A new floating drydock and shipyard for Northland has been dumped as a shovel-ready contender after the likely cost topped $210 million.
The news comes as the NZ Defence Force, which owns the existing drydock at Devonport alongside the naval base, said it expected to complete an "indicative" business case by the end of this year on the future location of the base. Northland and its port at Marsden Point, Whangarei is also a contender for the new navy base.
Infrastructure and regional economic development minister Shane Jones said the drydock proposal costs rose steadily during a feasibility study by Northport, and the project didn't make the cut with the Infrastructure Reference Group, which decides the shovel-ready programme.
Northport received nearly $1m last year from the Provincial Growth Fund to do the study, said Jones, who is seeking election as an NZ First MP in Northland.
Jones has long championed Northland as the new location for a big drydock to service ships because the Defence-owned drydock at Devonport is considered no longer fit for purpose.
Defence has confirmed the dry dock cannot service naval vessel the HMNZS Canterbury or the new KiwiRail ferries. It will not be able to service the new ship the HMNZS Aotearoa.
The facility has been leased to Babcock Australasia, part of the global aerospace and defence company Babcock, or its legacy companies, since 1994.
An initial report released to the Herald by the Ministry of Business, Innovation and Employment said a conceptual design for the proposed shipyard and floating drydock had been undertaken, the construction method investigated and a cost estimate produce.
All dollar and dimension figures and commercial details are redacted.
But the Herald understands the cost estimate was more than $210 million while Jones believed it was closer to $250m.
"It's a huge amount of money but the infrastructure would create huge value and be a leading global facility," he said.
"There's a desire for stakeholders in Picton to locate it at the top of the South Island but officials told us the best option was Whangarei."
The concept of a New Zealand-owned and operated floating drydock at Whangarei's port in Northland was mooted many years ago by the NZ Shipping Federation and KiwiRail, said the report. Options were explored but no further work done.
"The concept was discussed with Northport directors and it was agreed Northport should provide as much assistance to this project as possible; a stakeholder workshop was held at Northport in May 2018 to explore options and determine the best location for the proposed facility," it said.
"The preferred concept and alternatives were provided to (redacted) and NZ Defence Force for discussion and input; it was agreed the development proposed at the western end of the port facility would meet all the operational and infrastructure requirements."
The report said Northport and (redacted but most likely Babcock) entered into a heads of agreement in July 2018 to explore requirements for a shipyard facility and floating drydock at Northport.
Northport's feasibility work included investigating future navy ship requirements and dimensions and future commercial shipping needs.
Northport is a deepwater commercial port at Marsden Point near Whangarei. It is 50 per cent owned by the listed Port of Tauranga, and 50 per cent by listed Marsden Maritime. The Ports of Auckland has a nearly 20 per cent stake in Marsden Maritime, which is majority-owned by the Northland Regional Council.
On the naval base's future, a Defence spokesperson said Cabinet last year directed the department to review its real estate, including identifying potential options for the future location of the naval base.
The total Devonport Naval Base is 22 hectares and has a land value of $134.7 million, said CoreLogic. The dry dock is about one third of the total area.
There had been "numerous" reviews of navy base locations, the spokesperson said.
Asked by the Herald about constraints on navy operations at Devonport and when those constraints would become unsustainable, the spokesperson said the implications of sea-level rise were having an impact now on Ngataringa Bay.
"But it is still many years off before operations at the base become unsustainable. Any decision on the location of the naval base would be made by the Government, not the Defence Force."
Any relocation of the naval base would not go hand in hand with relocation of the drydock at Devonport.
The dry dock, the official name of which is the Calliope Graving Dock, named for its location at the foot of Calliope Point, was the largest dock in the Southern Hemisphere when it opened in 1888.
Defence records say the Navy purchased it in 1986. The last modifications to the facility were in 1996 to accommodate ANZAC-class frigates.