14  AMERICAN SHIPPER:  APRIL  2010

LOGISTICS

By Chris Gillis

Offshore wind energy may be one of the most

promising sources of clean electric power gen-

eration for North America in the next five to 10

years, but enabling construction of these major projects to

begin is no easy feat.

Port infrastructure and vessel equipment need to be

quickly built that specifically cater to efficiently handling

these large-scale offshore projects. “I don’t think this side of offshore wind farm development has been well thought out yet,” said Paul Madden, president of Offshore Wind Logis-tics, a Florida-based company seeking to build and operate a fleet of wind turbine installation vessels for U.S. waters. “Quite honestly, these issues should have been assessed starting three to five years ago.” Unlike the Europeans who have had

more than 20 years to gradually ramp up their offshore wind energy programs, state governors throughout the U.S. East and Gulf coasts and Great Lakes aim to start plant-ing wind turbines by the hundreds in their waters in the next several years. For two decades, European wind farm developers have benefited from govern-ment backing and an energy consumer base generally willing to pay a little extra for wind-generated electricity. The acceptance of these types of measures in the United States remains to be tested. A few offshore wind ventures, particularly along the U.S. Northeast and East Texas

coasts, have been under consideration for the past five to eight years. The proposed projects have been repeatedly dogged by lack of clear government approval proce-dures, occasional public opposition and insufficient access to financing due to the recent economic downturn. Only since the Obama administration took office in early 2009 with the goal to create thousands of “green” jobs and the approaching mandates for many states to generate a certain percentage of their power from renewable energy sources have U.S. offshore wind projects finally received a lift in their sails.

Purpose-Built. Vessel operators and shipyards that have been engaged for more than 30 years in the U.S. offshore oil and gas sector are keeping a close eye on the prospects of contributing to the construc-tion and maintenance of future offshore wind farms. “We’ve been watching this development for the past three years and have visited with each of the major U.S. wind farm develop-ers,” said Todd Busch, senior vice president of Crowley Maritime Corp.’s Technical Services Group, and an active player in the Gulf oil patch. “We believe the U.S. will enter the offshore wind industry like

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AMERICAN SHIPPER:  APRIL  2010  15

Europe has, but we’re certainly behind the curve in regards to technology.” “Several of the offshore wind develop-ers are actively looking for installation solutions,” Madden said. “They’re anxious for equipment to be offered to them and they’re scared of the numbers coming out of Europe.” Wind turbine installation vessels under charter in Europe’s North and Baltic seas easily fetch in the range of $250,000 a day from developers. In addition, vessel opera-tors must have the proper onboard equip-ment, such as jack-up legs for deck stability, heavy-lift cranes, and personnel with the expertise to satisfy the rigorous installation requirements of the turbine manufactur-ers, whose offshore units’ installed cost is now approaching $5 million apiece. “Our vessel strategy is crucial to making us successful,” said Paul Rich, chief de-velopment officer for offshore wind farm developer Deepwater Wind. “Right now it’s our weakest link.” In the United States, offshore wind farm developers must comply with U.S.-flag

requirements of the Jones Act, which may further add to their installation vessel costs. Madden believes there are sufficient U.S.-flag jack-up barges to at least get the first offshore test wind turbines installed, but new vessels will be needed to handle full-scale wind farm construction. “Very aggressive installation schedules and hostile work environments will require efficient, purpose-built vessels,” he said. With the proper equipment, Europe’s off-shore turbine installers can generally erect a turbine upon a pre-established base secured to the seabed in 36 hours. “It’s got to be a repetitive process. You can’t do that using equipment that only allows you to erect a turbine every five to six days,” Madden said.

Starting Line. Although cautious wheth-er the U.S. offshore wind energy business will get off the ground, Jones Act vessel operators in the oil and gas sector are confi-dent they can respond to the logistics needs. “The offshore industry has not been marked by incremental change, rather it’s punctuated by spectacular leaps forward in technology,” said Ken Wells, president of the Offshore Marine Service Association (OMSA), based in Harahan, La. “We excel at project management — how to get it done correctly and safely.” OMSA recently commissioned a study that found offshore vessels and shipyards that build them are responsible for about $18 billion in annual spending and more than 100,000 jobs, paying about $4.6 bil-lion in wages. “This study confirms our belief that offshore energy activity, whether it is oil, gas, wind or hydro-power, has critically important national benefits, not only for our coastal areas but for the entire U.S. economy overall. This is perhaps more important than ever before,” said Otto Candies III, OMSA chairman and treasurer of marine transportation company Otto Candies LLC. “The Jones Act operators are capable of building and operating those vessels needed for offshore wind farm work and the shipyards are there to do it,” Busch said. “The timing is as good as it’s ever been,” he added. “Most shipyards are nearing the end of their current building programs.” In addition to installation vessels, off-shore wind farm operators will require fleets of maintenance vessels to transport parts and personnel safely and efficiently to the turbines. “You can’t mix oil platform support ships with wind turbine support activity,” Harry Vordokas, business development manager for Germanischer Lloyd’s Americas Divi-sion, told attendees at a Marine Log confer-ence in Washington in early March. “Wind

turbines have special needs.” But the price tag for building installation and maintenance support ships specific to offshore wind farms will not be cheap. Purpose-build wind installation vessels may cost from $150 million to $350 million each to construct in a U.S. shipyard, while maintenance vessels may range from $3 million to $5 million apiece, said H. Clayton Cook Jr., an attorney with law firm Seward & Kissel, and a legal specialist in financing U.S.-flag vessels. Without firm charter commitments to participate in building offshore wind farms, vessel operators are hesitant to begin invest-ing in new equipment. “It’s difficult for any Jones Act carrier to build vessels on a leap of faith,” Busch said. Some maritime equipment develop-ers, such as Keppel AmFELs, Wärtsilä North America, and Derecktor, have pre-sented designs to the market that specifically cater to wind turbine installation and support activities. Installation ships operating in U.S. waters will have to handle turbines of 3.6 megawatts and larger, and in numbers exceeding 100 units per location at the biggest planned offshore wind farms. The United States aims to receive 20 percent of its electric power from the wind (246 gigawatts on land and 54 gigawatts offshore) by 2030. In July 2009, the Texas General Land Of-fice granted two concessions to Baryonyx Corp. to develop wind farms off the coasts of Mustang and South Padre islands with a total proposed output of up to 3,000 mega-watts. “It blows the Europeans out of the water when they see them on the charts,” said Hugh Rynn, project manager for Keppel AmFELS in Brownsville, Texas. Keppel AmFELS’ KATI installation vehicle, a joint design with Glosten As-sociates, is capable of transporting up to three pre-constructed 6 megawatt turbines to offshore sites where they are essentially lowered onto preset monopiles and other deeper water platforms, eliminating the need for a costly onboard crane. A typical onboard crane costs more than $45 million. Rynn explained that personnel and prod-uct safety are enhanced by pre-assembling turbines quayside, instead of performing the work at sea, which is the common method today. Turbines weigh hundreds of tons and stand 80 to 100 meters tall. While niche transportation services pro-viders may participate in U.S. offshore wind farm construction, Rynn believes it will ultimately take a handful of major construc-

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16  AMERICAN SHIPPER:  APRIL  2010

LOGISTICS

Cape Wind, a 130-turbine offshore wind farm planned off the coast of Nantucket Sound, has taken its

public relations hits from wealthy Cape Cod landowners, Native American groups and even ferry boat operators. The Passenger Vessel Association, which represents Nantucket Sound ferry boat operators, has recently come out against the Cape Wind project, not out of dislike for offshore renewable energy projects, but because the developer failed to take seriously the industry’s concerns about vessel navigation near fixed turbine structures between Cape Cod and Martha’s Vineyard. Edmund Welch, legislative director for the Passenger Vessel Association, said Cape Wind gave ferry boat operators the “backhand,” rather than engaging them early on in the process, and any information learned about the project had to be “gleaned from the press and government officials. “The location of the 130 turbines poses an unacceptable navigation risk,” Welch said. “Existing navigation routes should supersede new uses.” Lawrence Kiern, an attorney with Win-ston & Strawn, warned that offshore wind farm developers will cause themselves

nothing but headaches by ignoring those potentially impacted by these large proj-ects. At a recent Marine Log conference, he recommended that wind farm developers: • Seek resolution with all parties that have concerns with the project. • Evaluate the alternatives in the record. • Avoid temptations to take short cuts. In particular, short cuts become “a damn-ing indictment against the developer in the courts. These are the kinds of mistakes that can prove deadly to a project,” Kiern said. “Developers have full responsibility to ensure that things are done correctly, because it’s likely there will be collateral attacks in the courts,” he added. While not as far along in the planning process as Cape Wind, stakeholders are already lining up to voice their concerns about proposed offshore wind farms in the Great Lakes. U.S. and Canadian carriers say they’re generally not opposed to sharing the Great Lakes with offshore wind farms, as long as the turbines don’t encroach on their established vessel traffic patterns. “From a lakes carrier perspective, we want to make sure the wind farms don’t interfere with navigation,” said Glen Nekvasil, spokesman for the Lake Carriers’

Left outEngage all parties when planning

an offshore wind farm, attorney says

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 safety zone along each side of the course lines.” The last thing the carriers want to have to do is dodge turbines, especially if they’re forced off course or seeking safe harbor due to storms. “In heavy weather, the course lines can go out the book,” Nekvasil said. Bruce Bowie, president of the Canadian Shipowners Association, is concerned about offshore wind farm construction activities and the potential for supply ships moving across navigation channels. “There would need to be a traffic control system in place to ensure that vessels associated with construction do not present a safety hazard for commercial navigation,” he said. Another concern for the Great Lakes carriers is how offshore wind farms will interact with winter ice conditions. “The proposals will have to take into ac-count ice formations and flows experienced in the lakes during the early spring, late fall and winter navigation operations,” Bowie said. “Sufficient buffer space will need to be provided to ensure that the wind farms do not impede icebreaking operations.” Bowie believes installing wind turbines in shallow water will minimize interference with vessel navigation in the Great Lakes. However, when asked whether the Ca-nadian Shipowners Association has been contacted yet by any of the Great Lakes offshore wind farm developers for input, he answered “no.”

tion companies, such as Fluor and Bechtel, to take on the prime contractor role and the 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. “Having land is key,” said Steven King, managing director of Quonset Development 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.”

An inside look at a wind turbine.

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16  AMERICAN SHIPPER:  APRIL  2010

18  AMERICAN SHIPPER:  APRIL  2010

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 wind farm of more than 100 turbines, for an eventual output of 1.3 million megawatt hours per year or 15 percent of the electricity used in the state. In mid-February, Quonset Development received a $22.3 million Transportation Investment Generating Economic Recovery (TIGER) grant from the U.S. Transportation Department, which will go toward helping reinforce the pier, purchasing a mobile crane capable of lifting up to 200 tons, and widen-ing some roads between the port and two Deepwater production and staging properties each about a half-mile away. The port is about 20 miles by vessel from Deepwater’s Block Island offshore wind farm site. However, it’s possible for the port to serve wind farm interests as far north as Maine and as far south as New Jersey, Deepwater’s Rich said. In addition to Rhode Island, Deepwater, with PSEG Renewables, has formed Garden State Offshore Energy to develop offshore wind projects serving New Jersey. The first project, 20 miles due east of Avalon, N.J., will bring up to 345 megawatts of wind power to Ocean City, N.J. The company is also evaluating sites off the coasts of Maryland, Delaware, New York and Maine. Other ports may take on parts of the busi-ness. Cape Wind, a 130-turbine offshore wind farm planned off Nantucket Sound, has pro-posed using Massachusetts’ historic whaling port of New Bedford or Port of Providence, R.I., to stage its turbine components. Other de-velopers planning offshore wind farms in the Northeast are Bluewater Wind, Fishermen’s Energy, Long Island Power and Con Edison. In mid-January, the Virginia Beach mayor’s 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 Hampton Roads as a hub for manufacturing and supply for offshore wind farms in the region. “We want to be the Silicon Valley of wind energy on the East Coast,” said Bob Matthias, assistant to the Virginia Beach City manager, at the Marine Log conference. These hubs are expected to serve multiple wind farm developers to make the investment in supporting such an infrastructure worth it over the long term investment. “It’s going to take more than just one developer on its own to create this indus-try,” Rich said. “A lot of people will have to work together.”

U.S. maritime cabotage laws may apply to offshore wind power projects within navigable waters, but their appli-cation comes into question when those confines are expanded to cover this type of energy explora-tion and develop-ment on the outer continental shelf. That’s the con-clusion reached in a recent compre-hensive analysis of Section 27 of the 1920 Merchant Marine Act, better known in the U.S. maritime industry as the Jones Act, by attorneys Charlie Papavizas and Gerald Morrissey of the law firm Winston & Strawn’s Maritime Practice Group. They expect their findings to be published this spring. The United States’ navigable waters generally cover three miles offshore, whereas the continental shelf extends 200 miles into the sea. “Everything in the literature suggests the Jones Act applies (to offshore wind projects), but I have my doubts especially outside navigable waters,” Papavizas told attendees at the Marine Log con-ference in Washington in early March. The Outer Continental Shelf Lands Act (OCSLA) applies the Jones Act to the development of artificial islands

and installations attached to the seabed for the purposes of energy exploration. “That’s the catch,” Papavizas said. “Does exploring for renewable energy offshore apply?” The 2005 Energy Policy Act deals with renewable energy development on the continental shelf, but does not ad-dress Jones Act requirements for vessels involved in these activities. If the Jones Act is found not to apply, all the components for a wind farm could conceivably be transported to an outer continental shelf site on a foreign-flag vessel from the United States. Even if the Jones Act is found to apply, Customs and Border Protection may find that foreign-flag vessels can be used to install compo-nents but potentially not transport them. Also, once the wind farm is in place, the vessels involved in maintenance must be Jones Act qualified, since they will be shuttling materials and personnel from U.S. shore-side locations. Papavizas said it’s important for the offshore wind developers and their ves-sel transportation services providers to have a clear picture of when and how the Jones Act applies to these operations before the construction of the wind farms actually begin. “I don’t think the uncertainty is good for anyone,” he said. “It would be better for the whole industry to have clarity.” n

Jones Act questionOffshore wind farms in U.S. waters

may be tested by foreign-flag vessel operators.

DAS gets aroundWhere there’s a wheel there’s a way for international

and domestic used vehicle moves.

By Chris Dupin

Dependable Auto Shippers was founded in 1954 as a “driveaway” company in New York that helped

snowbirds and others find drivers to move their vehicles around the country. Today, DAS is a company with annual sales of about $130 million and 375 employ-ees, transporting thousands of automobiles

by truck each year domestically and around the world. The company long ago abandoned the driveaway business, and now uses its own fleet of specialized trucks to move cars, motorcycles and other equipment. It acquired its first truck in 1990 and today operates a fleet of about 90 to 100 large

Papavizas