New NASSCO Offshore Division Awarded $5.5-Million Module Order

National Steel and Shipbuilding Company (NASSCO), San Diego, Calif., a wholly owned subsidiary of Morrison-Knudsen Company, Inc., announced recently that it has been awarded a $5.5-million firm fixed-price contract by Shell California Production, Inc. (SCPI), a subsidiary of Shell Oil Company, for fabrication and transportation of two modules for a deepwater oil drilling platform.

C.L. French, president of NASSCO, also announced the formation of the NASSCO Offshore Division, a new operating division, organized to provide an integrated organizational unit for the production of all elements of offshore oil drilling platforms. The award of the SCPI contract is the first contract awarded to the new NASSCO Offshore Division, and marks the beginning of what NASSCO expects to be a major new business activity for its San Diego operations, according to Mr. French.

"While this is a relatively small order," said Mr. French, "we attach great significance to it because it marks our entry into a new business which is closely related to our shipbuilding business and provides an excellent opportunity for diversification." The SCPI order is for a crew quarters module and an electric generator module to be installed on a platform located about 9 miles from Huntington Beach in San Pedro Bay, an established producing offshore oil field. In addition to this producing offshore field, the oil industry has leased large tracts off Santa Barbara and north of Santa Barbara off Point Arguello.

Major oil discoveries have been announced by both Chevron and Texaco in the areas off Point Arguello. Other major oil companies hold leases in the same general area but as yet have not announced discoveries. However, oil industry sources generally forecast major offshore production in the Point Arguello-Santa Barbara area.

It is this major offshore activity to which NASSCO is directing the activities of its new Offshore Division.

Mr. French pointed out that there are too many variables to permit forecasting the volume of work that NASSCO might expect in its new Offshore Division. "Because of the radical up and down pricing of crude oil, the major oil companies cannot predict when they will be drilling in their offshore leases, so NASSCO certainly cannot predict the volume of platform work that might be available from the oil companies," said Mr. French. "We intend to start with whatever is available, aggressively pursue the work as it arises, and have our offshore Division grow as the market grows. It could be modest in the beginning; but over the long haul, we believe there will be a major amount of work," said Mr. French.

The NASSCO Offshore Division will seek work in three separate categories for the offshore market : fabrication of the steel decks that are attached to the top of the steel towers; fabrication of the equipment modules that are mounted on the platform decks; and construction of steel towers of a size that will permit transit under the Coronado Bridge.

Ken Cooley has been named director of the NASSCO Offshore Division and will be in charge of all aspects of the operation of the division. Mr. Cooley will report to R.H. Vortmann, executive vice president of NASSCO. Mr. Cooley has more than 22 years of engineering, supervisory, and management experience in the industry and has served NASSCO as supervisor of test engineer- ing, contracts administrator, special projects manager, and supervisor of repair estimating and management systems. Mr. Cooley has also served as manager of ship construction for Zapata Corporation of Houston, Texas.

Mr. French pointed out that NASSCO, along with the entire shipbuilding industry is in a state of great uncertainty and transition. Commercial shipbuilding clearly is in a precipitious decline; naval shipbuilding is accordingly far more competitive.

However, NASSCO has been highly successful recently in obtaining large contracts for major conversions, and major Navy repair and overhaul work. The new floating drydock recently ordered by NASSCO is expected to be in operation by the end of 1983 to further enhance NASSCO's strong position in naval and commercial repair. "By entry into the offshore platform business, NASSCO is adding a third leg to its business," said Mr. French. "We know only that the future holds both uncertainty and opportunity, and we are planning and preparing for all eventualities," he said.

NASSCO's firm backlog at the end of March 1983 was approximately $558 million. In addition, there is approximately $121 million of major conversion, repair, and overhaul work under contractual option by the government.

The backlog amounts do not include any options for construction of commercial vessels since all commercial ship construction options previously announced by the company have expired.

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