Horizon Lines Secures ECA Sulphur Limit Waiver

Horizon Lines file photo.
Horizon Lines file photo.

Soon-to-be defunct Horizon Lines says it has been issued a waiver from the North American Emissions Control Area (ECA) fuel sulfur content requirements allowing three of its Jones Act vessels to continue to use low-sulfur heavy fuel oil on its Alaska trade route as the company pursues the installation of gas scrubbers.

The permit, effective as of Jan. 1, 2015, was issued by United States Coast Guard (USCG) and the U.S. Environmental Protection Agency (EPA) and provides a conditional waiver for three diesel-powered D7-class containerships to use low-sulfur heavy fuel oil in their main engines while operating between Washington state and Alaska as they await the installation of the Exhaust Gas Cleaning Systems (EGCS), aka scrubbers.

The permit for the waiver pertains the North American Emissions Control Area (ECA) fuel sulfur content requirements stated in MARPOL Annex VI regulation 14.4, limiting the emission of SOx and particulate matter to 0.10% m/m (1000 ppm) on and after 1 January 2015.

Horizon Lines says it has entered into a supply agreement with Alfa Laval Aalborg Nijmegen BV for design and procurement of the PureSox 2.0 scrubber systems for all three of the vessels. The Alfa Laval EGCS is a multiple inlet hybrid system which will clean the exhaust gas from the main engine as well as the main generators, and is the first system of its kind for a Jones Act containership, according to Horizon Lines. Horizon says that with the contract it expects to incur a total capital spending of approximately $18.0 million, with installation of the first system planned to begin on the Horizon Kodiak in September 2015, and completion of the project by December 31, 2016.

In November, Horizon Lines agreed to sell its Alaska operations to Matson Inc., ending Horizon’s 50-year history of container shipping in Alaska which began under the Sea-Land banner in 1964. The acquisition by Matson includes all three of the Jones Act qualified D7-class ships, its port terminals in Anchorage, Kodiak and Dutch Harbor, and a reserve steam powered Jones Act containership. Horizon’s Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. Matson said previously that the value of the transaction is $456.1 million, including $69.2 million in stock plus the repayment of all outstanding debt.

In addition to the Matson acquisition, Horizon Lines also simultaneously announced the sale of its Hawaii business to The Pasha Group and the termination of its Puerto Rico operations by the end of 2014 due to continuing losses without the prospect of future profitability.

The acquisitions with Matson and The Pasha Group are expected to close sometime this year.

RELATED: Horizon Lines to Terminate Puerto Rico Service, Announces Sale of Remaining Company