JONES ACT, BANKRUPTCY RIG SALE COULD HELP AMFELS

"The Jones requires that all goods transported by water between U.S. ports be carried on U.S. flag ships ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents." Wikipedia

By Juan Montoya

That law, also known as the Merchant Marine Law of 1920, may well prove to be the salvation of Kepel-Amfels at the Port of Brownsville.

The Signapore-based Amfels, already working with skeleton crews at the Brownsville Navigation District, is scrambling to acquire offshore drilling rigs to refurbish them and sell them to potential buyers. However, with the worldwide glut of oil, those potential buyers are scarce. That's where the Jones Act comes in.

Not long ago, Kepel-Amfels announced that with the assistance of the Brownsville Economic Development Corporation, it was diversifying its operations and launching a ship-construction division at the port of Brownsville. Is asked the Greater Brownsville Incentives Corporation for $2.8 million in incentives to help it diversify into shipbuilding that would create 700 good-paying jobs.

And port commissioners say that the aging U.S.-constructed fleet serving the ports of the United States makes the enterprise a good one.
"The Jones Act requires that the keels of ships be built in the United States and that its crews be American," said BND commissioner John Woods. "It also requires that U.S.-built ships be the only ones that can go from U.S. port to U.S. port."

The Jones Act, for example, prohibits any foreign-built, foreign-owned or foreign-flagged vessel from engaging in coast-wise trade within the United States.

It also prevents foreign-flagged ships from carrying cargo between the US mainland and noncontiguous parts of the US, such as Puerto Rico, Hawaii, Alaska, and Guam.

Foreign ships inbound with goods cannot stop any of these four locations, offload goods, load mainland-bound goods, and continue to US mainland ports. Instead, they must proceed directly to US mainland ports, where distributors break bulk and then send goods to US places off the mainland by US-flagged ships. Jones Act restrictions can be circumvented by making a stop in a foreign country between two US ports, e.g., Anchorage, Vancouver, Seattle.

At the October 20, 2016 meeting of the Greater Brownsville Incentives Corporation, the five-member board was asked to provide the Kepel-Amfels which has been employing local workers for the last 26 years with incentives of $4,000 per new job that would total $2.8 million for the hiring of 700 workers to be hired in its expansion shipbuilding business.

Keppel Amfels has been employing local workers for the last 26 years and at its peak hired as many as 3,000 workers.
The worldwide glut in oil has taken its toll on the oil-exploration platform market and now the workforce hovers near 350, with many worker barely getting 30 hours a week at the plant. The company's officials said that there are only three other ship-building companies in the United States.

At one time, Keppel Amfels was Cameron County's fifth largest employer.
The new plan said the incentives will be used to create 700 new jobs with an average salary of $18.48 per hour over the next four years.

Brownsville Economic Development Corporation item back-up on the said GBIC's investment would be protected by a "claw-back" provision that jobs requires the company to return any money if the jobs are not created. Amfels has in the past returned GBIC incentives when the required number of jobs were not created. That has already happened once, the narrative says.

"This is custom-made for Amfels to get into the ship-building business to service offshore operations such as oil exploration rigs," Wood said. "Amfels is really going at it to get into the business."

Wood said that although Amfels' business refurbishing offshore drilling platforms had slowed down, it had recently acquired a contract to service rigs recently acquired by Enterprise Offshore Drilling of Houston, a privately owned limited liability company.

On January this year, Enterprise purchased of a fleet of Gulf of Mexico ships and equipment for oil exploration and production from Hercules Offshore Inc. Enterprise purchased the items for a bid of nearly $24 million at auction.

Hercules' Gulf of Mexico fleet is comprised of 13 so-called jack-up rigs used for oil exploration and production in shallow waters, many of which are older, outdated models from the 1970s and early 1980s. The Hercules trust had to market the assets to a specialty niche market because the assets were only suitable for work in the Gulf of Mexico.

With the acquisition by Enterprise, the former Hercules fleet of aging rigs will now be refurbished at the Amfels plant at the Port of Brownsville, increasing the potential of providing more jobs for laid-off Amfels workers.