Dredging Shakeup

1. On Tuesday April 17 the dredge Rosaire and hopper boat I.V.No.14 are lying at Meteghan, NS, with the Groupe Océan tug André H. (in the background) preparing to tow then to Quebec.

Another of those monumental shakeups that seem to follow the Canadian dredging industry has passed beneath the radar of the English language press, since it appears (on the surface) to be a Quebec story - but don't be so sure.

In 1956 Verreault Navigation of Les Méchins, QC entered the dredging business. A local entrepreneur and ship's captain Borromée Verreault built his own little dredging fleet with unique self-propelled hopper boats. As the lucrative business base, it was able to expand its shipyard into a large enterprise. When the founder died his wife, and then two daughters took over and ran the company.

In 2000 the Verreault daughters decided to split the enterprise, with Denise Verreault keeping the shipyard selling the dredging business to her sister Claudette. Among the contracts that went with it was the lucrative North Traverse maintenance dredging. A yearly channel clearing project that used the trailing suction hopper dredge Port Méchins, originally J.P.Porter's Lockeport, which had been based in Halifax. Claudette Verreault discovered that the fleet was in poor condition and that Port Méchins would not meet Transport Canada standards. Verreault had also gobbled up a lot of old DPW plant, but it had not been used much and was also in bad shape. As a result there were lawsuits between the two family members and and the newly formed Dragage Verreault took on a large debt to keep the company going. One frequent contract for Verreault was Saint John, NB harbour dredging, but this was eventually won by Harbour Development (through Atlantic Towing Ltd, a J.D.Irving company.) Verreault also lost the Traverse work because Port Méchins could not be upgraded. It was sent to Veracruz, Mexico where it may have found some work.

Meanwhile Groupe Océan of Quebec City, an aggressive marine construction and tug operator was expanding, and was extremely well capitalized. In 2004 it acquired Dragage St-Maurice and never looked back. With its own shipyard, and ability to built its own modern dredging plant and adapt existing equipment for dredging use, it became a powerful force. It gradually wrested away the majority of the St.Lawrence work from Verreault, leaving the company with very little work after about 2009.

In 2011 Océan won the North Traverse dredging contract and now have their own dredge under construction at their own shipyard. It may be in service this year.

In December 2011 Verreault's creditors had enough and forced the company into bankruptcy. On March 29, 2012 its entire fleet was put up for auction - and in a bit of a coup Groupe Océan acquired the whole lot. Valued by some estimates at up to $15mn, they probably paid a lot less, but whatever they paid, they overnight became the major player in the Canadian dredging business.

As this is written Océan is gathering up the Verreault assets at its Shipyard in Ile-aux-Coudres, QC. This includes a dredge and three self-propelled hopper boats that had been laid up in Meteghan, NS for three years. Two of the boats sailed on their own, but Ocean's tug André H. (ex Point Valiant, ex Foundation Valiant) has the dredge Rosaire (ex J.P.P.No. 530, ex P.W.D. No. 21) and hopper boat I.V.No.14 in tow. They passed Halifax late this afternoon.

There are only a few other players in the dredging business. McNally Construction, which was taken over the US firm Weeks Marine in 2011, seems to be more concentrated on marine construction than dredging, but does maintain a large, if aging plant.

Harbour Development is rather a small player, and has not replaced the dredge Shovelmaster which sank in 2008. It is currently working on dredging at the pier 9C extension in Halifax and still has the contract for Saint John.

I expect that we will see Océan expanding out over a wider region beyond Quebec and continuing to grow.

--

The dredge Rosaire was built by the Saint John DD Co in 1952 for the Department of Public Works. It was later acquired by the now defunct J.P.Porter Co. That company was brought down by the 1970s price fixing scandal and it was acquired by Verreault. Fitted with a 20 ton American crane , it has accommodation for 12 and is loaded with equipment.

I.V.No.14 is one of five self-propelled, self dumping spoil hopper boats converted from newsprint carriers. Originally built in the 1930s, they were rebuilt 1969-72 and are unique in the Canadian dredging business. All other operators use tugs and barges.

There are four other barge type dredges in the former Verreault fleet and a couple of scows.
The future of the Port Méchins however is in question.

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Sydney Dredging - Follow Up

My rather jaded report on June 10 regarding the dredging of Sydney Harbour has proven to be, well- too pessimistic!

The Prime Minister visited Cape Breton last week for the first time in his life to announce that indeed the feds will kick in the $19mn balance to fund the $38mn dredging of the harbour by an additional 17 feet. The issue of dredging had become the hottest political item on "the island" in many a moon - with all and sundry in favour of the project. Nova Scotia's premier admitted that it would be political suicide to be against the project. Good thing I'm not a politician.

Of course the dredging is really just the soup before the main course- a $200 mn (in today's dollars) container port that will be the next political must. It will be built to compete with Halifax and Point Melford (which has now received backing from a private investor.)

The Port of Halifax in particular is owned by the taxpayers of Canada, so it is really a question of why the feds would want to build another port to compete with it. But that is an issue for the next election.

Among the statements made in the past to justify the dredging was the import of foreign coal for our power plants. Now that we stand to get Newfoundland hydroelectricity to wean us off coal, this point seems to have faded. It has been replaced by the export of Cape Breton coal. Of course Cape Breton coal is too dirty for us to burn, but it is fine to sell it to somewhere else in the world - if we ever manage to mine anymore.

Gee whiz I am cynical.

As to the dredging itself, the winning bidder for the main part of the work was Van Oord. However their price has likely expired, since the work cannot now begin until next spring when Sydney will be ice free again. My thinking is that the authorities will have to re-tender the work, because the other bidders will squawk. Van Oord (or whoever gets the work) will bring in a foreign flagged trailing suction hopper dredge and do most of the work. There is some clamshell dredging to do, and that will be done by local firms. There is least one wreck to remove and some rock outcrops to blast out. The work will probably be completed by the end of next summer.

Meanwhile southern US ports are tripping over each other to compete for the expected arrival of New Panamax ships when the Panama Canal expansion is completed in 2014. Savannah and Charleston are at war over dredging funds, with Savannah at risk of undermining its historic waterfront if it makes its channel wider. New Orleans, Tampa, you name the port, they are clamoring for the business. Meanwhile Norfolk (and area) are grinning because they can handle the ships now. New York/New Jersey is dredging but they still haven't decided if they will raise or replace the Bayonne Bridge.

Halifax is extending its Halterm pier to accommodate two (current) post-Panamax ships, but so far hasn't revealed what it will do about the new Panamax era. (In fact they will be able to accommodate the new Panamax ships, but there is another generation of Post New Panamax ships on order now.)

Interesting times - stay tuned.

Dredging Sydney Harbour

The government of the Province of Nova Scotia announced that it would support dredging of Sydney Harbour up to $15 mn if the federal government kicked in the balance. The provincial government apparently made this announcement for political adavantage, putting the feds in the position of being the villains if they do not come up with the balance of the $38mn., and thus killing the project. [ The Cape Breton Regional Municipality that includes Sydney will chip in $2mn and Nova Scotia Power $1mn]

Tenders have aleady been received for the work, and the bidders are holding their prices until funding is found.

One wonders where the rose tinted glasses are coming from. First the dredging may have some benefit to coal imports for the power plants-larger ships will be able to deliver coal. [No one seems to be concerned that we are still burning coal and contributing to one of the largest carbon foot prints per capita in the western world!]

Second, and most relevant, is that the dredging is called for to make Sydney into a container port. This smacks of the worst form of grabbing at straws to find something for an economically depressed area to look forward to as another saviour. I can't imagine that there is a business case for a container terminal in Sydney even if the cost of dredging is not factored in. However proponents seem to think, despite winter ice conditions, and a long, slow and torturous railway route to the mainland, that a container port would bring riches untold to Sydney and Cape Breton island. Even if the province and the feds combine to make a deep water port where there isn't one now, will there be business to support a container port? Will there be private capital available to build the port or will the government(s) be on the hook for that too?

Another proposal to build a container terminal in Melford, on the Strait of Canso, has the advantage of abundant deep water (deeper than Halifax), no bridges and very little ice in most winters. Huge infrastructure costs are still present for roads, rail link to the main line and the port itself on a "green field" site. Lining up private investors for this project has proven challenging.

There is also the issue of the rail line from Sydney to Truro. The line has deteriorated since CN sold it off to short line operator Cape Breton & Central Nova Scotia. Upgrades will be costly and money will have to be "up front." The CB&CNS is not likely to finance improvements on the hope of more business.

Both ports have said that they also plan to use feeder ships to distibute containers to other ports. They are hoping that the huge post Panamax super ships, which can't enter US east coast ports due to their size, will be attracted to the new ports.

Halifax currently has a viable container port. Despite the downturn in the world economy, all the container lines that were here before the recession are still here. Volumes may be down, but the port is still doing business with all the same players, and has capacity for volume growth.

The rail connection from Halifax provided by CN has been open to criticism for years. CN does little to allay this by trying to run a scheduled railroad with trains of equal length every day. This might work if the volumes of containers to and from Halifax were equal every day - they aren't.

The effect is that the Port of Saint John has priority over the Port of Halifax with CN. The way this works is that the train leaving Halifax must be short enough so that it can pick up the Saint John traffic in Moncton. To keep the train short enough, containers are left in Halifax to go the next day or the next day. The reverse also happens, that containers destined for Halifax from Toronto or Montreal and the US mid-west can be delayed by days due to train length limitations.

CN will always be an irritant for Halifax, because its objective is to be the most profitable railroad it can be. More container traffic coming to Halifax will in fact improve the situation, because CN will have to move larger volumes and will add trains to handle it.

If Melford and Sydney become container ports, there will be an unholy jam up of cars in the Truro area, and Halifax will again be at the end of the list, since the trains leaving Halifax must be short enough to accommodate at least some of the loads from Melford/ Sydney. Eastbound trains will have the same problem.

Sydney and Melford may also chip away traffic from Montreal, since there are size restrictions on ships to that port, and ice issues in winter. Again, the time delays caused by transshipment-either by feeder ships or by rail-makes one wonder if there will be any significant traffic generated.

In conclusion-for now-these proposed container ports may take away volume from Halifax and Montreal. Why would the various governments want to promote that? The ports will have to find private capital- if there is any to be found, and they will also have to find "new" business if there is any to be found. They will also have to deal with rail issues. In short, a questionable area for government to dabble in, and one that should be left to private business to find the capital and take the risks.