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American Shipper Offshore Wind Article

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US will enter offshore wind market, but faces critical port and vessel issues.

US will enter offshore wind market, but faces critical port and vessel issues.

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  • 1. LOGISTICS By Chris Gillis O ffshore wind energy may be one of the most coasts, have been under consideration for the past five to eight years. The proposed promising sources of clean electric power gen- projects have been repeatedly dogged by lack of clear government approval proce- eration for North America in the next five to 10 dures, occasional public opposition and insufficient access to financing due to the years, but enabling construction of these major projects to recent economic downturn. Only since the Obama administration begin is no easy feat. took office in early 2009 with the goal to create thousands of “green” jobs and the Port infrastructure and vessel equipment need to be approaching mandates for many states to generate a certain percentage of their power quickly built that specifically cater to efficiently handling from renewable energy sources have U.S. offshore wind projects finally received a these large-scale offshore projects. lift in their sails. “I don’t think this more than 20 years to gradually ramp up Purpose-Built. Vessel operators and side of offshore wind their offshore wind energy programs, state shipyards that have been engaged for more farm development has governors throughout the U.S. East and Gulf than 30 years in the U.S. offshore oil and been well thought coasts and Great Lakes aim to start plant- gas sector are keeping a close eye on the out yet,” said Paul ing wind turbines by the hundreds in their prospects of contributing to the construc- Madden, president of waters in the next several years. tion and maintenance of future offshore Offshore Wind Logis- For two decades, European wind farm wind farms. tics, a Florida-based developers have benefited from govern- “We’ve been watching this development company seeking to ment backing and an energy consumer base for the past three years and have visited with build and operate a Madden generally willing to pay a little extra for each of the major U.S. wind farm develop- fleet of wind turbine installation vessels for wind-generated electricity. The acceptance ers,” said Todd Busch, senior vice president U.S. waters. “Quite honestly, these issues of these types of measures in the United of Crowley Maritime Corp.’s Technical should have been assessed starting three States remains to be tested. Services Group, and an active player in to five years ago.” A few offshore wind ventures, particularly the Gulf oil patch. “We believe the U.S. Unlike the Europeans who have had along the U.S. Northeast and East Texas will enter the offshore wind industry like 14  AMERICAN SHIPPER:  APRIL  2010
  • 2. requirements of the Jones Act, which may turbines have special needs.” further add to their installation vessel costs. But the price tag for building installation Madden believes there are sufficient and maintenance support ships specific U.S.-flag jack-up barges to at least get the to offshore wind farms will not be cheap. first offshore test wind turbines installed, Purpose-build wind installation vessels but new vessels will be needed to handle may cost from $150 million to $350 million full-scale wind farm construction. “Very each to construct in a U.S. shipyard, while aggressive installation schedules and hostile maintenance vessels may range from $3 work environments will require efficient, million to $5 million apiece, said H. Clayton purpose-built vessels,” he said. Cook Jr., an attorney with law firm Seward With the proper equipment, Europe’s off- & Kissel, and a legal specialist in financing shore turbine installers can generally erect a U.S.-flag vessels. turbine upon a pre-established base secured Without firm charter commitments to to the seabed in 36 hours. “It’s got to be a participate in building offshore wind farms, repetitive process. You can’t do that using vessel operators are hesitant to begin invest- equipment that only allows you to erect a ing in new equipment. “It’s difficult for any turbine every five to six days,” Madden said. Jones Act carrier to build vessels on a leap Starting Line. Although cautious wheth- of faith,” Busch said. er the U.S. offshore wind energy business Some maritime will get off the ground, Jones Act vessel equipment develop- operators in the oil and gas sector are confi- ers, such as Keppel dent they can respond to the logistics needs. AmFELs, Wärtsilä Photo couRtesy of sIemens AG, munIch/BeRLIn “The offshore industry has not been North America, and marked by incremental change, rather it’s Derecktor, have pre- punctuated by spectacular leaps forward in sented designs to the Busch technology,” said Ken Wells, president of market that specifically cater to wind turbine the Offshore Marine Service Association installation and support activities. (OMSA), based in Harahan, La. “We excel Installation ships operating in U.S. waters at project management — how to get it done will have to handle turbines of 3.6 megawatts correctly and safely.” and larger, and in numbers exceeding 100 OMSA recently commissioned a study units per location at the biggest planned that found offshore vessels and shipyards offshore wind farms. The United States aims Europe has, but we’re certainly behind the that build them are responsible for about to receive 20 percent of its electric power curve in regards to technology.” $18 billion in annual spending and more from the wind (246 gigawatts on land and “Several of the offshore wind develop- than 100,000 jobs, paying about $4.6 bil- 54 gigawatts offshore) by 2030. ers are actively looking for installation lion in wages. In July 2009, the Texas General Land Of- solutions,” Madden said. “They’re anxious “This study confirms our belief that fice granted two concessions to Baryonyx for equipment to be offered to them and offshore energy activity, whether it is oil, Corp. to develop wind farms off the coasts they’re scared of the numbers coming out gas, wind or hydro-power, has critically of Mustang and South Padre islands with a of Europe.” important national benefits, not only for our total proposed output of up to 3,000 mega- Wind turbine installation vessels under coastal areas but for the entire U.S. economy watts. “It blows the Europeans out of the charter in Europe’s North and Baltic seas overall. This is perhaps more important water when they see them on the charts,” easily fetch in the range of $250,000 a day than ever before,” said Otto Candies III, said Hugh Rynn, project manager for Keppel from developers. In addition, vessel opera- OMSA chairman and treasurer of marine AmFELS in Brownsville, Texas. tors must have the proper onboard equip- transportation company Otto Candies LLC. Keppel AmFELS’ KATI installation ment, such as jack-up legs for deck stability, “The Jones Act operators are capable vehicle, a joint design with Glosten As- heavy-lift cranes, and personnel with the of building and operating those vessels sociates, is capable of transporting up to expertise to satisfy the rigorous installation needed for offshore wind farm work and three pre-constructed 6 megawatt turbines requirements of the the shipyards are there to do it,” Busch said. to offshore sites where they are essentially turbine manufactur- “The timing is as good as it’s ever been,” lowered onto preset monopiles and other ers, whose offshore he added. “Most shipyards are nearing the deeper water platforms, eliminating the units’ installed cost is end of their current building programs.” need for a costly onboard crane. A typical now approaching $5 In addition to installation vessels, off- onboard crane costs more than $45 million. million apiece. shore wind farm operators will require Rynn explained that personnel and prod- “Our vessel strategy fleets of maintenance vessels to transport uct safety are enhanced by pre-assembling is crucial to making parts and personnel safely and efficiently turbines quayside, instead of performing the us successful,” said to the turbines. work at sea, which is the common method Paul Rich, chief de- Rich “You can’t mix oil platform support ships today. Turbines weigh hundreds of tons and velopment officer for offshore wind farm with wind turbine support activity,” Harry stand 80 to 100 meters tall. developer Deepwater Wind. “Right now Vordokas, business development manager While niche transportation services pro- it’s our weakest link.” for Germanischer Lloyd’s Americas Divi- viders may participate in U.S. offshore wind In the United States, offshore wind farm sion, told attendees at a Marine Log confer- farm construction, Rynn believes it will developers must comply with U.S.-flag ence in Washington in early March. “Wind ultimately take a handful of major construc- AMERICAN SHIPPER:  APRIL  2010  15
  • 3. LOGISTICS tion companies, such as Fluor and Bechtel, An inside look  to take on the prime contractor role and the at a wind turbine. installation process. “In this world of huge risk and mega-cost, you need someone with the muscle and ability to handle it,” he said. Hub Ports. Industry analysts note that to efficiently manage turbine components and the vessels that transport them will require the development of coastal hub ports to serve regional clus- ters of offshore wind farms. Several ports in the U.S. Northeast are already vying for this opportunity. Photo couRtesy of sIemens AG, munIch/BeRLIn “Having land is key,” said Steven King, managing director of Quonset Development King Corp., which oversees Rhode Island’s Ou- onset Point and Port of Davisville. “The size of these components is stunning when you see how large they actually are. We’re lucky we’re land rich here.” Left out Association, which represents the region’s U.S.-flag vessel operators. “What we’ve said is that we’d like to have a three-mile Engage all parties when planning safety zone along each side of the course lines.” an offshore wind farm, attorney says The last thing the carriers want to have to do is dodge turbines, especially if they’re C ape Wind, a 130-turbine offshore nothing but headaches by ignoring those forced off course or seeking safe harbor due wind farm planned off the coast potentially impacted by these large proj- to storms. “In heavy weather, the course of Nantucket Sound, has taken its ects. At a recent Marine Log conference, he lines can go out the book,” Nekvasil said. public relations hits from wealthy Cape recommended that wind farm developers: Bruce Bowie, president of the Canadian Cod landowners, Native American groups • Seek resolution with all parties that Shipowners Association, is concerned and even ferry boat operators. have concerns with the project. about offshore wind farm construction The Passenger Vessel Association, • Evaluate the alternatives in the record. activities and the potential for supply ships which represents Nantucket Sound ferry • Avoid temptations to take short cuts. moving across navigation channels. “There boat operators, has recently come out In particular, short cuts become “a damn- would need to be a traffic control system against the Cape Wind project, not out ing indictment against the developer in the in place to ensure that vessels associated of dislike for offshore renewable energy courts. These are the kinds of mistakes that with construction do not present a safety projects, but because the developer failed can prove deadly to a project,” Kiern said. hazard for commercial navigation,” he said. to take seriously the industry’s concerns “Developers have full responsibility Another concern for the Great Lakes about vessel navigation near fixed turbine to ensure that things are done correctly, carriers is how offshore wind farms will structures between Cape Cod and Martha’s because it’s likely there will be collateral interact with winter ice conditions. Vineyard. attacks in the courts,” he added. “The proposals will have to take into ac- Edmund Welch, legislative director for While not as far along in the planning count ice formations and flows experienced the Passenger Vessel Association, said process as Cape Wind, stakeholders are in the lakes during the early spring, late fall Cape Wind gave ferry boat operators the already lining up to voice their concerns and winter navigation operations,” Bowie “backhand,” rather than engaging them about proposed offshore wind farms in the said. “Sufficient buffer space will need to early on in the process, and any information Great Lakes. be provided to ensure that the wind farms learned about the project had to be “gleaned U.S. and Canadian carriers say they’re do not impede icebreaking operations.” from the press and government officials. generally not opposed to sharing the Great Bowie believes installing wind turbines “The location of the 130 turbines poses Lakes with offshore wind farms, as long in shallow water will minimize interference an unacceptable navigation risk,” Welch as the turbines don’t encroach on their with vessel navigation in the Great Lakes. said. “Existing navigation routes should established vessel traffic patterns. However, when asked whether the Ca- supersede new uses.” “From a lakes carrier perspective, we nadian Shipowners Association has been Lawrence Kiern, an attorney with Win- want to make sure the wind farms don’t contacted yet by any of the Great Lakes ston & Strawn, warned that offshore wind interfere with navigation,” said Glen offshore wind farm developers for input, farm developers will cause themselves Nekvasil, spokesman for the Lake Carriers’ he answered “no.” 16  AMERICAN SHIPPER:  APRIL  2010
  • 4. LOGISTICS Rhode Island may become the first state to realize the construction of the country’s first offshore wind turbines. Deepwater Wind plans to erect five to eight off the coast of Block Island by 2012, soon followed by a Jones Act question wind farm of more than 100 turbines, for Offshore wind farms in U.S. waters an eventual output of 1.3 million megawatt hours per year or 15 percent of the electricity may be tested by foreign-flag vessel operators. used in the state. In mid-February, Quonset Development U.S. maritime cabotage laws may and installations attached to the seabed received a $22.3 million Transportation apply to offshore wind power projects for the purposes of energy exploration. Investment Generating Economic Recovery within navigable waters, but their appli- “That’s the catch,” Papavizas said. (TIGER) grant from the U.S. Transportation cation comes into question when those “Does exploring for renewable energy Department, which will go toward helping confines are expanded to cover this type offshore apply?” reinforce the pier, purchasing a mobile crane of energy explora- The 2005 Energy Policy Act deals capable of lifting up to 200 tons, and widen- tion and develop- with renewable energy development on ing some roads between the port and two ment on the outer the continental shelf, but does not ad- Deepwater production and staging properties continental shelf. dress Jones Act requirements for vessels each about a half-mile away. That’s the con- involved in these activities. The port is about 20 miles by vessel from clusion reached in If the Jones Act is found not to apply, Deepwater’s Block Island offshore wind a recent compre- all the components for a wind farm could farm site. However, it’s possible for the port hensive analysis conceivably be transported to an outer to serve wind farm interests as far north of Section 27 of continental shelf site on a foreign-flag as Maine and as far south as New Jersey, the 1920 Merchant Papavizas vessel from the United States. Even if the Deepwater’s Rich said. Marine Act, better known in the U.S. Jones Act is found to apply, Customs and In addition to Rhode Island, Deepwater, maritime industry as the Jones Act, by Border Protection may find that foreign- with PSEG Renewables, has formed Garden attorneys Charlie Papavizas and Gerald flag vessels can be used to install compo- State Offshore Energy to develop offshore Morrissey of the law firm Winston & nents but potentially not transport them. wind projects serving New Jersey. The first Strawn’s Maritime Practice Group. They Also, once the wind farm is in place, the project, 20 miles due east of Avalon, N.J., will expect their findings to be published vessels involved in maintenance must be bring up to 345 megawatts of wind power this spring. Jones Act qualified, since they will be to Ocean City, N.J. The company is also The United States’ navigable waters shuttling materials and personnel from evaluating sites off the coasts of Maryland, generally cover three miles offshore, U.S. shore-side locations. Delaware, New York and Maine. whereas the continental shelf extends Papavizas said it’s important for the Other ports may take on parts of the busi- 200 miles into the sea. offshore wind developers and their ves- ness. Cape Wind, a 130-turbine offshore wind “Everything in the literature suggests sel transportation services providers to farm planned off Nantucket Sound, has pro- the Jones Act applies (to offshore wind have a clear picture of when and how posed using Massachusetts’ historic whaling projects), but I have my doubts especially the Jones Act applies to these operations port of New Bedford or Port of Providence, outside navigable waters,” Papavizas before the construction of the wind farms R.I., to stage its turbine components. Other de- told attendees at the Marine Log con- actually begin. velopers planning offshore wind farms in the ference in Washington in early March. “I don’t think the uncertainty is Northeast are Bluewater Wind, Fishermen’s The Outer Continental Shelf Lands good for anyone,” he said. “It would be Energy, Long Island Power and Con Edison. Act (OCSLA) applies the Jones Act to better for the whole industry to have In mid-January, the Virginia Beach mayor’s the development of artificial islands clarity.” n office formed an organization to encour- age offshore wind energy in the state. The Virginia Offshore Wind Coalition includes developers, manufacturers, utilities and environmental groups. One of the coalition’s goals is to promote DAS gets around Hampton Roads as a hub for manufacturing and supply for offshore wind farms in the Where there’s a wheel there’s a way for international region. “We want to be the Silicon Valley of and domestic used vehicle moves. wind energy on the East Coast,” said Bob Matthias, assistant to the Virginia Beach By Chris Dupin City manager, at the Marine Log conference. D These hubs are expected to serve multiple ependable Auto Shippers was by truck each year domestically and around wind farm developers to make the investment founded in 1954 as a “driveaway” the world. in supporting such an infrastructure worth it company in New York that helped The company long ago abandoned the over the long term investment. snowbirds and others find drivers to move driveaway business, and now uses its “It’s going to take more than just one their vehicles around the country. own fleet of specialized trucks to move developer on its own to create this indus- Today, DAS is a company with annual cars, motorcycles and other equipment. It try,” Rich said. “A lot of people will have to sales of about $130 million and 375 employ- acquired its first truck in 1990 and today work together.” ees, transporting thousands of automobiles operates a fleet of about 90 to 100 large 18  AMERICAN SHIPPER:  APRIL  2010

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