After three days of near media hysteria, the disabled multipurpose Russian cargo ship Simushir docked in Prince Rupert at 3am on Monday morning having been ocean towed by the 4,300 HP Barbara Foss and delivered to Smit for safe berthing with a pair of tractor tugs. The vessel had drifted off the west coast of Haida Gwaii for 18 hours before CCGS Gordon Reid was able to put up a tow line to the ship on Friday evening and slowly tow the Simushir a safe distance from shore. The CCGS Sir Wilfrid Laurier and USCGC Spar were also sent to the scene to provide back-up had it been required. If all goes to plan, the Sumishir will complete repairs and sail on the weekend.
The provincial government this week introduced new tax legislation for LNG projects.The tax rate on net income will be 3.5%, effective for taxation years beginning on or after January 1, 2017. During the period when net operating losses and the capital investment are being deducted, a tax rate of 1.5% will apply and is creditable against the 3.5% tax. In 2037, the LNG income tax rate will increase to 5% which in the words of the government “ensures that proponents have time to build a strong foundation in the communities in which they operatebefore the full extent of the tax is applied”. In addition, to encourage investment, the new tax framework will include a BC Corporate Income Tax Credit available to any LNG income taxpayer that has a permanent establishment in BC. This will be calculated based on the natural gas acquired for an LNG facility and will have the effect of reducing the provincial corporate income tax rate from 11% to as low as 8%.
The province has also this week introduced legislation designed to make potential LNG export facilities “the cleanest LNG facilities in the world” There are three main components to the policy:
Based on a review of other countries, BC is also implementing new interim ambient air quality objectives for nitrogen dioxide and sulphur dioxide for all new and expanding industrial facilities that are consistent with the benchmarks.
In response, Mr. David Keane President of the BC LNG Alliance representing the majority of major project proponents, issued a statement:
“LNG proponents appreciate the government revisiting its original tax structure. We believe there must be a fair return for British Columbians for the sale of their natural resources, while ensuring a stable fiscal policy so our industry is able to compete globally now and over the long term. This tax, along with other taxes we will pay have to strike the right balance that enables British Columbians to get fair value for their resource, but also recognize the huge technical and financial challenges of very large and complex projects with significant risk.”
“ BC is a high cost environment, for these projects to be economically viable, the LNG tax must be considered in conjunction with the overall fiscal framework, which includes other taxes, availability of skilled labor resources, constructing pipelines across two mountain ranges, global LNG market trends, and other fiscal and regulatory issues.” To understand how the tax impacts individual projects, journalists are encouraged to contact individual proponents.”
The Chamber’s Business of Shipping presentation team was in action in Calgary this week at the invitation of the Canadian Association of Petroleum Producers (CAPP). Stephen Pyne, Peter Swanson, Christian Waldegrave, Paul Hexter, Daryl Raibl, Kevin Obermeyer and Stephen Brown provided eight hours of introduction to the world of shipping to a group of about 50 representatives from across the oil industry. Thanks go to the team for a great job.
It was announced this week that Oldendorff Carriers has joined the prestigious World Ocean Council. With the company’s Green Ships program and more than 40 new vessels expected in the next 2-3 years, the company’s Managing Director, Thomas Weber, stated, “Oldendorff is pleased to become a member of the World Ocean Council. The WOC has created an international cross-sectoral forum for ocean industry collaboration on sustainability that doesn’t exist elsewhere.” Oldendorff has already participated actively in WOC events, such as the recent WOC Business Forum on Ocean Policy and Planning held in New York City, 28-30 September.
The World Ocean Council (WOC) mandate is to bring together the diverse ocean business community to collaborate on stewardship of the seas, improve ocean science in support of safe and sustainable operations, and educate the public and stakeholders about the role of responsible companies in addressing environmental concerns.
Global Container Terminals (GCT) has entered its four terminals, GCT Vanterm, GCT Deltaport, GCT New York and GCT Bayonne operating in the Port of New York and New Jersey into the Green Marine environmental certification program. “Joining Green Marine aligns with our company’s strategic priority to grow our business responsibly,” commented Stephen Edwards, President & CEO of GCT. “Our collaborative partnership with stakeholders is what makes GCT an industry leader. Taking part in this program is our commitment not to simply implement new procedures within our own facilities, but to share best practices.”
Rumors that the federal government plans to reduce the number of Arctic patrol vessels to be built by Irving Shipbuilding are being played down by the yard which says it remains confident the company will be building six such vessels. The original indication was for between six and eight vessels but this looks more like a maximum of six even through the specifications have been modified to keep costs down. Construction is due to begin in Q3 2015 and complete in 2022.
Congestion in the Port of Los Angeles appears to be worsening with accusations that each industry sector is taking a narrow view of the problems rather than working in unison to reach solutions. The port’s Executive Director appealed this week for “shipping lines, terminal operators, labor, truckers, railroads, equipment providers and the port authorities to meet as a single industry to talk about these unique opportunities.” The ports of Los Angeles and Long Beach this week reported respective increases of 9% and 7.3% in total container volumes in September compared to September of 2013. Part of the problem is seen to be the PierPass system which charges $133 per FEU for a day gate transaction and results in heavy traffic at night but comparatively light traffic on the day shift. The pressure is also on for the PMA and ILWU to conclude their contract negotiations which have now been dragging on for four months.
The International Chamber of Shipping has warmly welcomed some late in the day progress on the implementation of the IMO Ballast Water Management Convention. At last week’s meeting of the Marine Environment Protection Committee (MEPC) the concerns of the marine industry were finally acknowledged with an agreement to start work immediately on a revision of the G8 type-approval guidelines to make the process for approving ballast water treatment equipment more robust. It was also agreed in principle, that any ship owner that has invested in first generation treatment equipment, type-approved under the current G8 guidelines, should not be penalized, provided that the equipment is operated and maintained correctly. The adoption by IMO of new Port State Control guidelines to this effect are seen as seen as crucial. While there are still details to be finalized, there has been a sigh of relief all round. Please see the attached formal draft resolution.
Also approved at MEPC 67 were environmental provisions in the Polar Code together with draft amendments to MARPOL to make the code mandatory. MEPC will now look to adopt these amendments when it next meeting in May 2015 with a view to the Polar Code itself entering into force on January 1 2017. View the MEPC 67 Draft Ballast Water Resolution.
Ocean carriers regularly servicing trade to the three West African countries worst hit by Ebola are continuing to provide service but are seeing declining cargo volumes as the economies of Liberia, Sierra Leone and Guinea take a major hit from the health crisis afflicting them. There is general recognition that the severing of trade ties to these countries would only delay any prospect of bringing the current emergency under control. Notwithstanding its status as a hub for piracy, Lagos is also no longer categorized as a risk given that Nigeria appears to have contained its own Ebola outbreak. Simple precautionary measures are in place for those boarding ships with only essential visitors allowed access and crews are being confined to their vessels as an obvious precaution.
Over the next nine weeks, the provincial government is asking British Columbians to consider and help identify transportation opportunities and priorities as it develops “B.C. on the Move”, a new 10-year transportation plan to build the economy and connect the province’s communities. Priorities will focus on growing the economy, moving goods and people safely and reliably, connecting and strengthening communities, and maximizing collaboration and investment with partners including First Nations, the federal government, local governments, and the private sector.
A very well attended half day workshop on LNG safety at the Vancouver Club this week was addressed by presenters Tony Bingham of Teekay, Capt. Roy Haakonson of BC Coast Pilots, Captains Khairul Osman and David Kyle of Pacific NorthWest LNG and Calum McClure of CryoPeak. With an attentive audience ranging from the Mayor of Prince Rupert to a team of UBC engineering students, the whole range of issues related to LNG handling safety, vessel design and construction, preparation for LNG traffic on the coast, the key considerations that are incorporated into plans for Pacific NorthWest LNG and the development of safe practices for LNG bunkering were all subjects covered in some detail. Thanks again to the presenters for a job well done.
In order to overcome disruption to fish habitats and the potential for marine mammal disturbance related to the company’s Prince Rupert project environmental review, Pacific NorthWest LNG has proposed the construction of a 1.6 km long suspension bridge to minimize the project’s environmental impact. The company has budgeted around $11-billion for the Lelu Island export terminal as part of a potential $36-billion overall budget to take the project forward. The two other key modifications to previous plans are moving a proposed housing camp for construction workers off Lelu Island to Port Edward and eliminating the need for extensive dredging along the shallow waters of Agnew Bank. The bridge would connect with a 1.1-kilometre-long trestle/jetty to a deep berth location in Chatham Sound and thereby completely avoid the environmentally sensitive Flora Bank. The 24 metre wide bridge would be paved for vehicle access and would carry pipelines connecting the plant to the vessel loading dock.
The federal government has this week announced a $20 million three-year pledge to fund the University of Victoria’s Smart Ocean Initiative, an oceanographic data collection program designed to support Canada’s development of a World-Class Tanker Safety System. The announcement was made at the Vancouver Aquarium by Transport Minister Lisa Raitt. Oceans Network Canada was launched in 2006 and is primarily funded by the federal government and IBM Canada. The program’s website describes one of the organization’s key long-term goals as being the search for a “deeper understanding of how large-scale climate-related changes are impacting British Columbia’s waters.”
Canadian Federal Transport Minister, Lisa Raitt, and B.C. Transportation and Infrastructure Minister, Todd Stone, this week jointly announced a new model for the port drayage sector. The provincial government proposes to legislate retroactive rate regulation on the sector and appoint a Container Trucking Commissioner, who will assume responsibility for all Truck Licensing System licenses in place following the planned reforms by Port Metro Vancouver to be announced at the end of November 2014. The Commissioner, when appointed, will be supported by an advisory committee. The imposition on industry of retroactivity is proving to be highly controversial.
Mr. Robert Dick will assume the position of Regional Director General, Pacific Region, for Transport Canada effective November 3, 2014. After embarking on his public service career in Manitoba at Western Economic Diversification Canada, Mr. Dick spent nine years at the Privy Council Office, first as director of operations in Economic and Regional Development Policy Secretariat, and then as Director of planning in the Priorities and Planning Secretariat. Before joining TC in June 2013 as Director General, Air Policy, Mr. Dick was director general, National Cyber Security at Public Safety Canada, where he led the development and implementation of Canada’s first Cyber Security Strategy. Mr. Dick is a graduate of the University of Manitoba, where he earned a master’s degree in Political Studies, with a major in International Relations.
The Port of Portland has approved plans for Canpotex, through its Portland Bulk Terminals subsidiary, to invest up to $140 million in new equipment and infrastructure to improve handling efficiency of the company’s specialty white potash products. The combination of a new shiploader, an upgraded conveyer system, improved control system technology and a new storage building is expected to enable shorter turnaround times for both the Canpotex dedicated fleet of rail cars and improved vessel loading productivity. Canpotex is a joint venture of three Saskatchewan potash producers: Agrium, Mosaic and PotashCorp.As most are aware, the company is also a shareholder in Neptune Terminals here in Vancouver and has just signed a lease agreement with the Prince Rupert Port Authority for the site of its new export facility in Prince Rupert.