Congress approves shale-gas tankers for Sunoco operation

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The U.S. Congress approved delayed legislation on Friday that will allow Sunoco Inc. to transport ethane, a form of liquefied natural gas (LNG), from the Philadelphia area to the Gulf Coast.

By unanimous consent, the House on Friday approved a bill that permits three LNG tankers to participate in “coastwise” trade – carrying cargo between U.S. ports. The Senate approved the legislation on Thursday.

The Mariner Project, a joint venture between Sunoco Logistics Partners L.P. and MarkWest Energy Partners L.P., would transport ethane produced from the Marcellus Shale by pipeline to Marcus Hook and then by sea to the Gulf Coast, where ethane is used to make plastics.

Because there are no qualified U.S.-flagged LNG vessels available to carry the fuel between Marcus Hook and the Gulf Coast petrochemical plants, the Mariner Project needed a waiver to the Jones Act, the 1920 law that protects markets for U.S. vessels.

U.S. Sen. Pat Toomey and U.S. Rep. Pat Meehan, whose district includes Marcus Hook, promoted the Jones Act waivers. The Republicans argued the project would generate 300 to 400 new construction jobs and 25 long-term jobs to operate the shipping terminal.

The three LNG tankers are American-built, American-owned vessels that now fly foreign flags. Reflagged as U.S. vessels, the ships must also employ U.S. crews and be maintained in America.

Toomey and Meehan had steered the three LNG tankers into special legislation that was being rushed through Congress to allow 60 foreign ships to participate in the America’s Cup sailboat race. The bill appeared to have smooth sailing ahead.

But as the legislation landed in the House this month, it became freighted with five additional vessels whose sponsors also sought Jones Act waivers. That caused delays.

The American Maritime Partnership, a lobbying group of U.S. transporters and shipbuilders, objected to the five vessels, saying they “could have an adverse competitive impact on existing operators in the coastwise trade.”

Legislators agreed this week to remove two of the vessels, allowing for the bill’s passage.

The maritime association, in a letter to lawmakers, said it did not object to the three LNG tankers because they “present a unique situation insofar as there are no coastwise-qualified U.S.-flag vessels that would compete against those ships.”

But Sunoco’s project is not a sure bet. Energy analysts say the sea route will have a hard time competing with proposals to move ethane cross-country by pipeline, the cheapest mode of transport.

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Posted on November 21, 2011, in LNG, United States and tagged , , , , , , , , , . Bookmark the permalink. 1 Comment.

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