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SCA Weekly Report | May 30 - June 3, 2022
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SCA Industry Impacts Survey
At the SCA 2022 Winter Meeting, the Industry Partners Committee recommended, and the SCA Board of Directors approved, a survey to solicit input from SCA members on the various impacts on the shipyard industrial base including resulting lingering COVID issues, supply chain disruptions, inflationary costs and federal budget uncertainty, among other industry concerns.
Member participation in this survey is critical to conveying these adverse impacts on shipbuilding, ship repairing, and the businesses that support and supply the shipyard industry. The results of the survey will be aggregated industry data points to assist SCA's efforts to advocate for the shipyard industrial base to the Pentagon, Administration, and Congress.
The survey should not take any longer than 5-10 minutes to complete, and all results will be blinded and aggregated. This means that all company information will remain anonymous and only viewed by the SCA team.
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House Armed Services Committee to Begin Work on FY23 NDAA Next Week
Work will kick off on the fiscal 2023 defense authorization, with four House Armed Services subcommittees set to mark up H.R. 7900, the FY23 National Defense Authorization Act, on Wednesday and three on Thursday next week.
The Senate is expected to mark up their version of the bill on June 15th.
Both chambers will be marking their authorization bills without topline numbers for DoD from the Appropriations Committees. Negotiations between House and Senate appropriators is still ongoing.
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New Coast Guard Commandant Fagan Sworn In; Sets Priority on Policy, Personnel
Adm. Linda Fagan pledged her “highest priority as commandant will be to transform our policy management system” in remarks following her swearing in as the 27th leader of the Coast Guard and the first woman to lead a branch of the armed services.
Speaking Wednesday at the change-of-command ceremony in Washington, D.C., she said, referring to the men and women serving in uniform in the Coast Guard and the service’s civilian employees, “without you, steel doesn’t move.”
Fagan, who served as vice commandant since June 2021, said during her tenure as commandant she intended to give them “policy, training [and] support to succeed” as the Coast Guard modernizes its cutters, boats, aircraft and shore facilities.
One of the service’s highest shipbuilding priorities is the expansion of the icebreaking fleet from two now to six, a mix of heavy and medium cutters.
Fagan’s first assignment following her commissioning was to USCGC Polar Star (WAGB-10), a heavy icebreaker where she was the only woman aboard. Polar Star, commissioned in 1976, remains in service and is the nation’s only heavy icebreaker.
President Joe Biden said at the ceremony the Coast Guard will be called on to play “an increasingly prominent role” in maritime security. He added the nation’s leaders “will be calling on the Coast Guard more” for a wide array of missions.
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America's Next Wind Powerhouse: The Gulf of Mexico?
The Gulf of Mexico has spent eight decades as one of the nation’s prime petroleum hubs, home to thousands of rigs, platforms and other structures that drill, store and ship fossil fuels. Now the Biden administration is reviewing 30 million acres of Gulf waters near Texas and Louisiana for potential wind turbines — a development that could dovetail with proposals to generate other clean energy sources, such as hydrogen.
Challenges to potential Gulf wind projects persist, including the region’s frequent hurricanes and billions of migratory birds. The area’s typical wind speeds are also lower than those off the Atlantic Coast, the biggest haven for U.S. offshore wind projects. But as East Coast states jockey to attract offshore wind developers and the jobs the new industry promises, Gulf proponents believe their region is ready to join the green push. The wind projects would help meet President Joe Biden’s goal of building 30 gigawatts of wind power capacity by 2030 — enough power for more than 10 million homes.
The federal agency tasked with planning and leasing offshore energy projects, the Interior Department’s Bureau of Ocean Energy Management, outlined a schedule last year for seven offshore wind auctions across the country by 2025 — including in the Gulf of Mexico, with Texas and Louisiana as the states with the region’s highest wind capacity.
U.S. Proposes California Offshore Wind Sale
Late last week, the U.S. Department of the Interior announced a proposal to hold an offshore wind lease sale in U.S. federal waters off of California. The proposed sale would be the first-ever offshore wind lease sale on U.S. west coast. The Bureau Offshore Energy Management (BOEM) will issue a Proposed Sale Notice (PSN) that will include three proposed lease areas in the Morro Bay Wind Energy Area off central California, and two proposed lease areas in the Humboldt Wind Energy Area off northern California. The areas total approximately 373,268 acres for potential wind development and are expected to generate 4.5 gigawatts of wind energy which would be enough to power more than 1.5 million homes.
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Biden is Running out of Options to Tame Soaring Gasoline Prices
President Joe Biden has vowed to do everything in his power to fight record-setting gasoline and diesel prices, but he’s up against a stark reality: there are few options for taming the surge. While Biden has unleashed an unprecedented amount of oil from the US Strategic Petroleum Reserve, other tools at the administration’s disposal would come at the expense of environmental protection and have little effect on fuel costs stoked by strained crude supplies and a global shortage of refining capacity.
Biden’s massive release of as much as 180 million barrels of oil from emergency stockpiles over six months, on top of earlier drawdowns, may have limited crude price gains, but the bigger problem now is a lack of global refining capacity to transform oil into gasoline and diesel. The US lost more than 1 million barrels of refining capacity when fuelmakers shut some of their least profitable plants during the pandemic. The administration is exploring whether some shuttered capacity could come back online. At 97.4%, Gulf Coast refiners are already running harder than ever for this time of year.
White House Names New Port and Supply Chain Envoy
The Biden administration has selected a retired four-star U.S. Army general to lead efforts to improve cargo flow at U.S. ports and untangle other slowdowns in the sprawling domestic freight supply chain. The White House and the U.S. Dept. of Transportation announced on May 27 that Army Gen. Stephen R. Lyons, former head of the U.S. Defense Dept. Transportation Command, was named Port and Supply Chain Envoy to the administration's Supply Chain Disruptions Task Force. Lyons succeeds John D. Porcari, who was deputy DOT secretary in the Obama administration from 2009 to 2014 and and later an adviser to the Biden transition team. Porcari has been the port and supply chain envoy since last August.
ONE Orders Ten Large Containerships in South Korea and Japan
Japanese shipping line Ocean Network Express (ONE) has placed an order for ten large containerships with delivery in 2025. Shipbuilding contracts for the vessels have been signed with South Korea’s Hyundai Heavy Industries and Nihon Shipyard of Japan. Each shipyard will construct five vessels. Currently, ONE ranks as the world’s seventh largest liner operator with a fleet of 205 ships and 1.5 million TEU, according to Alphaliner. The company’s orderbook stands at 34 ships.
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If you have any questions, please do not hesitate to contact the SCA staff.
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