LNG projects and shipbuilding contracts will transform transportation in B.C.

WHISTLER, B.C. — If just one or two of the more than 40 LNG projects proposed for British Columbia get the green light there will be a profound impact on transportation in the province – both good and bad – according to Jonathan Whitworth, CEO of Seaspan and the keynote speaker at the BCTA’s annual conference.

If they come to fruition, the hoped for investments in energy resource extraction would be the biggest boost for Canada’s energy industry since the early days of the Alberta oilsands boom. Whitworth, whose company operates commercial ferries, tugs, barges, shipyard and marine bunkering operations stands to reap considerable benefit from the province’s investment in energy resource extraction, pointed to the LNG Canada project in Kitimat to illustrate the impact on transportation resources.

LNG Canada has indicated plans to build a 7,000-person camp in Kitimat, requiring 1,800 buildings to be pre-manufactured and then moved to the location.

“That’s like 500 barge voyages or 1,800 truckloads. That’s huge. That’s a life-changer,” Whitworth told the strongly attended conference of fleet executives and industry suppliers. “And this is just one of 42 projects that’s on the books.”

But there will be a downside too. These projects will suck both material and human resources right out of other industries.

“If one or two of these projects go, good luck trying to get tires or finding a mechanic to service your engines. There are going to be some tough issues that are going to come up when someone is going to suck up 1,800 truckloads,” Whitworth warned.

Banking on at least some of these LNG projects passing all the customary legal and financial hurdles to become reality, Seaspan is already investing heavily to ensure it can meet the expected increased demand for transportation solutions. (Last week B.C. locked up its first project to export LNG with Pacific NorthWest LNG looking to invest an initial $12 billion to produce and ship Canadian natural gas to Asia).

Seaspan is purchasing three large barges in Asia to haul large construction projects and has a 16,000-ton barge under construction in China. The ship will be used to transport aggregates.

On Monday the company will be announcing plans to cut steel on the first of two new Seaspan ferries. With a length of 150 metres and a breadth of 28 metres, these ferries will each be able to carry 60 trailers, a substantial increase from the 20-48 trailers carried on current Seaspan ferries. The ferries will also be the first hybrid vessels in western Canada, propelled by LNG, diesel and battery power.

“We will be able to literally turn a switch to go to a different energy source,” Whitworth said.

Both ferries are being built in Turkey with the first expected to be ready in the third quarter of 2016 and the second one by Q1 2017.

The company plans to build another three ferries once it has a chance to test which energy source, or combination of energy sources, is best.

Seaspan ferries move about 700 trailers a day and about 60% of all products consumed in Vancouver. The company is spending about a quarter billion to provide the trucking industry with better service, but Whitworth assured fleet executives this will not mean significant fee increases in coming years.

“Our bread and butter is your business…You’re not going to see 15% increases just because we’ve got new vessels. This is not a decision to force higher pricing down our users’ throats,” he said.

Seaspan traces its roots back to 1886 and its shipyard operations have been a mainstay in BC since 1902. Yet the company’s shipyard operation was reeling after the Great Recession and by 2011 had laid off about 50% of its staff. But on Oct. 19, 2011, Whitworth received the call that proved a game changer for the shipyard’s future outlook. It was awarded a National Shipbuilding Procurement Strategy (NSPS) contract to build a large number of non-combat ships, including three offshore fisheries science vessels, two joint support ships, five offshore patrol vessels, five medium endurance multi-tasked vessels as well as an offshore oceanographic science vessel and a polar ice breaker.

This fleet renewal strategy is no make-work project, Whitworth said. It was a much needed decision to re-invest in Canada’s marine fleet at a time when other nations such as China are looking to challenge Canada’s sovereignty over Arctic waters that are becoming navigable due to global warming.

“The ships we have now in the Coast Guard and Navy are dying. There is desperate need for these new vessels. The last time there was a major shipbuilding contract in Canada was 1982,” Whitworth said.

Thanks to the NSPS contract the Seaspan shipyard operation was quickly transformed from a business with no future to a business with shining future. The ships will be built over the next 30 years. More than $150 million in infrastructure improvements have been completed to prepare the facility for the shipbuilding work. Seaspan has also built a 70,000 sq.-ft. warehouse in the Lougheed area of Burnaby to house parts and equipment required for the future construction of NSPS vessels.

Materials will be shipped to and stored in the warehouse, placed into one of over 2,100 barcoded inventory locations, then kitted and shipped to the shipyard as needed. The warehouse has two ground-level loading bays, seven dock-level loading bays as well as high-density racking, floor storage and lay-down areas.

“We are not the biggest shipyard in the world but we are the best and most state-of-the art shipyard in the world. Why? Because everything is about six months old,” Whitworth said, adding that if the NSPS contract had not come along, Seaspan would likely have had to shut down most of its shipyard operations.

NSPS, designed to support a sustainable West Coast maritime industry, is expected to create over 5,000 direct and indirect jobs and generate up to $435 million per year of GDP growth over the next decade.

Whitworth figures one the biggest challenges to meeting the shipbuilding obligations of the NSPS contract will be human resources since there hasn’t been a future in shipbuilding for an entire generation.

“We need people that can hit the ground running. We have to go all over the world to find shipbuilding professionals right now. But eventually we need the talent to be homegrown,” he said.

The NSPS is expected to provide steady work for a period of up to 30 years.

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With more than 25 years of experience reporting on transportation issues, Lou is one of the more recognizable personalities in the industry. An award-winning writer well known for his insightful writing and meticulous market analysis, he is a leading authority on industry trends and statistics.

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  • Dear Mr. Smyrlis,
    Loved your piece about the LNG projects. Looks like the future of shipping will be with LNG fuel and the world needs to be quick enough and supple enough to anticipate and MOVE MOVE MOVE! If you have any statistics on the future need for maritime workers at the AB level and Assistant Engineer level, (especially in brown waters) I would very much appreciate any information. I’m trying to have my local community college start a Maritime Technology program for our area. Thanking you in advance I am gratefully, Rosemary Carroll “Delaware Maritime Education Task Force”