Kirby Corp Says Opportunities Ripe for… Barge Building

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April 25, 2013

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By Kristen Hays

HOUSTON, April 25 (Reuters) – Growing demand to move crude oil via barge along U.S. coastlines could spur construction of new barge capacity, Kirby Corp Chief Financial Officer David Grzebinski told analysts on Thursday.

Kirby, the largest U.S. barge operator, has been building barges, but largely to replace old ones, as well as adding to its fleet via acquisitions.

Grzebinski told analysts during the company’s first-quarter earnings conference call that Kirby is in conversations with several customers “about potentially building new equipment.”

“I would anticipate that the industry would need to build some new capacity here in the near term,” he said.

The company transports refined products, crude and chemicals both inland and along coastlines, but the coastal business is growing as refiners and others increasingly seek to move inland U.S. and Canadian crude to refining hubs along the coasts.

First-quarter earnings reached $56.6 million, or $1 per share, compared to $50.9 million, or 91 cents per share, in the same period of 2012. Chief Executive Joe Pyne said demand growth for coastal movements of crude and condensate drove the improvement.

On Monday Tesoro Corp and supply system provider Savage Companies announced plans to build a new crude-by-rail and marine offloading facility in southwest Washington State that would allow the refiner to move more cheap North American crude to its West Coast refineries.

Grzebinski said such shipping demand is growing with an aging fleet to move it.

“I would characterize it as more opportunities for new build equipment because of increased volumes and an aging fleet than through acquisitions,” he said when asked about buying more barge shippers.

Grzebinski also said that newbuild orders placed now for larger units likely wouldn’t see the vessel delivered until 2015, while smaller barges can be built faster. But bigger units that can haul 100,000 to 150,000 barrels or more are in higher demand.

Pyne added that shipping rates also would have to increase to justify new equipment construction.

Unrelated to the company’s results, Pyne noted explosions on two unmanned Kirby barges on the Mobile River in Alabama late Wednesday. He said the natural gasoline tank barges were being cleaned at a shipyard when the explosions happened, leaving three people hurt.

“Kirby is fully engaged working with the Coast Guard in determining cause of this incident,” Pyne said.

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