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Alaska editorial: The shipping news: EPA and TOTE reach deal on emissions

Posted: August 10, 2012 - 12:03am

This editorial first appeared in the Fairbanks Daily News-Miner:

The Environmental Protection Agency and a major ocean shipper to Alaska reached an agreement last week that could save Alaskans money and reduce pollution. But several questions about the deal remain.

Alaska’s congressional delegation and the state administration raised a warning late last month about the impending cost of new pollution rules for ships hauling goods to Alaska. The EPA, they said, would require ships to start burning low-sulfur fuel Aug. 1 because the agency had extended the North American Emissions Control Area, under an international maritime treaty, to waters off Alaska.

The state of Alaska sued to block the action. It said one shipping company reported the more expensive fuel would add 8 percent to the cost of hauling goods to Alaska, a cost that presumably would be passed on to Alaskans.

That shipper, Totem Ocean Trailer Express, reached an agreement with the EPA this week. The company has obtained a waiver that will allow it to continue burning high-sulfur fuel while it converts its two ships in the Alaska trade to cheap, clean-burning liquefied natural gas within four years.

In the long run, that sounds like a fine solution, but it raises several short-term concerns.

First, what will happen to shipping rates? Converting a ship to LNG sounds like an expensive operation. Will Fairbanks residents take a financial hit from this “solution”?

Second, is this option available to other shippers? If only TOTE is able to swing the deal, other shippers still will have to burn the more expensive fuel. That likely would mean shipping prices would increase, regardless of whether TOTE starts saving money on its new fuel.

Sen. Mark Begich, D-Alaska, who said he helped bring the EPA, U.S. Coast Guard and TOTE together to come up with the waiver, was optimistic in a news release Friday.

“The permit will help protect Alaskans from increased shipping costs, expand the market for natural gas, and ultimately lead to even cleaner air than ECA requires,” he said. “TOTE’s project will be the first major use of LNG as a ship fuel in the United States, and others in the maritime industry are sure to follow the path that TOTE will be blazing. This means the effects of expanded natural gas use, more economical shipping and cleaner air will be multiplied many times over.”

Sen. Lisa Murkowski, R-Alaska, was less encouraged.

“While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars,” she said. “My fear is that the total costs of compliance will simply be passed on to Alaskans.”

The waiver appears to have potential, but the proof will be in the pricing.

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Latitude58
14737
Points
Latitude58 08/10/12 - 07:52 am
6
6

Investments and costs

Interesting article.

Murkowski says that the costs of conversions will be passed onto Alaskans. But aren't the costs of pollution already being passed onto us?

Natural gas is far cheaper than diesel on a $ per unit energy basis these days. It also produces less CO2 and other pollutants. And Alaska has a lot of stranded NG. So this seems like a natural solution. I would expect that the savings in fuel costs would pay for the ship conversions. When I changed my boat from a two-stroke outboard to a 4-stroke outboard, the conversion paid for itself within a few years - same thing with the LNG conversion I would imagine.

My questions:

1. Will TOTEM be getting it's LNG from Alaskan sources? If so, where is the LNG plant?

2. Could we convert our ferries to do likewise?

Nice job, Senator Begich, on finding a cost effective, environmentally responsible solution that grows an Alaska industry. I wish Senator Murkowski would partner with him on this - bipartisan action goes a lot further in the Senate. We don't need political sniping between our own senators. And Don Young...well, whatever.

Jumpstart
551
Points
Jumpstart 08/10/12 - 09:21 am
3
4

Lat, thank you. Yes the

Lat, thank you. Yes the costs will be passed on to alaskans also in terms of health care costs for problems associated with increasing pollution, toxins etc....

Shame on Lisa Murkowski.

Lisa, step back and take good look at the whole picture will ya.

Alaskans also pay higher health care costs and Sean Parnell just can't see helping Alaskans out with this either, seeing hes decided not to implement health insurance exchange for our state.

Elections matter.

noroadfugtive
1378
Points
noroadfugtive 08/11/12 - 11:59 am
0
1

Good WorkNow...Natural Gas

Good Work

Now...
Alaska energy independence.

Natural Gas pipeline and treatment plant from the slope to Valdez with a local consumer branches at Fairbanks, Delta, Glen Allen, and to Anchorage from Fairbanks.

Note:
Nikiski is the only US port currenlty set up to Export LNG.
Valdez could be ready very quickly and is ice free.

How much $ to heat a house with Natural Gas??

An average home needs around 122,000 cubic feet of gas per year

At $7 per 1000 cubic feet, that's 122 * $7 = $854 for the year

At $9 per 1000 cubic feet, that's 122 * $9 = $1098 for the year.

Current NG price around is around 10$
Source: http//www.eia.gov/dnav/ng/hist/n3010us3m.htm

Source: http://www.alaskadispatch.com/article/alaska-lng-exports-asia-will-ultim...

The Nikiski plant is the nation's only operating LNG maker sanctioned for commercial exports. It was first authorized to send LNG to Japan in 1967 and has been doing so since the plant opened in 1969.

Last year, only nine loads of home-grown U.S. LNG arrived in foreign ports – eight sent to Japan and one to China. The total volume was 16.4 bcf, or an average of just 45 million cubic feet of gas a day. All of those shipments originated from the ConocoPhillips LNG plant in Nikiski, Alaska, that processes nearby Cook Inlet gas, not North Slope gas.

Wink Dinkerson
218
Points
Wink Dinkerson 08/12/12 - 07:12 am
0
1

It's nice to see political compromise

And good to hear TOTE will be transitioning from dirty diesel to the much cleaner natural gas. However, it's lame that our delegation challenged the law in the first place. The port of LA took the initiative to require low sulfur fuels back in 2005, for public health reasons. Alaska's the richest state in the union, but we can't afford it? How short sighted and selfish.

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