Philly Shipyard has won its first commercial newbuilding order since 2013 with an order for one Jones Act-compliant Subsea Rock Installation Vessel for U.S wind market from Great Lakes Dredge & Dock (NASDAQ: GLDD. The order also marks the entry into the offshore wind market for both Philly Shipyard and Great Lakes Dredge & Dock.
The contract includes an option for GLDD to retain a right of first refusal on a second ship.
The initial contract is valued at approximately $197 million. If both ships are ordered, the value of the contract would rise to approximately $382 million.
Delivery for the first vessel is expected in the fourth quarter of 2024 with the second, if awarded, to be delivered in the fourth quarter of 2025.
For Philly Shipyard, the order marks its first newbuild order in the commercial market since 2013, when it was awarded a two-ship contract from Matson for their Aloha-class 3,600 TEU containerships. The two ships were delivered in 2018 and 2019, respectively. After their delivery, commercial shipbuilding at the yard was put on hold as the shipyard pursued government repair and maintenance work as part of a “go gray” strategy.
But Philly Shipyard would announce its return to newbuilds in 2020 after winning an order for four National Security Multi-Mission Vessels (NSMV) for Tote Services LLC, which retains its option for a fifth NSMV. For those vessels, Tote is serving as the Vessel Construction Manager on behalf of the U.S. Maritime Administration, which plans to use the NSMV’s as training vessels for state maritime academies and for humanitarian and natural disaster response.
“Over the past several years, we have made a conscious effort to pivot toward a more diversified order backlog in an attempt to grow the Company’s profitability,” said Steinar Nerbovik, President and CEO, Philly Shipyard.
“Philly Shipyard has a long-standing position as the leading U.S. commercial shipyard for tankers and container ships, and we are making inroads into government projects – both new builds and repairs. This win now carves a path into the expanding offshore wind market. This contract is proof that we are executing on our vision and diversifying our market opportunities,” adds Nerbovik.
The Subsea Rock Installation Vessel(s) will be based on a design by Ulstein, a leading Norwegian/Dutch designer of offshore wind vessels. The vessel is designed to transport and deposit up to 20,000 MT of rock on the ocean bottom, laying the foundation for the monopiles, which serve as the prevailing support structure for offshore wind turbines. The ship will have an overall length of 140.5 meters (461 feet), a breadth of 34.1 meters (112 feet), and crew accommodations for 45 people. GLDD is expected to supply the rock placement system and other mission equipment.
“Philly Shipyard is proud to contribute to the delivery of a vessel which will be essential in achieving the nation’s ambitious offshore wind targets. It is monumental for our shipyard to win this contract for Great Lakes,” said Thomas Grunwald, Vice President and lead manager of U.S. offshore wind strategy and business development at Philly Shipyard.
Great Lakes Dredge & Dock announced plans for the vessel back in December 2020 to support offshore wind project development along the U.S. East Coast. With a 130-year history, Great Lakes Dredge & Dock Corporation is the nation’s largest provider of dredging services with a fleet of over 200 specialized vessels. This will mark its first foray into the burgeoning offshore wind sector.
“This contract, valued at approximately $197 million, marks a milestone for our company, the U.S. offshore wind industry and our nation,” said Lasse Petterson, Great Lakes Dredge & Dock’s President and Chief Executive Officer. “Offshore wind will play a crucial role in helping the U.S. meet its decarbonization and clean energy goals. The unique, technologically advanced vessel we are constructing is an essential step towards building the marine infrastructure required for this new industry, which holds so much promise for our nation economically and environmentally.”
Eleni Beyko, Great Lakes Dredge & Dock’s Senior Vice President, Offshore Wind, commented: “The design was reviewed and approved by the American Bureau of Shipping (“ABS”) and will be built with best-in-class safety and low emissions standards (LEV, Sustain2), EPA Tier 4 engines and plug-in capability to obtain power from shore while loading. The vessel will be able to run on biofuel which reduces the ship’s CO2 footprint and it will be equipped with advanced active emissions control technology to reduce NOx emissions to a minimum. The installed battery pack will shave peak loads to reduce fuel consumption and corresponding emissions. The vessel is expected to be sea-ready by Q4 2024, to coincide with major offshore wind project construction timelines previously announced.”
Philly Shipyard is the sole operating subsidiary of Philly Shipyard ASA (OSE: PHLY), which is majority-owned by Aker Capital AS, which in turn is wholly-owned by Aker ASA (Aker).
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