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Horizon Lines Plans to Convert Steam-Powered Cargo Vessels To Dual Diesel/LNG Engine Power Plants

Horizon Lines, Inc., one of the nation’s leading domestic ocean shipping companies, today announced that it plans to convert the power plants on two of its steam turbine cargo vessels to modern diesel engines capable of burning conventional liquid fuels or liquefied natural gas (LNG).

horizon

“We are viewing this as the first step in a repowering initiative for Horizon Lines vessels serving in the Hawaii and Puerto Rico trade lanes,” said Sam Woodward, President and Chief Executive Officer. “The two initial steam vessels targeted for the planned repowering are structurally viable for the conversion from steam-powered to dual diesel/LNG engines. Additionally, our repowering project has the support of the American Bureau of Shipping (ABS). We plan to work closely with the ABS and the U.S. Coast Guard (USCG) throughout the life of the project.”

The project’s goal is to reduce fuel consumption and lower emissions. The project, which would include an integrated repowering solution encompassing main engines, supporting components, and LNG storage tanks, has attracted interest from both domestic and foreign shipyards. As a result, six request-for-pricings (RFPs) have been issued to U.S. shipyards and six have been issued to foreign shipyards. The company has not decided where the repowering work would be conducted at this time, pending receipt and evaluation of the RFPs.

Horizon Challenger

The Horizon Challenger

Horizon Lines requested a predetermination ruling from the USCG National Vessel Documentation Center on coastwise eligibility in order to determine if the company could consider foreign options in addition to U.S. shipyards for the project. The USCG ruled that the work as described can take place in a foreign shipyard without jeopardizing the Jones Act status of the vessels.

“We expect to receive the completed RFPs in mid-July and will evaluate each based on the overall value that the shipyard can provide in terms of quality of work, cost of the project and schedule requirements,” said Pete Strohla, Vice President and General Manager of the company’s Ocean Transportation Services group. “As we further explore a comprehensive fleet program, additional RFPs will be needed to meet our vessel requirements. We expect U.S. shipyards will provide bids for this initial repowering project, as well as for upcoming projects. We tentatively expect work to commence on the first vessel in January 2015 and the first two ships to be completed late that same year or in early 2016.”

Horizon Lines also is conducting due diligence regarding various engine manufacturers capable of meeting the company’s specifications for a dual-fuel, medium-speed diesel power plant required for the planned repowering project. The company currently does not have a contract with any engine manufacturer but has engaged MAN Diesel & Turbo SE to conduct preliminary engineering, consulting and design work related to the proposed
repowering project.

“Horizon Lines is committed to a comprehensive repowering program that will improve our fleet’s fuel efficiency and environmental impact,” said Bill Hamlin, Executive Vice President and Chief Operating Officer. “Doing this in a cost-effective manner, while at the same time continuing to provide outstanding service to our customers without disruption, is consistent with Horizon Lines’ commitment to its customers, the consumers in the markets we serve, and our obligations as a Jones Act carrier.”

Horizon Lines Issues Statement in Strong Support of the Jones Act

Horizon Lines issued the following statement from interim President and Chief Executive Officer Stephen H. Fraser:

Horizon Lines Issues Statement in Strong Support of the Jones Act

Horizon Lines is, and always has been, a very staunch supporter of the Jones Act and all of its requirements.  The Jones Act stipulates that cargo shipped between two U.S. ports must be transported on vessels that are American-made, American-flagged, at least 75% American-owned and predominantly American crewed. We fully support these requirements and steadfastly believe they are vital to American economic, merchant marine, military, national and homeland security interests.  The Jones Act has provided a strong foundation for America’s domestic shipping industry since 1920, and has enjoyed the long-standing support of the U.S. Navy, bi-partisan members of Congress and every president in modern history.

As one of the nation’s leading domestic ocean shipping companies and as a proud member of the American Maritime Partnership, Horizon Lines understands that the history and livelihood of our company, our customers and the markets we serve are inextricably linked to the Jones Act.  Fifty-six years ago this week, the converted U.S. built tanker Ideal X departed Port Newark with 58 containers bound for Port Houston.  With that voyage, Sea-Land Service, our predecessor, went on to revolutionize ocean cargo transportation.  Today, the associates of Horizon Lines, in partnership with our maritime and shore-side union partners, are proud of the role we play supplying the citizens of Alaska, Hawaii and Puerto Rico with goods that are vital to their lives.  The Jones Act has made this possible.  It has been integral to our nation’s past and it is critical to our future.

Horizon Will Plead Guilty to False Vessel Oil-Record Keeping Entries

Horizon Lines, Inc. announced that its Horizon Lines, LLC operating subsidiary has entered into an agreement with the U.S. Department of Justice, under which the ocean cargo carrier will plead guilty to two counts of providing federal authorities with false vessel oil record-keeping entries on a containership in the U.S. West Coast-Hawaii service.

Under the agreement, which is subject to court approval, the company will pay a fine of $1.0 million and donate an additional $500,000 to the National Fish & Wildlife Foundation for environmental community service programs. The company also has agreed to be placed on probation for three years and institute an environmental compliance plan.

The charges stem from the improper use of an oily water separator and related inappropriate record keeping on the Horizon Enterprise, an American-flag containership that sails between Tacoma, Oakland and Honolulu. Oily water separators are used to remove oil from bilge or wastewater, so that the water can then be legally discharged into the ocean.

The company responded promptly and proactively to the discovery of these violations. As part of the company’s environmental review, Horizon Lines conducted a fleet-wide audit and has cooperated fully with the Department of Justice, the U.S. Coast Guard and other authorities involved. It also immediately implemented a compliance and training program, which is being performed by an outside contractor. The program augments the company’s existing environmental policies for mitigating operational impacts while at sea. Additionally, the company has established the position of Environmental Compliance Director to lead Horizon’s overall environmental compliance programs. The position reports directly to the company’s Chief Compliance Officer and the Board of Directors.

“Horizon Lines has always endeavored to operate as a responsible environmental steward,” said Stephen Fraser, President and Chief Executive Officer. “We do not in any way minimize the unauthorized actions by a few individuals that run contrary to the care and training normally demonstrated by our vessel crews throughout the company. We are making every effort to see that this does not happen again, as we continue to provide service to our customers as an environmentally responsible American corporation.”

Horizon Lines Ship Clips Dock and Damages Crane in Texas

A Horizon Lines ship recently damaged a crane after clipping a dock in Houston, Texas.

Horizon Challenger

The Horizon Challenger

Horizon Lines, Inc.  and APM Terminals today issued the following statement:

The Horizon Challenger experienced an unfortunate incident while docking at the APM Terminals facility in Houston on April 15, 2011.  After being released by the tug, the vessel clipped the dock and damaged an APM Terminals crane.

APM Terminals and Horizon Lines amicably and very quickly resolved the damage issue as part of a normal process that modestly delayed the ship’s departure for San Juan, Puerto Rico.  The Challenger is currently expected to arrive in San Juan on schedule.

APM Terminals and Horizon Lines jointly regret any inconvenience this might have caused to Horizon customers.