Monday, May 15, 2017


(Ed.'s Note: The diversification of Keppel-Amfels into the shipping business took a hit today after the U.S. Customs and Border Protection Service withdrew plans to observe the restrictions on foreign-flagged and built ships to service the offshore oil industry. By doing so, it limits the advantage Amfels would have had once its ships come off the dry docks. Donald Trump has touted his "America First" slogan. What happened here?) 

By David Blackmon
From Forbes
I wrote about the concerns of the offshore oil and gas industry regarding a set of last-minute Obama-era amendments to the Jones Act, and the failure of most of the Texas congressional delegation to engage on the matter. The Jones Act is a 19th century law that requires vessels carrying cargoes between U.S. ports to be U.S.-flagged and staffed by U.S. crews.

I won't repeat the details here, other than that the industry is concerned that finalization of the proposed regulations in question, which would extend Jones Act requirements to include vessels carrying cargoes between U.S. ports and offshore oil and gas rigs and platforms, would result in a lack of needed shipping capacity and create needless delays in offshore development.

Word came from the U.S. Customs and Border Protection Service (CBP), under whose authority the amended regulations were proposed, that it will suspend and reconsider them rather than finalize them, which it had been expected to do any day now:

"Based on the many substantive comments CBP received, both supporting and opposing the proposed action, and CBP's further research on the issue, we conclude that the Agency's notice of proposed modification and revocation of the various ruling letters relating to the Jones Act should be reconsidered. Accordingly, CBP is withdrawing its proposed action relating to the modification of HQ 101925 and revision of rulings determining certain articles are vessel equipment under T.D. 49815(4), as set forth in the January 18, 2017 notice. "

This decision by CBP is supported by 40 years of jurisprudence on the subject, and is the only possible decision that would have been consistent with the Trump Administration's America First Energy Plan. After all, it would have been unreasonable to expect offshore operators to be willing to make the massive new investments necessary to increase oil and gas production from the U.S. offshore if they could not reliably anticipate there would exist an adequate fleet of vessels to supply their drilling and production facilities.

A good outcome all around (?), and another clear signal that the outcome of the 2016 elections created a clear change in direction for U.S. energy policy.

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