Phillips 66 Uses Jones Act Waiver to Book Foreign Tanker as U.S.-Flagged ‘Armada’ Heads for Florida

Petroleum tankers pictured at the Port of Tampa Bay, September 13, 2017. Photo: Port Tampa Bay

Phillips 66 has taken advantage of the U.S. Department of Homeland Securities’ temporary Jones Act waiver applying to tankers in response to fuel shortages in the southeast United States in the wake of Hurricanes Harvey and Irma, Argus Media reported Thursday. 

The foreign charter comes as an “armada” of at least 26 U.S.-flagged vessels carrying millions of gallons of fuel and other refined products head for Florida, the American Maritime Partnership said. 

According to Argus, Phillips 66 used the waiver to charter the Marshall Islands-flagged Nave Jupiter, a 49,999 dwt oil and chemical tanker built in 2014. As of Thursday, the vessel was docked near Phillips 66’s Alliance refinery in Lousiana after departing from Houston on September 9, AIS data showed. 

The company confirmed it chartered the vessel this week but declined to provide further details on the charter, the Argus report said. 

Phillips 66 is believed to be the first company known to use the administration’s limited Jones Act waiver.

The waiver was first approved by DHS acting secretary Elaine Duke on September 8 in response to severe disruptions in the oil supply system resulting from Hurricanes Harvey and Irma. It is specifically tailored to the transportation of refined petroleum products, including gasoline, diesel, and jet fuel in hurricane-affected areas.

This week Duke extended the waiver through September 22 and expanded its geographic scope to include shipments from New York, New Jersey, Delaware, Maryland, Pennsylvania, New Mexico, Texas, Louisiana, Mississippi, Alabama, and Arkansas to Florida, Georgia, South Carolina, North Carolina, Virginia, West Virginia, and Puerto Rico. 

The Jones Act requires that cargo shipped between points in the U.S. be transported on vessels that are built in the United States and owned and crewed by American citizens. However, the temporary waiver allows oil and gas companies to use foreign-flagged vessels to move petroleum cargoes within the stated areas.

Jones Act ‘Armada’

News of Phillips 66’s charter comes as U.S-flagged Jones Act tankers descend on Florida ports to relieve gasoline and diesel fuel shortages since the voluntary mass-evacuation of Florida ahead of Hurricane Irma. The shortages have been compounded by closed ports following the storm, as well as clogged roadways that led to the Florida Highway Patrol to start providing tanker truck escorts, not to mention remnant supply issues due to Hurricane Harvey in late August.

All major marine terminals in Florida have been reopening and discharging tankers since Tuesday, September 12, including Jacksonville, Port Canaveral, Ft. Lauderdale (Port Everglades) and Tampa Bay, and the ports have continued to prioritize the arrival of fuel tankers. 

On Friday, the American Maritime Maritime Partnership described an “armada” of approximately 26 U.S.-flag vessels have are currently headed for Florida with millions of gallons of fuel. The vessels are expected to arrive anytime between now and September 17

Florida-based Crowley Maritime Corp. reported Thursday that it had sent 18 Jones Act vessels to Florida, bringing a combined 2.75 million barrels of gasoline and 500,000 barrels of diesel fuel within an eight-day period to the state, Crowley said.

“Nothing is more important right now than the safety and security of our fellow Americans.  The men and women of the American maritime industry are working around the clock to respond swiftly and effectively to the needs of those impacted by Hurricanes Harvey and Irma. Our U.S. domestic fleet has the vessels and capacity to move goods to those areas hit by the storm,” said Thomas A. Allegretti, chairman of the American Maritime Partnership, the voice of the domestic maritime industry.

The last Jones Act waiver was issued in December 2012, for petroleum products to be delivered for relief assistance in the aftermath of Hurricane Sandy.

“Even as our own maritime employees and their families contended with the aftermath of these devastating hurricanes, our U.S. mariners and their vessels immediately responded to the needs of the nation. As the ports reopened, U.S. vessels were there to deliver fuel and essential cargos,” said Matt Woodruff of Kirby Corporation.  “As rescue and recovery efforts continue, our industry – like we have done in so many natural disasters before – is here to help those impacted get the supplies they need as they work to rebuild their lives and communities.”