Three shipyards spread across the US are said to be in the running for a potential $500m wind turbine installation vessel (WTIV) newbuilding project being pursued by New York-listed Eneti.
Market sources have identified the trio as Keppel AmFELS in Texas, ST Engineering Halter Marine and Offshore in Mississippi and the Philly Shipyard in Pennsylvania.
Scorpio Group-backed Eneti announced on Tuesday that it was in "advanced discussions" with US shipyards for a fully Jones Act-compliant WTIV that would serve the growing US market for offshore wind power.
At the same time, Eneti said it had sealed a contract with South Korea's Daewoo Shipbuilding & Marine Engineering for a $330m WTIV newbuilding that has been the subject of a letter of intent since last August.
The two moves by Eneti accelerated momentum by the company, formerly Scorpio Bulkers, out of the dry-cargo trade and fully into the renewable energy realm.
Eneti did not identify the US yards with which it was in discussions, but market sources say the three present some intriguing options.
All three yards have partnerships with international allies: Singapore-based Keppel and ST Engineering for the plants in Texas and Mississippi, and the Aker Group of Norway for the Pennsylvania outfit.
Keppel AmFELS is the only option with experience in building WTIVs, as it is in the process of constructing a vessel for Dominion Energy of Virginia.
Upon expected delivery in 2023, the unit is to be the first to comply with the Jones Act, which requires cargoes carried between US ports to be built, crewed and owned by US citizens.
While the Halter yard has not built a WTIV, it does have considerable experience constructing jack-up rigs for the offshore oil industry, which are substantially similar in composition to WTIVs, market sources said.
And while Philly Shipyard has no experience with either, it has a track record in building commercial cargoships.
Labour costs are likely to be cheaper in Texas and Mississippi. But the Philly yard is closer to the Atlantic Ocean fields, where US wind farms will operate, and the facility has powerful political allies: it sits practically in the backyard of US President Joe Biden, the Delaware resident who is pushing the wind agenda.
Hefty price tag
When it comes to costs, the Dominion Energy vessel carries a price tag around $525m for what is substantially similar to the $330m Eneti unit at DSME.
The price differential for conventional newbuildings in US yards is infamous, with product tankers priced north of $30m internationally typically running at more than $100m.
While the factor is still substantial for WTIVs, the multiplier effect is smaller because the differential in labour costs is a smaller percentage of the overall price. In addition, specialised cranes may need to be imported from abroad as they are not available from US manufacturers.
The sources said Eneti has been evaluating a Jones Act project for roughly a year, but momentum accelerated when it became evident that Biden was likely to win the White House. Former president Donald Trump did not share the Democrat's green-energy agenda.
At present, there is more than one way to break into the US wind farm market. Some operators intend to use foreign-built WTIVs, which will receive turbine components from Jones Act-compliant barges and simply lift them into place atop seabed platforms.
Eneti's lean towards doing all the work with a fully compliant WTIV speaks to its belief that the lifting process is not, in fact, quite so simple.
Transport by barges to increasingly deepwater locations — as is planned, for example, in the Vineyard Wind 1 project off Massachusetts that was approved by Biden on Tuesday — carries inherent dangers that can be avoided when a WTIV does all the work.
There is also an element of political "optics" in having a Jones Act-compliant unit competing for contracts — said to be a smaller but still significant consideration in the choice.
Eneti is expected to reveal further details of its progress in a conference call with equity analysts on Thursday.
