“Why Jones Act and why now?” That was the question presented by Robert Flynn at Tuesday’s Marine Money Week in New York.
Flynn, president of MJLF & Associates Inc., a Stamford, Conn.-based ship brokerage, said if his packed session on the Jones Act tanker market were held last year, “we would have had only a few people in the room.”
Flynn said there are different cycles in a person’s maritime career, and the hope is that “you get one good cycle.” That may be happening now in the Jones Act market.
A Jones Act segment with a lot of potential is offshore LNG-fueled vessels.
Why? “Gas is clean, it’s safe, abundant, and very soon will be becoming very available,” John Hatley of Wärtsilä North America, said during his talk on LNG fuel for ships. Hatley cited Harvey Gulf International, which is building six LNG OSVs at TY Offshore in Mississippi. All six of the vessels will be outfitted with Wärtsilä LNGPac systems.
A big driver is federal OCS lease emissions caps. The cap must be observed by drillships, semisubmersibles, etc., and emissions from OSVs that service these rigs count against the cap.
There are three “basic pillars” of why LNG is fueling vessels in the offshore market, Hatley said. “It’s economics, its safe and reliable, plus sustainability. LNG is the cleanest burning fuel.”
But it is all about making money, and fuel is often the largest expense for vessel operations. “LNG is coming in at 40-, 50-percent less costly, which has an extremely fast payback.”
LNG is not new. It has been around for over 10 years overseas, but is new for the Gulf of Mexico.
“If you look at the decade ahead [in dealing with EPA emissions regulations]… by mid-decade, you are going to find a lot of pain, therefore a lot of gain, to go to LNG.”
In the challenging years ahead, Hatley said, gas will become “the best answer and preferable answer, if your balance sheet can afford it, to move forward.”
So far, Harvey Gulf and Wärtsilä are all about LNG in the Gulf. It will be interesting to see who follows them.