station in Antarctica.

The price tag of a new polar icebreaker is one of the hardest things to swallow.

According to a Congressional Research Service report “Coast Guard Polar Icebreaker Modernization: Background and Issues for Congress,” authored by Naval Affairs Specialist Ronald O’Rourke, the

cost to build a new polar icebreaker would be between $900 million and $1.1 billion.

The Coast Guard is in an Analyze/Select phase of acquiring a new polar icebreaker.

This stage in the process includes developing a formal mission need statement, a concept of operations, and an operational requirements document—all necessary before developing and implementing a detailed acquisition plan.

Thus far, the Coast Guard has received preliminary funding for the design and build of a new icebreaker—not quite $10 million. The Coast Guard believes that a “whole-of-government” approach will be necessary to fully fund the new icebreaker.

The Coast Guard would like to see supplementary financing from other agencies, such as the Navy, whose activities also rely upon the nation possessing a robust, Arctic-capable surface fleet.

The President is pushing to fast forward the acquisition of a new icebreaker by two years, from 2022 to 2020. He is calling on Congress to appropriate sufficient resources to build them.

TOP 10 REASONS TO ATTEND Highlights of WMTC 2015: 10. Over 225 technical papers and presentations from SNAME and the other 20 organizing Societies.

9. Panel Sessions focused on Ballast Water Treatment and Human Factors in the Maritime Industry.

8. Networking receptions and off-site events.

7. Topical Breakfasts and Lunches.

6. Internationally-focused Expo covering all reaches of the maritime industry.

5. Innovative Sessions showcasing technical advances and new products.

14 MARINE LOG September 2015

4. Student and Young Professionals Programs to connect the global maritime community of the future.

3. SNAME Cup Sailing Regatta and SNAME Annual Golf Tournament.

2. SNAME Annual Banquet and Awards Lunch to recognize leaders both young and old.

And the number one reason to attend?

1. A repeated history of excellence in its week-long program.

Lng

Fure West Rederi tanker Fure West was converted with a Caterpillar dual fuel engine to burn LNG

Uncertain Future for Marine LNG Adoption of an interim global 1% sulfur fuel could accelerate the movement towards

By John E. Graykowski, Principal, Maritime Industry Consultants LNG when new vessels are ordered

D

espite many indications that LNG is gaining acceptance as a marine and transportation fuel, ship owners still appear reluctant to fully embrace the new fuel. Many owners are hedging their bets by installing dual fuel engines and other LNGspecific features on their new vessels, but delaying the installation of the fuel tank and fuel gas system until some later date. Others are placing new build orders with conventional propulsion systems, effectively dismissing LNG as a credible alternative.

Since stringent worldwide limits on fuel sulfur content are scheduled to become effective in 2020, these decisions might seem questionable. A provision in MARPOL Annex VI, however, creates significant uncertainty whether the IMO will in fact hold to this schedule, thus allowing some operators to make a strategic calculation that the limits will be delayed.

Adopted in 2008, Annex VI created a two-tiered regulatory structure to phase in fuel sulfur requirements. For those states that implemented emissions control areas (ECAs), fuel sulfur limits were reduced in two stages from 1.5% to 1% in 2012 with a final reduction in January 2015 to 0.1%. Outside the ECAs, the current

3.5% limit is scheduled to be reduced to 0.5% in 2020. However, this will happen only after a mandatory 2018 IMO review which must find that sufficient compliant fuel will be available in 2020; otherwise the limit will remain at 3.5% until 2025.

At that time, there were only two “viable” compliance options for ship owners: use marine gas oil (MGO) or install exhaust gas scrubbers. The natural gas “revolution” was in its infancy and there was little, if any, discussion of LNG as a cleaner and more economical alternative to either MGO or scrubbers. Despite giving fuel suppliers over a decade of advance notice to prepare, the potential magnitude of demand for compliant fuel and concerns that MGO production would be insufficient led the IMO to create this 2018 “gate” before the 0.5% limit would become effective.

A fortuitous confluence of factors led to the emergence of LNG as an alternative marine fuel. The ECAs created unambiguous regulatory imperatives and hard deadlines; the unforeseen increase in worldwide gas production led to a steep decline in prices; and there were no technological barriers to the use of LNG as a propulsion fuel. MGO and scrubbers involve significant expense, provide September 2015 MARINE LOG 15

Lng

By 2018, more than 150 vessels worldwide will be burning Liquefied Natural Gas as fuel

The EU support is helping establish LNG bunkering capabilities at several of its major ports. Above, Fjord Line’s Bergensfjord is refueled

less comprehensive emissions reductions, and, in the case of scrubbers, increased risk. In contrast, LNG offers compliance with sulfur limits, significant improvements across the entire spectrum of emissions and long term cost advantages. Even with the current drop in oil prices, LNG is projected to maintain its economic and environmental advantages for many years to come. The ECAs made it possible for the first adopters to move forward in the U.S.; the EU to propound a formal policy to support LNG deployment throughout Europe; and Norway to emerge as a dominant player in the marine LNG world.

Experience in the ECAs has demonstrated that concerns about fuel availability are largely unfounded, and that the fuel supply industry can and will respond to demand signals, particularly those driven by clear regulatory requirements and deadlines. The phased approach in the ECAs allowed fuel suppliers and operators to first adjust to the 1% standard and then to prepare for the lower limits in 2015 and resulted in a smooth transition to MGO earlier this year with no apparent supply shortages. This approach had another important impact on marine operators in the ECAs who began looking at LNG as a credible alternative to either MGO or scrubbers.

The Annex VI review provision allows the IMO to consider “other relevant issues” and thus offers the means to include LNG in the analysis of fuel availability. LNG adoption that has already occurred is directly related to the implementation of the ECAs with their interim steps and fixed deadlines. The IMO should emulate this approach by requiring global fuel sulfur limits to be reduced to 1% in 2020 with a permanent reduction to 0.5% in 2025. The ECA experiences and the growth of LNG as a marine fuel provide ample justification to support this decision, rather than simply allowing the 3.5% limit to remain in place.

By 2018, more than 150 vessels worldwide will be using LNG as a fuel; the EU will have bunkering capabilities in several of its

major ports; LNG powered ships will be operating in the U.S.; China will be well on its way to transforming its inland f leet to LNG, and Singapore and Korea will be in the midst of building LNG bunkering infrastructure. The adoption of an interim 1% standard would likely galvanize the world shipping community to accelerate the movement to LNG when new vessels are ordered.

In turn, this would be an unequivocal signal to the gas supply industries to move forward with infrastructure development, thus banishing forever the chicken and egg cliché in connection with LNG development.

This is a crossroads moment for the IMO and it can make a clear, definitive, and compelling statement to advance environmental quality and affirm its commitment to continued reductions. The U.S., Canada, and the EU made the hard political decisions to implement stringent marine emissions standards, and the markets have adjusted. As 2018 approaches, the IMO will be under increasing scrutiny from many parties, including those with a vested interest in LNG development. I would urge those nations that have implemented ECAs, or are contemplating them; and those which have enacted formal policies to encourage the development of LNG as a marine fuel; natural gas suppliers and the environmental communities –admittedly a somewhat nontraditional alliance – to insist that the IMO adopt this phased approach. Anything less would be a lost opportunity to take a giant step forward in the effort to reduce marine air emissions, and likely slow the pace of LNG adoption for another five years. ■

16 MARINE LOG September 2015

John Graykowski is the former Deputy and Acting Maritime Administrator and is now a Principal of Maritime Industry Consultants, LLC most recently working with marine operators and gas suppliers on regulatory and market issues associated with use of LNG as a marine fuel.

John can be contacted at: JohnG@maritimeconsults.com

FERRIES

Social cruise brand Fathom and its MV Adonia could be making trips to Cuba as early as May 2016

The way to Cuba Ferry service between the United States and Cuba — Imminent or not?

By Michael J. O’Neil, Darrell L. Conner, and Sarah Moser Beason, K&L Gates LLP

R

ecent decisions by the Office of Foreign Assets Control (OFAC) of the Department of Treasury have increased the prospects for regular air and vessel service to and from Cuba. Those decisions have not yet opened the floodgates for the immediate operation of aircraft and ships in a Cuba trade. They do appear, however, to offer a roadmap to future aviation and shipping activities with Cuba, and early entrants are using that roadmap to commit resources to the opportunities they see. Interested entities should be following this evolving picture closely for clues about how best to understand U.S. government policies that will influence business opportunities in Cuba.

Treasury Guidance on Transportation to and from Cuba On May 5, 2015, OFAC, the government entity responsible for the administration of U.S. economic sanctions, issued guidance concerning both air and vessel transportation to and from Cuba. Some airlines have already acted. American Airlines, for example, has announced it will begin regularly scheduled f lights to Cuba on December 12, 2015.

In terms of maritime travel, although OFAC’s basic approach to transportation to and from Cuba remains largely unchanged, the new guidance states that OFAC may issue a specific license to offer transportation services to and from Cuba from the United States via vessel. Applications will be considered on a case-by-case basis. Additional specific authorization must be obtained from the

Bureau of Industry and Security (BIS) at the Department of Commerce, which is responsible for the approval of dual-use exports under the Export Administration Regulations, for the temporary sojourn of the vessel in Cuba. Further authorizations from other U.S. government agencies may also be required.

Passenger Requirements for Licensed Ferry Services Traveling to and from Cuba Vessels that are licensed to provide transportation services to and from Cuba may carry both passengers and cargo. Passengers who are under U.S. jurisdiction must either qualify under one of the twelve general licenses issued by OFAC or must obtain a specific license for travel from OFAC. The twelve categories include: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain authorized export transactions.

A traveler qualifying under a general license must certify to the carrier that the traveler is covered by the general license, but September 2015 MARINE LOG 17

FERRIES prohibit the use of appropriated funds to ban the travel of U.S. citizens to Cuba. Whether this provision survives the tortuous path that government funding bills face this year is uncertain, but it is a sign that further changes in U.S.-Cuba policy are possible.

Cuban nationals with valid visas or travel authorizations may also use the vessel transportation services, and Cuban nationals legally in the United States may use the services, as may diplomats.

Vessels that are licensed to provide transportation to Cuba may carry cargo and luggage accompanying passengers and any unaccompanied baggage or other goods authorized for export to Cuba

by BIS license or other authorization. Travelers may also import goods from Cuba authorized by a general or specific license. There are limits to the value and type of Cuban merchandize that travelers returning to the United States may bring into the United States.

Additional Requirements beyond Licensing

otherwise need not seek specific OFAC authorization for travel to Cuba. A traveler with a specific license approved by OFAC must present it.

The authorization for vessel transportation does not in any way change the U.S. ban on tourist travel to Cuba, which remains in force. President Obama has asked Congress to lift the travel embargo that prohibits most Americans from visiting Cuba, and there appears to be some momentum to lift the ban. In June, the Senate Appropriations Committee adopted an amendment to the Fiscal Year 2016 Financial Services Appropriations bill that would

Press reports say that at least seven companies—Balearia, Baja Ferries, Havana Ferry Partners, United Caribbean Lines, Airline Brokers Co., International Port Corp., and America Cruise Ferries—have received licenses since May 5, 2015 to offer ferry services to Cuba and that others are poised to do so. Companies have also announced plans to offer cruises to Cuba beginning in 2016, such as Carnival’s Fathom cultural cruises. At least one licensed company has expressed its hope to commence service as early as September 2015, whereas other companies are hoping to begin service early next year.

Although some observers may believe, or hope, that the provision of ferry services to and from Cuba is imminent, a number of other requirements must be satisfied before these companies, or any other licensed company, can commence ferry services to and from Cuba.

Although several companies have announced plans to offer services from particular ports, such as from Miami to Havana, the

Washington’s “New Course” on Cuba Generates Excitement from Ferry Operators Last December, President Barack Obama announced what the White House called “a New Course on Cuba” that would take steps to normalize relations with the island and scale back restrictions. The goal, said the White House, would be to empower the Cuban people; and enable Cuba to be a prosperous and stable country.

The new approach could also potentially serve as a boost to the U.S. maritime industry. For the U.S. offshore oil & gas industry, it could eventually lead to additional opportunties for exploration and development . It is estimated that offshore oil reserves around Cuba are between 4.6 and 9.3 billion barrels—potentially good news for oil companies in the U.S. Cuba on the horizon The ferry industry too, will benefit, should the tourism ban be lifted.

After the announcement was made, the U.S. Department of Commerce and U.S. Department of the Treasury’s Office of Foreign Assets Control began accepting applications for operating passenger vessel services to Cuba.

The Treasury’s Office of Foreign Assets Control (OFAC) originally named (and granted licenses to) five companies, approving their service to Cuba. Among them, America Cruise Ferries of Puerto Rico; Airline Brokers Co., Miami, FL, which has been a long-time licensed provider of air charter travel to Cuba; Baja Ferries, USA, a U.S. affiliate of Mexico’s Baja Ferries; Havana Ferry Partners which plans to operate as Cuba Ferry International and provide highspeed, 300-passenger ferry service from Florida to Havana; and

18 MARINE LOG September 2015

United Caribbean Lines, which plans to use overnight ferry vessels with 400 cabins and a capacity for 1,500 passengers.

Since its initial announcement, however, OFAC has granted approval to additional operators, including Spain-based Baleària Group and Carnival Corporation & plc’s new brand, Fathom.

The plan for Baleària is to operate two separate routes between Havana and Florida. One route would operate from Key West, via a high-speed ferry, with a crossing time of three hours. The second route would use a conventional ferry, departing from North Miami, Port Everglades. Travel time will be about 10 hours.

Beginning May 2016, Carnival will take passengers, via its new social-impact Fathom brand, to Cuba. The brand provides purposeoriented, social impact experiences to travelers onboard. Carnival says it intends for its Cuba itineraries, like its Dominican Republic itineraries (which begin April 2016), to provide cultural, artistic, faith-based and humanitarian exchanges between travelers and the island’s citizens, thus engaging in activities that support and empower the Cuban people.

“We’re incredibly excited and humbled by this potential opportunity to help travelers experience the amazing beauty and culture of Cuba, while being able to provide educational and cultural exchange activities that will benefit both the traveler and the Cuban people,” says Tara Russell, President of Fathom.

While the aformentioned brands have received approval from the U.S., Cuban authorities will still need to authorize operations before services can begin.

FERRIES Although some observers may believe, or hope, that the provision of ferry services to and from Cuba is imminent, a number of other requirements must be satisfied before these companies, or any other licensed company, can commence ferry services to and from Cuba.

Coast Guard will have to conduct port facility security inspections at the Cuban ports to which the ferries will travel before these companies can begin providing ferry services to Cuba.

Importantly, the Cuban government must itself agree to permit each proposed ferry service and provide necessary authorizations, e.g., for dock access, etc., at its end. In an interview with Cuba Standard in May, José Cabañas, then chief of the Cuban Interest Section in Washington, D.C., stated that each company’s proposal will be reviewed by Cuban authorities, which “will take time.” It remains unclear what requirements the Cuban government will impose. Mr. Cabañas also noted that the companies that have received licenses from the United States had not yet contacted the Cuban government concerning their proposals. The Cuban authorities reportedly have not approved any ferry service, although United Caribbean Lines’ website states that it expects to receive “confirmation from Cuban government authorities” for its Deluxe Ferry Service “by end August 2015.” One complication is that Cuba currently bans persons born in Cuba from traveling to or from Cuba by sea. However, Cuba may be considering a change to this regulation.

The Time to Engage is Now A s busi ness oppor tu nit ies i n Cuba develop, any company considering Cuba as a part of their future business strategy should engage. The U.S. and Cuba have

reestablished their relationship with the openings of the U.S. embassy in Cuba and the Cuban embassy in Washington. Now is the time to actively plan and position one’s company for the future in Cuba. ■

Application Instructions A company subject to U.S. jurisdiction wishing to apply for a license to provide ferry service to and from Cuba should seek legal advice concerning applicable laws and regulations. If a company determines to go forward, it should submit its application in the form of a letter to the Office of Foreign Assets Control, U.S. Department of the Treasury, Treasury Annex, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220.

A company seeking to provide cargo service to Cuba must do so under the authority of a license from OFAC. In addition, cargo carried by a vessel covered by such a license must be licensed by BIS. Cuban authorities must also authorize such arrangements.

Also, maintaining a permanent office in Cuba to handle cargo shipments requires a license from OFAC. Officials of companies that wish to travel to Cuba to arrange ferry or cargo service to and from Cuba may do so pursuant to a license issued by OFAC. September 2015 MARINE LOG 19

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KeyNote Address: Focus oN LNG

John D. Dwyer Chief, Inspection Division, Officer in Charge, Marine Inspection, USCG Sector Puget Sound

John Dwyer will kick off Ferries 2015 with an in-depth analysis of the challenges and opportunities presented by LNG as a marine fuel. Dwyer is responsible for safety, environmental and security standards for commercial vessels and waterfront facilities in the Pacific Northwest region, and is currently overseeing the development of four LNG fueling projects in Puget Sound. He also heads the Vessel Security and Washington State Ferries Security Sub-Committees within the Puget Sound Maritime Security Committee. He has over 38 years of maritime experience, including vessel inspection, port security, and casualty investigation.

AGeNdA HIGHLIGHts

• New ferry services for Cuba • Hybrid and all electric propulsion

• LNG newbuilds and conversions • Safety and training

• Regulatory compliance

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• International ferry services

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GREAT LAKES

The 150,000 bbl ATB tank barge Texas was built by Fincantieri’s Bay Shipbuilding in Sturgeon Bay

Great Lakes-Seaway System Vital Economic Driver

Compiled by Marine Log Staff

Lack of icebreaking capability, ballast water management remain hurdles

C

ommodities such as iron ore, salt, grain, coke, corn, steel, cement, gypsum, and soybeans transported by bulk carriers and general cargo ships f low into and out of the Great Lakes and the Saint Lawrence Seaway, connecting the heart of Midwestern U.S. and Canada with the rest of the world. The Great Lakes-Seaway System is responsible for more than $35 billion in trade and 227,000 jobs.

“The Great Lakes-St. Lawrence shipping system is a critical component of our broader transportation infrastructure in North America,” says John Buboltz, Vice President, Merchandising and Transportation, Cargill Inc. “We need to recognize that future growth in the agriculture and food economy sector depends on efficient shipping systems.”

An efficient shipping systems means state-of-the-art ships, terminals, ports, and waterway infrastructure. That translates into capital investment. A study released earlier this year by Martin Associates estimates $7 billion is being spent—over a period from 2009 to 2018—on new ships, terminals, ports, and infrastructure improvements in the Great Lakes-St. Lawrence Seaway system.

Of that total, $4.7 billion has been invested in navigation systems and another $2.2 billion is committed to improvements from 20142018. Two-thirds of the capital was invested by private companies.

Four billion dollars of the $7 billion is being spent on new ships in the biggest renewal of the Great Lakes-St. Lawrence fleets in 30 years. Another $1 billion is being spent by the U.S. and Canada to modernize the Seaway’s lock infrastructure and technology over the 10-year period. And Great Lakes and St. Lawrence River ports and terminals are also collectively investing more than $1.7 billion on expanding their docks, equipment, facilities and intermodal connections. In preparation for the 2015 shipping season, U.S.-flag Great

Lakes operators spent $75 million in overhauls, maintenance, and repairs to their fleets.

Local shipbuilders also support maritime activity inside and outside the region. Fincantieri’s Bay Shipbuilding in Sturgeon Bay, WI, builds for commercial customers such as Kirby Ocean, Moran Towing, and Plains All American. Sister shipyard Marinette Marine, Marinette, WI, is supporting the LCS program for the U.S. Navy, as well as programs for the Coast Guard and NOAA. And Burger Boat Company, also of Marinette, completed the recently commisisoned 78 ft research vessel Arcticus for the U.S. Geological Survey’s Great Lakes Science Center.

Meanwhile, Great Lakes Shipyard, Cleveland, OH, is building a 3,400 hp Handysize tug for Guatemalan customer Regimen de Pensiones y Jubilaciones del Personal de la Empresa Portuaria.

Moran Iron Works, Onaway, MI, has delivered two 180 ft deck barges for Durocher Marine designed by local naval architectural firm Netsco, Cleveland, OH. Showing its diversity, MIW also built the all-aluminum 281-passenger high-sped ferry Miss Margy for Shepler’s Mackinac Island Ferry. Donjon Shipbuilding & Repair, Erie, PA, is busy building a series of bulk barges, as well as a 185,000 bbl, 580 ft long unit for Seabulk Tankers.

Strong year for salt, grain and construction materials Among this year’s hottest commodities moving through U.S. and Canadian ports is salt. According to the St. Lawrence Seaway Management Corporation, salt shipments through the St. Lawrence Seaway from April 2 to July 31 were up 3 percent to 1.4 million metric tons as compared to 2014.

“Ships are already carrying road salt from Windsor to cities and towns all over Canada and the U.S., which are stockpiling now in September 2015 MARINE LOG 23

GREAT LAKES preparation for the colder winter months ahead,” says David Cree, CEO of the Windsor Port Authority. Road salt is being shipped from mines in Ontario and Quebec.

In addition to salt, U.S. construction pushed shipments of cement up 11 percent to 766,000 metric tons and American grain shipments were up 63 percent to 765,000 metric tons.

“There is a considerable amount of grain moving out in salties and lakers this year prior to harvest,” says Joe Cappel, VP Business Development for the Toledo-Lucas County Port Authority.

Across the board, however, year-to-date cargo tonnage on the Seaway was 14.5 million metric tons, down 7 percent, with iron ore down 8 percent and coal shipments down 38 percent.

Great Lakes Shipyard will build a 3,400 hp Z-drive tug for a Guatamalan customer

Hurdles ahead One of the significant hurdles facing ships moving cargo through the Saint Lawrence Seaway-Great Lakes system is the lack of icebreaking vessels. Stephen Brooks, President of the Chamber of Marine Commerce, says, “The limited number of icebreaking vessels from the U.S. and Canadian Coast Guards are in short supply and are often required to play double duty in other jurisdictions outside the Great Lakes. This situation has significantly delayed commercial ships for the past two years, not only costing our industry millions of dollars but also disrupting the operations of North American manufacturers and energy suppliers that rely on the timely delivery of raw materials.”

The Chamber of Marine Commerce is a bi-national association that represents U.S., Canadian and international shipping companies, ports and terminal operators and other commercial marine industry interests in the Great Lakes-Seaway region.

Brooks also points to the lack of harmonization in federal, state

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and provincial regulations as an impediment to shipping commerce. “Ballast water is a perfect example of this,” says Brooks. “For many years the Chamber of Marine Commerce has been urging governments in the U.S. and Canada to adopt one, single, harmonized standard for ships operating in the bi-national Great Lakes - St. Lawrence.”

Brooks points out that U.S. EPA rules mandate that many Canadian domestic ships install ballast water treatment equipment “despite neither the support of scientific rationale nor the existence of cost-effective solutions, while they effectively exempt the American Great Lakes fleet. On top of this, states have the ability to implement their own specific rules, which may not match the federal regulations.”

He says that since 2006, all vessels entering the Great Lakes from

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September 2015 MARINE LOG 25

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outside Canadian waters are required to exchange their ballast water while still at sea. To ensure compliance, the U.S. and Canadian governments inspect ever y oceangoing ship entering the Great Lakes in Montreal. “Since this practice began,” he says, “no new aquatic invasive species associated with ship ballast water have been discovered in the Great Lakes.”

Investing in new tonnage Shipowners, meanwhile continue to invest in a younger, greener f leet. Montrealbased Canadian Steamship Lines has earmarked $250 million to renew its fleet.

Algoma Central Corporation kicked its fleet renewal plans in 2010 when it entered

into contracts with China’s Nantong Mingde Heavy Industry Co., Ltd. to build six Equinox Class dry-bulk vessels.

While Algoma Central did take delivery of two bulkers under the contract, its plans faltered when Mingde entered a court supervised restructuring process in 2014.

That left Algoma Central looking for a new shipyard to build its bulkers.

To fill the gap, Algoma Central signed contracts with a subsidiary of Croatia’s Uljanik d.d. for the construction of two new Equinox Class 650 foot, 24,000 dwt self-unloading dry bulk lake freighters.

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Fleet Model & Lake Freighter Minis owner and designer Bob May has sent 14 ships “down the ways.” May has been building model boats from scratch for more than 30 years. In 2013, he launched his paper model boat kit company, Lake Freighter Minis, LLC. The model kits designed by May are realistically detailed, color and laser printed on 100 pound card stock. Included in each kit are detailed and illustrated instructions. The bulkhead design used in the models gives them their uniquely strong hull.

Whether designing the next Great Lake freighter kit, such as the recently available Col. James M. Schoonmaker, a museum vessel, or a flagship for corporate use, it takes about three months to develop a model kit for sale.

First, photographs, digital images, deck plans and color references are gathered and researched. Input from vessel owners is also solicited.

Next, the design phase begins, graphically creating vessel parts used to build

the first prototype. The prototype is used to study the proper sequence of steps required to build the ship, making the necessary adjustments for the finished model.

May was commissioned by Owen Sound Transportation Company to design a model boat kit of the Chi-Cheemaun ferr y. Upon deliver y of the completed model and kits, Owen Sound Transportation President and CEO Susan Schrempf stated, “The model is exquisitely detailed with thorough instructions that are easy to follow,” adding “It is the best model we’ve ever seen.”

The 14 model kits available in the Fleet Model & Lake Freighter Minis, LLC product line are proudly produced in Michigan and are currently sold at 50 maritime museums and hobby shops nationally and throughout the Great Lakes.

Fleet Model Kits & Lake Freighter Minis, LLC can design and create a model kit that can be used as a corporate gift or a cost effective promotional tool. The product line can be viewed at www.lakefreighterminis.com - Jim Clary

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September 2015 MARINE LOG 27

PANAMA CANAL

Doubling Capacity An Insider Look at the Panama Canal Expansion

By Jorge L. Quijano, Administrator, Panama Canal Authority

E

ach year, container ships move nearly 95 percent of the world’s manufactured goods. And the Panama Canal is an important route for container cargo flowing from the most important producer and consumer markets of the world: Northeast Asia and East and Gulf Coasts of the United States. The 101-year-old waterway between the Atlantic and Pacific Oceans plays an enormous role in global trade. The Panama Canal currently connects 144 routes and 1,700 ports in 160 countries. It can quickly and reliably connect businesses from every corner of the world, driving economic growth, creating jobs and encouraging the spread of technology and innovation.

In fiscal year 2014, 327 million Panama Canal tons traveled through the Canal’s waters. With time, that number will be significantly larger, thanks to the increased capacity provided by the Panama Canal Expansion, which will allow the waterway to attend the growth in demand.

The Expansion—a new lane of traffic that will double the waterway’s capacity—is now 93 percent complete. The new locks will carry ships up to 14,000 TEU with triple the cargo. The project is on track to be open for commercial transits by April 2016. At which point, the Canal will be able to handle almost 98 percent of the world’s containership fleet—not coincidentally, the largest portion 28 MARINE LOG September 2015

of the Canal’s business currently at 50 percent of toll revenues.

The completed Expansion will deliver enormous value to Panama and the transportation and logistics sector. By doubling the Canal’s capacity, the Expansion will have a direct impact on economies of scale and international maritime trade. It promises to alter global shipping patterns, improve transit times and increase the global flow of both traditional and non-traditional commodities.

The effects will be felt across Panama and beyond. Already, about one-fifth—or 20 percent—of Panama’s GDP is derived from the cluster of activities related to the Canal area. The Canal Expansion, alone, has created 39,000 jobs since its execution. Once complete, it promises to keep creating high-quality jobs in the transportation sector and beyond, while significantly boosting trade, as well.

But the trade story doesn’t end with more dredging or building larger ports—there is a whole supply chain downstream to consider, including the services provided by the railroad, ports, Colón Free Zone, banking, insurance, bunkering, warehousing, among others. The increased demand for cargo-related services will spur business transactions across not only in the maritime sector but By theJorge ground and air transportation and finanL. Quijano, Panama Canalsectors, Administrator cial sectors, as well.

And the Expansion’s benefits extend beyond improving cargo

PANAMA CANAL volume and spurring transshipment. The larger waterway will also allow for the transit of non-traditional commodities, such as Liquid Natural Gas from the Gulf of Mexico to Asia or from Trinidad to Chile. When the Expansion Program was launched, no one could have foreseen the energy revolution, with the United States becoming an exporter of energy. But today, LNG is an area with huge potential for growth and the diversification of projects.

The Panama Canal Expansion has incorporated several new technologies to increase its efficiency and operation. The project was designed to promote smart water savings. Based in the gravity fluctuation, the chambers could be filled transferring water from the water-saving basins and vice versa. The new locks’ design will be able to conserve water, using 7 percent less water than the existing locks and reusing 60 percent of the water required for each transit.

The water-saving basins are adjacent to each lock chamber and are approximately 1,300 ft. long, 230 ft. wide and an average depth of 18 ft. The highest in each set is positioned slightly below the top of the lock chamber; the lowest is just above the chamber’s minimum water level. Gravity funnels water from the basins and Gatun Lake through culverts in the lock walls, filling each chamber with 15 million ft 3 of water and raising ships about 30 ft in approximately 10 minutes. When vessels are lowered, valves reopen and gravity feeds 60 percent of the water back into the basins.

Instead of hinged miter gates, the new locks will use paired rolling gates. The gates will roll out of wall recesses on tracks to seal the chambers. For repairs and maintenance, one gate will continue to operate while the other is returned to its recess, which is then sealed and pumped dry, allowing traffic to continue during maintenance.

In addition, the new locks will have a “brain” condensed in one Control Tower per site to manage operations of the gate and valves movement for the filling of the chambers and water-saving basins.

The completion of the Panama Canal Expansion will be a historic day for the waterway and the entire country, but the Canal’s commitment to improving won’t stop when the new lane is opened.

The Panama Canal will continue operating in a safe, reliable and cost-competitive manner.

The Canal will serve larger vessels, handle new trades and make environmental strides, but more importantly, will continue—as it has for more than a century—to strengthen bonds with customers and facilitate international trade and global economic growth. ■

Ushering in a new pattern of global trade in LNG This past June, the U.S. Trade and Development Agency awarded a grant to the Panama Canal Authority (ACP) to support the planning of a Liquefied Natural Gas (LNG) import terminal. When the third set of locks are completed next year, the canal is expected to handle a significant number of LNG carrier traffic. In order to capitalize on this growth, the ACP is interested in developing LNGrelated infrastructure projects, including an import terminal.

“The U.S. Government is very pleased to partner with the Panama Canal Authority through this USTDA grant as the ACP looks to develop a LNG import terminal,” said Chargé d’Affaires Kevin M. O’Reilly, who signed the grant agreement along with ACP Administrator/CEO Jorge L. Quijano.

“As we near the completion,” said Quijano, “we are eager to explore new segments such as LNG, which are now possible given our enhanced capacity to accommodate longer and wider ships.

This grant by the USTDA will build on plans and projects related to LNG that are already ongoing and will present us with the ability to evaluate additional market opportunities and client services for the benefit of the U.S.-Panama energy trade.”

The USTDA-funded feasibility study will help the ACP set strategic priorities and plan projects related to LNG infrastructure and natural gas utilization at the Panama Canal. The LNG terminal is anticipated to support the implementation of maritime- and energy-related projects that will accommodate increased shipping traffic through the expanded Canal.

Largest LNG Carriers to transit through Panama Canal Once the expansion is complete, Spain-based Elcano’s two 178,000 m3 LNG carriers will be the largest vessels of its kind to navigate through the Panama Canal upon their delivery in 2017.

Currently under construction at Imabari Shipbuilding, and classed by Lloyd’s Register, the gas carriers will be fitted with two low-speed, dual-fuel gas injection MAN ME-GI diesel engines, driving two propellers with high-pressure gas supply systems. The dual-fuel engines are expected to improve fuel consumption performance by 40% when compared to conventional steam turbine ships.

The new locks are filled at the Panama Canal

September 2015 MARINE LOG 29

MARINE LOG CONFERENCE & EXPO

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While there have been significant early adopters of LNG as a marine fuel, operators overall have been slow to commit to natural gas as an alternative fuel.

This track will examine options for financing newbuilds and refits, creating a new bunkering infrastructure, and developing a regulatory regime.

Environmental compliance remains at the top of the list for many vessel operators as they look to comply with a laundry list of new and impending regulations. This track will focus on the real world best available technologies and the best practices for compliance, as well as examine what regulations might be on the horizon.

Puerto Rico’s financial crisis has once again whipped up a heated debate about the Jones Act’s impact on the commonwealth’s economy. Is it time to modify the Jones Act? Should Puerto Rico receive a exemption? What’s the Jones Act’s impact on the overall U.S. economy? These are just some of the topics that this program will explore.

Shipyards need to continue to invest in order to remain competitive. What can they do to increase productivity, improve product quality, and lower costs? What government financing is available?

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OPINION

The big sticking point in CCF is the liquidated damages provision

Making Financing More Flexible Removing provision from CCF would make program more flexible for offshore

By H. Clayton Cook Jr., Esq., Principal, Cook Maritime Finance support vessel construction

E

ach agreement . . . shall contain a liquidated damages provision for the purpose of placing the party in its prefund position for each day a qualified agreement vessel is operated in violation of the geographic trading restrictions . . . The liquidated damages provision requires that the party repay the time value of the deferral of Federal Income Tax which the party has received.”

46 CFR § 390.12 (a)(1) In recent talks with Gulf Coast shipbuilders, a colleague and I asked why more of them weren’t using the U.S. Maritime Administration (MARAD) Capital Construction Fund program (CCF) to build Offshore Support Vessels (OSVs). They pointed to the liquidated damages provision as a stumbling block.

While CCF has been available to a 32 MARINE LOG September 2015

shipyard building vessels for the “qualified” domestic non-continuous trades, the MARAD 46 CFR § 390.12 “liquidated damages” rules have prevented Gulf Coast shipyards from using it to build OSVs that might be used in section 390.5 “non-qualified” international services.

Section 390.12 requires that each agreement “contain a liquidated damages provision for the purpose of placing the party in its prefund position for each day a qualified agreement vessel is operated in violation of the geographic trading restrictions” and that a CCF Program seller must require that “the transferee agree with the Maritime Administrator to comply with the geographic trading restrictions and to pay liquidated damages for any breach of such agreement that occurs after the transfer.”

We explained that we believed that this language simply required that: (i)

the Agreement fundholder remained liable (after Agreement termination) for section 390.5 violations in the employment of the qualified agreement vessel that had occurred during the period the selling (transferor) fundholder was party to an Agreement (prior to the transfer); and (ii) the purchasing (transferee) new vessel owner (whether or not a new fundholder party) would be liable for section 390.5 violations after that date.

We saw no requirement that the selling transferor fundholder would have any liability for violations after the sale of the qualified agreement vessel. And we suggested that the purchaser (transferee) new vessel owner should only be subject to section 390.5 restrictions at that time it was itself a CCF Program Agreement participant and the vessel was a “qualified agreement vessel” under that Agreement.

OPINION However, the shipbuilders said that we were mistaken, and gave the following two examples of MARAD application of section 390.5 “non-qualified operations” and section 390.12 “liquidated damages” provisions to the situation of a hypothetical Shipyard Alpha CCF Program participant, and an OSV Vessel purchaser owner Delta (not a CCF program participant).

Example No. 1: Shipyard Alpha uses the CCF Program to finance construction of an OSV that is sold to Purchaser Delta (not a CCF participant). In year 5, Delta operates the OSV in a service that is a non-qualified service under section 390.5. Alpha and Delta are each liable to MARAD under section 390.12 damages for these 5 years after delivery section 390.5 non-qualified OSV operations.

Example No. 2: The facts are the same as in Example 1 except that Delta does not operate the OSV in a non-qualified service, but in year 5 sells the OSV to Purchaser Gamma (not a CCF participant), and in year 7 of Gamma ownership, Gamma operates the OSV in a service that is a non-qualified service under section 390.5.

Alpha, Delta and Gamma are each liable to MARAD for 390.12 damages for this 17 years after delivery OSV non-qualified operation.

As the shipyards explained, any owners

use of the OSV that provided services to platforms in international non-U.S. locations services would require that payment of liquidated damages under 390.12 for which the shipyard and every other owner in the CCF Program funded vessel chain of title would be liable. The Gulf Coast shipyards asserted they could not assume this burden, and urged that MARAD should not

These changes would enable U.S. shipyards to use the CCF Program to finance OSV building for U.S. flag OSV owner-operators free of any limitations on international trade employments. be asking the shipyards to assume it.

U.S.-based OSV owner-operators provide services in the Gulf of Mexico and at locations around the world. When Shell contacts an owner to request OSV services for a project in Indonesia, the OSV owner delivers—if it wishes to remain a Shell “preferred provider.” But if the OSV has been financed with shipyard CCF monies,

SAVE THE DATE!

the owner will be subjected to MARAD liquidated damages unless prior approvals are obtained. MARAD has no published regulations explaining the standards that it will apply. So, the OSV owners will forgo CCF program use, and will avoid purchases of vessels with CCF restrictions, in order to maintain needed business flexibility.

When the CCF Program is employed, the program participant gains the tax advantage of the deferral of tax on the amounts deposited under the program. These taxes are later recaptured by the Treasury, for a shipyard at vessel delivery, and for an owner-operator over the vessel’s life or at its sale. If a CCF Program participant operates a CCF financed vessel in a non-qualified trade, the value of that deferral is repaid to the Treasury in the form of the “liquidated damages” under section 390.12.

Under current MARAD interpretations these liquidated damages provisions are being treated as being “attached” to the vessel, both to the original program participant and all subsequent purchasers.

This philosophy implies that the original CCF tax deferral benefit in some way flows through to the subsequent purchaser. But this is not the case.

When a CCF Program participant sells

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September 2015 MARINE LOG 33

OPINION a qualified agreement vessel in a taxable transaction, tax is computed on the excess of the selling price over the adjusted basis of the vessel. Because the qualified withdrawals that have been made for the vessel will have lowered its adjusted basis, the gain attributable to the CCF reduction will be taxed at ordinary income rates. The taxation of the gain attributable to the CCF basis reduction recoups the original tax deferment, and no tax advantage is passed

on to the purchaser. Of course the CCF Program participant has benefitted from the time value of the deferral of the tax over some period. However, during this period that money has been used for MARAD approved qualified CCF Program objectives. The sale of a qualified vessel should not be an occasion for MARAD’s recapture of the timing benefit that was used to accomplish MARAD approved Schedule B objectives.

These changes would enhance the value

H. Clayton “Clay” Cook Jr., Esq., is Principal of Cook Maritime Finance.

Previously, Clay worked for 10 years as U.S. flag counsel with Seward & Kissel LLP. Early in his career, he served as General Counsel at MarAd. At MARAD, Clay was responsible for the Nixon Administration decisions that ended the Treasury Department efforts to prevent CCF Program implementation and compelled Inter nal Re venue Ser v ice cooperation. He advises shipowners and shipbuilders on legal issues associated with their U.S. maritime business operations, and serves as special maritime counsel to general practice law firms. He brings over 40 years of senior government and law firm experience in reviewing, designing and implementing U.S. flag projects. He is recognized as one of the nation’s leading experts on the MARAD Title XI financing guarantee and Capital Construction Fund (CCF) tax deferral programs, and on the MARAD and U.S. Coast Guard U.S. citizenship determinations under Title 46 of the United States Code. www.cookmaritimefinance.com

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34 MARINE LOG September 2015

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of the program and result in more widespread CCF Program use. They would allow the employment of OSVs in worldwide service competition, enable fair market value sales of vessels with clean titles, free of CCF Program restrictions and the need for MARAD negotiations. And with these changes in place, MARAD staff would no longer be required to devote time to the grant of 390.5 waivers or to monitoring the operation of formerly CCF Program qualified agreement vessels that have been sold to other than Program participants so that liquidated damages can be assessed under section 390.12.

These changes would enable U.S. shipyards to use the CCF Program to finance OSV building for U.S. flag OSV ownerop er ators free of any limitat ions on international trade employments. The CCF provisions of the 1970 Act were intended to “level the tax playing field” for our U.S. citizen vessel operators. Certainly no one who was involved with the 1970 Act passage or implementation would have imagined that MARAD would later block this intended tax result and erect a barrier to competition with foreign flag operators in its CCF Program regulations.

MARAD should act to remove these barriers to U.S. shipyard CCF Program participation. ■

To exhibit contact: Chris Dimmerling cdimmerling@divcom.com

7/8/15 10:22 AM

newsmakers

USCG names VADM Charles Michel its new Vice Commandant USCG Vice Admir al Charles Michel has been named to the role of Vice Commandant of the United Sates Coast Guard. Michel will oversee the Coast Guard’s operational governance and management of the service’s more than 58,000 employees and 30,000 volunteers.

Andrew Gl ass has been appointed Managing Director of BMT Cordah, a subsidiary of BMT Group. Glass will be responsible for leading the business in implementing strategy, direction and policy, ensuring the company continues to provide extensive range of specialist services to its UK and international offshore oil and gas customers.

Carnival Corporations & plc’s newest cruise brand, Fathom, has named Michelle Sut ter its Senior Sales Leader. Sutter will be responsible for marketing and business development supporting sales for the Fathom brand.

W är t sil ä’s B o ard of Directors has appointed Jaakko Eskola, MSc (Eng.), as the new President and CEO of Wärtsilä Corporation. He will assume the position on November 1, 2015, succeeding Björn Rosengren, who will become the CEO of Sandvik, a global engineering group based in Sweden.

C ap t a i n J o h n D .

Reeves has joined Elliott Bay Design Group (EBDG). Reeve s is a licensed professional engineer and mariner who has spent 22 years leading high-per for mance teams and directing, engineering, maintenance, safety and operations for the United States Coast Guard.

F ollow ing t he appoint ment of Jack Prendergast as President and CEO, VT Halter Marine, Pascagoula, MS, has announced the reshuffling of its management line up. Richard A. Zubic has been named Executive Vice President, Shipbuilding; Rob Mullins has been promoted to Senior Vice President, Strategy and Estimating; Harry Bell will now take on the role of Vice President of Sales and Marketing; and Pawan Agrawal will serve as Vice President, Repair. VT Halter also welcomed Phil Adams to the VT family,appointing Adams Senior Vice President.

Matson, Inc., has promoted Kenny Gill to the position of Vice President, Alaska. Gill will be responsible for operations in Alaska, including terminal operations, customer service, sales, and financial performance of the company’s terminals in Anchorage, Kodiak, and Dutch Harbor. Prior to his appointment, Gill served as Senior Director of Operations for Horizon Lines’ Alaska Division.

Electronic Marine Systems Inc. has appointed Ron Monnell as its National Sales Manager. Monnell brings with him over 35 years of marine sales experience.

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September 2015 MARINE LOG 35

revers

techNews Ubw Goes In Deep

MAN Power for world’s largest cutter-suction dredger Jan de Nul is ready to add more power to its fleet. The company recently announced that its new self-propelled cutter suction dredge, currently on order at Croatian shipyard Uljanik Brodogradiliste, will be equipped with one MAN 14V48/60CR and two MAN 9L48/CR engines, generating diesel power of over 40,000 kW for the vessel.

This makes the dredge 50% more powerful than the group’s J.F.J De Nul—the world’s largest cutter suction dredge.

The cutter power will be 8,500 kW and the cutter ladder will weigh around 2,000 tonnes. “These figures are unrivaled and make the vessel the ultimate tool for dredging hard rock,” says Jan De Nul. “This new vessel represents a significant

development within the dredger segment in that, up to now, the largest installed power on similar vessels was approximately 27-28 MW, a figure the new vessel easily surpasses,” says Lex Nijsen, Vice President and Head of Four-Stroke Marine, MAN Diesel & Turbo.

The 48/60 CR engines are equipped with key, in-house-developed technologies to optimize their economic and ecological performance including high-efficiency, TCA-type, exhaust-gas turbochargers; advanced, electronic fuel-injection systems; electronic hardware and software for engine control, monitoring and diagnosis in the form of MAN Diesel & Turbo’s proprietary SaCoSone system. www.mandieselturbo.com

if U-Boat Worx founder Bert Houtman has his way, man (or woman) will be able to travel to the deepest parts of the ocean and see with their own eyes the underwater landscape for the first time. The Netherlands-based U-Boat Worx (UBW) has launched the world’s first transparent three-person submersible, capable of reaching depths of 1,700 m.

The C-Research 3 will feature a spherical acrylic pressure hull in order to reach those depths.

Teaming up with a number of scientists, UBW designed a compact and cost-effective submersible that enables the human exploration of the world’s oceans with safety, high performance, ultra-wide field of vision and comfort guaranteed. DNV GL oversees the design, construction and trials of the submersible.

UBW says the presence of humanbeings in the subsea environment allows for much more effective observation and research when compared to unmanned underwater vehicles.

The C-Researcher 3 can be transported in a shipping container to minimize mobilization time and cost; and unlike traditional research submarines, it can be operated from a variety of vessel types, even superyacts.

A number of optional tools can be mounted on the submersible, allowing scientists to collect samples and marine organisms, measure water conditions, create 2D/3D underwater maps and analyze the seabed. www.uboatworx.com

First dual fuel trailing suction hopper dredge to be powered by Wärtsilä A pair of Wärtsilä dual-fuel (DF) engines will power a new generation Antigoon class trailing suction hopper dredge.

The dredge, named Scheldt River, is under construction at the Netherlands shipyard Royal IHC. The vessel is being built for the Belgian dredging, hydraulic engineering, and environmental solutions group DEME. The 104m dredge will have a Green Passport and a Clean Design notation, and will be in compliance with all SECA emission requirements.

Under the contract, Wärtsilä will supply one 12-cylinder and one 9-cylinder Wärtsilä 34DF engine(s), two Wärtsilä controllable pitch propellers and two transverse thrusters as well as its patented LNGPac gas

36 MARINE LOG September 2015

supply and storage system.

The vessel will have a hopper volume capacity of 8,000 m 3 and will be the first dredge to operate on dual fuel engines capable of utilizing LNG or conventional marine fuels.

“Wärtsilä’s unmatched experience and extensive reference list in dual-fuel engine applications, plus our complete solutions portfolio, were key considerations in the award of this contract,” says Lars Anderson, Vice President, Engine Sales, Wärtsilä Marine Solutions. “We congratulate the shipyard and owners for taking the decision to have this new dredge become the first to be capable of using LNG or diesel fuel.”

“Environmental considerations are extremely important for every new vessel

built today,” says Jan Gabriel, Head of New Building and Conversion Department, DEME. “Operating on LNG allows DEME to set new standards in minimizing harmful emissions. Scheldt River will easily comply with all local and international environmental regulations. Wärtsilä’s dualfuel know-how and, in particular, the 34DF engine series made our concept feasible.” www.wartsila.com

contracts Shipyard Contracts Marine Log welcomes your input. If you would like to report any new contracts, deliveries or changes to our listings, please e-mail: marinelog@sbpub.com. Some contract values and contract completion dates are estimated. Information is based on best available data on or about August 1, 2015. A more complete listing of Shipbuilding Contracts, Vessel Deliveries, and a Shipyard Directory are available on Marine Log’s Shipbuilding Intelligence website, www.shipbuilding.marinelog.com Shipyard

Location

Qty Type Particulars Owner/OPERATOR Est. $ Mil Est. DEL.

RECENT CONTRACTS Eastern Shipbuilding Great Lakes Shipyard Kvichak Marine Main Iron Works

Panama City, FL Cleveland, OH Seattle, WA Houma, LA

1 1 1 1

Towboats Tug Patrol boat Tug

134 ft 3,400 hp 74 ft 44 ft 6 in. x 13 ft 7 in.

100 ft x 38 ft

IWL River Regimen de Pensiones NYPD Bisso Towboat

2016 2016 2016-1Q 2016-3Q

Mobile, AL Lockport, LA Panama City, FL Somerset, MA Bayou La Batre, AL

1 1 1 1 1

LCS FRC Tug Patrol boat Towboat

418 ft x 104 ft 154 ft Z-Tech 80 ft x 38 ft 68 ft 8 in x 19 ft 80 ft x 33 ft

U.S. Navy U.S. Coast Guard Suderman & Young NYPD FMT

2015-3Q 2015-3Q 2015-3Q 2015-3Q 2015-3Q

DELIVERIES Austal USA Bollinger Shipyards Eastern Shipbuilding Gladding Hearn Horizon Shipbuilding

PENDING CONTRACTS

NOTES

Philadelphia, PA 4 Aker Philadelphia BAE Systems Southeast Mobile, AL 2 BAE Systems Southeast Jacksonville, FL 1 Sturgeon Bay, WI 1 Bay Shipbuilding Candies Shipbuilders Houma, LA 1 Gulf Coast Shipyard Gulfport, MS 4 Kvichak Marine Seattle, WA 30 Leevac Shipyards Jennings, LA 2 TBD 1 6 TBD TBD 3 3 TBD TBD 1

2017 Options Option Option Option Options Opt. to 2019 Options 2018-2020 RFP issued EBDG design 2018-2021 Design

Tankers Dump Scows Tug ATB Subsea vessel PSVs Skimmers PSVs Double-end ferry Car ferries Double-end ferries Pass./vehicle ferries School ship

50,000 dwt 7,700 cu. ft.

141 ft x 46 ft, 12,000 bhp 8,000 hp/155,000 bbl 108m x 22m, MT6022 dual fuel, 302 ft x 64 ft 30 ft 3 in x 9 ft 8 in 300 ft x 62 ft 70-car similar to Pocohontas 1,200 PAX (convert to LNG) 4,500 PAX 1,000 PAX/100 vehicles National Security Multi-Miss.

Crowley Maritime $500 Great Lakes Dredge Seabulk Tankers Inc. Plains All American Pipeline Otto Candies LLC Harvey Gulf Intl. Marine U.S. Navy Tidewater VDOT $25 Washington State Ferries NYCDOT $309 DRBA $101 U.S. DOT $5

Index of Advertisers Company Page #

Company Page #

ABS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Japan Radio Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . 10

Austal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

JMS Naval Architects . . . . . . . . . . . . . . . . . . . . . . . . 11

Blount Boats, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 4

KVH Industries, Inc.. . . . . . . . . . . . . . . . . . . . . . . . C4

Bristol Harbor Group, Inc. . . . . . . . . . . . . . . . . . . . . 4

Lloyds Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . C2

CIMAC Congress 2016 . . . . . . . . . . . . . . . . . . . . . . 33

Marine Art of J. Clary . . . . . . . . . . . . . . . . . . . . . . . 24

Clark Cooper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Marine Pollution Control . . . . . . . . . . . . . . . . . . . . 26

Conrad Shipyards LLC . . . . . . . . . . . . . . . . . . . . . . . 11

NAMEPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3

Danish Maritime Technology Conference. . . . . . . . . 5

Netsco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Detyens Shipyards. . . . . . . . . . . . . . . . . . . . . . . . . . 2

Pivotal LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Energy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Renishaw.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Great American Insurance Group . . . . . . . . . . . . . . 8

RSC Bio Solutions . . . . . . . . . . . . . . . . . . . . . . . . . 25

Interferry Conference. . . . . . . . . . . . . . . . . . . . . . . . 13

SNAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

International WorkBoat Show. . . . . . . . . . . . . . . . 34

Steel of West Virginia, Inc.. . . . . . . . . . . . . . . . . . . 12 September 2015 MARINE LOG 37

marketplace ENGINEERS & ARCHITECTS GILBERT ASSOCIATES, INC.

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on MarineYellowPages.com FLEET ENGINEER Andrie Inc., a Michigan based marine transportation company is seeking a highly motivated individual to fill the position of Fleet Engineer to assist in the development of equipment and repair budgets, direct the repair of equipment, prepare cost estimates for repairs, retrofits, shipyard work, and perform scheduled machinery and vessel inspections to assure proper operation and maintenance.

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To place a job posting, contact: Jeanine Acquart • 212 620-7211 • jacquart@sbpub.com September 2015 MARINE LOG 39

Marine salvage

ASA welcomeS membership beyond North America Spring is known as the season of new beginnings and that has certainly been the case for the American Salvage Association. Change didn’t end with the summer solstice, however, as the ASA has continued to grow and transform deep into the dog days of August.

Building upon a mandate to expand its reach beyond North America, the ASA has been busy establishing and promoting a presence in Central and South America, as well as the Caribbean Sea. This involves highlighting the work of current members in the region, in addition to actively recruiting companies headquartered in these countries to become ASA members. The recruitment process looks promising and the expanded ranks of new members will help to promote and amplify the initiatives for which the ASA fights on behalf of all of its members. This is summarized in the new mission statement, which reads, “The mission of the ASA is to be a unifying association of the commercial marine salvage industry, serving as the definitive spokesman for this industry in Washington, D.C. and elsewhere in North, Central and South America as well as the Caribbean Sea.” A recent exciting development has been that the ASA, in the interest of supporting the membership campaign, applied for and was immediately accepted as an Associate

MarineLoG ISSN 08970491

USPS 576-910

A Simmons-Boardman Publication 55 Broad Street, 26th Floor New York, N.Y. 10004 Tel: (212) 620-7200 Fax: (212) 633-1165 www.marinelog.com

Member of the Inter-American Committee on Ports (CIP) of the Organization of American States (OAS).

The CIP is the permanent Inter-American forum and advisory body of the OAS member states that promotes hemispheric development and cooperation at the highest government level in the port (maritime) sector with the active participation and collaboration of the private sector.

OAS-CIP is sponsored by the following member states: Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana,

Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts and Nevis, St. Vincent and the Grenadines, St. Lucia, Surinam, Trinidad and Tobago, United States, Uruguay, and Venezuela.

While OAS-CIP has a broad range of interests, three areas are of direct relevance to the ASA including 1) Port protection, 2) environmental protection and 3) navigation safety.

The calendar may read September but the vibrant, Spring-like spirit of progress and renewal remains with the American Salvage Association. As 2015 inevitably leaves the stage and cedes to 2016, we look forward to continued success for both the Association and the industry at large.

ASA members operate all over the world, such as this project off of Gibraltar

Advertising Sales UNITED STATES New York Sales Office 55 Broad Street, 26th Fl New York, NY 10004 U.S. Gulf Coast and Mexico Jeff Sutley National Sales Director Tel (212) 620-7233 Fax (212) 633-1165 E-mail: jsutley@sbpub.com U.S. East Coast, Midwest, West Coast and Canada Ian Littauer Regional Sales Manager Tel (212) 620-7225 Fax (212) 633-1165 E-mail: ilittauer@sbpub.com

40 MARINE LOG September 2015

Paul Hankins, President, American Salvage Association

WORLDWIDE Marine Log (UK) Suite K5 & K6, The Priory Syresham Gardens Haywards Heath RH16 3LB UNITED KINGDOM International Louise Cooper International Sales Manager Tel: +44 1444 416368 Fax: +44 1444 458185 E-mail: lcooper@sbpub.com

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STER I G E R !

NOW

2015 NORTH AMERICAN

October 5-7, 2015

WORLD MARITIME DAY www.worldmaritimedayna.net

Maritime Education and Training Summit Collaboration for Industry’s Future

Securing Maritime’s 21st Century Workforce Maritime Institute of Technology & Graduate Studies (MITAGS), Linthicum Heights, MD PROGRAM Monday October 5, 2015 (Arrival) 6-9:00 PM Opening Dinner for those attending conference plus Industry Panel “Hot Topics” • Paul “Chip” Jaenichen, MARAD • RADM Fred Kenny (USCG-Ret.), IMO • Tim Meisner, Transport Canada • RADM Paul Thomas, USCG • RADM James Watson, (USCG-Ret.), ABS Americas • Clay Maitland, NAMEPA (Moderator) Tuesday October 6, 2015 (Day 1) 8:45 am Opening Remarks • Congressman Elijah Cummings Maryland 7th District Keynote Speaker • Admiral Paul Zukunft- Commandant, United States Coast Guard Keynote Speakers Tim Meisner- Director General, Marine Safety & Security, Transport Canada Day Chairman Remarks RADM James Watson (USCG, Ret.)- President and COO, ABS Americas Plenary Session– Maritime Workforce Needs in the 21st Century • Session Chairman: RADM Michael Alfultis- President, SUNY Maritime College • Panelist 1 Shipping: Mark Barker- Interlake Steamship CEO Workshop I A. Educators: Starting a Marine/Maritime/Intermodal School or Program

LUNCH (Luncheon Speaker) Paul “Chip” Jaenichen Maritime Administrator

Plenary Session – American Labor Developing a 21st Century Workforce • Session Chairman: RADM Thomas K. Shannon USN, Commander Military Sealift Command • Panelist 1 President MM&P, Don Markus • Panelist 2 President AMO, Paul Doell (Invited) • Panelist 3 President SIU, Mike Sacco • Panelist 4 President MEBA, Marshall Ainley

Workshop II A. Educators: Academic Outcomes Of Marine/Maritime/ Intermodal K-12 School Programs B1. Industry: Domestic Vessel Operator Association Partnerships B 2. Industry: Overcoming Regulatory Impediments to a Maritime Career C. Administrators: Promoting a Diverse Workforce

Workshop IV A. Educators: Marine/Maritime/Intermodal K-12 Teacher Development B. Industry: Maritime Industry K-16 School Partnerships C. Administrators: Marine/Maritime Community College Programs C 2. Administrators: Maritime Museum, Historic Ship and Aquarium Education Partners

Workshop III A1. Educators: Marine/Maritime/Intermodal High School Career Tech Programs A 2. Educators: Global Primary and Secondary Marine/ Maritime Education B. Industry: Military Transition to Merchant Mariner C. Administrators: Community Maritime Organization Support

Workshop V A. Educators: Marine/Maritime STEM Education Programs B1. Industry: Port and Terminal Workforce Development B 2. Industry: Quality of Training: Measuring Effectiveness C. Administrators: Post-Secondary Marine/Maritime Education

B 1. Industry: Apprentice/Internship Programs B 2. Industry: Marine/Maritime Professional Organization Partnerships C. Administrators: Maritime Higher Education K-12 Partnerships

Wednesday, October 7, 2015 (Day 2)

Workshop VI A. Educators: Role of Maritime Simulation Technology in Preparing for the Future B. Industry: Future Workforce Needs and Trends C. Administrators: Navy, Coast Guard, NOAA and USACE Outreach Programs

8:15 am Opening Remarks • Rear Adm. Frederick Kenney (USCG –Ret)- Director of Legal and External Affairs, International Maritime Organization

CONFERENCE SUMMATION DAY TWO Moderator: Captain Michael Rodriguez USN, Deputy Maritime Administrator

DINNER • “Maryland Shore Dinner” All Conference Attendees

Keynote Speaker • Secretary of Labor, Thomas E. Perez (Invited)

Visit our website: www.WorldMaritimeDayNA.net for more information and to register today!

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