AMO Currents - Resilient U.S. shipyards, AMO and the LNG horizon

AMO Currents - Posted: March 15, 2013

Resilient U.S. shipyards, AMO and the LNG horizon

By Tom Bethel
National President

To borrow a bit from Mark Twain, reports of the American shipbuilding industry's death in commercial markets are greatly exaggerated.

Two years ago, General Dynamics' NASSCO shipyard in San Diego completed the five-ship "State-class" product tanker project for coastal trade with the Evergreen State.

More recently, the Aker Philadelphia yard in its namesake city delivered the product tankers Pennsylvania and Florida, and BAE Systems in Mobile turned out the product tanker American Phoenix.

Meanwhile, the VT Halter Marine yard in Pascagoula continued construction of the Marjorie C, the second combination roll-on/roll-off-containership for service between the U.S. mainland and Hawaii.

In a groundbreaking development late last year, Totem Ocean Trailer Express - TOTE Inc. - launched plans to convert its roll-on/roll-off ships North Star and Midnight Sun at NASSCO to use liquefied natural gas as their primary fuel.

TOTE took this visionary project a significant step further when the company announced it had signed with NASSCO for the construction of at least two LNG-powered container ships for service between the U.S. mainland and Puerto Rico. These will be the largest LNG-fueled ships of any design anywhere in the world.

As national president of American Maritime Officers, I am pleased to note once more for the record that this new tonnage represents additional employment for our union and new employer contributions to the AMO benefit funds. This, in turn, means greater long-term job and benefit security for all AMO families.

In a broader sense, a resilient U.S. shipbuilding industry - 85 construction and repair yards and 86 shipyard suppliers in 29 states, according to the Shipbuilders Council of America - helps blunt criticism of the Jones Act, which holds domestic waterborne commerce for merchant vessels owned, built, flagged and crewed in the U.S.

Much of this criticism comes from Hawaii and Puerto Rico, where business interests and local political figures often call for amendment to or outright repeal of this increasingly important law. The empty argument made most often is that the Jones Act's "build American" requirement discourages private capital investment in merchant vessel construction for service within Jones Act jurisdiction.

But the fact that U.S. shipyards are set to partner with the U.S. shipping industry to hasten the advent of LNG as a common, clean and less expensive vessel fuel brings additional positive dimension to this story - and this joint leadership could result in even more new work for AMO.

"Demand for LNG-powered engines is on the rise in the maritime sector, and the craze is starting to gain momentum in other industries that are looking to secure new sources of affordable fuel," the worldwide shipping newspaper Trade Winds said in a March 6 feature. "Campaigns led by the U.S. and other nations to slow global warming have made LNG power more attractive too, observers say. In the shipping sector, operators are subject to increasingly strict emissions standards that call for the use of low sulphur fuel oil."

This trend toward LNG as a sensible alternative to traditional fuel would require the construction of gas liquefaction plants and bunkering sites for LNG-fueled merchant vessels, as well as for gas-powered trucks and railroad locomotives.

Shell, which employs AMO members in senior vessel positions in its international LNG fleet, announced early this month that it will build one liquefaction plant in Louisiana and one in Ontario, where it would supply LNG to vessels operating on the Great Lakes-St. Lawrence Seaway. "We are investing now in the infrastructure that will allow us to bring this innovative and cost-competitive fuel to our customers," one Shell executive said.

Other such projects are in development, and my administration is monitoring each of them closely. This burgeoning industry could require a fleet of coastal LNG tankers to keep fueling sites supplied, and the hope here is that demand will rise to the strong point many analysts predict over the next few years. If so, U.S. shipbuilders will meet the need, and AMO - the only U.S. merchant marine officers' union with real LNG experience and a standard-setting LNG training program - will be ready to man the licensed positions on these vessels.

With our own careful planning, and with sustained strong support of the AMO Voluntary Political Action Fund, we could see this market developing for us as early as this year.

As always, I welcome your comments and questions. Please feel free to call me on my cell at (202) 251-0349.