gCaptain Article: U.S. Would Need to Build At Least 100 LNG Carriers to Transport LNG

The article on the main page: http://gcaptain.com/u-s-would-need-to-build-at-least-100-lng-carriers-to-transport-lng-exports-gao-finds/#.VmgmY75OnbM

The United States would need to build at least 100 LNG carriers if the government were to require that all U.S. natural gas exports be transported to overseas markets on U.S.-built-and-flagged ships, according to a new report by the U.S. Government Accountability Office.

According to Department of Energy (DOE) and industry expectations, in the next few years the United States is expected to change from a net importer of natural gas to a net exporter, with those exports destined for different regions of the world, especially Asia. Currently there are five large-scale U.S. liquefaction facilities under construction across the nation with a projected capacity to export more than 12 percent of U.S. natural gas production in 2020. The report says that the liquefaction capacity at these five facilities has already been sold mainly through 20-year contracts, with the customers responsible for transporting the LNG to export markets.

But if Congress were to pass proposed legislation that would require the use of American LNG carrier to transport these exports, the U.S. will need 100 or more LNG carriers and between 4,000 and 5,200 mariners to operate them, the GAO found. Based on the current capacity of U.S. shipyards, the GAO says that this many ships would likely take over 30 years to build and they would cost two to three times more than similar vessels built in Korean shipyards, as well as being more expensive to operate.

“Based on GAO analysis, these costs would increase the cost of transporting LNG from the United States, decrease the competitiveness of U.S. LNG in the world market, and may, in turn, reduce demand for U.S. LNG,” the GAO said in its report, titled Implications of Using U.S. Liquefied-Natural-Gas Carriers for Exports.

The report added that no new LNG carriers have been built in the United States since before 1980 and there are currently no LNG carriers registered under the U.S. flag.

The report added:

“Additionally, limited availability of U.S. carriers in the early years of construction may decrease the amount of LNG that could be exported from the United States for a period of time, leading customers to seek alternate sources. Further, a reduction in the level of expected U.S. LNG exports could impact the broader U.S. economy, including potential job and profit losses in the oil and gas sector.”

Not yet being in the industry, I can’t say anything of value on this, but how do you all feel about it? I like the idea of more American mariner jobs. Should there be a temporary amendment to allow a percentage of foreign built vessels just for LNG transport?

The thing I don’t like about an amendment is it may persuade people to allow more and more foreign built vessels. In turn, it may begin a collapse of a vital part of the US maritime industry.

Current US law allows foreign built US flag ships In foreign trade. I see no reason to Change the law.

I would favor allowing US companies to buy or build foreign LNG ships to be flagged US (current law) and requiring that 50 percent of US LNG exports are carried on US flag ships. This would be fair to our trading partners, and it would allow the quick build up of a US flag LNG fleet.

We need to do something similar with oil rigs and offshore construction vessels.

The government should provide favorable financing to US companies to accomplish this.

[QUOTE=tugsailor;174955]Current US law allows foreign built US flag ships In foreign trade. I see no reason to Change the law.

I would favor allowing US companies to buy or build foreign LNG ships to be flagged US (current law) and requiring that 50 percent of US LNG exports are carried on US flag ships. This would be fair to our trading partners, and it would allow the quick build up of a US flag LNG fleet.

We need to do something similar with oil rigs and offshore construction vessels.

The government should provide favorable financing to US companies to accomplish this.[/QUOTE]

this is an excellent answer that would actually work…thanks

A South Korean LNG carrier costs about $250m to build. An American built one would reportedly cost cost 2-3 times more than Korean, so that would be $500m-$750m x 100 carries brings a total cost of $5bn-$7.5bn… doesn’t seem that feasible…

[QUOTE=tugsailor;174955]Current US law allows foreign built US flag ships In foreign trade. I see no reason to Change the law.

I would favor allowing US companies to buy or build foreign LNG ships to be flagged US (current law) and requiring that 50 percent of US LNG exports are carried on US flag ships. This would be fair to our trading partners, and it would allow the quick build up of a US flag LNG fleet.

We need to do something similar with oil rigs and offshore construction vessels.

The government should provide favorable financing to US companies to accomplish this.[/QUOTE]

Why would there be a need for financing? A foreign owner will just setup or use any of the available proxy owner companies working MSP, add an LNGC to their ‘US’ fleet and then away they go. It’ll all be foreign owners actually, but it will look US. How about instead, any U.S. prospective owner allowed to use foreign build must commit to one new US-build each three-five years with end goal to construct 100 LNGCs. Constructing ships is how to make sustained benefit. Your suggestion just leads to some mariner and shoreside jobs, like MSP. But how great would it be if the U.S. yards were on tap to eventually build sixty vessel MSP fleet instead of just paying foreign owners for the use forever?

The first shipment of US export LNG has arrived in Klaipeda, Lithuania to save them from the peril of being dependent on Russian gas imported by pipeline: http://www.foxbusiness.com/markets/2017/08/21/us-delivers-first-shipment-gas-to-ex-soviet-state.html

Fox Business News report that the US based tanker Independence docked there to deliver this first shipment.
The truth is that the Independence is a FSRU that is permanently moored in Klaipeda to receive, store and regasify LNG. It has been there for some time now, receiving LNG from various sources: https://en.wikipedia.org/wiki/FSRU_Independence
But then again, facts has never been of major importance to Fox News.