By R. Bruce Striegler
In an interview with Canadian Sailings earlier this year, BC Ferries President and CEO Mike Corrigan spoke with enthusiasm about the prospect of powering new-build vessels for the westcoast ferry operator with LNG (liquefied natural gas). At the time he said, “On new construction we are aggressively looking at LNG technology for all our new vessels. We’re pretty bullish on it and we think we can make it work on any new vessel we put into the system.” Mr. Corrigan is about to have his beliefs about LNG-powered vessels put to the test. With 35 vessels travelling between 47 terminals, on 25 routes, BC Ferries is one of the largest ferry operators in the world, both in terms of fleet size and passengers carried. Its fleet, however, includes a number of older vessels, which the ferry service is taking steps to upgrade.
In July, BC Ferries received the go-ahead from B.C. Ferry Commission, the quasi-judicial regulatory agency overseeing the B.C. ferry operator, to construct three new intermediate-class vessels. Two of the new ships, each capable of carrying 145 vehicles and up to 600 passengers and crew, will replace the 48-year old Queen of Burnaby and the 49-year old Queen of Nanaimo, scheduled for retirement in 2016. A third vessel, with a capacity of 125 vehicles and 600 passengers and crew, will also be built to augment peak and shoulder season service on the Tsawwassen – Southern Gulf Islands route, plus provide refit relief for the other two new ships.
In a press release from BC Ferries announcing the new ships, Mr. Corrigan says, “As we begin the next phase of our new-build program, a key objective is to achieve capital and operating cost savings and efficiencies through an overall class and standardization strategy and a series build program. Improved operational efficiencies are also expected including lower crew training costs with standardized bridge, engine room and accommodation layouts, and lower maintenance costs with standardization of parts and equipment.”
Mr. Corrigan said in his earlier interview with Canadian Sailings that there are higher standards of safety when fueling with LNG. “We’re talking about a gas; it comes onto the system in a liquid state and is delivered by trucks much like diesel, stored in cryogenic chambers and it is gasified as we use it. And, we require specific engines that burn natural gas rather than diesel.” He added that the cost-savings were significant. “We’re looking potentially at about 60 per cent of the price of diesel. The challenges are the capital costs upfront. There’s not much of a premium when you are talking about a newbuild with either diesel or natural gas engines, but the pay-back with natural gas is fairly fast, perhaps two years.”
Procurement open to Canadian and international shipyards
The ferry service begins its procurement process almost immediately, seeking a design-build contract, open to both Canadian and international shipyards, and the contract is expected to be awarded in January 2014. With B.C. awash in natural gas, the province is promoting LNG whenever it can. Premier Christie Clark has repeatedly stated that she believes B.C.’s route to a debt-free future is in LNG. However, BC Ferries and procurement of new ships is a sensitive subject for B.C.’s unions. The last ferries built, three Super-C class vessels delivered in 2010, were awarded to a German shipyard on guaranteed contracts worth $542 million. Labour unions were disappointed that the new announcement by BC Ferries welcomed proposals from international shipyards because, they say, it limits the ability to provide local training and apprenticeship opportunities for British Columbians.
George MacPherson, President of B.C. Shipyard General Workers Federation, referring to the federal National Shipbuilding Procurement Strategy, said “on one hand, the provincial government lobbies the federal government to ensure ships are built in B.C., but it refuses to do the same when it comes to BC Ferries.” Lee Loftus, President of the B.C. Building Trades Union is quoted, saying, “We have been building ships on the west coast for over 100 years. We have the infrastructure, we have the facilities and we have the trades people to do the job.”
“Almost fifty years ago we built the original vessels, surely some 50 years later, we can build the replacements as well,” noted B.C. Federation of Labour President Jim Sinclair. Sinclair said the province can’t afford to give away well-paying jobs that the shipbuilding industry provides. “British Columbians pay every day for the operations of BC Ferries; so it should be British Columbians who first benefit from any shipbuilding contracts.”
BC Ferries says that among the key design elements yet to be finalized for the new vessels are those dealing with liquefied natural gas. It says that further technical and financial analysis is required before making a final decision, and that decision depends to some extent upon the responses to the Request for Proposals, reiterating that LNG-fueled vessels will have a higher capital cost than those fueled with diesel but that the lower life cycle costs would have a positive impact on fares.
The B.C. ferry service has had a turbulent history when it comes to building new vessels. Not only is the controversy over the recent German shipyard award still fresh, but there is a B.C. legacy nightmare called “the fast ferries.” Between 1998 and 2000, a former NDP government set out to support its economic goals of advancing B.C. shipbuilding by constructing locally a fleet of high-speed aluminum-hulled catamaran passenger/vehicle ferries. Three of the controversial vessels were built, costing double the original budget at $450 million and behind schedule by three years. The vessels had to be taken out of service not long after they began running due to mechanical problems and a public backlash against the extreme wakes created by the catamarans.
The vessels were expensive to operate, not able to run at speed due to the wake problems so could not achieve the 30-minute reduced travel times which had been a promised feature and therefore could not justify premium fares. Finally, their streamlined design precluded carrying more than a small number of vehicles. They were kept dry-docked for years until 2003, when the B.C. Liberal government sold all three to the Washington Marine Group for about $19 million. Ultimately, in 2009, Washington Marine Group (parent company of Seaspan Marine) sold the mothballed vessels to Abu Dhabi Mar, a United Arab Emirates-based yacht building company.