Tampa-based Overseas Shipholding Group (OSG) has lined up all four of its Alaskan-class tankers for lifecycle engine upgrades under a contract with Germany’s MAN Energy Solutions.
The vessels Alaskan Explorer, Alaskan Frontier, Alaskan Legend, and Alaskan Navigator, all approaching 20 years in age, will see the 48/60 type engines fitted with newer parts, that should lead to to reduced fuel consumption but also include readiness for methanol fuel. The project will further include the installation of advanced control systems and optimisation technologies to allow more efficient operations.
The lifecycle upgrades, which OSG said would provide the capability to meet Carbon Intensity Indicator (CII) regulations without sacrificing the operational capacity of the vessels through at least 2035, are set to begin in early 2024 in conjunction with plans to reactivate the recently acquired suezmax Alaskan Frontier. The remaining three engine upgrades will be carried out concurrently with scheduled vessel drydocking periods through 2026.
“When combined with previously announced commitments to reactivate the Alaskan Frontier, the aggregate investment we will be making into our Alaskan fleet over the next three years will be close to $100m,” said Sam Norton, president and CEO of OSG.
“These vessels were originally built with a 40-year design life. With Alaskan crude oil production expected to increase by as much as 250,000 bpd by the end of this decade, ensuring the extended operating life of these vessels in compliance with environmental regulations has been a top priority for us and our customers,” added Chris Merten, chief operating officer of OSG’s subsidiary Alaskan Tanker Company. “The upgrade of these vessels’ main engines should allow that goal to be achieved over the next decade, adding years of CII compliance for these vessels to generate additional cashflows through 2035.”
The New York-listed OSG lists 21 ships in its fleet, including suezmaxes, conventional and lightering articulated tug barges, shuttle and conventional MR tankers, and non-Jones Act MR tankers participating in the US Tanker Security Program. The company has set a target of achieving a 15% reduction in annual CO2 emissions by 2030 and this investment is expected to account for roughly one-third of that target.
Coinciding with lifecycle upgrades, OSG agreed to amend existing charter deals with BP for the Alaskan Navigator and Alaskan Legend, adding five more one-year extension options for each vessel at agreed rates through 2035.
