Kirby reports third quarter results

Consolidated revenues for the 2015 third quarter were $532.6 million compared with $680.7 million for the 2014 third quarter.

President and CEO David Grzebinski said the results were “largely in line with our expectations.”

“Demand across the majority of the products we carry in the inland marine transportation market remained stable with utilization in the 90% to 95% range,” he said. “Market pressure from inland tank barges shifting out of crude oil service led to continued modest pressure on contract renewal pricing. Spot prices were generally around contract price levels throughout the quarter. In the coastal marine transportation market, pricing for term contract renewals increased modestly. Our results also reflected the anticipated earnings impact from heavy coastal equipment shipyard activity.”

Mr. Grzebinski called market conditions in Kirby’s land-based diesel engine services business, as continuing to be challenging due to the decline in the price of crude oil and, consequently, the low utilization levels of the oilfield service industry pressure pumping fleet.

In the marine diesel engine services and power generation markets, results reflect continuing soft activity in the Gulf of Mexico oilfield service market, but otherwise stable levels of demand.

MARINE TRANSPORTATION

Marine transportation revenues for the 2015 third quarter were $418.3 million compared with $448.7 million for the 2014 third quarter. Operating income for the 2015 third quarter was $93.7 million compared with $112.1 million for the 2014 third quarter.

Kirby’s inland marine transportation business maintained tank barge utilization in the 90% to 95% range.

Demand for inland barge transportation of petrochemicals, refined products and black oil products, excluding crude oil, was consistent with the second quarter. Demand for barges moving crude oil and condensate during the quarter was lower both sequentially and year over year.

Operating conditions were challenging due to scheduled lock closures along the Gulf Intracoastal Waterway and high water conditions during the first part of the third quarter. Delays related to lock outages contributed to a 40% increase in delay days relative to the prior year quarter and a decline in ton miles. In addition to increased delay days, fuel prices, which were down 38% year-over-year, contributed to the year over year decline in revenue.

Demand in the coastal marine transportation market for the transportation of refined petroleum products, black oil, and petrochemicals was relatively stable, although demand for equipment for crude oil transportation declined sequentially and year over year.

Coastal fleet utilization remained in the 90% to 95% range and operating conditions were seasonally normal during the third quarter. A continued heavy shipyard schedule impacted operating results.

The marine transportation segment’s 2015 third quarter operating margin was 22.4% compared with 25.0% for the third quarter of 2014 as a result of higher labor costs, including pension, lower inland marine transportation rates, increased shipyard activity and higher depreciation expense in the coastal business, and the impact of fuel price escalators on inland marine affreightment contracts.

CASH FLOW

Kirby continued to generate strong cash flow during the 2015 first nine months with EBITDA of $437.5 million compared with $484.6 million for the 2014 first nine months. Operating cash flow was used in part to fund capital expenditures of $265.2 million for the 2015 first nine months, including $66.6 million for new inland tank barge and towboat construction, $75.2 million for progress payments on the construction of four new coastal articulated tank barge and tugboat units (“ATBs”), $3.4 million for progress payments on the construction of two 4900 horsepower coastal tugboats, $1.6 million for progress payments on the construction of a new coastal petrochemical barge and $118.4 million primarily for upgrades to existing inland and coastal fleets.

Additionally, Kirby spent $41.3 million to acquire six pressure barges in the first quarter and a total of $202.2 million on share repurchases in the first nine months of 2015.

Total debt as of September 30, 2015 was $810.4 million versus $716.7 million on December 31, 2014, and Kirby’s debt-to-capitalization ratio was 26.4%.

OUTLOOK

Mr. Grzebinski said, “Our earnings guidance range for the 2015 fourth quarter is $0.93 to $1.03 per share and we are revising our full year 2015 guidance range to $4.10 to $4.20 per share [down from the prior guidance of $4.10 to $4.35 per share]. In our inland marine transportation market, our fourth quarter outlook reflects continued modest pricing pressure. Utilization in Kirby’s inland fleet, however, is projected to remain in the 90% to 95% range. In our coastal marine transportation market, although we’ve seen some industry spot availability related to the uncertainty around crude supplies, we expect supply and demand to remain consistent with the first nine months of the year and Kirby’s fleet utilization to remain above 90%. Our guidance assumes normal fourth quarter operating conditions for both the inland and coastal marine transportation markets, including the winter cessation of most operations in Alaska.”

Mr. Grzebinski said demand is expected to remain weak in the land-based diesel engine services market and the offshore oil services portion of the marine diesel engine services market, but is expected to remain relatively stable in the marine and power generation markets.

CAPITAL SPENDING

Kirby expects 2015 capital spending to be in the $320 to $330 million range, an increase of $5 million from earlier capital spending guidance. Contributing to this is a shipbuilding contract entered into the quarter for a 35,000 barrel coastal petrochemical tank barge. The vessel will enter service under contract with an existing customer on delivery, expected in early 2017.

The capital spending guidance range includes approximately $70 million for the construction of 38 inland tank barges and three inland towboats, all expected to be delivered in 2015.The capital spending guidance range also includes approximately $100 million in progress payments on new coastal equipment, including two 185,000 barrel coastal ATBs, two 155,000 barrel coastal ATBs, two 4900 horsepower coastal tugboats and the new coastal petrochemical tank barge.The balance of $150 to $160 million is primarily for capital upgrades and improvements to existing inland and coastal marine equipment and facilities, as well as diesel engine services facilities.

TSB investigates passenger boat capsize in which five died

Five lives were lost in the incident in which the vessel, the Leviathan II, operated by Jamie’s Whaling Station, capsized. One person is still missing.

Prelimary information released yesterday by the Transportation Safety Board of Canada (TSB) said that most of the passengers and crew were on the top deck on the port side of the vessel when the incident occurred. This would have raised the center of gravity, affecting the vessel stability.

The sea conditions were such that a wave approached the vessel from the starboard quarter. The vessel broached (tilted up and rolled) and then capsized.

One life raft deployed and was activated. At least two hand flares and one parachute rocket were fired.

Since arriving on scene, the TSB team has met with the Royal Canadian Mounted Police to review the information collected during, and immediately after, the rescue operation. It has also conducted interviews with the crew and some of the survivors to confirm certain facts during the time of the capsizing; and coordinated efforts to salvage the vessel so that the team can access it and start the physical examination.

Today, the team planned to examine the vessel, and determine how to recover any electronics onboard that may help identify the exact position of the vessel at the time of the occurrence. They also planned to examine the vessel to understand its condition at the time of the accident and review stability information at the time of its construction, examining any modifications made since that may have affected its stability.

The team will examine the various weights and their position onboard at the time of the accident to allow TSB naval architects to assess the vessel’s stability at the time of the occurrence. The team will also look at the maintenance and inspection records of the vessel, including life-saving appliances.

VESSEL OPERATOR STATEMENT

The vessel operator posted a statement on its web site October 26 saying it would be working closely with the Transportation Safety Board to determine exactly what has happened and to assist with the investigation in any way it could.

“To the best of our knowledge there was no distress call,” wrote the company’s Director of Operations, Corene Inouye. “From what we know at this stage it appears that the incident happened so quickly, the crew didn’t have an opportunity to send out a mayday.

“We have learnt that the crew was able to access emergency flares that are a part of the safety equipment on board the boat, and deployed them from the water. Local Ahousaht First Nations fishermen were the first to see this, and rushed to the scene to come to the assistance of our passengers and crew.

“As soon as the radio reports of an incident came in we immediately sent out all available vessels to assist in search and rescue efforts and liaised with RCMP, the Coast Guard as well as our local hospital and rescue volunteers.

“We can tell you that the skipper of the MV Leviathan II has over 20 years whale watching experience in these waters – 18 years with our company. The other two crew have five years and three years of experience. All are licensed by Transport Canada and go through rigorous training as well as bi-weekly safety drills and exercises.”

JHSV program gets new name and another $53.4 million

 

The new name for the series is part of a change in ship type designators that began back in January when Secretary of the Navy Ray Mabus announced that the next flight of “frigatized” Littoral Combat Ships would get the FF, or frigate, designator.

Last month, the secretary brought in a new E designator that, in addition to see the Joint High Speed Vessel (JHSV) become the Expeditionary Fast Transport, or EPF, sees the Mobile Landing Platform (MLP) become the Expeditionary Transfer Dock, or ESD; and the Afloat Forward Staging Base (AFSB) variant of the MLP become the Expeditionary Mobile Base, or ESB.

The EPF will provide high speed, shallow draft transportation capability to support the intra-theater maneuver of personnel, supplies and equipment for the Navy, Marine Corps, and Army.

Austal’s new contract action allows the procurement of ship sets for the specifications supporting integrated propulsion, main diesel generator engines, propeller and shafting, integrated bridge and voice communications.

Fiscal 2015 shipbuilding and conversion (Navy) funding in the amount of $26,739,198 is being obligated at time of award and will not expire at the end of the current fiscal year.

The contract was not competitively procured in accordance with U.S. Code 2304(c)(1) – only one responsible source and no other supplies or services will satisfy agency requirements.
The Naval Sea Systems Command, Washington, DC, is the contracting activity (N00024-16-C-2217).

Fincantieri opts for Intergraph flagship software solution

OCTOBER 28, 2015 – Fincantieri has selected Intergraph Smart Yard to improve the execution of international large-scale cruise, military and merchant shipbuilding projects. Smart Yard is Intergraph’s flagship solution for a single,

New LNG containment system makes progress

  The joint venture group comprises Braemar Engineering, Honghua Group EnTX and Jamestown Marine Metals.

The FSP system – a new flat-panel, semi-membrane, prismatic-shaped LNG tank-containment system Type B – uses new flat plate technology to overcome the issues associated with partial filling and sloshing. The system employs  the ‘riction stir welding technique, used in the aerospace industry, for optimum integral strength. 

FSP can be used in a wide range of applications: Floating Production and Storage (FPSO); Floating Storage Regasification Units (FSRU), LNG transportation and LNG marine fuel tanks. It can also be used as offshore storage. 

The new Type B containment system has been designed to be constructed, outfitted, insulated and tested off hull and lifted complete onto the platform. The use of on shore construction facilities ensures the highest standards of quality care and repeatability.

In a joint statement, Chairman Zhang Mi, Chairman and President of Honghua Group, and Geoff Green, Managing Director of Braemar Engineering, said that “substantial progress has been made to date, and this is expected to continue going forward”. 

They added that GDA and Tank Specific Approval are moving forward in parallel, and that approval, construction and test-completion of an initial tank is projected for March 2016.

Concept LNG fueled mega box ship would be COGAS electric

The partners in the study — LNG containment system specialist GTT, containership operator CMA CGM (and its subsidiary CMA Ships) and classification society DNV GL — say the concept that has the potential to offer a more efficient, more flexible and greener box ship design than current 20,000 TEU two-stroke diesel engine driven ultra large container vessels.

They have dubbed the vessel the “Piston Engine Room Free Efficient Containership” (PERFECt).

Essentially, the concept ship takes advantage of the flexibility of electric drive to use space previously occupied by the main to carry cargo, more than offsetting the extra volume required by the LNG fuel tanks in comparison with conventional HFO tanks.

A comprehensive analysis with the DNV GL COSSMOS tool simulated components of the power production and propulsion system to analyze the COGAS system, making it possible to get detailed data for the calculation of the overall fuel efficiency for a complete round voyage.

Using a global FEM analysis, the project partners also evaluated the impact of the changes that were made to the general arrangement.

The two 10,960 cu.m LNG fuel tanks are located below the deck house, giving the vessel enough fuel capacity for an Asia/Europe round trip.

With the gas and steam turbines integrated at deck level within the same deck house as the tanks, space normally occupied by the conventional engine room can be used to increase cargo capacity significantly.

The dissociation of electric power generation from electric propulsion allows the electric power plant to be moved away from the main propulsion system, giving a great deal of flexibility. In fact, say the partners “an engine room is not needed any more.”

The three electric main motors, which are arranged on one common shaft, can be run fully independently of each other providing increased redundancy and reliability and a high level of safety.

With gas turbine-driven power production utilizing a very clean fuel as well as electric propulsion, the ship’s machinery systems will be simplified and more robust. This approach is also expected to lead to new maintenance strategies, already common practice in aviation, that would enable shipping companies to reduce the ship’s engine crew and save costs.

The study also suggests that optimizing the power plant through minimizing the steam turbine size, reducing power capacities, condenser cooling, and using a two-stage pressure steam turbine and steam generator will increase the system’s efficiency further. The next phase of the study aims to optimize the propulsion system and ship design to attain even greater efficiency and increased cargo capacity.

THE PRICE TAG

As part of the analysis, costs for additional and reduced systems to the base case ship (CMA CGM’s 20,000 TEU Marco Polo) were considered.Additional costs included:
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Costs that could be eliminated or reduced in compared to the two-stroke engine system included:ƒƒ

At the end, the CAPEX (capital expenditure) for the COGAS ship are seen as being to be 20% to 24% above those for a conventionally-fueled vessel.

The OPEX (operating expenditure) costs largely depend on the difference in fuel price, the additional income related to the additional containers which can be transported and the savings related to a possibly higher system efficiency.

On the basis of the current gas price in Europe, which is nearly the same as the HFO price a business case in comparison with a two stroke ship using HFO plus scrubber as a reference therefore “needs compensation either by a larger difference between gas and LNG price or by additional benefits from efficiency improvement and additional revenue from additional container slots.”

Still, the partners say that the results of the feasibility study, including the CAPEX and OPEX calculations, encourage them to plan a more detailed evaluation of the overall system in a follow-up project.

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Perfect GA

Nakilat retrofits QMax’s main engines to LNG fueling

 

The project involved retrofitting two MAN B&W S70ME-C HFO-burning engines in the chartered Q-Max vessel Rasheeda with gas-burning M-Type Electronically Controlled – Gas Injection (ME-GI) Systems, which have now been successfully commissioned.

The retrofit modification meets all current and foreseen global emissions regulations.

Nakilat-Keppel Offshore & Marine (N-KOM) carried out the conversion at its Erhama bin Jaber Al Jalahma Shipyard facilities in the major Qatari port of Ras Laffan Industrial City.

The project collaborators, including MAN PrimeServ, installed the ME-GI system on the vessel at the shipyard in June 2015. The partner for the ME-GI fuel supply system is TGE Marine Gas Engineering GmbH,

Christian Ludwig, Head of Retrofit and Upgrades, MAN PrimeServ, said: “This is a fantastic milestone in our company’s history. It is a lighthouse project, and there has been a remarkable partnership and cooperation through this historic conversion. Our ME-GI order book now stands at 140 orders – for different vessel sizes and applications, which we see as a compelling case for our technology to be designated the industry standard.”

Nakilat Managing Director Eng. Abdullah Al-Sulaiti, said, “The success of the ME-GI project is the culmination of years of cooperation with Qatargas, RasGas and MAN Diesel & Turbo as turnkey project manager. In late 2013, Nakilat worked with our charterers to implement a pilot conversion on Q-Max Rasheeda, the first retrofit ME-GI project ever to be implemented in the marine industry. This is a milestone moment for all involved parties.”

MAN Diesel & Turbo reports that the vessel’s ME-GI units have displayed a seamless change between fuel-oil and gas operation – a key characteristic of the ME-GI technology.

The Qatar fleet comprises 14 Q-Max and 31 Q-Flex LNG carriers, all using dual MAN Diesel Turbo’s S70-ME low-speed diesel engines for propulsion.

THE ME-GI ENGINE

The ME-GI engine gives shipowners and operators the option of utilizing oil or gas fuel depending on relative price and availability, as well as environmental considerations.

The ME-GI uses high-pressure gas injection, allowing it to maintain the attributes of MAN B&W low speed engines that have made them the default choice of the maritime community.

The ME-GI is not affected by the derating, fuel-quality adjustment or methane-slip issues that have been seen with other dual-fuel solutions.

MAN Diesel & Turbo sees significant opportunities for gas-fueled tonnage as fuel prices rise and exhaust-emission limits tighten. Research indicates that the ME-GI engine delivers significant reductions in CO2, NOx and SOx emissions, with its negligible methane slip makes it the most environmentally friendly technology available.

An ME-LGI counterpart that uses LPG, methanol and other liquid gases is also available and has already been ordered.

 

NTSB: Search fails to locate El Faro pinger

The second stage of the search will now start, attempting to find the vessel using side scan sonar.

 

The USNS Apache arrived at the last known position of the El Faro on October 23, and began searching for the vessel with a Towed Pinger Locator (TPL).

The search area consists of a 10 nautical mile by 15 nautical mile area, in which the USNS Apache towed the TPL on five search lines across the search area in order to detect the acoustic signal associated with the El Faro’s pinger.

The USNS Apache concluded the first phase of the pinger locator search on October 26, 2015, with negative results.

The NTSB says that the TPL’s ability to detect the El Faro’s pinger may be affected by the orientation of the vessel as it lays on the sea floor or the current condition and functionality of the pinger.

The second phase of the search began yesterday, using the Orion side-scan sonar system. The second phase of the search will be conducted over the same search area. This phase will consist of 13 search tracks and will take about 14 days to complete. The side scan sonar system will be used to locate the El Faro, and if found, create an image of the vessel.

If the ship is found on the sea floor, its Voyage Data Recorder or “black box” can be retrieved to help investigators determine the El Faro’s final moments. It is suspected that the ship sank in Hurricane Joaquin on October 1 and is lying on the sea bottom in 15,000 feet of water near the Crooked Islands in the Bahamas. All 33 onboard are presumed lost.

APL in $9.8 million False Claims Act settlement

Scottsdale, AZ, based APL is a wholly-owned American subsidiary of Singapore-based Neptune Orient Lines Limited.

The Department of Defense contract required APL to affix a satellite tracking device to each shipping container transported from Karachi, Pakistan to U.S. military bases in Afghanistan when the Department of Defense (DOD) requested the tracking services.

The United States alleges that APL billed the DOD for tracking services despite knowing that the tracking devices completely or partially failed to transmit data, or were not affixed to shipping containers. The government also claims that APL attached a single satellite tracking device to two shipping containers despite being required to affix one device to every container.

“Today’s settlement demonstrates our commitment to ensure that contractors doing business with the military perform their contracts honestly,” said Principal Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to ensure that there are appropriate consequences for those who knowingly fail to live up to their bargain and misuse taxpayer funds.”

“Thanks to the collaborative efforts of many U.S. law enforcement professionals, APL is today being held accountable for their actions,” said Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.

“I applaud all those responsible for their continued pursuit of those who attempt to take advantage of the U.S. military through false claims for services that were not provided.

The settlement with APL was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office of the Northern District of California, Affirmative Civil Enforcement Unit; DOD’s Defense Criminal Investigative Service; the Army’s Criminal Investigation Command and DOD’s Defense Contract Audit Agency.

The Justice Department notes that the claims resolved by the civil settlement are allegations only; there has been no determination of liability.

Barge mounted solution brings LNG to challenging locations

The Wärtsilä Mobile LNG solution has been developed for challenging locations where pipelines and large-scale LNG receiving terminals are not feasible, or where the quantities of LNG needed are smaller. It is well-suited for shallow water areas where access for larger vessels would not be possible without major jetty constructions or dredging operations.

The all-in-one solution includes a jetty-based LNG receiving system receiving system, LNG storage and a regasification barge. The barge can be used in combination with a fixed or floating power plant with an installed capacity of up to 250 MW, which is ideal for many medium-sized communities. Its capacity can be ramped up by floating a second barge next to it

Compared to constructing conventional land-based terminals in difficult soil conditions and areas with an undeveloped infrastructure, the barge can mean a significantly lower capital investment (capex) and faster delivery. And, being mobile, it can be easily re-located giving it a high resale value.

The Wärtsilä Mobile LNG solution will make LNG available to new consumer segments, and will benefit both utilities and end-users. The flexibility of location it provides can bring clean energy to areas that have only limited or no access to a national electrical grid.

“Wärtsilä’s solutions support the entire gas value chain, from drilling and production, to delivery, liquefaction, regasification, storage, and power generation. This latest innovation is one more important step towards completing our LNG infrastructure offering. Most existing facilities are geared for larger-scale users, whereas the Wärtsilä Mobile LNG offers a flexible and mobile option for small to medium requirements,” says Timo Koponen, Vice President, Flow and Gas Solutions, Wärtsilä Marine Solutions.

The LNG is transferred by a small scale LNG carrier.

mobile LNG 2

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