• What is a deepwater port?
• Who has the authority to issue licenses for deepwater ports?
• What is the license granting process and who is involved in it?
• How and where do companies get information to apply for a Deepwater Port license?
• What happens if a company does not accept the conditions specified for the license?
• How long does the license-granting process take?
• What is the role of the states in the licensing process?
• How does the public get involved?
• How is liquefied natural gas (LNG) different from natural gas?
• What are the different types of vaporization technologies that are commonly used to process LNG?
• What is Open Rack vaporization?
• What is Submerged Combustion Vaporization?
• What is Intermediate Fluid Vaporization?
• What is Shell and Tube Vaporization?
• What is the Integrated Precooled Single Mixed Refrigerant process of liquefaction?

What is a deepwater port?

The Deepwater Port Act of 1974 initially defined the term "deepwater port" to mean “non-vessel, fixed or floating manmade structures that are used as ports or terminals for the loading, unloading, or handling of oil for transportation to a State.” The 2002 amendment to the Deepwater Port Act (DWPA) expanded this definition to include facilities constructed at sea, which are used as terminals to transfer natural gas, usually received in the form of Liquefied Natural Gas (LNG) from LNG carriers for delivery to deepwater ports, onshore storage facilities, and pipelines.

In 2012, the definition for the term deepwater port was revised to address LNG exports. A deepwater port is currently defined as “any fixed or floating manmade structure other than a vessel, or any group of such structures, that are located beyond State seaward boundaries and that are used or intended for use as a port or terminal for the transportation, storage, or further handling of oil or natural gas for transportation to or from any State…”

Section 101 (a) of the Consolidated Appropriations Act, 2016 repealed a former restriction on exporting crude oil. This repeal now permits crude oil to be exported from the United States through deepwater ports.

The term “deepwater port” includes all associated components and equipment, including pipelines, pumping stations, service platforms, mooring buoys and similar features or equipment to the extent they are located seaward of the high-water mark.

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Who has the authority to issue licenses for deepwater ports?

The authority for the issuance, transfer, amendment, or reinstatement of a license for the construction or maintenance of a deepwater port rests with the U.S. Secretary of Transportation. However, the Secretary delegated this authority to the Administrator of the Maritime Administration on June 18, 2003, by Federal Register (68 FR 36496). The delegation of authority was updated on April 5, 2016, in the Federal Register (81 FR 19840).

The Maritime Administration, acting on behalf of the Secretary, is required to confer with a number of Federal and State agencies and the public and must also obtain approval from the Governor of the Adjacent Coastal State or States.

The U.S. Coast Guard, part of Department of Homeland Security, has delegated authority for the application processing and environmental review functions (62 FR 11382) and the Administrator of the Pipeline and Hazardous Materials Safety Administration, which is also part of the Department of Transportation, has authority by delegation for the establishment, enforcement, and review of regulations concerning the safe construction, operation, or maintenance of pipelines on Federal Lands or the Outer Continental Shelf (49 CFR §1.97(3)49 CFR §1.53(a)(3)).

What is the license granting process and who is involved in it?

The Maritime Administration, working in conjunction with the U.S. Coast Guard, administers the review process for granting deepwater port licenses and coordinates/consults with approximately two-dozen Federal and applicable State agencies to reach a Record of Decision. The Maritime Administration is also charged with evaluating and determining the ability of the applicant to meet the financial requirements of the Deepwater Port Act, including the ability to secure the required financial bonding for the costs of the project. The U.S. Coast Guard is instrumental in developing the environmental and marine navigation aspects of the application review process and in confirming compliance with all environmental regulations as stipulated by National Environmental Policy Act.

The Department of Commerce’s National Oceanic and Atmospheric Administration and the National Marine Fisheries Service also have responsibilities to make recommendations regarding potential impacts of the proposed facilities on the environment in accordance with the National Environmental Policy Act, to which the port facilities are subject. The U.S. Fish and Wildlife Service is responsible for protecting and conserving migratory birds, endangered species, marine mammals and fish. The Bureau of Safety and Environmental Enforcement governs the safety, environment, and energy resources in the ocean. Applicants for Federal licenses are required to consult with the U.S. Fish and Wildlife Service and the Bureau of Safety and Environmental Enforcement to comply with certain environmental and ocean management regulations.

The Maritime Administration -- working through the Bureau of Ocean Energy Management (which governs right of ways and lease block issuance) and the Department of Energy -- provides insight into the benefits and consequences of the proposed facilities to the nation’s energy needs, and in issuing a National Interest Determination in accordance with the Natural Gas Act of 1938. The U.S. Department of State provides counsel in the reconciliation of safety and environmental requirements with respect to international obligations.

Ultimately, the Maritime Administration has the final approval authority and responsibility to issue the Record of Decision and License. The Record of Decision, which is issued regardless of approval or disapproval, must be issued within 90 days of the last public hearing, which by statute, must take place within 240 days after the public has been notified of a complete application. Subsequently, the License is issued by the Maritime Administration and spells out the terms and conditions that the applicant must accept in order to own, construct, and operate the deepwater port in accordance with the Deepwater Port Act.

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How and where do companies get information to apply for a Deepwater Port license?

Information on how to apply for a deepwater port license is outlined in Title 33 of the Code of Federal Regulations (CFR) under Part 148. The details of each subpart are described below.  Additionally, 33 CFR Parts 149 and 150 provide deepwater port design, construction and operational requirements, which should be addressed in the deepwater port license application.

• 33 CFR Part 148, Subpart A contains general information regulations for the licensing, construction, design, equipment, and operation of deepwater ports under the Deepwater Port Act of 1974, as amended.

• 33 CFR Part 148, Subpart B describes how to apply for a license to own, construct, and operate a deepwater port.

• 33 CFR Part 148, Subpart C prescribes the requirements for processing an application for a deepwater port license.

• 33 CFR Part 148, Subpart D concerns the license for a deepwater port and the procedures for transferring, amending, suspending, reinstating, revoking, and enforcing a license.

• 33 CFR Part 148, Subpart E activities that are involved in site evaluation and pre-construction testing at potential locations for deepwater ports.

• 33 CFR Part 148, Subpart F provides procedures for requesting exemptions from a requirement in this subchapter. It is noted that the Maritime Administration and the Commandant of the U.S. Coast Guard coordinate in evaluating requests for exemption.

What happens if a company does not accept the conditions specified for the license?

The Secretary may issue a license outright with no special conditions, deny the license, or issue a license subject to certain conditions, which are specified in the license. If the company does not accept the conditions listed in the license, it may advise the Maritime Administration that it will not accept the license, thus foregoing the opportunity to own, construct, and operate the proposed deepwater port.

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How long does the license-granting process take?

The project milestones of the application process have mandatory deadlines and operate on a 356-day ‘clock’ that begins when the applicant submits a deepwater port license application. The Maritime Administration, the Coast Guard, and other Federal and State agencies evaluate newly-submitted applications and work with applicants to meet rigorous review requirements as well as the expectations of State regulators and the general public. This process results in either a Notice of Application in the Federal Register or a formal rejection by the Maritime Administrator.

Once the application has gone through the Federal, State and National Environmental Protection Act review processes, it reaches the Record of Decision stage, which requires the Maritime Administrator to consider nine (9) criteria to approve an application for a license. These nine criteria include:

1. Financial responsibility,
2. Compliance with relevant laws, regulations and license conditions,
3. National interest,
4. International navigation,
5. Impact on the marine environment,
6. National environmental laws,
7. Consultation with the Secretaries of the Army, State and Defense,
8. Governor of the Adjacent Coastal State, and
9. Consistency with Coastal Zone Management Program.

When a favorable Record of Decision is issued, it will stipulate certain conditions the applicant must comply with in order to receive an official deepwater port license. Upon certification of acceptable compliance with applicable laws, requirements and conditions, the Maritime Administration will grant a deepwater port license.

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What is the role of the states in the licensing process?

Adjacent coastal states, acting through their governors, have a veto power over all Deepwater Port Act projects. States must also demonstrate compliance with the Coastal Zone Management Act.

How does the public get involved?

The public is informed of the entire process through publications in the Federal Register, as well as the posting of all public documents on the Federal Docket Management System: www.regulations.gov. The National Environment Policy Act (NEPA) process, as well as other Federal statutes (e.g., the Coastal Zone Management Act) also provides for public participation. Each Federal Register notice will indicate opportunities for public involvement. The public is able to participate in the initial scoping meeting to determine which potential impacts are most important to consider during the NEPA process. Following issuance of a draft Environmental Impact Statement, or an Environmental Assessment, the public can comment on the environmental documents as well as attend public hearings. The final environmental report will include responses to public and agency comments.

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How is liquefied natural gas (LNG) different from natural gas?

LNG, or liquefied natural gas, is natural gas in liquid form. Natural gas is cooled at an onshore (or offshore) liquefaction facility, or onboard a special purpose built ship with a liquefaction system until it is liquefied at minus 260 degrees Fahrenheit (-161 degrees Celsius) for transport via highway, rail, or vessel. Upon reaching its destination, LNG may be heated and vaporized back into natural gas for use by the consumer.

What are the different types of vaporization technologies that are commonly used to process LNG?

Several common types of vaporization commonly used are Open Rack Vaporization; Submerged Combustion Vaporization; Intermediate Fluid Vaporization; and Shell-and-Tube Vaporization.

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What is Open Rack vaporization?

Open Rack Vaporization is a type of technology that uses the heat from a continuous supply of processed water to regasify LNG and produce natural gas. For offshore terminals, seawater provides the supply of process water. Seawater at ambient temperature is pumped through a series of heat exchanges, treated with an oxidizer (e.g., sodium hypochlorite) to prevent fouling from marine growth and is discharged back to the source at a cooler temperature. Vaporization effectiveness depends on seawater temperature, which must be at least 46 degrees Fahrenheit and preferably warmer. This technology produces no combustion-related air emissions except for those related to pumping equipment. Because of the large volumes of water used, protecting the source and receiving waters is essential to the design and use of Open Rack Vaporization intake and discharge.

What is Submerged Combustion Vaporization?

Submerged Combustion Vaporization is a highly efficient, bath-type vaporization technology where the liquefied natural gas (LNG) passes through submerged steel tube bundles. The heat source used to warm the process water comes directly from jetting combustion gases into the bath (with the combustion process fueled by 1.5 to 2.0 percent of the LNG cargo). Submerged Combustion Vaporization uses an open flame to heat the process water. In order to neutralize acidic conditions, the water must be treated with a caustic compound, which requires safeguards in transportation, storage, handling, and use. This technology requires a considerable amount of space, an open flame, and high fuel usage.

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What is Intermediate Fluid Vaporization?

This closed-loop technology uses an antifreeze-type fluid, such as ethylene glycol or propane, referred to as the heat transfer fluid (HTF). Seawater flows through tubes in the bottom of a large boiler to heat the HTF. This fluid passes through a shell-and-tube vaporization unit to regasify the LNG and then moves to a second heat exchanger where it condenses before being re-boiled. This two-heat exchanger arrangement requires a large amount of space.

What is Shell and Tube Vaporization?

Shell and Tube Vaporization (STV) technology uses a natural gas-fired heat exchanger or boiler in which tubes containing Liquefied Natural Gas pass through a counter-current of heated water or glycol/water. The natural gas to heat the water or glycol/water is extracted from the send-out from the system’s vaporizers. The burning of natural gas results in NO_x and other air emissions. STVs can also be designed to use seawater as a heat source, in an open-loop system. STVs are suitable for use on floating platforms or ships that lack the stability of a fixed platform. The Neptune LNG and Northeast Gateway deepwater ports employ this type of vaporization.

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What is the Integrated Precooled Single Mixed Refrigerant process of liquefaction?

The Integrated Precooled Single Mixed Refrigerant (IPSMR) process of liquefaction is a procedure that uses a proprietary blend of nitrogen, methane, and other light hydrocarbons as a refrigerant to liquefy natural gas. The FLNGVs that employ this process use air, rather than seawater, as the cooling medium for both the liquefaction process and the on-board generation of electrical power during normal operations. Additionally, these FLNGVs produce their own demineralized water, freshwater, and potable water for this process and other requirements. The Delfin LNG deepwater port will use the IPSMR as its liquefaction technology.

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