Matson To Install Scrubbers on Alaskan Containerships Acquired From Horizon

Matt Cox, president and chief executive officer of Matson, says the shipper will look for ways to expand the use of LNG.

Matson Inc. [NYSE:MATX] (Matson) Monday disclosed that it will be installing scrubbers on three Alaska containerships acquired under its purchase of Horizon Lines Inc., but the company has no foreseeable plans to install scrubbers on its Hawaii, Guam, or China fleets.

The disclosures were made during a question and answer session following Matson's reporting of its first quarter 2015 financial results.

Joel Wine, senior vice president and chief financial officer for Matson, said the first of the three Alaska diesel powered Jones Act qualified containerships will be outfitted with scrubbers in the third quarter of this year, and the other two will be outfitted in 2016.

"Each of these are approximately 90 days in terms of duration, possibly a little bit longer, and from a cost CapEx perspective about $8 million per vessel total of $24 million," he said.

Matt Cox, president and chief executive officer of Matson, said that "these three vessels in operations spend virtually their entire route inside the ecozone requiring the burning of these [diesel] fuels, and [this] makes it essential for these scrubbers to work and be installed in order for them to meet their base deployment schedule on a three-ship turnaround service." 

Benjamin Nolan, director at Stifel Financial Corp., followed his query about the Alaskan vessels by asking if scrubbers would be installed on Matson's other vessels.

Cox replied that outside of Hawaii and the west coast "we can operate on more conventional fuels as permitted under the emission control area rules, and so it is unlikely at this point that Matson would install scrubbers on its Hawaii and Guam and China fleets."

He added that two ships Matson has on order with a delivery date of 2018 are designed to burn liquified natural gas (LNG), "and LNG burns cleaner and can operate at full speed in the eco zone. So, I would imagine over time, a very long time in connection to ship replacement programs, that we will continue to look for ways to expand the use of LNG."

This week Matson also credited lower bunker fuel prices for a strong first quarter 2015 financial result.