N.S. Yards to Build Offshore Vessels
New supply vessels designed to service the offshore oil and gas industry will be built at the Halifax Shipyard, with related work to be done at the Shelburne and Liverpool yards.
The ships will be the first produced under Nova Scotia's Offshore Support Vessel (OSV) Program, which was announced today in Halifax. The program calls for four vessels; construction of two begins immediately.
During peak construction periods, almost 400 jobs will be added to the workforces at the three shipyards.
"The OSV program levels the playing-field for shipyards in Nova Scotia," said James D. Irving, president and CEO of J.D. Irving Ltd. "It means that we can now successfully compete with other countries, including the United States. We have a talented workforce in Nova Scotia."
The Nova Scotia OSV program copies the hugely successful U.S. program Title XI. Under both, government guarantees the buyer's financing, ensuring lower interest rates and, therefore, lower overall costs.
For years, shipbuilders and others have lobbied the federal government for a program that would allow some of the shipbuilding now being done in the United States by Canadian shipbuilders to come home. The Nova Scotia government is responding by recognizing that there is a ready market and purchasers waiting to take the vessels.
"Our OSV program is a new chapter in Nova Scotia's shipbuilding history," said Premier Russell MacLellan. "There is a market right here on our doorstep for new ships. We're determined that ships purchased and operated by our own local companies, for our offshore, are built right here in our home province. We'll start here and then we'll move to the export market."
Incremental tax revenues, direct and indirect, on the construction of the four vessels is estimated at $8.9 million. The guarantees will generate another $4 to $5 million in fees to government over the life of the program.
The construction work will be divided among the yards. At peak, in mid-1999, 750 workers will be employed at the Halifax Shipyard. Shelburne and Liverpool will both benefit from 15 new jobs at each yard.
"This is good news for the workers at the Halifax Shipyard who are just now completing the last of the coastal defence vessels," said Les Holloway, executive director of the Marine Workers Federation. "The success of the coastal defence vessels project is a testimony to the quality of work our shipyard workers produce in this province. It's timely news -- indeed, great news -- for the workers, this shipyard and the province that we are now able to build offshore supply vessels."
Atlantic Towing, an Irving-owned company, has already bought two of the vessels. The first will be delivered in October 1999, with the second scheduled for February 2000.
"We see great opportunities for local companies in servicing the growing offshore oil and gas industry -- here at home as well as in Europe," explained Bob Youden, vice-president of Atlantic Towing. "These multi-function ships are ideally suited to the demands of the offshore industry and the winter conditions of the North Atlantic. We will be able to provide anchor-handling and towing, as well as assistance with tanker-loading, stand-in communications, diving support, evacuation and rescue for up to 300 people."
Under the new program, the provincial government will guarantee up to 87.5 per cent of the buyer's loan. The provincial guarantee will not exceed $80 million at any one time and will remain in effect for up to 15 years. The Irving Group of Companies will pay the remaining 12.5 per cent. Each vessel will cost $44 million to construct.