Crude Oil Buoyed by Weak Dollar, Positive Manufacturing Data
In a bout of post-weekend short-covering, crude futures edged back into positive territory on the New York Mercantile Exchange this past Monday led by encouraging domestic manufacturing data and a weaker dollar. As the U.S. currency lost ground against the euro, its denominated price of light, sweet crude oil for March delivery gained more than $1.50 from last week’s lower price tag to settle at $74.43 a barrel.
Additionally, Wall Street was encouraged by Exxon Mobil Corp.’s earnings report, which beat out analysts’ expectations. The world’s largest publicly traded oil and gas company, ExxonMobil posted upstream earnings of $5,780 million, up $146 million from the fourth quarter of 2008.
“Oil prices were starting to lose momentum, and coming in this week, without the dollar continuing to rebound and with better-than-expected manufacturing numbers, the market took that as a sign that things may be turning around,” said analyst Gene McGillian at Tradition Energy in Stamford, Connecticut. On Friday, the oil price exited the month of January down more than 8% from December 2008.
He continued, “I think that the market is showing strong resistance near $74-$75, and for the price to get boosted above that, we’ll need to see another round of unexpected economic data.”
Littoral Combat Ship RFP: Cost Will Be Chief Factor
The Request for Proposal (RFP) issued Jan. 26 by the U.S. Navy for the next round of bids for Littoral Combat Ships (LCS) details factors that will guide the choice later this year of a design basis for Flight 0+.
Navy officials have indicated that cost will be the foremost determining factor in their choice between a Lockheed Martin design and one from rival General Dynamics. But the RFP makes it clear a number of other criteria will be considered – chiefly technical and management factors.
Unclassified portions of the RFP were made public Jan. 28, posted on the Navy Electronic Commerce Online (NECO) Web site.
The RFP lists three primary bid items for the contract: a basic seaframe, or ship; selected ship systems equipment, consisting of weapons, sensors, computers and the ship’s combat system; and the systems to handle the integration and testing of the ship’s systems and equipment.
At stake is an award this year for 10 ships, including selected ship systems – two ships per year through 2014. A follow-on competition is scheduled for 2012, when a second shipyard will be chosen to build five ships over three years. A second source also will be chosen in 2012 to supply select ship systems.
Technical and management factors listed by the RFP are, in order of preference: affordability and production approach; management; technical data package adequacy, and rights in technical data and computer software; design change impact; past performance; and life-cycle cost reduction initiatives.
The guidelines also caution bidders to provide realistic price data.”Experience in Navy programs indicates that a contract awarded to a contractor submitting an unrealistic price proposal … may cause problems for the Navy as well as the contractor during contract performance,” the RFP reads in part.
The LCS program became a poster child for cost growth in Navy shipbuilding after the $220 million ships contracted for by the Navy in 2004 more than tripled in cost.
The inability of either contractor to meet a congressional cost cap of $480 million for each of the new ships led the service in September to drop plans to buy both variants. Instead, the Navy took up a new plan to buy only one design, hoping to find economies in standardization and quantity orders.
The RFP lists technical management as “approximately equal in importance” to price and cost as the chief factors in determining a winner.
However, it cautioned, “the importance of overall evaluated price/cost as an evaluation factor will increase with the degree of equality in technical/management between competing proposals.”
Ice Is ‘Rotten’ in the Beaufort Sea
Recent observations show that Beaufort Sea ice was not as it appeared in the summer of 2009. Sea ice cover serves as an indication of climate and has implications for marine and terrestrial ecosystems.
In early September 2009, satellite measurements implied that most of the ice in the Beaufort Sea either was thick ice that had been there for multiple years or was thick, first-year ice.
However, in situ observations made in September 2009 by Barber et al. show that much of the ice was in fact “rotten” ice — ice that is thinner, heavily decayed, and structurally weak due to a uniform temperature throughout.
The authors suggest that satellite measurements were confused because both types of ice exhibit similar temperature and salinity profiles near their surfaces and a similar amount of open water between flows. The authors note that while an increase in summer minimum ice extent in the past 2 years could give the impression that Arctic ice is recovering, these new results show that multiyear ice in fact is still declining.
The results have implications for climate science and marine vessel transport in the Arctic. The research appears in the journal Geophysical Research Letters.
Authors include David G. Barber, Ryan Galley, Matthew G. Asplin, Kerri-Ann Warner and Mukesh Gupta, Centre for Earth Observation Science, Faculty of Environment, Earth and Resources, University of Manitoba; Roger De Abreu, Canadian Ice Service, Environment Canada; Monika Pućko, Centre for Earth Observation Science, Faculty of Environment, Earth and Resources, University of Manitoba, and Freshwater Institute, Fisheries and Oceans; Simon Prinsenberg, Bedford Institute of Oceanography, Fisheries and Oceans; Stéphane Julien, Laurentian Region, Canadian Coast Guard.
Icelandic Trawlers Return to Port in Protest
Virtually all Iceland trawlers in the Vestmannaeyjar (Westman Islands) region of the country have been returning to port in the past few days to protest over a Government plan to take away one of their few income tax “perks”. Vestmannaeyjar is one of the largest fishing regions in Iceland.
It has also had the unusual step of uniting the two sides in the industry – the fishing unions and the country’s trawler owners association.
They are also angry over proposals to re-distribute fishing quotas and to impose a levy on exports of unprocessed fish.
Called the fishermen’s rebate, the tax scheme, which is causing the most concern, is the only one of its kind in the country and has been running for more than 50 years. The current rebate is around € 5.5 (C$8.25) for every one day spent at sea. Both the owners and the fishermen say it is a modest compensation for a fisherman’s long absence from their home and families.
A Spokesman for the Iceland Fishing Vessel Owners Association said: “These tax breaks have been in place since 1954. Those who want them eliminated cite that vessels are now not what they were etc – i.e working conditions are now much better. “
Things have certainly moved on – also in the private and public sector where people receive tax free travel expenses to cover food and accommodation when staying away from their natural habitat. Fishermen look at their tax breaks as a somewhat similar thing.
He said he could not see the proposal going through the Althing (Iceland’s Parliament) without a major political fight. It was also being suggested that the tax breaks should be fitted into a ‘one system fits all’ day allowance system.
In a separate move all Icelanders (including fishermen) face a big increase in income tax, VAT and alcohol duties as the government tries to get the economy back on its feet.
Measuring The Chinese Fleet
A mistake by a US Navy intelligence official has given the world an unexpected peek into the secret world of China’s navy. The US Office for Naval Intelligence (ONI) committed the blunder of posting, on an open website, the agency’s assessment of the state of the Chinese navy. Before the ONI could rectify this indiscretion by pulling off the report, it had been downloaded and posted on publicly accessible websites.
The 47-page report, entitled, “A Modern Navy with Chinese Characteristics”, is still posted on the website of the Federation of American Scientists, a policy advocacy body at: http://www.fas.org/irp/agency/oni/pla-navy.pdf
The ONI report analyses the capabilities and the future direction of the People’s Liberation Army (Navy), or PLA(N). Interestingly, the ONI assessment differs substantially with the conventional view — widely prevalent in India and the Indian Navy — of a China racing unstoppably towards naval superpower.
The assessment notes China’s recent deployment of Task Groups — each consisting of two warships and a replenishment vessel — for anti-piracy operations in the Gulf of Aden. This marks the first time in over 600 years that a Chinese flotilla has operated in waters beyond China’s immediate vicinity. But the report concludes, “none of these operations indicates a desire on the part of the PRC (People’s Republic of China) to develop a constant global presence. Beijing’s ambition appears to remain focused on the East Asian region, with an ability to protect the PRC’s maritime interests in distant seas when required.
The Chinese navy last went global during the Ming rule in the early 15th century, when the great Chinese admiral Zhang He stamped the authority of the Chinese navy across the Indian Ocean, reaching to the shores of Africa. But, in 1435, China decided to focus inwards. Around 1477, by the emperor ordered the burning of records of Zhang’s seven great voyages, from 1405-1435. Thereafter, no further naval activity was permitted in the southern seas.
This inward focus continued through Mao’s revolutionary war, which brought the communists to power. Thereafter, a coastal navy was sufficient to enforce China’s claims over most of the East and South China Seas, and the need to deter Taiwan from declaring independence. But the US Navy’s dominating presence in the Asia-Pacific and need to protect China’s supply lines convince Beijing of the need for greater naval power. China’s Defence White Paper of 2008 calls for expanding the navy’s operating range, and a greater role in international security.
The PLA(N)’s most key acquisition, says the ONI report, is a sophisticated anti-air capability, which would allow its ships to operate in “distant seas”, far from land-based air-defence systems. The Luyang I class of destroyers, already formidable, have been followed by the Luyang II class and the Jiangkai II frigates, which are linked with an air-surveillance network as good as America’s world-standard Aegis system.
Submarines, both conventional and nuclear, will be a key deterrent in the PLA(N). The ONI report says that Beijing will replace its large number of low-tech submarines with “smaller numbers of modern, high-capability boats (submarines)”. But while the number of surface ships remains constant, today’s fleet of 62 submarines will increase over the next 10-15 years to 75. [In that time-frame, India’s submarine fleet will be about one-third that of China’s.]
Most worrisome for the US Navy’s pre-eminence in the region, is the programme to develop the world’s first Anti-Ship Ballistic Missile (ASBM), a variant of China’s Dong Feng – 21 missile. The ONI report reveals that the ASBM’s peculiar flight path, involving a mid-course trajectory correction, will make it very difficult to intercept.
Despite the addition of high-tech platforms, US intelligence estimates that much of the PLA(N) will still remain outdated 10-15 years from now. Its surface ships will remain vulnerable to air attack, while command and control systems will still be relatively undeveloped. Therefore, while the PLA(N) will be gradually expanding beyond the South China Sea, it will focus on what Beijing calls, “military operations other than war.” These include protecting its international lines of supply, humanitarian relief, and naval diplomacy.
The strength of the Chinese fleet was listed as:
Submarines- 62 (53 diesel Attack Submarines, six nuclear Attack Submarines, three nuclear Ballistic Missile Submarines). The U.S. has 72 submarines, all nuclear (53 attack and 18 ballistic missile.)
Destroyers-26. The U.S. has 52.
Frigates-48. The U.S. has 32, including two of the new LCS vessels.
Amphibious Ships 58. The U.S. has 30, all much larger and equipped with flight decks and helicopters, plus landing craft.
Coastal Patrol (Missile)- at least 80. The U.S. Navy had a few of these, but got rid of them. China uses these for coastal patrol and defense, a concept they inherited from the Russians.
In addition, the U.S. has eleven aircraft carriers (ten of them nuclear powered) and 22 cruisers.
Most of the Chinese ships are older (in design, if not in the age of the vessels) than their American counterparts. China is building new classes of ships, with more modern equipment and weapons.
Their new destroyers have better anti-aircraft weapons, although nothing to match the American Aegis system, much less the 20 U.S. Aegis ships with anti-missile capability. China is trying to develop classes of nuclear submarines that come close to the capabilities of their American counterparts.
China is also vastly outmatched in naval aviation, with nothing comparable to the hundreds of American maritime patrol (P-3) aircraft. But China is building aircraft carriers, and upgrading its naval aviation.
Only a portion (about a third) of the U.S. fleet is facing China, because of other commitments, while nearly all the Chinese fleet operates along their coast. But the U.S. also has major naval allies in the region (like Japan and South Korea), while China has none. The Chinese fleet is no match for the U.S. Navy now, but the Chinese are building and planning for the future. In another few decades, the Chinese expect the situation to be quite different. But the question is the timeline and scale of the ambitious building plan of PLA Navy.
The former Russian carrier Varyag is now in Chinese possession.
The Varyag aircraft carrier, Type 052C “Chinese Aegis” and Type 093/094 submarines are always the focus point of Western defence analysts. Some sources in the Chinese defense industries indicate that China will continuously push its huge Navy construction in world economic crisis. In next few years the hardware construction of Chinese Naval Force is going to enter an higher climax.
In Dalian Shipbuilding Corporation, Varyag has become a covering smog of PLA Navy’s intention. China will simultaneously build two 70,000-80,000 displacement Carriers in Dalian Shipbuilding Corporation and Shanghai Jiangnan Changxing shipbuilding base. Chinese’s new carrier is believed to have conventional power propellant (some people notes that one conventional power and another is nuclear power) and steam catapult, not ski-jump ramp. Besides, Dalian Shipyard will build a steam turbine powered large air-defense destroyer, which will be a expanded type of 051C destroyer (Type 051D?).
Not only the aircraft carrier, Shanghai Jiangnan Changxing shipbuilding base will build other 3 general 7000-tonne class (some opinions say 9000-10000 ton) missile destroyer, whose armament includes HHQ-9G long-range air-defense missile, HHQ-16 medium-range air defense missile, YJ-XX anti-ship/land-attacking missile, anti-submarine missile and 1 Z-15 helicopter. As the fire-control system, the improved Array Scan Radar in Type 052C is an option but Chinese people are developing a ship-borne sensor which is similar to SAMPSON multi-function air tracking radar used in British Type 45 destroyer.
An artist rendering of Type 052D Destroyer
Type 052D, the upgrading version of well-known Type 052C destroyer, will become the air-defense core of PLA Navy Aircraft Carrier Group. Huangpu Shipbuilding Corporation located in Guangzhou will start the production of 4 Type 052D destroyers.
Hudong Shipbuilding Company, another shipbuilder in Shanghai, will carry the task of producing 6-8 23,000-tonne class “flush deck” amphibious transport dock ships. As the bloom of Type 054A frigates appeared in Chinese ship yards, the performance of this new missile frigate has been recognized by PLA Navy. It can be sure that the production of Type 054A frigate will be continue in Hudong and Huangpu shipbuilding Yards.
One Type 041 AIP diesel-electric submarine in Wuchang Shipbuilding Industry Co.
The underwater fleet is also being paid great attention by PLA Navy planners. In their international fleet review, PLA did not uncover its newest submarines, such as Type 093/094 nuclear submarines and Type 041 (NATO “Yuan” class) diesel-electric submarine.
China’s first aircraft carrier (36 combat aircraft) battle group is said to be supported by 4 type 052D destroyers, 4 General missile destroyer, 2 Type 054A frigates, 2 Type 093 Nuclear Submarines. Such a battle group would pose a significant strike force presence in the South China Sea Island.
Coping With The Great American SSN Shortage
The U.S. Navy is facing a temporary SSN (nuclear attack submarine) shortage, and there is no solution that will not involve some pain. The problem is that new Virginia class subs cannot be built quickly enough to replace all the Cold War era Los Angeles class boats that have to retire. Even that will be delayed, at least for 16 Los Angeles class subs, that will get enough refurb to keep them at sea for up to two more years. Meanwhile, many of the shipyards used to build all those Los Angeles class boats, were discarded as part of the Peace Dividend for winning the Cold War.
The shortage will begin in 2022, when the number of SSNs will fall below 48. The bottom will be in 2028, when only 41 SSNs will be available, and the shortage won’t end until 2034. While keeping boats at sea more than six months per cruise will insure that all current requirements (that need about ten boats at sea at any given time) are met, the navy won’t be able to meet its wartime need for 35 boats. Keep in mind that a certain number of boats are always laid up for upgrades, maintenance or repairs. And some of this work can be speeded up, or even put aside, to get boats to sea in wartime, or a major crises.
Keeping existing boats at sea for longer cruises also comes with a cost. For each additional day (beyond six months) you keep a crew at sea, a certain percentage of them will not stay in the navy. Those long months at sea are hard on the families, and sailors as well. Too much of that, and more of them leave. For submarine crews, the most highly trained, with the highest standards, in the navy, this is no small problem.
There are other ways around the problem. The navy and the shipyards have found ways to built SSNs more quickly. Currently it takes 70 months to build a Virginia. But in the next few years, that will be coming down to 60 months. For the navy, the worst solution is to change war plans, and peacetime use patterns of SSNs, and adapt to a smaller number of attack boats. The navy would rather not think of this, but politicians often do, so the navy must.
50th Anniversary of World’s Deepest Dive
Fifty years ago, two men voyaged to the bottom of the deepest sea. Nobody has been back since.
On Jan. 23, 1960, Navy Lt. Don Walsh and Swiss explorer Jacques Piccard, in the submersible Trieste, descended seven miles into the Mariana Trench in the Pacific Ocean. The feat was celebrated Saturday at the Naval Undersea Museum, where the vessel’s successor, Trieste II, is displayed.
“The surprising thing is that more people have walked on the surface of the moon than have been to the deepest part of the world’s ocean,” said museum director Bill Galvani. “These two guys went in 1960. No one has been back since. No one has been even close. In the meantime, we’ve sent 12 people to the moon and many people into space. We know more about the surface of the moon, and even the opposite side of the moon, than we do about the deep ocean.”
Piccard died in 2008, leaving Walsh as the only living person to have made the 37,799-foot dive, 200 miles south of Guam. The 78-year-old Walsh, who lives in southwest Oregon, will be attending another Trieste anniversary event Saturday in San Diego.
The Trieste was designed by Piccard’s father, Auguste Piccard, and built in Italy in 1953. The U.S. Navy bought it in 1958. Walsh, then a 28-year-old Navy submariner, became its officer in charge.
The strange-looking vessel was called a bathyscaphe, or “deep ship.” There was just enough room in its 7-foot crew sphere for two people. Most of the vessel was huge tanks of lighter-than-water gasoline that functioned as a big balloon. To descend, air tanks were filled with seawater. To return to the surface, steel pellets were released.
Twenty-five-foot waves pounded the Trieste on the morning of the historic dive as it bobbed on the surface with its headquarters ship, the USS Lewis. At about 8 a.m., its heavy door clanked shut, and the vessel slipped under the waves. No other vessel had ever dived deeper than 12,300 feet, and the Trieste hadn’t gone below 23,000 feet.
Between 4,000 and 7,000 feet, drops began seeping in, but decreased as the dive continued. Walsh and Piccard were jolted by a big bang at 31,000 feet, as if something had broken. They couldn’t find a problem, so they kept going.
At 34,000 feet, the water beneath them began to lighten up as Trieste’s light reflected off the seafloor. At 36,000 feet, they still hadn’t reached it, however, nor at 37,000. Finally, they released just enough shot to make an easy landing. The depth gauge read 37,800 feet.
“Jacques and I shook hands and expressed our feelings of relief and joy,” Walsh said. “It was a great day for all of us who had worked so hard for nearly five months at Guam.”
They didn’t take any pictures because the Trieste had stirred up so much bottom sediment that there was no visibility.
“It was like being in a bowl of milk for our entire time on the bottom,” Walsh said.
At 1:30 p.m., after sitting at the bottom for only 20 minutes, the Trieste dumped ballast and headed home so it could reach the surface before sundown. The ascent took 3 1/2 hours.
Back in the states, Walsh and Piccard became heroes. They were ordered back to Washington, D.C., to be acclaimed by political and military heavyweights, including President Dwight D. Eisenhower, and wound up on the cover of Life magazine.
Israel in Talks to Buy Another Submarine from Germany
Israel has broached the idea of buying a sixth discounted submarine from Germany as part of a military build-up designed to signal strength in the face of Iranian nuclear ambitions, officials said.
Israel has three of the Dolphin-class diesel submarines, with two more on order from Kiel shipyard Howaldtswerke-Deutsche Werft (HDW) and due by 2012. The vessels are widely believed to have been deployed with nuclear cruise missiles. Israeli Defense Minister Ehud Barak, who visits Berlin with Prime Minister Benjamin Netanyahu, will ask the Merkel government to underwrite another Dolphin sale, aides said.
Dolphins cost some $700 million but those in Israel’s fleet came at a deep discount from Germany, which is devoted to the security of a Jewish state founded in the wake of the Holocaust.”We are in a dialogue about a sixth submarine, but no decision has been made yet. There are tough budgetary issues to deal with,” a senior Barak aide told Reuters. The German Economy Ministry would not say whether a Dolphin sale would be under discussion during Monday’s discussions, and added that the question of state aid was not for it to decide.
A second Israeli source with knowledge of the talks said that Netanyahu, who has described the prospect of an Iranian bomb as a mortal danger, wanted to expand the submarine fleet. The Israelis have hinted at pre-emptive strikes against Iran if diplomacy fails to curb its nuclear project, but many analysts believe the limitations of force would compel the Netanyahu government to adopt a more deterrent posture.”Five submarines are sufficient, but of course we could use more. Our ideal number would be nine — enough to ensure we have the necessary assets at sea to cover all relevant threats and targets,” the Israeli source said. Armed with just 10 torpedo tubes — which can also be used to launch cruise missiles — the Dolphins would be of meagre use for any conventional Israeli assault on Iran.
STRATEGIC DEPTH
Israel does not discuss its own nuclear capabilities. There is further speculation over whether Israeli cruise missiles would be able to reach Iranian facilities from the Mediterranean sea, where the Dolphins routinely patrol from their Haifa dock.”I remain unconvinced — unless the Israelis have managed to replicate Tomahawk, which would be an extraordinary achievement,” said Stephen Saunders, editor of Jane’s Fighting Ships, referring to a U.S.-made, long-range and nuclear-capable cruise missile that Washington has refused to supply to Israel.
A bigger Dolphin fleet could allow Israel the option of basing some in its Red Sea port of Eilat, providing a short-cut to the Gulf. An Israeli submarine crossed the Suez Canal for an exercise off Eilat last July, the first such deployment. Iran denies seeking the bomb but its leaders’ Holocaust denials and vituperation against Israel have stirred war fears. While condemning the rhetoric from Tehran, Germany maintains some $5.7 billion in annual exports to Iran — to many Israelis’ chagrin.
German opposition parties, including the Social Democrats (SPD), have voiced misgivings about weapons exports to crisis areas, but the last two Dolphin sales were approved while the SPD was part of a previous coalition government. There is also domestic support for keeping production going at HDW, a branch of parent company ThyssenKrupp, given the lack of foreign clients for new diesel-powered submarines.
U.K. MOD Awards Contracts for Aircraft Carriers
Contracts worth £333M ($543 million) have been awarded by the Aircraft Carrier Alliance (ACA) to companies across the United Kingdom to help to build the Royal Navy’s new Queen Elizabeth Class aircraft carriers.
U.K. MOD has awarded $543 million contract for building Elizabeth class aircraft carriers
Five sub-contracts have been awarded to suppliers from Glasgow to Portsmouth for equipment to be installed on the ships and services for their assembly, bringing the total value of sub-contracts awarded so far on the programme to almost £1.1bn.
These contracts and sub-contracts represent the vast majority of the equipment orders for the Queen Elizabeth Class Carriers and demonstrate the progress made on the programme to date.
The two future aircraft carriers will form the cornerstone of the UK’s naval capability and will be the largest, most capable and powerful warships ever constructed in the UK. They will be a highly versatile and potent joint defence asset, able to meet the widest range of tasks around the world throughout their expected service life of around 50 years.
China to Take Naval Forces to Another Level
An assessment of the Chinese People’s Liberation Army (Navy) – PLA(N) – inadvertently released by the US Office of Naval Intelligence (ONI) suggests that over the next 10-15 years China will build a naval force increasingly equipped for maritime security missions and humanitarian relief operations well beyond its traditional operating areas around Taiwan and the South China Sea.
At the same time, ONI assesses that the PLA(N) will continue to modernize its warfighting capabilities to shape a balanced maritime force commensurate with a shift from a strategy of coastal defence to a more forward-leaning naval strategy of offshore defence.
The report, entitled ‘A Modern Navy with Chinese Characteristics’ and dated August 2009, was briefly placed on an open source website by the ONI in November 2009 before being withdrawn from public view. However, in that time a copy of the document was downloaded by the Federation of American Scientists and remains accessible on its website.
According to the ONI, the development of the PLA(N) over the past decade goes well beyond the introduction of new equipment. Its report states: “Recognizing that it takes more than technology to create a capable navy, China has also actively pursued the modernization of its doctrine, organization, and training with the ultimate goal of developing a professional force. While much work remains, trends in recent years indicate the PLA(N) is beginning to ‘operationalize’ its modern force, taking on new and more challenging missions.
