Supply Chain News / Risk & Compliance / Ocean

Congress Examines Tankers

June 27, 2012
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The Subcommittee on Coast Guard and Maritime Transportation, chaired by U.S. Rep. Frank LoBiondo (R-NJ), will meet on Wednesday, June 27, 2012 to review the process used to determine the availability of U.S.-flagged vessels during the summer 2011 drawdown of crude oil from the Strategic Petroleum Reserve (SPR) and what steps are being taken to improve that process.

The SPR is the federal government’s reserve supply of emergency crude oil. It is stored in salt caverns which were built by the Department of Energy (DOE) deep within massive salt deposits at four sites under the Texas and Louisiana coastline. With a maximum capacity of 727 million barrels, it is the largest stockpile of government-owned crude oil in the world.

SPR oil transported by water between points in the United States must be carried on U.S.-owned, -flagged, -manned and -built vessels, if such vessels are available.

The President has the authority to draw down the SPR upon finding that there is a severe energy supply interruption. On June 23, 2011, President Obama announced the U.S. and its partners in the International Energy Agency (IEA) would release a total of 60 million barrels of oil into the world market to offset the disruption in the oil supply caused by unrest in Libya. In doing so, the U.S. pledged to release 30 million barrels of oil from the SPR.

Subsequently, DOE indicated there would be a blanket waiver of the Jones Act for vessels seeking to move SPR oil, which was met with strong adverse reaction from the U.S.-flag maritime industry. DOE then dropped the language providing for the waiver. Of 45 SPR oil shipments, 44 were carried out on foreign vessels which received individual waivers. Wednesday’s hearing will examine the process by which Jones Act waivers are granted in the event of an SPR drawdown.

For more information on Wednesday’s hearing, click here.

A live webcast of this hearing will be available at http://transportation.house.gov.

WITNESSES:

Panel I

  • The Honorable John D. Porcari, Deputy Secretary, U.S. Department of Transportation

Panel II

  • Mr. Thomas Allegretti, President and CEO, American Waterways Operators testifying on behalf of American Maritime Partnership

     
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