Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
July 29, 2014

LNG Export Boom Will Likely Leave Out U.S. Shipyards

When you think of U.S. shipbuilding, you may think of places such as Ingalls Shipbuilding in Pascagoula, Miss. building Navy destroyers.

But this week Rep. John Garamendi, D-Calif., made an effort to make American shipyards part of the growing momentum for export of U.S. liquefied natural gas.

According to the International Group of LNG Importers, the United States is on course “to become the world’s third largest LNG exporter by the end of the decade.”

When the House debated a bill to speed up Energy Department approval of applications to export LNG from U.S. terminals, Garamendi tried to attach amendments to require U.S. LNG exports to be carried on U.S. flag vessels or to require that federal regulators give priority to exporters who use U.S. flag vessels.

At the end of last year, the world LNG tanker fleet consisted of 393 vessels, with 113 on order. The dominant shipbuilders are Samsung Heavy Industries, Daewoo, Hyundai, and Kawasaki.

“Do you stand with American sailors and shipbuilders?” Garamendi asked on the House floor right before his motion to recommit the LNG export bill – with instructions to the Energy and Commerce Committee to report it back with his amendment attached – was defeated by a vote of 225 to 192.

On Monday, trying to persuade the Rules Committee to allow him to offer his amendments, the California Democrat said, “The export of this natural resource beyond North America will require hundreds, hundreds, of LNG tanker ships. These ships should be American built, with American crews.”

His amendment, he said, “would lead to an expansion of our shipbuilding industry which is clearly in the United States interest.”

Garamendi spokesman Matthew Kravitz said none of the legislation he offered this week “would have required that the vessels be built in the U.S. [just flagged in the U.S.], although that is a policy that he would certainly be open to in the future.”

Kravitz said Garamendi’s “efforts to require LNG be shipped on American vessels would create demand for a new domestic industry. The legislation he has offered would create the signal needed for American businesses to attract investment and begin building these ships.”

Bill Cooper, president of the Center for Liquefied Natural Gas, a trade association of LNG producers, shippers, terminal operators and developers, “The problem is there are no U.S.-flagged LNG vessels in operation anywhere in the world. There are no shipyards in the United States that are building LNG vessels.”

A requirement that U.S. LNG be carried on US-built ships “would essentially stop LNG exports from ever happening out of the United States until such time as a U.S. shipyard decided to try to build these things and could do so competitively with Korea and China, where LNG vessels are currently being built.”

Cooper added, “I don’t think you could start from scratch” building fleets of U.S.-made LNG carriers. The economic opportunity for exports from the United States “may not be there by the time the ships are ready,” Cooper said. “A lot of (LNG) supplies are coming on line in the next few years and if the U.S. can’t compete and deliver those supplies in the next four five years, we’re not going to be in the market.”

Now in his third term, Garamendi serves on the Transportation and Infrastructure Committee.

According to the Center for Responsive Politics, his campaign gets strong support from labor unions including contributions from the Seafarers International Union, which represents merchant mariners and the American Maritime Officers, the largest union of merchant marine officers.

The Rothenberg Political Report/Roll Call ratings say Garamendi has a safe seat for this November’s election.

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