Jones Act renaissance
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- Published on Monday, 15 December 2014 08:00
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Jones Act renaissance
IHS Maritime’s Greg Miller explains why US yards see stronger order levels in the tanker, container, and offshore sectors
Three external drivers have converged, pushing production of ships for the United States’ protected Jones Act trades to unusually high levels.
The first factor is surging domestic oil production, which creates a greater need to transport petroleum products and crude in coastwise trades. Such cargoes must be carried aboard US-built tankers and barges.
Second, the daunting requirement that 0.1% sulphur bunker fuel be used within the North American Emission Control Area (ECA), which extends 370km off US and Canadian , comes into effect 1 January 2015. For operators of Jones Act container ships and product tankers, and even some offshore operators, LNG is seen as a more attractive fuel option, prompting orders for LNG-capable newbuildings.
The third driver is robust offshore production, which continues to support supply vessel orders. The Energy Information Administration (EIA) is forecasting a 12.8% increase in US offshore production this year, followed by an 18.4% jump next year. The EIA noted that six US projects came online in the Gulf of Mexico during 1H14, with another five to follow in 2H14. 7 hull forms.
Five product tankers will be built for APT with deliveries from 4Q15 through to 2Q17. An additional three product tankers of the same design will be delivered to Seabulk between 2Q16 and 1Q17, priced at about $126.1M each.
The second major competitor in the Jones Act tanker newbuilding market, AKPS, is marketing an MR product tanker design by Hyundai Mipo Dockyard. The AKPS product tankers have a capacity of 49,990dwt, or about 330,000 barrels, and will be LNG conversion-ready. Four have been ordered by a JV between Crowley and AKPS at about $125M each for delivery between 3Q15 and 3Q16.
Orders for vessels of the same design were also recently finalised by a new entrant to the market: Philly Tankers. AKPS has invested in a 54% stake in Philly Tankers, with the remaining 46% held by AKPS affiliate American Shipping Co (AMSC), private equity giant Apollo, and other institutional investors. Two confirmed Philly Tankers newbuildings are due for delivery from AKPS in 4Q16 and 1Q17.
Beyond its six firm product tanker orders, AKPS is delivering one additional crude tanker to ExxonMobil subsidiary SeaRiver for deployment in the Alaska-US West Coast trade. AKPS is using Samsung Heavy Industries as its design and procurement partner on the crude-tanker orders.