Decision No. 250-W-2001

With Decision No. 448-W-2001

May 16, 2001

APPLICATION by P.F. Collins Customs Broker Ltd., on behalf of Polar Ship Management AS, pursuant to the Coasting Trade Act, S.C., 1992, c. 31, for a licence to use the "POLAR PRINCESS", a Norwegian research vessel, to conduct 2-D seismic survey off the east coast of Canada, exclusively in the continental shelf zone, during the period commencing on or about April 16, 2001 and ending on August 20, 2001.

File No. W9125/P5/01-9

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APPLICATION

P.F. Collins Customs Broker Ltd. has, on behalf of Polar Ship Management AS (hereinafter the applicant), applied to the Minister of National Revenue for a licence to operate the service set out in the title. The matter was referred to the Canadian Transportation Agency (hereinafter the Agency) on March 29, 2001.

The Agency conducted a search of the relevant portion of the marine industry and notice of the application was given on March 29, 2001. An offer for a Canadian ship was filed on April 9, 2001 by Geophysical Service Incorporated (hereinafter GSI).

ISSUE

Pursuant to subsection 8(1) of the Coasting Trade Act, the issue to be addressed is whether there are suitable Canadian vessels available to provide the proposed service or perform the activity described in the application.

POSITIONS OF THE PARTIES

The applicant

The application is to carry 2-D seismic survey for a period of 4 months. The applicant states that the "Polar Princess" will be departing Norway around April 20, 2001 and will arrive in Canada around April 28, 2001, fully rigged and ready to start operation immediately.

The applicant states that the vessel offered by GSI is registered in Panama as the "Austral Horizon". The vessel has not been taken over by GSI and work onboard (installing equipment and conducting dry-dock) will not start until the vessel is taken over. The vessel has been laid up in Leith for the past 16 months and major efforts will be required to bring her up to operational standards. The applicant believes that the sellers have invested only a minimum of attention and expenditures in the vessel during this period and that the vessel may not be in good condition.

The applicant indicates that GSI has failed to provide information that the "Austral Horizon" will be available at the time of the importation of the "Polar Princess". As well, the "Austral Horizon" does not have the capabilities of the "Polar Princess" to undertake the required scope of work at this time due to the non-existence of the streamer, navigational and data processing equipment onboard the vessel.

GSI

GSI indicates that it is a Canadian corporation that has purchased a seismic vessel. The name "GSI Admiral" was approved by the Canadian Registry of Shipping on April 3, 2001 and the vessel was registered in Halifax, Nova Scotia on April 9, 2001. A copy of the certificate of registry was filed with the Agency on April 10, 2001.

This vessel is currently undergoing Department of Transportation inspections and only minor modifications are required. The vessel had a major refit in1998 and GSI states that the vessel is state of the art in her bridge electronics. The time necessary to recommission a laid up vessel is determined by the way the vessel is laid up, and this vessel is in good overall condition. The vessel will arrive in the port of Mulgrave on or about May 15, 2001 and undergo mobilization of seismic equipment, and it will be available for work in any mode of operation by May 25, 2001.

GSI states that the issue is not seismic equipment, but the vessel and ships equipment, along with the vessel's capacity to do the work. The vessel is capable of towing 4 streamers each 6 kilometres long for a total of 24 kilometres of streamers and can tow a 12 kilometre streamer as it is today. GSI has state of the art survey seismic equipment which it already owns as well as other equipment to expand the vessel's capability to perform 3D operations.

GSI submits that timing is not an issue. Survey operations conducted during the June - October time frame have just as favourable weather as the April - August period. GSI indicates that it has a Canadian flagged vessel which is capable of performing the seismic data acquisition.

ANALYSIS AND FINDINGS

The intent of the Coasting Trade Act is to allow foreign vessels to be used in Canadian waters when there is no suitable Canadian vessel available for a proposed activity. When dealing with a coasting trade licence application, the Agency must determine if the Canadian vessel offered is suitable and available for the activity proposed.

Although the applicant stated that the vessel offered by GSI was not registered in Canada at the time the offer was made, GSI provided evidence that the vessel was registered in Halifax, Nova Scotia on April 9, 2001.

The "GSI Admiral" is of comparable size and capacity to the "Polar Princess", and its suitability to perform seismic research and survey activities has not been questioned by the applicant. GSI already owns the required seismic equipment which will be installed on the vessel before May 25, 2001. Therefore, the Agency is of the opinion that the applicant did not demonstrate that the Canadian vessel offered is not suitable for the proposed activity.

The application was for the period commencing April 16, 2001 and the "Polar Princess" was scheduled to arrive in Canada on or about April 28, 2001. GSI's vessel will be available for operation on or about May 25, 2001. The applicant did not justify that the survey had to be done at a specific time. In this respect, GSI argued that this activity can be performed at a later time. The Agency has also examined applications received in the past years for seismic research and survey, and found that the period for similar activities range from April to November. Therefore, the Agency is of the opinion that a suitable Canadian vessel is available to perform the proposed activity.

CONCLUSION

In light of the above, the Agency determines, pursuant to subsection 8(1) of the Coasting Trade Act, that there is a suitable Canadian vessel available to provide the service or perform the activities described in the application.

This determination will be provided to the Minister of National Revenue for any necessary action as provided for in the Coasting Trade Act.