Clash arises over proposed Jones Act modifications

The oil and gas industry said CBP’s proposed revisions on when Jones Act vessels must be used in offshore oil and natural gas activity will lead to less oil and gas production, but the OMSA said it would return 3,200 jobs to the Gulf Coast.    The Offshore Marine Service Association (OMSA) is disputing a report released by the American Petroleum Institute that projected “significant and damaging impacts” from modifications proposed by U.S. Customs and Border Protection (CBP) in rulings related to when Jones Act vessels must be used in offshore oil and natural gas activity.
   The study, conducted by consulting firm Calash, said amended interpretation by CBP would allow “portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board” to be transported on non-coastwise vessels, but would revoke previous rulings, which allowed these vessels to transport equipment considered to be in furtherance of the mission, fundamental to the operation of the vessel, used by a vessel in the course of its business or necessary to carry out a vessel’s functions.

   Calash said over the forecasted period of this study (2017-2030), the proposed modifications and revocations are projected to lead to a decline in the number of oil and natural gas projects coming online in the range of twenty percent and lead to:
     • Losses in the range of 30,000 industry supported jobs in 2017 with as many as 125,000 jobs lost by 2030, mostly impacting the Gulf of Mexico states;
     • Decreases in U.S. oil and natural gas production in the range of 23 percent from 2017-2030;
     • Decreases in government revenues by over $1.9 billion per year from 2017-2030;
     • Decreases of offshore oil and natural gas spending in the range of $5.4 billion per year;
     • And a cumulative lost GDP of $91.5 billion from 2017-2030.

   OMSA President and CEO Aaron Smith said in a statement published in WorkBoat that the notice issued by CBP in January where it said it would correct previous misinterpretations of the Jones Act “would return more than 3,200 jobs to the Gulf Coast, generate more than $700 million in annual economic output, and provide more than 1,000 mariners ready to answer the call of the U.S. military if needed. Moreover, this would be accomplished without disrupting or impeding offshore energy exploration or production given the recent $2 billion in investments by U.S. companies.
   “Since CBP signaled in 2009 that this ruling would be forthcoming, the U.S. offshore marine sector has invested more than $2 billion to ensure that offshore oil and gas exploration and production would not be affected,” Smith said. “The 31 vessels constructed and retrofitted to meet this need are U.S. built, owned and crewed, and are subject to some of the most stringent safety standards in the world.”
   Smith also said that “foreign interests are lining up against the CBP to take these U.S. jobs away from U.S. workers, for the sole benefit of lining their own pocketbooks. Put on the defensive, these foreign entities are dubiously asserting that the CBP’s correct interpretation of the Jones Act will make those operating in this field less safe. Nothing could be further from the truth.”
   By using the U.S. vessels that have been built for this purpose by U.S. shipyards, operations can be performed by just one vessel, eliminating the need to conduct inherently risky offshore vessel-to-vessel transfers, which is currently the only Jones Act-compliant option for foreign vessels, Smith said.