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Providing coverage of Alaska and northern Canada's oil and gas industry
March 2019

Vol. 24, No.9 Week of March 03, 2019

An icebreaker is funded

Appropriations bill includes $655 million to build new polar security cutter

Alan Bailey

Petroleum News

The U.S. Congress has approved funding for the construction of a new heavy polar icebreaker for the U.S. Coast Guard. The appropriations bill for fiscal year 2019, signed into law by President Donald Trump on Feb. 15, includes $655 million for the construction of what is termed a polar security cutter, in effect a heavy icebreaker. The appropriation follows the passage in August of a national defense authorization act, authorizing among other things the construction of six heavy polar-class icebreakers for the Coast Guard. The new appropriation accounts for the first of these vessels. In addition, the appropriation includes another $20 million to cover the acquisition cost of long lead-time materials for the second of the icebreakers.

New icebreakers needed

Currently the Coast Guard only operates two polar capable icebreakers: the Healy, a medium duty icebreaker, much used as a base for polar research, and the Polar Star, which is a heavy icebreaker but is 41 years old and nearing the end of its operational life. A third icebreaker, the Polar Sea, sister ship to the Polar Star, is laid up in port and has become a source of spare parts for the Polar Star.

In a Feb. 20 news release U.S. Sen. Dan Sullivan, R-Alaska, expressed his delight at the new icebreaker funding.

“After years of advocating for the federal government to take America’s role as an Arctic nation seriously, we have finally secured substantial resources for our country to strengthen its position in the region with a brand-new icebreaker,” Sullivan said. “With this appropriation, Congress and the Trump administration are acknowledging that Alaska is America’s Arctic, a fact that is important to our broader national security interests. I was glad to have the opportunity to use my leadership role on the Commerce and Armed Services Committees, in conjunction with Senator Murkowski’s work on the Appropriations Committee, to secure America’s first new polar icebreaker in a generation and the needs of the Coast Guard in Alaska.”

The authorization act passed last year indicated a need to award a contract for the first of the new vessels by fiscal year 2019, to enable the vessel to go into service by fiscal year 2023.

A lengthy debate

The debate over how, when and at what cost to acquire new U.S. polar icebreakers has continued for many years. In the not too distant past the Coast Guard has estimated the cost at about $1 billion per vessel. However, the agency sought ways to reduce that cost. According to a Congressional Research Service report, in January 2018 the agency was estimating the cost at around $930 million per vessel.

In April of last year, the CRS issued a report saying that the Coast Guard had further revised its estimated costs downwards, on the basis that the icebreaker costs could be reduced through the use of a standard, existing design for the vessels, and by placing a higher reliance on civilian commercial shipbuilding specifications rather than military specifications.

The Coast Guard now thought that the first three vessels could be built at a total cost of $2.1 billion, with an average cost of $700 million per vessel, but with the first icebreaker costing more than the other two because of initial design costs and the inevitable learning curve for the first of the vessels. In a March 2018 request for proposal that the Coast Guard issued for the advanced procurement and detailed design for the icebreaker program, the agency gave an estimated cost of $746 million for the first icebreaker and an average cost of $625 million per vessel for three vessels, according to the CRS.

Questions from the GAO

However, in September 2018 the GAO issued a report questioning the lack of a preliminary design review for the proposed icebreaker program and suggesting that the cost of the program may be underestimated. In particular the estimated cost and development schedule are based on a preliminary concept rather than a mature design, the report commented. And the GAO said that the icebreaker program had not fully assessed how well some key technologies would work on the planned ships.

A Congressional Research Service report published on Feb. 15 indicates that the Coast Guard is sticking with its estimate of an average cost of $700 million per vessel, with the first icebreaker costing more than the other two. The report says that the Coast Guard already has $359 million in prior-year funding that could be applied towards the construction of the first two vessels. That would suggest that the new appropriation of $655 million should be more than enough to cover the cost of the first vessel.






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