Waiver Allows Freight Carrier to Convert Ships to LNG;
August 03, 2012
The waiver will give Totem Ocean Trailer Express (TOTE) four years to convert its two Alaska-bound ships to liquefied natural gas, instead of having to switch immediately to more costly fuel. The waiver will enable TOTE to develop and convert its two ORCA-class vessels, already the “greenest” ships in the U.S. domestic fleet, to the use of Liquefied Natural Gas (LNG) as their primary fuel source. The conversion will advance technology and accelerate the use of natural gas as a cleaner domestic energy source. The ORCA-class vessels ship between Tacoma and Anchorage. “When the Orca class vessels were delivered in 2003, they were purpose-built to serve the Alaska market and exceeded all regulatory and environmental standards. Post LNG conversion, the Orca vessels will again set a new standard for environmental responsibility. These changes will provide benefits to the residents of Alaska well into the 21st century,” said John Parrott, President of TOTE. To Totem Ocean Trailer Express’ knowledge, this will be the first conversion in the world of vessels of this type according to spokesperson John E. Graykowski. In addition to exceeding the sulfur reduction goals of ECA by 95 percent, when the TOTE ships are converted, they will achieve significant emissions reductions in all other categories of emissions: particulate matter (PM), nitrogen oxide (NOX) and carbon dioxide (CO2); making these ships among the cleanest in the world. More importantly, these broader benefits will continue to accrue and compound over the next thirty years or longer. The shore side LNG infrastructure that is to accompany TOTE’s plan may help other transportation industries in Puget Sound follow TOTE in converting to LNG. This could result in a significant increase in air quality throughout the Puget Sound region. U. S. Senator Mark Begich (D-AK) said, “I commend TOTE for its innovative thinking and applaud EPA and the U.S. Coast Guard for having the flexibility to come to this agreement regarding the North American Emission Control Area (ECA)." Begich said, “The permit will help protect Alaskans from increased shipping costs, expand the market for natural gas, and ultimately lead to even cleaner air than ECA requires. TOTE’s project will be the first major use of LNG as a ship fuel in the United States, and others in the maritime industry are sure to follow the path that TOTE will be blazing. “This means the effects of expanded natural gas use, more economical shipping and cleaner air, will be multiplied many times over," said Begich. Begich said, “I was happy to help bring the three parties together and to see the long-term impacts this kind of innovation can have. Instead of endless litigation, this is the kind of teamwork, creativity and regulatory flexibility that we truly need.” John Parrott, President of TOTE said, “Senator Begich’s passion for this project and constructive support of it, and the use of natural gas as a commercial maritime shipping fuel, were critical in forming this successful public/private partnership." "This is just the start to a project that will achieve significant environmental benefits. However, the real win is that the use of LNG greatly strengthens our ability to provide the highest levels of service to Alaska," said Parrott. U.S. Senator Lisa Murkowski (R-AK) believes the EPA still needs to provide greater flexibility to freight and cruise ship companies. The EPA was a major proponent of including waters off southern and southeastern Alaska in an international Emission Control Areas (ECA), despite the fact that the EPA has no Alaska-specific air quality data to justify the need for the stricter fuel requirements. “I have been urging the EPA for months to work with the freight and cruise ship industry to lessen the economic burden that the new ECA rules will impose on Alaskans,” U.S. Senator Lisa Murkowski (R-AK) said. “While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars. My fear is that the total costs of compliance will simply be passed on to Alaskans.” Since 2009, Murkowski has also been pressing EPA to reduce the burden on Alaska in order to avoid causing prices for consumer goods – which predominately arrive by ocean freight – and the cost of visiting Alaska by cruise ship to increase without good reason. Murkowski asked EPA to work with shipping companies doing business in Alaska on a waiver and asked the agency to accept a pilot project that would help both cruise ships and freight haulers to comply with the ECA at lower costs and would require specific air quality monitoring in Alaska. Murkowski sent a letter (attached) to President Obama on Tuesday, calling on the administration to address the issue of increased shipping costs associated with the implementation of the ECA. Prior to the waiver, the EPA's new emission control regulation would have required marine ocean carriers and cruise ships in Southeast and Southcentral Alaska to use fuel that meets 1-percent sulfur limits starting on Aug. 1. The new requirements would tighten even more to 0.1 percent sulfur beginning in 2015. The new regulations require marine cargo carriers and cruise lines to use costly and difficult-to-obtain low-sulfur fuel. Applying the new regulations in Southeast Alaska and Southcentral Alaska would have meant greatly increased shipping costs to Alaskans and to harm the state’s tourism sector. Freight carriers said EPA’s new requirements if enforced in Alaska would force them to raise their rates on goods being transported to the state. In July, the State of Alaska filed suit against the Secretary of State, Environmental Protection Agency (EPA), Department of Homeland Security, U.S. Coast Guard, and others, to block the federal agencies from extending the North American Emissions Control Area (ECA) to Alaska. The EPA and the Coast Guard, a division of the Department of Homeland Security, had planned to enforce the EPA’s new emission control regulations beginning Aug. 1, 2012. Totem Ocean Trailer Express (TOTE), one of Alaska’s largest shipping companies, estimated that moving to the required low sulfur fuel required by the new regulations would result in an increase of about 8 percent in TOTE’s total costs. The increased shipping costs would be passed on to Alaska consumers in the form of higher prices for goods, raising Alaskans’ already high cost of living even higher. “This is the first permit issued under the Annex VI, Regulation 3 program, and it is tangible evidence that when committed organizations join together, innovative solutions can result,” said Phil Morrell, Vice President of Marine and Terminal Operations at TOTE.
Edited by Mary Kauffman, SitNews
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