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Legislation seeks to revive U.S. Shipbuilding and Shipping

Legislators propose a share of U.S. crude oil and natural gas exports be transported in ships built in the U.S. and operated with U.S. crews.

Rep. John Garamendi (D-Calif.) and Sen. Roger Wicker (R-Mass.) have reintroduced a bill, the Energizing American Shipbuilding Act (H.R.3829), that seeks to revive domestic shipbuilding and maritime industries by requiring that increasing percentages of liquefied natural gas and crude oil exports be transported on U.S.-built, flagged and crewed vessels.

Garamendi’s offices said the Shipbuilders Council of America has estimated the bill would result in the construction of more than 40 ships: approximately 28 LNG carriers by 2041 and 12 oil tankers by 2033.

In remarks on the floor of Congress on Tuesday, Garamendi said, “The steel in the ships, the pumps, the pipes, the electronics, the propellers, the drive shaft, the engines — all of those things — can be made in America if we have a national policy that simply says the export of a strategic national asset, oil and gas, that that be on American-built ships. Not all of it, 10%, 15%, 40 ships over the next 15 years or so when the Energizing American Shipbuilding Act becomes law.”

There is, he said in a press release, “a unique opportunity to create new middle-class jobs by strengthening our nation’s crucial domestic shipbuilding, advanced manufacturing and maritime industries — which are key to national security and our ability to project American military power abroad.

“Our bipartisan bill counters other export countries’ similar requirements, including the Russian-flagged vessel requirement for arctic oil and natural gas exports announced by the Kremlin in December 2018. American shipyards and mariners are ready for the job, and our bill ensures they are no longer expected to compete against heavily subsidized foreign shipyards in Korea, China and elsewhere,” Garamendi said.

Shipbuilders Council of America President Matthew Paxton said the bill “will not only ensure the dozens of new ships with hundreds of thousands of tons of capacity will be built here in the U.S. but will also invigorate the shipyard industrial base, which spans to every state in the nation.”

On Dec. 18, 2015, the U.S. enacted legislation authorizing the export of U.S. crude oil without a license. Exports to embargoed or sanctioned countries continue to require authorization. Prior to December 2015, exports were highly restricted.

In 2018, the United States exported about 7.59 million barrels of petroleum per day to 190 countries and four U.S. territories. About 26% was crude oil and 74% was non-crude oil petroleum, including refined petroleum products such as gasoline and diesel fuel, according to the U.S. Energy Information Agency (EIA).

In January, the EIA projected that “for the first time since the 1950s, the United States will export more energy than it imports by 2020 as increases in crude oil, natural gas and natural gas plant liquids production outpace growth in U.S. energy consumption. Different assumptions about crude oil prices and resource extraction affect how long EIA projects that the United States will export more energy than it imports. The United States has been a net exporter of coal and coke for decades, began exporting more natural gas than it imports in 2017 and is projected to export more petroleum and other liquids than it imports within the decade.”

In May, the EIA said the United States has been a net exporter of natural gas for more than 12 consecutive months.

The bill would require that vessels built in the United States transport 15% of total seaborne LNG exports by 2041 and 10% of total seaborne crude oil exports by 2033.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.