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Offshore energy industry navigating 100-year-old US law

Section 27 of the U.S. Merchant Marine, sponsored by Senator Wesley L. Jones and enacted in June 1920, requires vessels traveling between any two U.S. points to be U.S.-manufactured, -owned, -flagged, and -crewed (with some exceptions). This has become a stumbling stone for the offshore energy industry 100 years after the law was enacted, and even more so now that the offshore wind developers are gearing up for construction.

The offshore wind sector in the United States, with construction of several wind farms to take off over the coming several years, has driven some shipowners to building Jones Act-compliant transport and installation vessels. Meanwhile, the country’s oil & gas sector recently asked the Federal Government to temporarily waive the law so the U.S. producers could more easily move their products within the country.

According to a recent report from Competitive Enterprise Institute (CEI), there are also no LNG tankers in the U.S. under the Jones Act and, as for LNG production and usage, Puerto Rico is affected by the Jones Act and is importing LNG from Russia, France and Belgium. Puerto Rico had asked the government for a ten-year waiver so it can import LNG from the mainland U.S. instead, the report said, adding that Puerto Rico is entirely reliant on foreign oil and other energy sources due to the law.

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