Marine Transportation System

Posts Tagged ‘Alternative Fuels’

What Will This Congress Do?

In Congress, Infrastructure, Marine Highway, Politics, Ports, Security, Surface Transportation Policy, Water Resources on January 9, 2015 at 1:45 pm

Nearly a dime’s worth of days into the New Year, this is no time to rehash what happened in the last Congress. A new Congress—the 114th of our maturing nation—is now underway. And what a new Congress it is.

Republicans now rule Capitol Hill and veteran Senate Democrats are being reminded of how it feels to be called Minority. (Republicans have held the majority in the House and Senate more often than not in the previous 10 congresses, since 1995.) At the other end of the avenue is a president who has confronted more than his share of domestic and international crises. January is the starting gun for his latest test – working with the 114th Congress and its routinely unfriendly and uncooperative Republican membership. In that respect, so far, there is not much new about this Congress.

The leaders in the House and Senate themselves face internal and external challenges as they assume on behalf of their caucuses the collective role of governing. Politico used apt “cliff” and “landmine” metaphors for what faces Speaker Boehner (R-OH) and Majority Leader Mitch McConnell (R-KY) as they advance legislation through their own caucuses. The leaders know that the GOP is well positioned to turn around the “do-nothing Congress” label that the Republicans made possible—even intended—over recent years. (Yes, the dethroned Harry Reid hardly facilitated the legislative process in the Senate but Messrs Boehner and McConnell are faced with colleagues in the rank and file who came to Washington to stand in the way of government. Twelve Republicans found reason to vote against returning Boehner to the Speaker’s chair, as if he is didn’t well serve the cause(s) of conservative Republicans.) This go-round Democrats, with little control over committees, the bills they produce, and the floor schedule, will not be plausible scape goats for a failure to legislate. And in the Senate McConnell may be 6 votes shy of a filibuster proof majority but he has a pool of moderate Dems and an Indie who are potential “ayes,” such as we will see with the upcoming Keystone XL vote.

The success of a legislature is measured by legislative productivity. Can this Congress be productive with the Obama White House, which has vetoed exactly two bills in the past six years?

As previously noted, President Obama also will be tested. How well he will deal with the new Congress, his constitutional partner in making law? No doubt we will see more vetoes in his last two years in office but his legacy will depend more on what is accomplished than what he blocked.

In other words, they need each other. Few points will be awarded if progress is not seen in Washington. So, the question is whether the president can find within him the resolve of Bill Clinton, who famously made lemonade out of the GOP blowout of 1994, and whether the Republicans will function as if they want to be remembered as the “did-something Congress.”

All of that is background to a rundown of just some of the issues and questions that are of interest to the port/maritime industry and the larger freight sector.

The president put his previously stated policy view into surprise policy action with his late December announcement on normalizing diplomatic relations with Castro’s Cuba. Any number of ports, exporters and others were pleased by the news. There is bipartisan support among some in the House and Senate but Congress will either come down hard on the White House initiative or, rhetoric aside and with an eye on what Castro might do in the months ahead, show a willingness to reconsider the long-standing trade embargo that can only be ended by a change in law.

Last year, Congress came close to hitting the “target” of spending $1.2 billion from the Harbor Maintenance Trust Fund. The enacted water resources law (WRRDA 2014) sets ambitious, incrementally higher targets for Congress to meet with funding for channel maintenance and other work authorized to be supported by trust fund monies. Will the Republicans, as the saying goes, “put trust back in the trust fund” or continue to allow the Harbor Maintenance Tax assessment on cargo to be used as general revenue applied against the Federal budget deficit?

Last year the House and Senate produced a “sense of Congress” statement generally in support of the US-flag and Jones Act sectors. It can be interpreted as reaffirming existing maritime policy. Around the same time John McCain (R-AZ) reaffirmed his own maritime policy to undo the Jones Act in a speech to the Heritage Foundation. He and the petroleum industry actively urge changes to current law, which is to say, the end of the Jones Act. Meanwhile the Maritime Administration and the Secretary of Transportation will steer a draft National Maritime Strategy through the policy and political wringers of the White House. What will that document say about Administration policy and what if anything needs to be done to improve the US merchant marine or American ports?

In 2015 Congress will have to tackle surface transportation policy and funding. Will it include real money to renew freight corridors and build new infrastructure to support modern, intermodal commerce? Will Congress bite the bullet and find the money to pay it or, for that matter, to save the failing Highway Trust Fund? Past refusal by Congress to tackle this issue has depressed road and transit funding and been a principal expression of austerity economics—advocated by most Republicans, but abetted by many Democrats who also have avoided new revenue proposals—during a time when the country was climbing its way out of The Great Recession. Should this Congress produce a transportation bill that only perpetuates an inadequate level of funding and papers over the structural deficiencies of Highway Trust Fund financing it will not make for a convincing accomplishment.

The issues that may arise in the new Congress are many. Committees are establishing their work plans for the year ahead. What will the Republican majority serve up in the way of budget cuts and appropriations? Will a uniform ballast water policy finally become law? Will the TWIC reader rule that seems to assume container terminals to be at a lesser risk be implemented without alteration? How will Title XI vessel financing fare and will marine highway policy wither from inattention? Will Congress see a Federal role in helping ports, cities and businesses plan for rising sea levels and assist in improving waterfront infrastructure for the coming decades? Will the Coast Guard prepare helpful guidance and rules on cybersecurity and will the industry actively engage in developing it? Will Federal policy foster clean fuel initiatives for the freight modes and encourage off-shore wind energy development? How will the committees answer shipper complaints about railroads? Will a Republican Congress and a White House Democrat come to terms on tax reform, infrastructure funding, and trade policy?

At bottom, how well do the legislators of the new Congress—both Republicans and Democrats—understand, and how will they respond to, these and other issues of relevance to the port/maritime sector?  Pbea

2013: The Year Before the Year of LNG?

In Efficiency, Energy/Environ, Green Transportation, Infrastructure, Ports on December 29, 2013 at 4:51 pm

A year in which U.S. shipyards announced contracts for over twenty new ocean going vessels (with options for several more) is noteworthy, especially given the recent difficult times experienced by the shipbuilding industry.  What makes this fact even more significant is that LNG as a propulsion fuel is a central feature in each of these vessels, either as the intended fuel source upon delivery or at some point in the future.

So does this mean that the U.S. maritime industry in America has reached the LNG tipping point, where a tidal wave of even more marine projects will be announced in the coming year?  My short answer would be a heavily qualified, but nonetheless definite: “maybe.”

A distinction has developed between ships that will be “LNG-ready” as opposed to those that are “LNG-capable,” the difference being those vessels that will use LNG upon delivery and those that can be converted to operate on LNG at some later date.  While certain design modifications are incorporated into these ordered vessels, such as foundations for LNG fuel tanks and dual fuel main engines, they will operate on conventional diesel fuels when they are delivered.

The reasons for taking a half step to LNG rather than making the plunge are several, among them the additional cost of the entire fuel gas system, including the fuel tanks.  However I suspect the greatest reason is uncertainty related to LNG supplies in the ports where these vessels will call.  This is particularly the case with the product tankers that have been ordered that, unlike the LNG-powered container vessels do not operate in a classic point-to-point liner service.  Their deployment is largely dictated by cargo availabilities throughout the United States and thus, until LNG is more widely available, the owners will likely hold back on a full commitment to LNG.

If one is looking for positive signs on the infrastructure front, they are there.  The Port Fourchon terminal project on the Gulf of Mexico in Southern Louisiana is being developed by Harvey Gulf Marine to serve its fleet of LNG-powered offshore service vessels.  It will be the first operational LNG bunkering facility in the United States and is expected to be operational next year.  Clean Energy has announced its intent to construct facilities dedicated to the marine industry in Jacksonville.  Tote, Inc. issued a request for proposal (RFP) to potential LNG suppliers to provide LNG for their vessel operations based in Tacoma, Washington and Jacksonville, Florida.  Each announcement of new LNG-powered ships results in a deluge of phone calls from potential LNG suppliers seeking meetings and making proposals to vessel owners.  So again, there is clear movement, growing interest and some tangible progress; but it is slow and these projects still face regulatory challenges and uncertainty that may result in delays and higher costs.

Given the delivery schedules of the Tote, Inc. ships, in late 2015 and early 2016, and the Crowley vessels in 2017,  it seems that the window for putting bunker infrastructure in place—completing land acquisition, clearing Federal and local permit requirements, and facility construction—is growing very tight.  This raises the possibility of ships being delivered and no LNG being available, which will greatly increase operating costs due to the requirements to use ultra-low sulfur diesel (ULSD) to meet Emission Control Area (ECA) regulations.

So, to offer a slightly more elaborate answer to the tipping point question, the U.S. is closer today than a year ago but one cannot conclude that the LNG revolution has begun.  Of the limited number of Jones Act liner operators, three have already announced projects–Matson being the third–and another has announced intentions to convert existing vessels to LNG. The product tanker market has been effectively replaced over the last ten years so there are limits to the expansion there.  I think the greatest opportunities for achieving critical mass in a marine fuel transformation can be found when and if several large harbor services or tug and barge companies either convert existing tugs to LNG or CNG or acquire new tonnage or the top-tier international liner companies announce new construction programs with LNG-fuelled vessels.  Either – and certainly both – of these developments would be a critical next step to accelerate widespread LNG deployment.

Marine vessels represent the potential for a large concentrated market for LNG/CNG, and a port that has both ocean going and harbor vessels that need LNG for fuel would surely provide sufficient basis for investments in LNG marine terminal infrastructure for bunkering.

While there is still a way to go until we all agree that the breakthrough has occurred we are seeing some decisions and investments that are the necessary predicate to making LNG a common transportation fuel throughout the country.  John E. Graykowski