One of the developments in the aftermath of Hurricane Maria is the upgrading of Puerto Rican power plants to liquid natural gas generation. The problem with that is that there is a statute that restricts ship delivery of LNG that needs modification to work better for the island.
“It’s a law called the Jones Act,” said American Commitment’s Phil Kerpen. “It dates back to World War I. It was originally put in to sort of protect the domestic shipbuilding industry and continues to exist for the same reason. The shipyards insist on it. This law says that any cargo that travels between two domestic United States ports has got to be on a ship that is U.S.-built, U.S.-crewed and U.S.-flagged.”
The problem is no ship in the world that meets those criteria hauls liquid natural gas.
“A tanker that can carry liquified natural gas has not been built in the United States since 1980,” said Kerpen. “There are zero of them currently in service. There’s no prospect really, on the horizon of any being built, because it would be three or four times the cost of the current world price.”
That also means that no one who knows how to build such a ship works here anymore, either. That said, Kerpen admires the way that the waiver that is being asked for has been written.
“The genius of the way Puerto Rico wrote this waiver request is, they made it conditional,” said Kerpen. “They said, look, let us use a non-Jones Act tanker under a waiver, but, in the event that the U.S. shipyards actually build a tanker that can carry natural gas, our waiver would automatically expire and we’d switch to that ship.”
If a waiver is not obtained, Puerto Rico would have to pay around $100 million per year more for the privilege of purchasing foreign natural gas.