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Canada Buys Commercial Icebreakers for its Coast Guard

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The Balder Viking (file image)

By MarEx 2018-08-13 18:36:10

On Monday, Norwegian harsh-environment OSV operator Viking Supply Ships announced that it has sold three icebreaking anchor handlers to the government of Canada, which will retrofit them for use by the Canadian Coast Guard (CCG). 

Last week, Public Services and Procurement Canada awarded a $610-million contract to Davie Shipbuilding for the acquisition of the three icebreaking anchor handling tug supply (AHTS) vessels and the conversion of the first ship in the class. Davie's work is expected to proceed quickly, and the initial vessel is slated to begin work this December. The second and third vessels are scheduled for delivery over the course of 2019.

The vessels - Tor Viking, Balder Viking and Vidar Viking - were built to the commercial DNV ICE-10 notation. Davie, the conversion project's main proponent, suggests the ships would meet Polar Class 4 (PC4). Its prospectus indicates that the vessels would be roughly comparable in capability to the CCG's T1200-class icebreakers, which can maintain three knots in 10 feet of ice. 

Viking said in its announcement that the sale would yield a profit of about $275 million, which represents a strong result for the distressed offshore market. Viking lost $12 million on the sale of three PSVs in the first half of the year, and it has made a loss provision of $18 million for the sale of the AHTS Odin Viking, which is expected to close in the second half.

Competition for orders

Davie is not designated under Canada's National Shipbuilding Strategy, unlike competitors Irving Shipbuilding and Vancouver Shipyards, and it has lobbied hard to receive federal contract work despite its unlisted status. The three yards' ongoing contest for Canadian Navy and Canadian Coast Guard work has been contentious and political, with close involvement from regional elected officials.

In response to the announcement of the Viking contract for Davie, Irving Shipbuilding asked Ottawa to recommit to assigning work to two yards rather than three. "We call upon the Federal Government to confirm to Irving Shipbuilding . . . that the National Shipbuilding Strategy remains intact and, therefore, construction of the ships for Canada’s Navy and Coast Guard will be done exclusively by Irving Shipbuilding and Vancouver Shipyards," the yard said in a statement. "While we have no interest in getting into a public squabble with our valued government customer, this issue is too important to the long term strategic success of our shipyard."

In a press conference Monday, Parliamentary Secretary for Procurement Steven MacKinnon answered by asserting that "Davie [has had] and will continue to have opportunities under the national shipbuilding strategy to bid, to win work."