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Energy Liberty Ships

Liberating the world from the consumption of fossil fuels will reduce the economic shocks that occur when the price of petroleum or natural gas fluctuates. This will also stop the bleeding of capital from countries dependent on importing fossil fuels, and it will end the price war that has developed over a finite resource.  Like junkies who binge and crash, our society is operating in an unsustainable manner. Kicking this bad habit is also cheap insurance against the possibility that CO2 emissions will cause global warning. Insurance companies are taking notice of the claims that will result when rising sea levels flood most of the major metropolitan areas of the world.

The deployment of a fleet of OTEC powered chemical processing plantship can be a fast acting solution to the fossil fuel crisis. All the technology required is very mature. Tests conducted over 30 years ago proved the technology can work. It is only a matter of scaling up production to drive down the cost. And since building plantships is a manufacturing process, instead of a construction project, it can benefit from economies of scale and industrial automation in ways that alternatives, such as nuclear power, will not.

Nuclear power is also on the table as an option, however, the cost of third generation reactors is too high to be cost effective. The nuclear plants that have been proposed typically take at least five years to complete. An MIT study estimates the cost per kilowatt from a new nuclear power plant will cost $0.084 per kWh. Private financing is difficult, even with loan guarantees. The problem with continuing to use these light water reactors is a basic design flaw. High-pressure light water reactors cost more to build and operate. They only burn 3% of the fuel and the cost of the pressure containment vessel can be avoided by moving to advanced reactor designs. A second problem with our current nuclear energy policy is that the selection of the technology was driven by the production of plutonium that could be used in nuclear weapons. The result was the use of the uranium-235/plutonium fuel cycle instead of the safer thorium/uranium-233 fuel cycle. This was a simple case of politics getting in the way of science and engineering.

The GEN IV reactors offer significant safety and efficiency improvements over the legacy light water technology that is currently used in all US based reactors. Of particular interest is the molten salt reactor technology. The concept was proven at Oak Ridge National Laboratory (ORNL) over 40 years ago.  The molten salt approach treats reactor design as a continuous flow chemical process rather than a carefully controlled physical configuration of solid chunks of fissile material. Both technical approaches were devised in the 1940s, but only the light water reactor concept was used in commercial reactors. 

The Molten Salt Reactor Experiment (MSRE) carried out at ORNL in the 60s proved the flexibility and safety of approaching nuclear power as a chemical engineering problem. They used the same reactor vessel to "burn" multiple fissile materials (uranium 235, plutonium 239 and uranium 233) through nuclear fission. The MSRE proved that a molten salt reactor could be used in "burner" reactors to convert nuclear waste and nuclear bombs into thermal energy and rare earth elements. 

Thorium based reactors are much simpler than light water reactors. The high boiling temperature of a molten salt makes it possible to operate at atmospheric pressure and at higher temperature than water cooled reactors. This eliminates the costly containment shell and many other safety devices required by the high pressure light water reactor. 

In the past there has been some interest in Congress to investigate a more rational policy on nuclear power. The Thorium Energy Independence and Security Act of 2008 would have kicked off a program to build Thorium fueled power plants. Thorium is much more abundant, much less toxic, and it can't be used to make weapons. Unfortunately the slow pace of regulatory change at the Nuclear Regulatory Commission makes it likely that we are years away from having an approved design for this new technology. Another avenue to explore is having the Navy use molten salt reactors as a tool for implementing their green Navy program. This would allow the NRC to be sidestepped. 

The cost competitiveness of molten salt thorium breeder reactor will be hard to beat in the long run. An article on the Energy From Thorium website on describing Liquid fuel Nuclear Reactors concluded with the following: 

In summary, LFTR capital cost targets of $2/watt are supported by simple fluid fuel handling, high thermal capacity heat exchange fluids, smaller components, low pressure core, high temperature power conversion, simple intrinsic safety, factory production, the learning curve, and technologies already under development. A $2/watt capital cost contributes $0.02/kWh to the power cost. With plentiful thorium fuel, LFTRs may indeed generate electricity at less than $0.03/kWh, underselling power generated by burning coal. Producing one LFTR of 100 MW size per day could phase out all coal burning power plants worldwide in 38 years, ending 10 billion tons per year of CO2 emissions from coal plants.

In the short term scaling up production of OTEC plantships could be cost competitive solution that could be deployed within a few years. Because of the low tech nature of the equipment required to build OTEC plantships, the application of lean manufacturing techniques to the process should lead to a long term drop in the cost per kilowatthour.

Let's ramp up production and target building 500 ships in less than ten years.  Sounds crazy?  Not at all.

The mass production of ships during an emergency was done during WWII. The United States Maritime Administration undertook the construction of a fleet of cargo vessels to support the war effort. The Maritime Administration financed the construction of shipyards dedicated to the production line construction of Liberty ships. Work starting early in 1941.

It's time to start a new, aggressive ship building program, a Energy Liberty Ship program. This time we will build OTEC powered plantships.

Liberty Ships

At the Oregon Shipbuilding Company, the time required to build the first ship was 253 days and the first ten ships averaged 224.1 days. Just under 23 months later the average time to deliver a ship dropped to 27.6 days. On average across all shipyards it took about 40 days to build a ship. A working paper on the economics of the Liberty Shipbuilders describes the predictable cost savings that occur when the same design is produced hundreds of time. Work at 18 shipyards in the US eventually completed 2710 Liberty Ships at 17 shipyards between April 30, 1941 and October 30, 1945.

A detailed history of the Liberty ship program by James Davies describes the speed at which production on Liberty ships ramped up in 1941:

It was a project on a massive scale, undertaken with great speed and efficiency. The first Liberty ship (the Patrick Henry) was launched on 27 September 1941 (and completed on 30 December 1941), which was an incredible feat considering that just seven months previously neither shipyard nor workforce existed to build her....

During the peak building period (March 1943 to December 1943) over 100 were completed per month.

Wartime pressure to build many ships quickly and economically lead to innovations in both methods for building ships and in paying for the ships. A history of the US Maritime Administration states the following about how ship builders were paid:

The first step in the emergency program was the recruiting of managerial experience and devising a fair method of contracting for the payment of the ships the nation had to have . . . and those steps taken by the Commission were explained with humor and vigor by its chairman, Rear Admiral Emory S. Land, before the Sub-committee on Shipyard Profits, Merchant Marine and Fisheries of the House of Representatives on March 22, 1944

Cost-Plus Method Outlawed

The old cost-plus method of building ships had been outlawed and the commission used an advanced type of contract never used before. Under this contract a shipbuilding contractor built and provided the facilities for building ships at cost without any provision of profit to him, and as Admiral Land explained it:

"The key idea to the plan was that the contractor would have to produce ships before he would get anything beyond costs. We worked out the location of the yards, the arrangement with the contractors to build the facilities and the ships and a contracting plan for the building of the yards and facilities at cost with no profit to the contractor, and the building of the ships on the basis of an estimated cost with a base fee plus or minus bonuses and penalties dependent on meeting, exceeding, or falling short of required bogies in completion dates, man hours and costs."

The Commission had to be both bold and realistic in inducing shipbuilding brains and production management to launch forth on this great program. To persuade private capital into such an undertaking, so transitory that in most cases its life was limited by the national emergency, was impossible. Most of the emergency shipyards were specially built plants adapted to production of a single type of ship, and no contractor could be expected to build a $20,000,000 yard with which he would be stuck at the end of the emergency. The commission therefore placed the emphasis on the shipbuilders' output and not on his capital invested.

Admiral Land Solved Difficult Problem

Parenthetically, Admiral Land made this humorous observation to the Subcommittee on Shipyard Profits: "If we were to attempt to use as a yardstick under these extraordinary circumstances a percentage return on the capital invested by the shipbuilder under some illogical theory that the relations between invested capital and profit are in any way similar to those commonly found in permanently organized businesses operating under private auspices and in ordinary commercial undertakings, I am frank to say that I have not the slightest idea as to what the proper return in percentage would be. If we reached up into the air and picked out 10 per cent return on the invested capital as suitable, it would lead in the case of some of the Liberty ships to a total profit for the shipbuilder of about $65 per vessel before taxes or about $18 per vessel after taxes, this on vessels costing, let us say, roughly, one million and three-quarters each. I do not want you to take this $18 too seriously. I point to it merely as showing the utter absurdity of attempting to relate the shipbuilder's profit to his invested capital under the conditions which had to be met to make our shipbuilding program possible."

One result of incentive payments, however, was to stimulate rivalry between shipbuilders to reduce man-hours and cost and expedite deliveries so that an original estimate of 635,900 man-hours for a Liberty ship was brought down to 520,000 man-hours and in several yards to below 500,000; in one instance even to 350,000. Another result was better ships than those built at Hog Island in the first world war, at lower cost, completed during the war and not after it was over.

And although the shipbuilders would be the first to agree that Admiral Land never spared the rod for fear of spoiling the child, he had this to say about them to the Congressmen:

Shipbuilders Have Performed Splendidly

"These shipbuilders have done one of the greatest managerial jobs of all history. They have provided the 'know-how' and brought to the task imagination, initiative and ability that astounded the world with their achievement. If there is to be a percentage basis for paying them, I think it should be a percentage on brains and not a per-centage on capital. I wish I knew some way to figure the proper percentage of return on brains."

In other words the United States Maritime Commission spent the money and produced the goods.

More information on the cost of Liberty ships is available here.

The price tag for a 441 ft 6 in x 57 ft Liberty Ship (EC2-S-C1) was $1.6 million. Construction time for the 10,500 dwt ship at the Bethlehem-Fairfield shipyard in Baltimore, Md., was some seven and one-half months. The facility would eventually slice production time for one Liberty Ship to 28 days

Another source has slightly different information on the cost of building liberty ships.

The U.S. Maritime Commission used a "cost-plus variable fee" contractual arrangement to pay for the Liberty Ships.  In 1941, the government reimbursed the shipbuilder for costs and paid an additional $110,000 fee if the ship was built using the established average of 500,000 man hours.  The fee also varied according to the speed of delivery, ranging from a minimum of $60,000 to a maximum of $140,000.  The fee schedule was adjusted during the war as the average production time decreased.(39)  The Liberty Ships produced by the Jones Construction Company cost an average of two million dollars each.(40).

The speed of production did have a negative impact on quality, but apparently this was a calculated choice.

I then measured the effects that production speed, labor productivity had, along with various other factors, on the probabilty that an individual ship would develop fractures. The results were dramatic. If one were to holding all the other factors at their average levels, but reduce the labor hours expended in production of a ship from 1.25 million hours to 350,000 hours (these are about the range of the sample data), the probability that a ship develops fractures rises from six percent to twenty percent.  Put another way, there is strong evidence that the Maritime Commission and the yards traded quantity for quality. In fact, various contemporary documents show that this was a conscious decision on the part of top management. Even the American Bureau of Shipping, which was responsible for safety inspections instructed its inspectors not to be as rigorous as they would be in peacetime. What does this matter for studies of learning? It matters because yards were making poorer quality ships later in the war than they were at the earliest stages, and this implies that the official productivity figures, which have attracted so much attention from economists, overstate the true rate of productivity growth

This reference provided one additional interesting facts about liberty ships:

A Liberty ship contained almost 600,000 feet of welded joints, and welding labor accounted for about one third of the direct labor employed in construction.