The United States Coast Guard Proposes New Guidelines for LNG Transfer During Bunkering Operations

The United States Coast Guard (USCG) has proposed new guidelines to govern the transfer of liquefied natural gas (LNG) and other alternative marine fuels during bunkering operations, warning operators that no transfers may proceed without prior risk assessment.

As disclosed, the CG-OES Policy Letter No. 01-25 provides guidance to Coast Guard Captains of the Port (COTPs) on investigating and overseeing the bunkering of vessels with alternative fuels within US jurisdiction, thereby introducing a framework for conducting risk assessment in the absence of ‘comprehensive’ regulations.

The fuels that the policy letter could apply to, beyond LNG, are methanol, ammonia, dimethyl ether, and liquefied petroleum gas (LPG), all of which have emerged as an ‘attractive’ option for maritime transport industry stakeholders looking to adjust their compasses to better align with global regulations, including those set by the International Maritime Organization (IMO).

According to the USCG, the overarching goal of these new guidelines is to mend the gaps in the existing US regulations, which are primarily focused on the bunkering of traditional petroleum-based fuels, and establish a model using current industry standards. As part of this, the USCG has placed emphasis on collaboration with local harbor safety committees as a means of leveraging local knowledge in tackling hazards and spotting potential stumbling blocks and risks.

As informed, in practice, the policy will mandate the submission of a bunkering proposal from the fuel supplier ‘well ahead’ of time, detailing the fuel type, vessel(s), facility, location, company involved in the operation, as well as the anticipated date ranges.

It is understood that if COTP members are not notified within ‘adequate’ lead time or if bunkering operations are not to be performed per the submitted risk assessment and final report, the operation itself can be halted.

The Tumultuous LNG Question

Since the second-time-in President Donald Trump took over the helm of the United States in January this year, the perpetual US LNG question was reopened. In March this year, following periods of tug-of-war within this landscape, liquefied natural gas gained once again regulatory support with the nation’s Department of Energy (DOE) doing away with the obstacle standing in the way of using LNG as a marine fuel to power ships.

The decision was described as a tool that could “streamline” the bunkering of this alternative fuel and make it more efficient and accessible. This came roughly a year after former President Joe Biden’s administration decided to pause pending approvals of liquefied natural gas exports to non-free trade agreement nations to review their environmental and economic impact.

Directly related to this, more recently, namely on July 25, Florida-representing Congresswoman Laurel Lee and Texas-representing Congressman August Pfluger unpacked the “Cutting LNG Bunkering Red Tape Act”, a bill said to codify the Trump-era DOE order clarifying that ship-to-ship (STS) transfers of liquefied natural gas used as a marine fuel are not considered exports under Section 3 of the Natural Gas Act, unless conducted in foreign waters.

Reflecting on this act, Congressman Pfluger stated: “This legislation permanently reverses one of these misguided policies to ensure American LNG can compete on the global stage by removing regulatory uncertainty and streamlining the use of it as a cleaner, more efficient fuel source for maritime transportation.”

“Liquefied natural gas is a more efficient, cleaner, and cost-effective energy source. My bill ensures that LNG bunkering is not hindered by red tape, so that ports in Florida and across the nation can continue to expand, drive job creation, and compete globally,” Congresswoman Lee concluded.