Shipping Industry Gears Up for Arctic Transport

General Dynamics Announces Arctic Submarine Tankers


While Arctic tanker traffic has not yet arrived, traffic in monetary speculation in Arctic tanker traffic has stepped up considerably the last few months. Shipbuilding companies are eyeing the potential Arctic market, planning to build vessels that will be able to plow through 10-feet-thick ice. When gas shipments start in 1985, the ships will have 4 times the power of conventional LNG carriers, costing $380 million each. In 1986, Dome Petroleum hopes to begin shipping oil from the Beaufort Sea.

Canada will need over 400 new ships and other marine equipment worth over $33 billion by 1990, according to a recent study of Canadian shipping demands. Vessels worth over $l3 billion are being planned for the Arctic region. Dome Petroleum will need 25 ice-breaking tankers of 200,000 tons and a number of highly technical special ships.

Of recent note was the announcement in November that General Dynamics wants to haul Liquefied Natural Gas (LNG) in $20 billion dollars worth of 1,470-ft-long tanker submarines from Alaska to West Germany under the Arctic ice. This was the first announcement that industry was planning to haul U.S. oil to a foreign market. Previously, Arctic tanker reports speculated about the Canadians shipping oil across the Beaufort and Bering Seas to Japan.

J. J . Murphy, General Dynamics V. P. for marketing operations, said that hauling the liquefied gas in submarine tankers would be 40 percent less expensive than hauling it in icebreaking tankers. While safety experts have wondered if explosions would result from ruptured LNG tanks leaking into warmer water, Murphy said that General Dynamics-built tankers and Navy submarines both have good operating records. Financing of the project would require U.S. government-guaranteed loans and shipbuilding subsidies to 25 percent of the building costs. In addition $1 billion in shore facilities in the U.S. and Germany would be needed. Some 15 subs would transfer LNG from terminals at Prudhoe Bay to ports in Europe and Canada, using sonar beacon paths, ensuring a year-round supply of gas. West German shipbuilders would assemble some of the submarines and do repair work in return for West German government investment.

Canadians Seek $ for Arctic Pilot Project
While Eskimo leaders vow they will fight the Arctic Pilot Project because of detrimental environmental impact, industry leaders are confident that the project will obtain approval of Canada’s National Energy Board and government in mid-1982. Government-owned Petro Canada heads the project. Trans-Canada Pipelines will transport the gas and Panarctic Oils will produce the gas. Canada hopes to gain 13-14 trillion cubic feet of natural gas on Melville Island and other islands with promising fields. The members of the project have spent $50 million on preliminary exploration and will seek loans necessary for 75% of project costs. The largest single expenditure will be $800 million for 2 ice-breaking oil tankers.

Trans-Canada leads a consortium of 4 firms which wants to sell 500 million cubic feet of Arctic gas to West Germany. Shipments are planned to begin in 1988 at the earliest. The entire project would cost about $4 billion. A 2-year $6-7 million feasibility study has just begun the Canadian environmental review. Partners in the proposal are Petro-Canada and Ruhrgas and Gelsenberg of West Germany. Gelsenberg is the German subsidiary of British Petroleum. The project represents West Europe’s interest in reducing dependency on Soviet energy supplies.

Dome Readies Arctic Tankers
While industry forecasters have predicted a glut in world supplies of Liquefied Petroleum Gas (LPG) this year and increasing to a surplus of 13 million metric tons by 1985, international trade in LPG will increase to 30 million metric tons per year by the same date. Japanese demand will increase to 22.1 million tons by 1985. Eyeing the oriental market, Dome Petroleum, developer of the Canadian Beaufort oil reserves, gave a contract last year to Burrard Yarrows shipbuilders in Vancouver, B.C., for an ice-breaking supply ship. Powered by two 6,000-hp diesel engines, the ship is expected to be “state-of-the-art” in icebreaking technology and forerunner of large icebreaking tankers for operation in the Arctic Sea.

Dome also purchased Davie Shipbuilding for $38.6 million Canadian last year. Included in the Davie purchase is Branch Lines, which transports petroleum products on the Great Lakes to Montreal. On June 26, 1982, Dome announced it was selling Branch Lines for $44 million. Dome is expected to use Davie’s facilities to construct some equipment for Beaufort Sea oil production. It also plans to use Davie for constructing components for ice-breaking LNG and oil tankers that will transport petroleum out of the Arctic.

Also last year Dome announced plans to build a new major shipyard on Canada’s west coast and to expand 2 existing yards. The new yard will be over 3 times larger than Canada’s largest existing shipyard. These moves are related to Dome’s offshore development in the Arctic and plans to build warm-water 200,000-ton LNG tankers for transporting oil and gas out of the Arctic are reported to reach $5 billion.