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Hot Air?

U.S. Offshore Wind and An Ongoing Look at Inland

 

“The answer, my friend, is blowin’ in the wind”
-Bob Dylan

U.S. offshore wind farms come up frequently in the news, often related to politics and with a list of players that seems to change monthly. The number and location of sites in this industry, fledgling in the U.S., is confusing.  To help visualize what is happening, I found several websites with information on the U.S. Windfarms operators. I created a “U.S. Offshore Windfarms” table found below, listing each wind farm by its coastal location to include its development status as of mid-February 2024.

Creating an Offshore Wind Farm

The U.S. government offers offshore zones for development through a bidding process similar to what is done with offshore oil sites. Once a bid is accepted, the owners go through a concept and early planning phase. Of great importance is the research into its feasibility to include understanding the seasonal wind patterns, the water depth and currents, the seabed condition for turbine towers, the distance to shore to determine the need of substations. The application will have to contain, among other things, an environmental assessment of ecological, marine, and coastal impact. The consent application is then submitted to permitting authorities. When an application is accepted and consent received, construction can begin.

One can see that the process is long. It is possible that some may never be created and probable that others will look different in ownership and/or design from the original concept.

Inland Market Update

Overall, the grain market is unchanged. While the U.S. yield in corn has been raised by the USDA, due to higher per acre yield, the existing/scheduled export amounts have minimal change. However, they do continue to be higher than last year. Currently, the biggest consumer of U.S. corn is the U.S. because of the money invested in ethanol fuel. Argentina and Brazil follow, with Brazil also heavily invested in biofuels.

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Soybean yield is slightly higher than estimated, but the forecast for exports is unchanged and 11.9% below 2022 exports. The biggest buyer by far is Brazil at twice the amount of the second user, the U.S. The export totals are down mainly due to tariff disputes with China.

Hopper barge utilization may depend on bushel prices and the possibility of farmers storing part of their crops, awaiting better prices.

Next year, the USDA believes farmers will transfer some fields from corn to soya beans. While corn acreage will drop, the yield is expected to grow so available corn for 2024-2025 will be steady. The 2024 export of corn and soybeans is expected to be good, as part of it will be a carryover of the 2023 crop. With large volume, prices are expected to drop a bit and make U.S crop exports more attractive.

The wheat trade is not a big factor in the inland river trade, but knowing the players can be entertaining. Wheat is the largest agricultural product in the U.S., but ironically, the U.S. is not one of the top five consumers. By far, the largest buyer is Russia followed by the EU, probably due to the shut off from the large Ukraine wheat harvest. The importation of U.S. corn to Russia and the Ukraine is up only slightly since pre-war.

Outside of the grain market, steam coal exports are down 7.4% YTD 2022. Metallurgical coal is up 1.6% with China as the largest buyer.

Northbound imports were down in the 4th quarter 2023. Cement was down, possibly due to the drop in new home construction. Imported steel and fertilizer were also down with the latter possibly due to seasonal needs. The biggest drop was in the importation of alumina and bauxite as a number of aluminum plants have closed or partially closed some of their production lines starting in 2022.

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Inland new barge construction, dry and liquid

There were 318 new hopper barges built in 2023. In 2016, 1,000 new barges were built, and that number has continued falling each year. New construction in 2022 was depressed by steel costs. The cost of steel plate has dropped but also barge construction has become somewhat more affordable due to the growing acceptance of hot rolled coil steel. Time will tell if this new steel construction method holds up to inland river service.

These new barges have come from two sources. Arcosa Marine Products, ex Trinity Marine Products, and Heartland Fabrication, ex Brownsville Marine Products. Most are for the listed buyer, but many were purchased to be leased.

Company

Order

Builder

Heartland Barge Mgmt.

121 covered

Heartland

Heartland Barge Mgmt.

30 covered

Arcosa

Campbell

54 open

Arcosa

Crounse

40 open

Arcosa

Parker Towing

31 covered

Arcosa

(9 more of the Parker order are slated for 2024 delivery)

CIBCO Barge Line

25 covered

Arcosa

St. Paul Barge Line

6 covered

Arcosa

JEM Transport

5 covered

Arcosa

M/G Transport

4 covered

Arcosa

RTI Barge Management

2 covered

Arcosa

This is what River Transport News (RTN) researched for inland tank barge deliveries in 2023:

Seven companies ordered 26 new barges for 2023 compared to eight companies that ordered 22 tank barges in 2022. Despite the larger number of new units, their aggregate volume was lower in 2023 as many of the barges built were of smaller capacity. According to RTN, this was the lowest aggregate capacity year since they started their research in 1990. The probable cause of this drop was that current rates did not justify the costs of new construction. Some of the new barges were built for special service which may have rates/charters that justified their construction.

Company

Quantity

Size

Type

Builder

ACBL

10

10,000 bbl

Chem

Arcosa

Kirby

4

16,000 bbl

Pressure

Conrad

 

1

10,000 bbl

S/S tanks

Southwest S/Y

Enterprise Marine

2

30,000 bbl

clean

West Gulf Marine

 

2

30,000 bbl

heated

West Gulf Marine

Cenac Marine

2

30,000 bbl

Clean

West Gulf Marine

Southern Duvall

2

30,000 bbl

Clean

Conrad

Superior Bay Marine

2

30,000 bbl

Clean

Conrad

Carline

1

10,000 bbl

Clean

Southwest S/Y

RTN research believes that there will be little change in tank barge deliveries in 2024 from the 2022-2023 level.

Kirby’s 4th Qtr. report anticipates some revenue growth in 2024 due to increases in rates. The 2021-2023 numbers given in this report indicate that Ton Miles revenue and Operating Margin are up. We will look at Kirby and others after their 2023 10-K reports are released.

Drones

DLS has used drones and an in-house designed ROV since 2018. We were the first independent marine survey company to be certified by the American Bureau of Shipping for external digital inspections. During COVID, when traveling was restricted, we were able to conduct external inspections of two vessels in Scotland using drone technology.

More recently, we have done preliminary test inspections of the first operating wind turbines in Dominion Energy’s field off the coast of Virginia by drone.

Earlier this week, I sat in on a meeting and witnessed the first sample of a visual report that DLS is working on. This software allows anyone to see a vessel through the eyes of a marine surveyor conducting an inspection. Using a mouse, one can move forward and backwards, left and right, up and down, 360 degrees, and zoom, just as if the viewer was the inspector. Future inspections can be compared side by side with prior inspections to look for changes.  This is very helpful in detecting or tracking damage. Measurements for damage or litigation can be done on screen in U.S. or Metric units.

The aerial inspection of the vessel is done with a drone, now with a high-resolution camera. The onboard walkthrough is done with a 360-degree camera. While the eye is the camera, the brains are the attending DLS surveyors. The surveyor directs the drone operations to fit the purpose of the inspection. It might be for an appraisal, damage survey, litigation, or insurance. Our UAV specialist, Charles Sterling, can remotely control/position the camera, monitoring the video feed in real time as one sees with ROVs.

DLS is now looking into different platforms where our digital walkthrough can be merged with additional data about each vessel such as the ship’s general arrangement drawings. High resolution photographs taken by the attending surveyor can then be inserted as a layer on these documents to draw attention to points of importance. DLS will have our introductory digital survey offering in Q2 2024.

-Norman Laskay

 If you’d like to keep this conversation going, please email me at nlaskay@DLSmarine.com

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Matt McDaniel DLS Marine Survey and Appraisal

Matt McDaniel

Hull & Machinery Surveyor

Areas of Expertise:

  • Hull and Machinery
  • Damage Assessment and Repairs
  • Condition
  • Inspections
  • Project Management

Memberships / Professional Certification:

  • NAMS-CMS

Background:

Matt began marine surveying in 2014 and has experience with damage causation, reviewing transit plans, new construction, cargo transfers, salvage operations, on/off charters, and general condition surveys. He joined the Hull & Machinery department at DLS in 2019.

mmcdaniel@dlsmarine.com
Charles Sterling - DLS - UAV Supervisor | Digital Inspection Manager

Charles Sterling

UAV Supervisor | Digital Inspection Manager

Areas of Expertise:

  • Uncrewed Aerial Vehicles & ROV’s
  • Digital Inspections
  • Computer Technology

Professional Certifications:

  • AS, Computer Information Systems
  • BS, Information Technology
  • FLIR Infrared Training Institute

Certified Specialist in Caterpillar diesel engines to include:

  • CFR Part 107
  • Level 1 sUAS Thermographer
  • Microsoft Certified System Engineer

Background:

Charles joined the firm in 2024, after managing an enterprise drone service provider based in New Orleans. He also teaches basic and advanced UAV class at Delgado Community College. Charles has extensive experience planning, flying complex missions in the Industrial, Chemical and Oil & Gas industries.

csterling@dlsmarine.com

Ave P. Boudreaux

Marine Surveyor

Areas of Expertise:

  • Hull and Machinery
  • Project Management Supervisor (QC) – overseen numerous construction and delivery schedules for vessels
  • Extensive knowledge of U.S. Coast Guard and ABS rules and regulations for vessel construction and repair

Education:

  • Rolls-Royce Z-Drive Failure Analysis Seminar
  • Flex-Core and Aluminum Welding Course
  • Extensive training in engine, gear, and shaft alignment
  • Extensive training in vessel repair and new construction

Memberships / Professional Certification:

  • NAMS-CMS

Background:

Mr. Boudreaux has 15 years experience with offshore supply vessels, crewboats, and anchor handling tugs. During this time, he served 8 years in vessel repair and new construction, 3 years in vessel operation and logistics, and 4 years as a vessel port captain.

Mr. Boudreaux served over 3 years as a marine surveyor performing numerous types of surveys in the marine industry prior to joining DLS.

 aboudreaux@dlsmarine.com

Norm Laskay - DLS Marine Valuation

Norman F. Laskay

Of Counsel

Mr. Laskay joined Stickney, Dufour & Associates, Inc. in 1988 as a partner. He is now of Counsel. He became a Marine Surveyor in 1974, having gained prior experience in steamship agency, bulk cargo handling and vessel operations. He has been involved in many aspects of marine surveying including hull, machinery and cargo, both inland and ocean. Since becoming an Accredited Senior Appraiser of commercial marine equipment, he has been active with the American Society of Appraisers’ International Machinery and Technical Specialties Committee. He has written a comprehensive exam for the Commercial Marine Appraisal specialty and has written a 30-hour course for the American Society of Appraisers on appraising commercial marine vessels and yachts and is the lead instructor.

Areas of Expertise:

  • Commercial Marine Appraisal
  • Hull Damage and Repair
  • Cargo Loading, Securing and Trip in Tow Preparation

Education:

  • Maine Maritime Academy Graduate
    B.S. in Marine Transportation
  • Continuing education credits in Law, Appraisal, Marine Survey, and Diesel Repair.

Professional Certification/Memberships:

  • NAMS Regional Board of Directors Member 1989-1994
  • American Society of Appraisers – Chapter Treasurer 1991-1994
  • American Society of Appraisers – Chapter President 1994-1995
  • Mark Twain Club (Charter Member)
  • Machinery and Technical Specialties International Committee 1995-Present

Publications

  • The Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers “TUGBOAT DESIGN 101” Vol 13 No. 2 Fall 1996
  • The Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers “KEEPING AN EYE ON YOUR MARINE ASSET” Vol 13 No. 3 Winter 1996
  • Marine Money, The Ship Finance Publication of Record “ASSET BASED APPRAISAL:, Vol. 21, No. 3, May/June 2006 Wrote the chapter on Marine Asset Appraisal for the American Society of Appraisers text book: “VALUING MACHINERY AND EQUIPMENT: THE FUNDAMENTALS OF APPRAISING MACHINERY AND TECHNICAL ASSETS” Second Edition. In 2008, revised the chapter for the future Third Edition and wrote an accompanying Work Book section.

Email: nlaskay@dlsmarine.com

  

Harry Ward President DLS Marine

Harry Ward

President

Harry Ward is the President of Dufour, Laskay & Strouse, Inc. Harry is a US Navy veteran and has spent much of the past decade in the maritime industry in sales, finance and general management. He has extensive experience in asset and business valuation and is working to maintain DLS leadership in marine appraisal and survey for another 50 years. Harry is a graduate of the US Naval Academy and served as a helicopter pilot and survival instructor through multiple tours of duty. He has an MBA from San Diego State University.

Areas of Expertise:

  • Fleet and Vessel Appraisals
  • Marine Business Valuation
  • Transaction Support – Due Diligence
  • Transaction Support – Marine M&A Advisory
  • Digital Inspection – Marine and Offshore Wind

Education:

  • U. S. Naval Academy, Annapolis, MD – 1991, Bachelor of Science
  • San Diego State University, San Diego, CA – 1999, MBA with emphasis in Finance

Licenses and Professional Associations

  • FINRA Licenses, Series 63 and 79 (Investment Banking)
  • American Society of Appraisers, AM
  • Certified Exit Planning Advisor, CEPA (Business value assessment and strategy development