U. S. MARITIME
ADMINISTRATION
STATEMENT
OF PROGRAM DIRECTOR
DEEPWATER
PORT LICENSING PROGRAM
H. KEITH
LESNICK
BEFORE THE
COMMITTEE
ON HOMELAND SECURITY
UNITED
STATES HOUSE OF REPRESENTATIVES
ON
SECURING
LIQUIFIED NATURAL GAS TANKERS
MARCH 21,
2007
Good Morning, Mr. Chairman
and Members of the Committee. I am
pleased to have the opportunity to testify before you today and to discuss the
dramatic growth in U.S. Liquefied Natural Gas (LNG) imports, the deepwater
licensing program, and the Department of Transportation and the Maritime Administration’s
plans to increase the employment of U.S. mariners within this highly
specialized and vital energy sector.
While
worldwide natural gas is in plentiful supply, the United States holds less than 4
percent of world reserves. During 2006,
about 84 percent of all natural gas consumed in the United States was domestically
produced. By the year 2025, as demand
increases, domestic production is only expected to account for 79 percent of
consumption. To accommodate this
shortfall, LNG imports are projected to increase eight-fold to 4.4 trillion
cubic feet per year.
Importing LNG will serve to
relieve the Nation’s growing energy needs by diversifying energy sources. Deepwater ports are necessary to enhance the Nation’s
ability to import LNG from world wide sources.
The Energy Information Administration’s recently released Annual Energy Outlook 2007 states U.S. energy consumption projected
for the year 2025 will be about 23 percent higher than it was in 2006.
As a consequence, the United States
finds itself in a situation unlike any we have experienced before. There is strong international competition
from China, Japan, and Korea for energy resources. Advances in vessel size to transport oil and
LNG, the number of LNG carriers, and advances in LNG transfer technology have made
importing energy ever more efficient and cost effective.
Numerous logistical hurdles
remain, however. Local opposition to the
construction of LNG terminals is growing, compounding the already difficult
task of locating suitable gas receiving sites.
At present, the continental United States
has 5 operational LNG import terminals 1 is a deepwater port located
116 miles off the coast of Louisiana. The combined capacity of the five terminals is
equal to six percent of the Nation’s gas consumption. Clearly, the Nation’s growing need for imported
natural gas necessitates a greater investment in the infrastructure required to
accommodate energy needs. As such, the
Maritime Administration’s Deepwater Port licensing program is designed to
facilitate the licensing, construction, and operation of deepwater oil and LNG
terminals located seaward of U.S. territorial waters.
In 2002, the Deepwater Port
Act was amended to expand the Secretary of Transportation’s existing authority
to include authority to issue licenses for offshore natural gas terminals. (The permitting of LNG facilities onshore and
in state waters remain under the jurisdiction of the Federal Energy Regulatory
Commission.) The Maritime Administration,
by delegation from the Secretary of Transportation, is the lead federal agency
for licensing offshore LNG and oil terminals.
The Secretary of Transportation delegated authority over “pipeline
maters” to the Pipeline and Hazardous Materials Safety Administration. In processing of Deepwater Port
license applications, the Maritime Administration works in concert with the
U.S. Coast Guard, numerous federal agencies, and state and local
governments. At the conclusion of the application’s
environmental review process, the Maritime Administration makes a final license
approval determination through the issuance of a Record of Decision. The Record of Decision incorporates the
reasons behind the Maritime Administration’s decision to issue or deny a
license. The Record of Decision also
enumerates the various conditions of licensure that govern the operation of the
deepwater port facility.
To date, 15 LNG Deepwater
Port applications have
been filed and 4 licenses have been issued.
If all applications under consideration by the Maritime Administration were
constructed and operating at full capacity, they would represent over a quarter
of the Nation’s total gas capacity.
Congress amended the
Deepwater Port Act through the Coast Guard and Maritime Transportation Act of
2006, to direct the Secretary of Transportation to develop and implement a program to promote the transportation of LNG to
the United States
on U.S.-flag vessels. The Act further
directed the Secretary to give top priority to applications that use U.S.-flag
vessels in their operations. The Act
also requires that applicants provide the nation of registry for, and the
citizenship of officers and crew members serving on vessels transporting LNG to
U.S.
deepwater ports. The Maritime
Administration interprets this requirement to include those international LNG
tankers providing gas to the deepwater facilities licensed by the Agency.
Therefore, in responding to
these legislative directives, the Maritime Administration is in the process of
developing a voluntary deepwater port manning program to encourage employing
highly trained and skilled U.S.
mariners to meet the current and forecasted demand for professional mariners in
the international LNG shipping industry.
We are already seeing
results from our efforts. Last December,
the Maritime Administration announced an innovative public-private partnership
with SUEZ Energy the first official partnership of its kind within the
international LNG industry. Under this agreement, SUEZ
will provide training and employment opportunities for U.S. citizen officers, cadets, and unlicensed
mariners aboard their tanker fleet and at both of their planned deepwater port
terminals off the coasts of Boston and Florida. Additionally, Excelerate Energy has entered
into a similar agreement for the Northeast Gateway deepwater port facility in
Massachusetts Bay and for its existing facility in the Gulf
of Mexico. In January 2007,
a Louisiana-based applicant, Freeport-McMoRan Energy, also committed to work
with the Maritime Administration to develop programs to train and employ U.S. mariners on LNG vessels servicing their
Main Pass Energy Hub facility being planned off the coast of Louisiana.
These agreements represent
sound public policy – increased safety, security, and improved transportation
efficiencies – and they open up vital training and employment opportunities for
U.S.
mariners in the LNG industry. The
Maritime Administration intends to continue to reach similar voluntary agreements
with our pending and future deepwater port applicants and all energy companies
serving the Nation’s international maritime markets.
It is estimated that as many
as 3,700 to 5,000 additional mariners may be needed by next year. The magnitude of this manpower shortage will
only serve to negatively impact this industry’s excellent safety record. Over the last 5 years the global LNG carrier
fleet grew by 73 percent, from 128 to 222 vessels. And, an additional 133
LNG vessels are scheduled for delivery to service the global LNG trades by
2010. This expanded fleet will require as many as 10,000 additional
seafarers, of whom almost 3,000 will be licensed officers – and, offers
tremendous employment opportunities for both licensed and unlicensed U.S. mariners.
This dramatic increase also comes at a time when we are already experiencing a
greater demand for seafarers in general due to a dramatic increase in
international trade.
The worldwide LNG tanker
fleet currently lacks a single U.S.-flag vessel. As a direct result, few U.S. mariners
have the opportunity to gain vital hands-on experience in this growing
industry. Clearly, the lack of U.S.-flag LNG tankers translates into a
lack of job opportunities for U.S.
citizens. It is the Maritime Administration’s
goal to help correct this situation and provide U.S. mariners opportunities in an
industry vital to our energy and security needs.
The Maritime Administration strives
to ensure a reliable supply of U.S.
citizen mariners to serve on LNG vessels calling at U.S. energy receiving
facilities. The Agency is working with the U.S. Merchant Marine Academy,
state maritime academies, and other training facilities to develop and expand
innovative educational programs.
Specifically, the goal is to provide immediate employment for entry
level mariners, both licensed and unlicensed, into the LNG industry upon
graduation and courses for the retraining and/or recertifying of current
mariners who are sailing on vessels other than LNG permitting them to
transition into LNG service.
Ultimately, employing highly trained and skilled licensed
U.S.
mariners will help alleviate the growing worldwide shortage of professional
mariners confronting the international LNG shipping industry. It will also serve to help maintain the
industry’s excellent safety record by maintaining the LNG officer pool. U.S. mariners are highly skilled in
the operation of steam plants used on the majority of LNG vessels and are
experts in operating other marine main propulsion systems, such as diesel,
diesel electric, and gas turbines. In
addition, America’s
maritime officers unions continue to train their members to the highest
industry standards in LNG technologies.
It is also important to note that from an economic
and competitive perspective, the growing worldwide shortage of trained and
qualified LNG ships’ officers has created an opportunity for U.S. officers
to work aboard foreign-flag LNG vessels.
International vessel operators are dramatically increasing the wages and
benefits offered to foreign officers to keep or attract their services, thus
narrowing the gap between the wages and benefits paid to Americans and those
paid to their foreign counterparts.
The licensing of deepwater
ports also contributes to the Department of Transportation’s strategic goal of
improved mobility and reduced congestion by limiting the number of mega LNG
tankers entering our Nation’s port facilities.
The construction of deepwater port terminals enhances transportation
safety by isolating terminals away from congested population areas.
The Maritime Administrator
is required to consider the national interests in the issuance of a deepwater
port license. The Maritime
Administration considers the safe, secure, and efficient importation of an
environmentally friendly source of energy vital to the Nation’s economic
growth.
We are proud of the
Deepwater Ports Licensing Program and our efforts to encourage employing
qualified U.S.
citizens to work aboard the vessels serving the energy sector.
I want to thank the Members
of the Committee and Chairman Thompson in holding this hearing today and I am
happy to respond to any questions that you may have.
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