San Diego Business Journal

General Dynamics Nassco Awarded Contract to Build Tanker

By Brad Graves Monday, June 16, 2014

General Dynamics Nassco announced plans to build a commercial ship and may be in line to build a new class of U.S. Navy ship.

The Barrio Logan shipyard has a contract to build another commercial tanker for American Petroleum Tankers, the shipbuilder said on June 16. Financial terms of the deal were not disclosed.

Meanwhile, the Defense Department awarded Nassco a preliminary, $23.5 million contract for design work on a new version of a U.S. Navy amphibious assault ship, the DoD said June 13. The “Big Deck Amphib” ship resembles an aircraft carrier — though at 844 feet, it is shorter by the length of a football field.

The Navy calls the new class of ship LHA(R). The design contract runs through May 2015.

Nassco, a subsidiary of General Dynamics Corp. (NYSE: GD), will compete against Ingalls Shipbuilding of Mississippi to build the vessel, LHA 8. Ingalls is part of Huntington Ingalls Industries Inc. (NYSE: HII).

Building an amphibious ship — which carries a contingent of about 1,500 Marines and aircraft — would be a departure for Nassco, since its specialty is auxiliary ships.

The commercial ship award from American Petroleum Tankers means Nassco’s backlog now includes eight tankers. The shipyard plans to begin construction in fourth quarter 2015, and deliver the ship in second quarter 2017.

The 610-foot ship will be able to haul 330,000 barrels of cargo. Its owner will be able to convert the ship easily from diesel propulsion to liquefied natural gas propulsion.

American Petroleum Tankers, a subsidiary of Kinder Morgan Energy Partners LP (NYSE: KMP), will be able to haul cargo between U.S. ports with the ship.