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Jones Act enchilada really was too big to swallow

Wed 17 May 2017 by David Foxwell

Jones Act enchilada really was too big to swallow

Back in March I speculated that the idea of banning international construction vessels from the Gulf of Mexico depended on where you were in the world.

If you happen to be a US-based owner of light construction vessels – of which there are a growing number in the US and more on order – you almost certainly wanted CBP to realign interpretations of the Jones Act in your favour. Only the other day, Harvey Gulf took delivery of the first of two subsea vessels scheduled for delivery to the company in 2017.

The company said the vessel has the capability to undertake field development activity and is the equal of any ship in the foreign fleet.

If like IMCA you looked at the big picture and the fact that the ruling would have left the Gulf of Mexico without other assets that US owners haven’t invested in, you probably breathed an enormous sigh of relief when the CBP withdrew the ruling.

Bodies such as IMCA warned of dire consequences. It says its members' clients – the oil majors – were concerned about the changes.

Even the API had serious doubts about an idea that could, it was claimed, see costs increase in the Gulf of Mexico at a time when the industry is desperately trying to reduce costs. Projects could be delayed, it says.

No detailed explanation of the decision to withdraw the notice was provided, but reports submitted to CBP by the likes of the American Petroleum Institute must have played a role.

If you read the submissions on the matter you realise just how complicated an issue it was. But when it comes down to it, warnings about job losses, disruption to the supply chain, and the potential for a slowdown in an already dire market probably won the day.

What will happen now isn’t entirely clear because of the rather opaque way that these decisions are reached and made public. The decision to revoke the ruling may be the end of the matter. It could be modified and resubmitted, or CBP may kick it into the long grass by addressing it as a rule-making issue, but for the time being that isn’t clear.

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