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Navy’s Energy Reform Initiatives Raise Concerns Among Shipbuilders 


By Grace V. Jean 

The secretary of the Navy’s announcement last fall of several initiatives to wean the sea service off fossil fuels has generated excitement but also some trepidation among energy researchers and defense contractors.

Much of the hope for reducing the Navy’s oil dependency rests on the shoulders of the biofuel and renewable energy sectors, both of which are in their nascent stages.

Scientists worry that the Navy’s ultimate goals, including sailing a green fleet in 2016 and powering half of its energy needs through alternative energy sources in 2020, are too aggressive.  

Of particular concern to industry is the restructuring of contract awards in the Navy and Marine Corps.

Secretary Ray Mabus intends to make the lifetime energy cost of a system and the “fully burdened” cost of fuel in powering those platforms mandatory factors when evaluating and awarding future contracts. “We are going to hold industry contractually accountable for meeting energy targets and system efficiency requirements,” he announced in October. “We will also use the overall energy efficiency and the energy footprint of a competing company as an additional factor in acquisition decisions,” he added.

The Defense Department in fiscal 2008 spent $16 billion on fuel. But that amount excludes the costs for transporting and protecting the oil from point of purchase to the end user. Delivering a $2.82 gallon of fuel to the battlefield can cost as much as $600 when factors such as logistics and security personnel are accounted for. (See related story) Pentagon officials are trying to implement a requirement for the fully burdened cost of fuel for acquisition programs, said Christopher DiPetto, director of developmental testing in the office of the under secretary of defense for acquisition, technology and logistics.

In a competition for helicopter engines, for example, an engine that burns 30 percent less fuel, but costs $2 million more to develop, may not receive a contract today. But if the fully burdened cost of fuel is a factor in evaluating the competitors, then that engine might win, despite the higher up-front cost. The engine is worth the $2 million extra because its return on investment will appear down the road as money saved in fuel costs, DiPetto said.  

Incorporating this concept into the Joint Light Tactical Vehicle and the Army’s Ground Combat Vehicle are the next steps, he added. Eventually, all military acquisitions programs will be affected.

This is good news for the Navy, officials said at an energy future symposium sponsored by the American Society of Naval Engineers. For a typical surface combatant with a lifespan of 35 to 40 years, about 45 percent of its cost is spent on acquisition while 55 percent is spent on ship operations. That latter percentage is broken down into 27 percent for manpower, 15 percent for maintenance and 13 percent for energy.

Consider that the consumer price index has increased by 59 percent since 1991, pointed out Rear Adm. Philip Cullom, director of the Navy’s fleet readiness division. Military manpower costs have risen by 114 percent while energy costs have increased by 292 percent, more than five times the consumer price index. “If there were ever a reason why we should be out there doing what we’re doing … it’s so we get some kind of control over this problem,” he said.

Amory Lovins, co-author of “Winning the Oil Endgame,” asked the conference what it was worth to save a watt or a kilowatt-hour, or a kilogram or a cubic meter aboard ships. “Those parameters aren’t explained to the designer so you end up with heavier, bigger platforms,” he said. The Navy needs to start designing ships as whole systems based on total life-cycle ownership costs. In principle, the fully burdened price of fuel as a key performance parameter will fix this, he said.

“Industry is excited about it,” said Joe Carnevale, senior defense advisor at the Shipbuilders Council of America, who moderated an industry panel discussing the topic. “We want to contribute … but the devil is in the details.”

Shipyards already are undertaking a number of initiatives to become more energy efficient in ship construction. Despite those efforts, the yards face challenges, said Vince Dickinson, principal project specialist at General Dynamics-Bath Iron Works, which is building the DDG-1000 and DDG-51 class destroyers. Workloads and work forces can vary depending on the project. There are also regional differences — some yards are in the north where winters are harsh and heating becomes a factor. Other yards are in the south where summers are sweltering and air conditioning demands spike.  

Tim Danhieux, chief naval architect at Marinette Marine Corp. based in Marinette, Wisc., presented case studies to show how acquisitions requirements can influence the design and energy efficiency of platforms. “You don’t want to keep a ship designer from doing his best work by setting forth the wrong requirements for energy,” he said.

A case in point is the Coast Guard’s fast response cutter program, which was awarded to Bollinger Shipyards last year. Requirements for the ship included a flank speed of 28 knots and a loiter speed of 10 to 16 knots obtained on a minimum of two engines operating. The ship also had to be based on the design of a proven parent craft, the Damen Stan Patrol 4708. Anything underneath the hull in the water — propellers, shafts, hull shape — had to be the same. The consequences of those requirements meant that the team had to incorporate larger 2,300-kilowatt engines to attain the 28-knot speed, even though only 500 kilowatts was necessary for the loiter speeds.

“Here’s a case of being too specific in those requirements,” he said. “If the team had been allowed some creativity, they could’ve produced greater fuel savings for the ship,” he said.
An alternative that could have been proposed was a single-engine operation, which uses 3.9 tons of fuel or about 1,500 gallons a year. Another alternative could have been an auxiliary propulsion system, he added.

In the Coast Guard’s forthcoming solicitation for the offshore patrol cutter, requirements writers need to be cognizant of how speed impacts fuel usage, Danhieux said. If they require a 357-foot ship to reach a speed of 25 knots, then that results in a speed-to-length of ship ratio of 1.4. A ratio that is greater than 1.3 means that a lot of power is required to push the ship through the water, he explained. Contracting officials need to find a way to include the life-cycle costs of fuel and balance that against performance requirements, he said.

The Navy on average needs 90,000 barrels of fuel annually per ship. Fueling each ship costs $10.6 million per year if the price per gallon is $2.81. The fully burdened cost of fuel is between five and 50 times greater than the retail price. Assured delivery of that fuel ranges from $10 to $100 a gallon, said Bill Pfister, vice president of external affairs and facilities at Austal USA, an Australian shipbuilding company with a shipyard in Mobile, Ala.  

Multi-hulled ships — such as the littoral combat ship variant that his company built for the General Dynamics Bath Iron Works-led team — are more fuel efficient than single-hulled ships, he said. Steel monohulls use one-third more fuel than an aluminum multi-hull. That adds up to $2 billion in fuel costs over the 30-year life expectancy of the ship. But the Navy is not considering life-cycle costs in its evaluation of the two competing LCS designs later this year, he pointed out. “This is business as usual,” he said.

DiPetto conceded that both the LCS and the Air Force tanker replacement programs are not taking life-cycle costs into consideration. That is anathema to the Navy’s green initiatives. The LCS class will rank among the speediest of the service’s surface combatant fleet. The Navy plans to buy 66 hulls in the next 30 years.

Navy officials expect a 25 percent increase in fuel consumption in the future because of new ships coming into the fleet and the growth in mission areas.

Since 2005, the market price of fuel has changed 15 times. “This wreaks havoc on the Navy’s fuel budget,” said Thomas Martin, Naval Sea Systems Command’s representative to the Navy’s task force on energy.

Energy prices have skyrocketed from $33 per barrel of oil to $147 per barrel in recent years. The Navy’s fuel bill went from $1.2 billion to $5 billion within a single year.

The federal government consumes only two percent of the total U.S. energy share. Of that two percent, the Defense Department consumes a whopping 93 percent. The Navy consumes a quarter of the Defense Department’s total share. That fuel is evenly split between aviation and ships. Expeditionary and onshore elements comprise small slivers of that pie.

Seventy-five percent of the Navy’s energy consumption is tactical in nature — powering planes, ships and ground vehicles, said Cullom. To operate those platforms requires more than a single source of fuel. Two conventional fuels are used in the Navy: JP-5 and F-76.

The Navy is seeking alternative fuels at a competitive price, said Cullom.

One solution is pursuing biofuels, which are derived from plant-based sources such as camelina and algae.

The Navy by 2012 plans to demonstrate a green strike group composed of nuclear vessels and ships powered by biofuel in local operations. It will need 40,000 barrels of blended fuels to meet this goal. By 2016, that strike group will deploy as a “great green fleet” with aircraft flying only with biofuels. That will require 120,000 barrels of blended fuels. The Navy will need 8 million barrels of alternative liquid fuel by 2020 and each year thereafter to reduce its overall annual fuel consumption to 27 million barrels from 32 million barrels, said Cullom.

“If you want a demand signal for your business, your potential investors, that’s the demand signal we have,” he said. “We know we can’t make the market, but we can be an early adopter.”

But there are challenges, said Bhatka Rath of the Naval Research Laboratory. The Navy consumes 1.2 billion to 1.6 billion gallons of fuel a year, or 5,000 gallons a day. Deriving 100 percent of the Navy’s jet fuel from algae would require some 500 square miles of land area and a large amount of carbon dioxide from adjacent power plants to grow the plants and convert it into biofuel. The price per gallon could be as little as $2, but without the carbon dioxide supply, that cost could jump as high as $44 per gallon.

For camelina-based fuels, there are similar problems. To grow the crop in adequate amounts would take up a land area roughly equivalent to a quarter or a third of the state of Montana, Rath said.

President Obama directed the Department of Agriculture and the Environmental Protection Agency to create a marketing plan for biofuels and infrastructure. The nation as a whole wants to produce 36 billion gallons of biofuels by 2022. “We’re behind already,” said William Hagy III, special assistant to the under secretary of agriculture for rural development. The officials are attempting to speed up the process by reducing the financial risk for farmers, ranchers and forest landowners.

“Everyone that produces biofuels is eligible for funding to offset costs,” said Hagy. Last year $55 million was distributed. This year, $85 million will be spent. First-generation fuel, based on cornstarch, will continue to be supported, he added.

The secretaries of Agriculture and the Navy signed an agreement to work together on biofuels.
Resources are important to keep the momentum going, said Roger Natsuhara, acting assistant secretary of the Navy for installations and environment. In the current budget, there is almost $200 million for energy projects, including research and development efforts. In the next five years, the Defense Department is spending more than $1 billion on research and development for energy.

One of the Navy’s most aggressive goals is to increase its total energy consumption from alternative sources from 17 percent to 50 percent by 2020. That means half of the service’s ships, aircraft, tanks, vehicles and shore installations would have to be powered by alternative sources.

The goal may seem ambitious, but it is an imperative for energy security, officials said.

“Too often in America, we focus on the corporate quarterly loss. Too often we end up not looking far enough ahead in the future,” Cullom said. “This is an opportunity to look into the future and to plan accordingly to that, and to end up in a much better place in 2030.”

Reader Comments

Re: Navy’s Energy Reform Initiatives Raise Concerns Among Shipbuilders

The 500 square miles to grow Algae for oil to meet the Navy's needs is misleading.

Richard McPherson on 02/10/2012 at 01:01

Re: Navy’s Energy Reform Initiatives Raise Concerns Among Shipbuilders

Sea Solar Power Plants could provide electricity to island and coastal military installations. In addition, these plants could provide liquid fuel and algea and carbon dioxide. We have the technology ready to proceed. Will the Navy permit a contract that can be financed with private capital? That is can a meaningful loan guarantee that is not too cumbersome for small business be made to work for a small company that has the technology and capability to build a commercial prototype plant today?

Jim Anderson

James H. Anderson Jr. on 03/17/2010 at 15:14

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