Hornbeck Offshore orders 16 new OSVs from VT Halter, Eastern

From a Hornbeck Offshore Press Release
27 November 2011

COVINGTON, La., Nov. 17, 2011 /PRNewswire/ -- Hornbeck Offshore Services, Inc. (NYSE: HOS) announced today the execution of definitive contracts for the construction of sixteen high-specification offshore supply vessels ("OSV"), in connection with its latest newbuild construction program announced on November 7, 2011. This is the Company's eighth newbuild vessel program since its inception in 1997, and its fifth newbuild program involving state-of-the-art, technologically advanced new generation OSVs.
The Company has separately contracted with VT Halter Marine, Inc. of Pascagoula, Mississippi and with Eastern Shipbuilding Group, Inc. of Panama City, Florida for the construction at each yard of eight 300 class vessels with options to build additional such vessels should future market conditions warrant. The Company's first decision with respect to the exercise of options will need to be made in September 2012. Delivery dates for option vessels will be approximately 26 months following the option exercise. The aggregate cost of the first sixteen vessels under this program is expected to be approximately $720 million, excluding construction period interest. Construction costs will be funded with cash on-hand (including the net proceeds of the Company's recently completed equity offering), projected free cash flow from operations and, if necessary, available capacity under the Company's currently undrawn and recently expanded $300 million revolving credit facility.
VT Halter Marine will construct eight vessels based on the Super 320 design that it developed for Hornbeck Offshore. These DP2 OSVs are designed to have 6,200 long tons of deadweight capacity, approximately 20,900 bbls of liquid mud carrying capability, 11,863 sq. ft. of deck area and a fire-fighting class notation. The Super 320 design is based on a larger version of the HOS Coral, an existing 290 class DP-2 OSV which the Company has successfully operated since her delivery in early 2009. The Super 320 design has been developed with particular attention to the most stringent regulations for environmental stewardship, including a double-hull that eliminates any fuel storage adjacent to the sideshell, and propulsion machinery that meets the requirements of EPA Tier 3 for stack emissions.
The eight OSVs to be constructed by Eastern Shipbuilding Group will be DP-2 classed and consist of four vessels based on the STX Marine SV 300 design and four vessels based on the STX Marine SV 310 design. Features of the STX design include over 20,000 bbls of liquid mud carrying capacity and a fire-fighting class notation. In addition, the SV 300 design calls for 5,500 long tons of deadweight capacity and 10,976 sq. ft. of deck space, while the SV 310 design calls for 6,144 long tons of deadweight capacity and 11,536 sq. ft. of deck space. The STX designs meet the same environmental standards mentioned above for the Super 320 design and will also carry the ENVIRO class notation by the American Bureau of Shipping.
Based on the schedule of projected vessel in-service dates below, the Company expects to own and operate 56 and 67 new generation OSVs as of December 31, 2013 and 2014, respectively. These vessel additions result in a projected average new generation OSV fleet complement of 52.2 and 62.8 vessels for the fiscal years 2013 and 2014, respectively. Inclusive of the vessel deliveries referred to below, the aggregate cost of the Company's fifth OSV newbuild program is expected to be approximately $720 million, of which $44 million, $227 million, $348 million and $101 million is expected to be incurred in 2011, 2012, 2013 and 2014, respectively. The first sixteen OSVs under this newbuild program are expected to be placed in service in accordance with the schedule shown in the table below:

	2Q2013E	3Q2013	4Q2013	1Q2014	2Q2014	3Q2014	4Q2014
Estimated In-Service Dates:
300 design	1	1	1	1	-	-	-
310 design	-	-	-	1	1	1	1
320 design	-	-	2	2	3	1	-
	1	1	3	4	4	2	1

All of the above capital costs, anticipated periods of their incurrence and delivery date estimates for the contracted newbuild program are based on the latest available information and are subject to change. All of the figures set forth above represent expected cash outlays and do not include the allocation of construction period interest.
Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels primarily in the U.S. Gulf of Mexico and Latin America, and is a leading short-haul transporter of petroleum products through its coastwise fleet of ocean-going tugs and tank barges primarily in the northeastern U.S. and the U.S. Gulf of Mexico. Hornbeck Offshore currently owns a fleet of 80 vessels primarily serving the energy industry.

Maritime Industry Urges Support for Cargo Preference

From the Seafarers InternationalUnion
22 November 2011

SIU Executive Vice President Augie Tellez and other maritime labor and company officials on Oct. 3 attended an open forum on an important program that greatly affects Seafarers and the industry at large. The multi-component program known as cargo preference stipulates that a certain percentage of U.S.-made or U.S.-funded items must be shipped on American vessels with American crews. The meeting was organized by the Maritime Administration (MarAd), whose stated goal was to open up the issue to public discussion.

Tellez (pictured below) and other speakers pointed out that cargo preference law enforcement is becoming increasingly more important to the maritime industry. With overseas conflicts starting to wind down, non-military cargo is going to become a more vital source of income for shipping companies and subsequently for merchant mariners.

“We in the maritime industry understand the critical need for our cargo preference laws, particularly those that affect food aid, our loan guarantee programs and other nondefense cargoes,” said Tellez. “As Operation Iraqi Freedom and Operation Enduring Freedom wind down after almost a decade, our industry needs to find cargo wherever it can, and we recognize we cannot continue to rely on the Pentagon for everything. Non-defense cargo is more important now than it has ever been.”

Maritime Trades Department, AFL-CIO (MTD) Executive Secretary-Treasurer Daniel Duncan was also on hand at the meeting expressing the department’s support for cargo preference laws.

“The MTD firmly believes that the nation’s series of cargo preference laws is a bedrock of the U.S.-flag maritime industry,” said Duncan. “These laws have played a vital role in ensuring that America has a strong domestic shipbuilding base and merchant marine. Cargo preference laws help create good-paying jobs for American workers, provide tax revenues at the local, state, and federal levels, and make sure America’s merchant marine is ready and available when needed for strategic sealift and other defense interests.”

The Marine Engineers’ Beneficial Association (MEBA) and the International Organization of Masters, Mates, and Pilots (MM&P) also jointly voiced their support for cargo preference laws and talked about the impact that they have on their respective memberships.

“There should be no question that, in order to grow and maintain the U.S. Merchant Marine, U.S.-flagged vessels should be used to the greatest extent possible when shipping government-impelled cargoes,” said William Doyle of MEBA. “Rigorous enforcement and oversight of cargo preference laws enables MarAd to fulfill its mission. Without oversight and enforcement from MarAd, the presence of the U.S.-flag fleet in the foreign trades would cease to exist, leaving a glaring hole in our national defense capabilities and negatively impacting our economy.”

Other speakers pointed out the economic importance the laws have on private shipowners and the costs that are deferred from the government because of them. Cargo preference laws, according to several presenters, provide an economically efficient way to bolster private industry and support jobs.

“Virtually every privately owned U.S.-flag vessel engaged in the foreign trade depends to some degree on cargo preference to remain economically viable,” said Bill Kenwell of Maersk Line, Limited on behalf of USA Maritime, an industry group consisting of shipowners, operators, and labor groups. “Indeed, absent cargo preference, it is no exaggeration at all to say that the U.S.-flag fleet in foreign commerce would disappear and the U.S. government would have to duplicate that sealift capability at enormous expense with government-owned vessels.”

In spite of these facts, however, many in the room were disappointed with MarAd’s efforts to enforce cargo preference laws. Even with revisions made by Congress that would bolster the programs, the agency’s efforts are still seen as lacking.

“If I had to sum up our feelings about MarAd’s performance when it comes to cargo preference matters in one word, that word would be frustration,” said Tellez, pointing to long vacancies in important MarAd positions and the lack of implementation of a three-year-old revision that punishes entities that don’t adhere to cargo preference rules.

Richard Berkowitz of the Transportation Institute, another maritime industry group composed of multiple sectors, agreed.

“Judging from the lengthy time it has taken to fill key management positions at MarAd related to cargo preference administration, it is difficult to believe that the administration’s role to ‘promote … the viability of the U.S. Merchant Marine’ is being taken with the earnestness and purpose needed to direct the government-impelled cargo so key to sustaining U.S. vessels in international trade lanes,” said Berkowitz.

Liberty Maritime Corporation CEO Philip Shapiro sent a letter to MarAd to throw his company’s support behind USA Maritime’s statements but added that the agency could be doing more in regards to cargo preference.

“Liberty Maritime would only like to add that it is imperative that the U.S. Maritime Administration place a high priority on cargo preference implementation and enforcement,” said Shapiro. “Congress has charged MarAd with ensuring that cargo preference achieves its objectives of supporting a strong and vibrant U.S.-flag Merchant Marine.”

In spite of some complaints, the SIU and others at the meeting reinforced their eagerness to work with the administration.

“The cargo preference laws work when they are properly enforced,” said Tellez. “They work when the resources needed to ensure that they’re being enforced are there. I am confident that MarAd can resolve these issues swiftly and I look forward to working with the agency in the future as we all strive to promot and protect our merchant marine.”

###

LNG use on Washington State Ferries Could Save Millions over Time.

An LNG-fuelled ferry would have significant environmental and economic benefits, according to a recently feasibility study for Washington State Ferries. Architectural and marine engineering firm, The Glosten Associates, recently completed the feasibility study for Washington State Ferries (WSF) on converting its 144-car ferry design to liquefied natural gas (LNG) propulsion. 

Glosten's study concluded that the conversion is both technically feasible and cost effective, although technical and regulatory challenges remain. The study examined design, economic, regulatory, and environmental issues. 

The operational savings for a single vessel are estimated to be between $900,000 and $1.25 million per year, after an upfront capital cost premium of $8.5 million to $10 million. Switching to natural gas fuel will significantly reduce emissions of nitrous oxides (NOx), sulfur oxides (SOx), particulate matter, and carbon dioxide (CO2). These greenhouse gases have been identified by the U.S. Environmental Protection Agency (EPA) as significant factors in harming human health, including respiratory illnesses, as well as damaging to the environment. 

Glosten’s design was formally reviewed by the United States Coast Guard (USCG). USCG provided extensive feedback as well as a written response, showing their willingness to work with owners early in developing a case-by-case design basis until official rules are developed. The USCG response provides WSF with a regulatory basis from which to advance the project design. This is an important result, as the lack of USCG regulations is often cited as a primary risk to vessel owners interested in reaping the benefits of LNG fuel conversion.

Overall, this looks very promising for the nation's largest ferry system to save on operating costs. The initial investment is pretty sizeable, however saving nearly a million dollars per year in fuel will do a lot to shrink the state budget. We think that this would be a great use of federal funds as opposed to some of the other job creation projects that have been touted - such as the high-speed rail project the current administration is pushing.

Click herefor the full Glosten Associates report.

New amendment passes to boost transparency of Jones Act waivers

Press Release From US Representatives Elijah E Cummings and Jeff Landry
Cummings, Landry say measure will help preserve U.S. mariners' jobs
(11/15/2011)
(WASHINGTON) -- Congressman Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, and senior member of the House Committee on Transportation and Infrastructure, today joined Rep. Jeff Landry (R, LA-03), Vice Chairman of the Coast Guard Subcommittee, in applauding their colleagues in the House of Representatives who approved the Cummings-Landry amendment to the Coast Guard reauthorization bill that passed the House on Tuesday. The amendment will increase government transparency surrounding the issuance of waivers allowing non-Jones Act-qualified vessels to carry cargo between U.S. ports. It is nearly identical to the American Mariners Job Protection Act (H.R. 3202), a bill with bipartisan support that was introduced by Reps. Landry and Cummings earlier this year. “Americans are desperate for jobs,” said Cummings. “In this time of economic turmoil, we owe it to the people we represent to make full use of American maritime capabilities by adhering firmly to the Jones Act. Every single ship that can carry cargo under the Jones Act should be full and every American mariner should be able to work a fair day’s work for a fair paycheck. Congressman Landry has stood resolutely beside me as we protect the jobs of American mariners and I thank him for his support.” Under current law, when the head of the agency responsible for the administration of the Jones Act believes it necessary to waive the Act’s requirements in the interest of national defense, the agency must request the Maritime Administration to assess whether Jones Act-qualified vessels are available to carry the cargo under consideration. “I came to Congress to increase government transparency and get America back to work; today we took another step in that direction,” said Landry, whose district has the most domestic maritime industry jobs in the nation and transports much of the nation’s energy-based resources. Excited by today’s passage, Landry continued: “American mariners are the most qualified and safest workers in the world, and I am grateful my colleagues voted today to put them back to work. I thank Congressman Cummings for his leadership on this issue and thank him for working to ensure that the American mariner is always the first option.” The Cummings-Landry amendment will require the Maritime Administration to include in such assessments information on the actions that could be taken to enable Jones Act-qualified vessels to carry the cargo for which the Jones Act waiver is sought. The Maritime Administration would also be required to publish its determinations on its website. Further, the amendment would require notification to be provided to Congress when a waiver is requested or issued.

Occupy Wall Street is Killing Small Business

An article from the New York Post

Protesters force cafe layoffs as biz drops

By KEVIN FASICK, SALLY GOLDENBERG and BOB FREDERICKS

Last Updated: 10:00 AM, November 2, 2011

Posted: 2:55 AM, November 2, 2011

They want to change the economy, and now they have -- by putting people out of work!

Heartbroken Shamil Cepeda was one of 21 employees of a once-thriving cafe and catering business who just got fired because the weeks-long Occupy Wall Street protest chased away too many customers.

“I support their freedom of speech but the whole thing is hypocritical if it makes people lose their jobs,” a tearful Cepeda, 23, told The Post yesterday.

“Isn’t that the whole point of the protest?” fumed Cepeda, 23, who had worked at the Milk Street Cafe at 40 Wall St. since it opened in June.

She said she supported the protesters at first -- but now, she’s furious at them.

“I felt really, really angry,” Cepeda said of learning she was a casualty of the supposedly pro-worker movement. “I really enjoyed the job. I liked the people and my co-workers. Everybody was so enthusiastic to make the company go.”

Cepeda also had some common-sense advice for the mash-up of protesters and squatters who have occupied Zuccotti Park since Sept. 17.

“If they would just go get a real job, helping real people, that would help a lot more than just taking up space and shouting at people and putting others they claim to care for out of work,” she declared.

Her former boss, Milk Street Cafe owner Marc Epstein, said he had no choice but to slash staff after Occupy Wall Street caused his business to plummet 30 percent -- and warned he may have to shut down soon.

“We laid off people Friday. We had a staff of about 100,” fumed Epstein. “It’s sad, it’s just so sad.”

He said the ragtag protesters and metal police barricades in front of his once-booming business forced not only Friday’s employee bloodbath but a drastic cut in the eatery’s hours of operation.

“We had to cut back from [closing at] 9 in the evening to just 3:30 in the afternoon,” he said.

The protests, he said, have turned parts of once-bustling Wall Street into a ghost town.

“Wall Street, which is a beautiful pedestrian mall, has for the last six weeks become totally desolate. People aren’t walking here anymore,” he said.

“The food industry does not have anybody in the 1 percent, workers or owners,” said Epstein, who has no love for the protesters.

But he also pointed a finger at the NYPD and City Hall, which he said had ignored his pleas for help.

“I’m saying to all of them, understand the consequences of your actions. As a result of you guys making these decisions, a small business that just invested in your city is threatened, as well as all of the jobs here,” he said.

Also yesterday, Mayor Bloomberg and one of his predecessors, Ed Koch, sparred over who caused the nation’s financial turmoil.

“It’s not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp,” Bloomberg said during the 40th- anniversary breakfast of the Association for a Better New York.

“They were the ones that pushed the banks to loan to everybody, and now we want to go vilify the banks because ... It’s easy to blame them.”

But Koch said, “I want to see somebody ... punished criminally. There’s something wrong with a kid who steals a bike going to jail and someone who steals millions paying a fine.”

Meanwhile, Assembly Speaker Shelly Silver took some shots at the protesters and Bloomberg.

“I asked the mayor to enforce those codes, to enforce the health code while reinforcing the right of people to express themselves,” Silver said, echoing a letter that he and other lawmakers had sent the mayor. People have rights, Silver added, but they “should not include drumming in the middle of night ... defecating or urinating on sidewalks and in places that cause odors, and [they] should not include [police] barriers ... that are infringing on businesses’ right to exist.’’

Other signers of the letter included Rep. Jerrold Nadler, state Sen. Daniel Squadron and City Councilwoman Margaret Chin, all of whose districts include Zuccotti Park.

In another development, the protesters’ security team spotted a man suspected of sex assault in the encampment and notified cops. They took him into custody for questioning.

Additional reporting by Lisa Riordan Seville in New York and Erik Kriss in Albany

rfredericks@nypost

Where are the Jobs?

In a recent Op-Ed piece for  The Wall Street Journal, Harold Ford Jr., wrote about several major projects which will provide several thousand jobs in various parts of the country.

 A brief listing of the projects he mentioned included:

• Two new build oil tankers in the Philadelphia Shipyard

• Alaska, 500 off-shore drilling leases to move forward

• New-York, Natural Gas drilling to commence after lifting Hydraulic Fracturing moratorium

• Ohio, new steel-mill to be built in  Youngstown

• Multi state pipeline project from  U.S. Gulf Coast to Canada

The main point that Mr. Ford was getting at in his Op-Ed is that thousands of jobs would be created if policies were lifted to allow it. These are real jobs being prevented from starting due to government red-tape.

 The politicians are continually posturing over how to fix the nations employment problem and in turn, fixing our economy.

I will say, that there are jobs out there. There are industries that are succeeding despite the downturn. Some of the jobs Mr. Ford  outlined in his comments are slightly more complicated than a simple "green light" from the Government. For instance, the Multi-state pipeline requires not only an "OK" from the EPA, but also from each of the states it passes through.

The fact that the two oil tanker builds in Philadelphia are pending is miraculous, considering Exxon could have taken the builds to Korea at half the cost. So in addition to authorizing these builds, I would suggest we take a hard look at how the Historic Philadelphia Shipyards received these contracts. Perhaps there's some value added element that has not been reported on yet, and other industries, who are losing jobs to Korea and China, could learn from.

There's a lot that can be done, and lifting government red-tape is only one step. We don’t necessarily support recent jobs bills, but we do believe that any jobs bill passed have elements that begin to lift regulations that hinder job creation.

(Mr. Ford, a former Democratic member of Congress from Tennessee, is a visiting professor at New York University.)

K. Swanson