FOREIGN MARINERS WORKING IN THE GULF OF MEXICO TAKING JOBS FROM AMERICAN CITIZEN SEAFARERSBackground:For more than ten years there has been a steady incursion of vessels from foreign nations into the U.S. Gulf of Mexico. While generally slow and limited up till 2005, the damage to the offshore energy infrastructure brought about by hurricanes Katrina and Rita caused that trend to rapidly accelerate with the requirement to make needed repairs. With the return of production in the Gulf back to pre Katrina levels, these vessels which were brought in are not leaving and in fact, more are arriving monthly. These vessels are foreign built, foreign flagged and manned by foreign nationals and as a result, a very substantial number of opportunities are being lost to American seafarers, American vessel operating companies and American shipyards. I firmly believe that this trend is contrary to the intent of the Outer Continental Shelf Lands Act (43 USC 1331), that it is harmful to the interests of the United States of America and that action needs to taken by the U.S. Congress to curb and ultimately reverse this trend. It is this very troubling dilemma that this letter hopes to bring to light.
Historically, the workboat fleet in the Gulf of Mexico was a developed by local boatmen in the years after WWII. Through the next three decades offshore drilling grew at a exponential pace and as a result, the workboat fleets as well so that by the mid 1980’s it numbered in the many hundreds of vessels of all sorts including supply boats, tug boats, crew boats, etc… The 1970’s were a particularly boom time for vessel owners and Gulf coast shipyards. One important point is that all of the vessels built for the OCS then were owned by U.S. citizens, constructed in the U.S., flew the U.S. flag, and were manned by U.S. seafarers. After the 1970’s boom years the Gulf workboat industry suffered deep suffering due to the steep industry downturn in mid 1980’s caused by the drastic drop in the price of oil and many vessel owning companies who had been in business for 30 years were forced into bankruptcy and their vessels sold off to work in other parts of the world. With a gradual increase in the price of oil and a drive by the major oil companies to explore in deeper waters, by the mid 1990’s the U.S. vessel operators began an aggressive program to build new supply vessels to meet the demands of working farther offshore and as a result today there is a sizable fleet of these type ships ranging from as small as 100 feet up to over 300 feet in length. The great majority of these vessels are less than 10 years old, are well equipped and use current technology to accomplish their mission. I do not believe there to be any risk to this sector by foreign interests as their sector is well protected by the Jones Act.
Beyond the carriage of cargo however, there is a fleet of service vessels designed and equipped to perform a number of specialized functions such as to support divers, remote operated vehicles (rov’s), lay pipelines, install floating platforms and all the supporting undersea equipment in what is know as subsea oil and gas production. In the past, this work occurred in the relatively shallow waters of less than 1000 feet and did not require very sophisticated vessels to do the needed tasks. In the past this work was done by U.S. vessels and labor. In today’s industry, the great majority of this type work happens in waters in depths ranging from 1000 up to 9000 feet. To accomplish the development of energy in such depths, the vessels need to be large and highly specialized. Since these vessels by design do not carry cargo or passengers, they fall into a category that does not require them to be Jones Act qualified nor in even U.S. flagged. It is within this sector of the industry that control is being lost to foreign corporations who are bringing a steady stream of the most modern and highly sophisticated specialty vessels and becoming well entrenched in the market. It is this trend that is so troubling to an American mariner like myself as I am loosing desirable employment for which I am fully qualified to do. It also is harmful to U.S. shipowners, shipbuilders, fellow American mariners and ultimately the interests of the U.S. as a whole which I will speak of in more detail later in this letter.
Vessels:Generally, the vessels I speak of in this letter fall into three broad categories. Ranging from largest to smallest are heavy lift/pipelaying vessels, subsea construction vessels and rov/dive support vessels. For the most part they are built in Northern Europe with Norway being the most common followed by the Netherlands. They are generally less than 5 years old and in some cases are entering the Gulf of Mexico for their first assignments after completion. All are sophisticated, are very specialized and capable for their unique functions. They use the most current methods of construction, equipping and outfitting. All are manned with foreign nationals with officers principally from Northern Europe and unlicensed rating from the Philippines, Indonesia or other Asian nationalities. It is important to note that these are not vessels being “dumped” into the Gulf being offered by their owners at artificially low charter rates. Rather, they are coming to the market at world scale charter rates which justify their owners to spend well over $100M for their construction. Charter dayrates of $150-200k for these vessels is not uncommon at all and the major offshore operators such as BP seem to be quite willing to pay the premium dayrates for those vessels.
Although this issue extends throughout the offshore industry, for the purposes of this letter only the subsea and rov/dive support vessels will be discussed since their introduction is the most recent and involve the greatest number. Prior to hurricanes Katrina and Rita the rov and dive support vessels tended to be U.S. flag offshore supply vessels converted to the more specialized work. For the most part these vessels provided the basic abilities required but little more and as the work to complete subsea oil production went into deeper waters a need for more capable vessels emerged. Some U.S. vessel operating firms recognized this need and contracted to have purpose built subsea vessels constructed starting in the latter 90’s. These vessels were built in U.S. yards and flew the U.S. flag. Oceaneering International and Global Industries are two firms who made this step and up until 2005 they were the only ones to have done so. Some offshore operations have since recognized the market potential for subsea vessels amd in the past three years a number of US flagged subsea vessels have been built or converted from existing supply vessels yet this number is small in comparison to the number of foreign vessels which have entered the Gulf of Mexico on a quasi permanent basis.
Below is a list of some of those foreign vessels working on charter to U.S. offshore contractors in the Gulf of Mexico. In some cases the vessels are directly time chartered by a separate American company and in some cases the vessels are owned by a foreign parent but operated by a U.S. based subsidiary performing contracts for a range of clients for their development activities on the OCS. This list is not to be considered all inclusive in any respect and that the total number of these ships operating in the U.S. Gulf of Mexico is growing each month. I base it on press releases and articles found in trade publications and by my own personal observations while working in the Gulf of Mexico. I am afraid to say that it is certainly incomplete and I would not be surprised if the final tally proved close to thirty of these foreign owned, operated, flagged and manned vessel working in the U.S. waters on the Outer Continental Shelf.
-CHARTERING/OPERATING COMPANY
-VESSEL NAME
-VESSEL FLAG YEAR BUILT VESSEL TYPE VESSEL OWNER
Oceaneering International, Houston TX
OCEAN INTERVENTION III
Norway 2005 Rov/dive/subsea support Island Offshore, Norway
Oceaneering International, Houston TX
OLYMPIC INTERVENTION IV
Norway 2008 Rov/dive/subsea support Olympic Shipping AS, Norway
Global Industries, Carlyss, LA
OLYMPIC CHALLENGER
Norway 200 Rov/dive/subsea support Olympic Shipping AS, Norway
Global Industries, Carlyss, LA
REM COMMANDER
Norway 2006 Rov/dive/subsea support REM Offshore, Norway
Canyon Offshore, Houston, TX
OLYMPIC TRITON
Norway 2007 Rov/subsea support Olympic Shipping AS, Norway
Canyon Offshore, Houston, TX
ISLAND PIONEER
Norway 2007 Rov/subsea support Island Offshore, Norway
Clough Offshore Ltd.
NORMAND CLIPPER
Norway 2000 Rov/subsea support Solstad Shipping, Norway
Phoenix International, Houston, TX
HAVILA PHOENIX
Norway 2008 Rov/dive/subsea support Havila Shipping, Norway
Veolia Specialty Services, Lafayette, LA
SIEM SWORDFISH
Norway 2007 Rov/subsea support Siem Offshore AS, Norway
Veolia Specialty Services, Lafayette, LA
NOR TIGERFISH
Singapore 2007 Rov/subsea support Nor Offshore, Norway
Veolia Specialty Services, Lafayette, LA
KINGFISHER
Vanuatu 1989 Rov/dive/subsea support Veolia Specialty Services, Lafayette, LA
Veolia Specialty Services, Lafayette, LA
VIKING POSEIDON
Norway 2009 Rov/dive/subsea support Eidesvik AS, Norway
Aker Solutions, Houston, TX
BOA SUB C
Spain 2006 Dive/subsea support BOA Group
Aker Solutions, Houston, TX
BOA DEEP C
Spain 2003 Dive/subsea support BOA Group
C&C Marine Technologies, Lafayette, LA
NORTHERN RESOLUTION
Norway 1999? Survey Support C&C Marine Technologies, Lafayette, LA
not known at this time
GULMAR FALCON
Panama 1975 Dive/subsea support Gulmar Offshore, UAE
not known at this time
GULMAR CONDOR
Marshall Islands 1976 Dive/subsea support Gulmar Offshore, UAE
CalDIve International, Houston, TX
KESTREL
Vanuatu 1976 Dive/subsea support CalDIve International
CalDIve International, Houston, TX
UNCLE JOHN
Bahamas 1977 Dive/subsea support CalDIve International
CalDIve International, Houston, TX
MYSTIC VIKING
Bahamas 1983 Dive/subsea support CalDIve International
Helix Energy Solutions, Houston, TX
CAESAR
Not available 2009 Pipelayer Helix Energy Solutions
Anadarko Petroleum, Houston, TX
BELFORD DOLPHIN
Singapore 2000 Drillship Fred Olsen Energy
Repsol E&P USA Inc., Houston, TX
STENA DRILLMAX
Not available 2008 Drillship Stena Drilling
not known at this time
SAFE CONCORDIA
Not available 2005 Accommodations Prosafe
Technip-Coflexip USA, Houston, TX
CSO DEEP BLUE
Bahamas 2001 Reel pipelayer Technip-Coflexip, France
Allseas USA Inc, Houston, TX
SOLITAIRE
Not available Not available Pipelayer Allseas
Heerema Marine Contractors, Houston, TX
BALDER
Not available 1978 Heavylift/pipelayer Heerema
Heerema Marine Contractors, Houston, TX
THIALF
Not available Not available Heavylift/pipelayer Heerema
You will plainly see that the vast majority of these ships are new or nearly new, virtually all built and flagged Norway and in my belief not one has a U.S. officer or seaman in its crew!
The law as it is currently written and interpreted:Both 43 USC 1356 and 33 CFR 141 address the nationality of both vessels and personnel employed on the Outer Continental Shelf. Generally, both mandate for US vessels and personnel be employed although they leave provision for the employment for foreign vessels and/or personnel to be used. What is not at all specified is what operating limitations, if any, are placed on these foreign vessels. It is this ambiguity that has lead to the present situation.
The exact text as found in 43USC1356 reads:
TITLE 43 > CHAPTER 29 > SUBCHAPTER III > § 1356
§ 1356. Documentary, registry and manning requirements
(a) Regulations
Within six months after September 18, 1978, the Secretary of the Department in which the Coast Guard is operating shall issue regulations which require that any vessel, rig, platform, or other vehicle or structure—
(1) which is used at any time after the one-year period beginning on the effective date of such regulations for activities pursuant to this subchapter and which is built or rebuilt at any time after such one-year period, when required to be documented by the laws of the United States, be documented under the laws of the United States;
(2) which is used for activities pursuant to this subchapter, comply, except as provided in subsection (b) of this section, with such minimum standards of design, construction, alteration, and repair as the Secretary or the Secretary of the Department in which the Coast Guard is operating establishes; and
(3) which is used at any time after the one-year period beginning on the effective date of such regulations for activities pursuant to this subchapter,
be manned or crewed, except as provided in subsection (c) of this section,
by citizens of the United States or aliens lawfully admitted to the United States for permanent residence.
(b) Exceptions from design, construction, alteration, and repair requirements
The regulations issued under subsection (a)(2) of this section shall not apply to any vessel, rig, platform, or other vehicle or structure built prior to September 18, 1978, until such time after such date as such vehicle or structure is rebuilt.
(c) Exceptions from manning requirements
The regulations issued under subsection (a)(3) of this section shall not apply—
(1) to any vessel, rig, platform, or other vehicle or structure if—
(A) specific contractual provisions or national registry manning requirements in effect on September 18, 1978, provide to the contrary;
(B) there are not a sufficient number of citizens of the United States, or aliens lawfully admitted to the United States for permanent residence, qualified and available for such work; or
(C) the President makes a specific finding, with respect to the particular vessel, rig, platform, or other vehicle or structure, that application would not be consistent with the national interest; and
(2) to any vessel, rig, platform, or other vehicle or structure, over 50 percent of which is owned by citizens of a foreign nation or with respect to which the citizens of a foreign nation have the
right effectively to control, except to the extent and to the degree that the President determines that the government of such foreign nation or any of its political subdivisions has implemented, by statute, regulation, policy, or practice, a national manning requirement for equipment engaged in the exploration, development, or production of oil and gas in its offshore areas.
The broad interpretation of this is that unless a vessel is carrying cargo or passengers from a U.S. land base to an offshore facility it need not be U.S. built or flagged even if in fact it is owned by a U.S. corporation. What is does required is that it needs to be manned with U.S. citizens or resident foreign nationals unless an OCS-B1 visa is obtained under the proviso that the foreign personnel the visas are needed for persons who have specialty skills or otherwise that qualified U.S. citizens cannot be found and hired. This situation commonly exists with oil drilling rigs and ships which work in the Gulf of Mexico. Virtually all are foreign built and flagged but they are owned by U.S. corporations and in keeping with the statute, U.S. citizen crews man them. These rigs are substantial in size and have correspondingly large personnel needs. With the need to hire so many U.S. citizens for their rigs, the various drilling companies have always maintained significant programs in the U.S. to recruit their personnel. They have been quite successful at this and there are virtually no non U.S. nationals working on the drilling rigs and ships in the Gulf of Mexico even though the provision is made to apply for the OCS-B1 visas by these companies..
By contrast the second condition which exists within the statute is when such a foreign built and foreign flagged vessel working on the OCS is owned and effectively controlled by a foreign corporation. In such a case no U.S. citizens are required in the manning of it. Here a gross contradiction occurs in that with two identical vessels one would require all U.S. manning and the other require no U.S. citizens in its crew regardless if such vessels are ultimately working on charter to the same U.S. energy company doing identical jobs but the only difference being where one was owned by a U.S. corporation and the other owned by a foreign corporation and only chartered to the U.S. entity. One can see that there is a disincentive for the U.S. corporation to use a U.S. vessel that has U.S. mariners as they have no reason to under the law. It is this gross contradiction that ultimately is causing many hundreds of jobs to be lost to U.S. mariners and business lost to U.S. vessel operators. I cannot believe that when this statute was written, that it was anticipated that foreign vessels would enter the U.S. Gulf of Mexico offshore industry on a long term and quasi permanent basis and that they would remain here with their foreign national crews fully preserved.
Yet this is exactly what the case is today and the U.S. side of the equation is coming out the looser. More and more the firms doing the specialized subsea work for the major oil companies are chartering the foreign vessels to accomplish the needed work and they are not requiring the vessel owners to replace the foreign manning of those vessels as they have no incentive or even reason to do so. The foreign owners want their nationals to run their assets which is understandable as an American vessel owner, it is natural that I would like to keep my vessel crewed with my fellow countrymen. However any American vessel owner wanting to work in the waters of the same countries that are sending their vessels to the Gulf of Mexico, that vessel owner would be required to replace their crew with that nation’s citizens if not being barred outright from working in that nation’s waters which is the case of Norway. In Norway where there is an almost total barrier to any non Norwegian vessel working in their offshore energy industry and I can say with full certainty that there is not one U.S. vessel working there today. With this in mind, I wish to call your attention to U.S. Coast Guard Navigation Vessel Inspection Circular (NVIC) #7-84 which is a guiding document used by Coast Guard Marine Inspectors when determining if a foreign vessel working in U.S. waters is in compliance with all applicable regulations. In 3.a.(1) is states:
(1) A foreign-flag, foreign-owned unit or a foreign-flag, American-owned unit may receive exemptions from the citizenship requirements if the unit is, or will be, under the effective control of foreign citizens (
unless the President determines that either the vessel's flag country, or the nation that the owners or charters are citizens of or incorporated within, are discriminating against American units by excluding U.S citizen and resident aliens from U.S. units engaged in offshore activities off its shore. If the latter, exemptions may be reciprocally denied or modified.) A foreign-flag, foreign-owned unit is exempt from the citizenship requirements. Such a unit must be more than 50% owned and controlled by a foreign citizen(s) or entity to be considered foreign owned, and the foreign owner cannot have a subordinate relationship to any U.S. citizen or entity. A foreign-flag,American-owned unit may receive an exemption if the unit is under a long term bareboat charter to a foreign citizen or corporation.
There are no opportunities for any American flag vessel or for an American maritime officer or seaman to work in Norway. In fact the licenses and seaman’s certificated issued by the U.S. Coast Guard to American merchant mariners are not recognized as valid in Norway or in any European Union nation. To my knowledge, only the UK will recognize a U.S. issued license but since there are few (if any) U.K. flag vessels working on the OCS, that issue is moot. Since all foreign nationals serving on vessels working on the OCS require an OCS-B1 visa, it is plainly easy to see that the provision found in the NVIC#7-84 is not being enforced by the Coast Guard and that the OCS-B1 visas are being issued without any effort made to determine if all provisions required to be met before the visas are issued. I have even run across employment ads being posted on the internet for mariners with exactly my particular credentials and qualifications yet after replying I received no word from the respondent. It just so happened that those are ads were placed by companies with foreign vessels in the Gulf and that by running them, they were satisfying the requirement to say that they had tried. I very seriously doubt that the officials issuing the OCS-B1 visas made any attempt to verify when they were told that there were no qualified U.S. citizens replying to their solicitation. This occurs frequently and is on the face of it both deceitful and dishonest.
Resultant harm:The harm resulting from this situation to the U.S., it’s vessel owners and operators, its shipbuilders, its manufacturers of maritime equipment, to American workers and their families is substantial and includes:
1. employment opportunities for U.S. seafarers on state of the art specialty vessels in the Gulf of Mexico with resultant loss of income and consequent spending, and the loss of professional experience to further develop skills in completing offshore oil projects
2. the loss of employment opportunities to skilled U.S. shipyard labor with the same resultant losses in income and consequent spending plus loss of further opportunities for improving their skill level in shipbuilding.
3. the loss of income and FICA taxes which would be collected by the Federal Government which would result from more American seafarers and shipyard workers earning good wages.
4. the loss of business opportunities to U.S. vessel owners and operators with resultant loss of profits which could be reinvested into more U.S. vessels.
5. the loss of business opportunities to U.S. shipbuilders who could use the profits they earn to reinvest into expanding and modernizing their facilities.
6. the loss of business opportunities to U.S. manufacturers of the components used in the building and outfitting of these ships.
7. the loss business taxes which would be remitted to the Federal Government on the profits earned by all concerned U.S. businesses that are currently being excluded from this business opportunity.
8. the cumulative loss of all the above to U.S. energy security and defense since all are applicable to maintaining a strong naval, maritime transportation and supply of U.S. controlled oil. All of which are critical to the defense of our Nation. The more we become dependant on foreign equipment and men to access our offshore resources, the less control we have over them
9. loss of employment opportunities for American mariners which results in a decreased pool of potential reserve crewmembers to man the Ready Reserve Fleet should that fleet need be mobilized in time of National Emergency. Many reports have pointed to a shrinking pool of certified U.S. merchant mariners as a weak link in our defense mobility. To rely strictly on the deepsea cargo fleet to maintain this pool is not adequate. To develop a second pool of officers serving this offshore fleet will significantly augment this Nation’s maritime reserve force and as a result, is very much in the interest of the U.S.
As you can see, this is a serious issue with serious implications which involves a grave potential risk and significant losses to our Nation’s economy if left to continue unchecked.
What should happen:Unfortunately, since any direct violations by these foreign vessel owners are murky and that rash action might provoke a backlash from the major oil companies who are now relying on these foreign vessels to develop their offshore prospects, a methodical approach is needed which includes:
1. The Subcommittee should commission the Government Accountability Office to begin a thorough investigation of this matter and issue a report to the Congress.
2. Hearings before the Subcommittee should be considered.
3. The Federal Government should issue a clear policy on this subject and declare that all work on the U.S. Outer Continental Shelf to be strictly domestic trade within the U.S. It should further appoint one single branch of the Administration to act as the regulatory agency to enforce that policy. I do not believe that agency should be the U.S. Coast Guard as they have already shown that all functions not related to Homeland Security take a backseat role in their operations. Rather since the issuance of the OCS-B1 visas are critical to these foreign vessel owners, that the U.S. Customs and Immigration Service become the watchdog agency in this matter. Obviously, any such agency would require additional funding to take on this role, but I cannot believe that the amount would be a significant burden on the budget and the increase income taxes collected from American workers may very well offset if not even exceed that added expense.
4. The statute 43USC1356 and regulation in 33CFR141 should each be rewritten by the Congress to close this glaring loophole and drastically restrict the use of foreign officers and seamen working in the U.S. Gulf of Mexico on vessels operating under any flag.
5. The both the companies that charter and those that own these foreign vessels working on charter in the Gulf of Mexico need to be told by the U.S. Customs and Immigration Services that the further issuance of OCS-B1 visas for their crews will be steadily decreased by 33% each year for the next three years starting in 2009 which gives them three full years to recruit U.S. nationals to operate their ships. Vessels already working on the OCS should not be grandfathered to allow them to continue operating with all foreign crews.
6. The issuance of Transportation Workers Identification Cards (TWICs) should only be issued to foreign nationals on a highly restricted basis. Currently, the rules for the issuance of TWIC cards has been changed to allow issuance of the cards to foreign nationals who originally were prohibited from obtaining the credentials.
7. Financial incentives should be offered to companies that change their vessels registries to the U.S. flag such as accelerated depreciation schedules.
8. Conversely, companies what resist changes should be levied with financial penalties such as steep duties or license fees for operating a foreign flag vessel in U.S. waters.
9. The industry in conjunction with the Federal Government should begin a campaign to make young men and women aware of the opportunities in the offshore sector and to provide them the needed specialized training in the course of their studies. This should happen with particular emphasis at the six Marine Academies where cadets can be assigned to offshore subsea vessels as part of their at sea training program. Maritime academy students are generally very desirous of serving at sea upon graduating but find entering the deepsea sector of the industry often filled with barriers towards entry and promotion. Due to this, many end up not serving at sea and as a result their value as serve as reserve merchant marine officers is severely diminished should they be needed in wartime. It is exactly that reserve capability that keeps these schools funded and subsidized by the Maritime Administration.
10. Regulations governing the ability of US citizen mariners to obtain licenses to qualify them to serve as officers on those vessels who’s crews are ordered to be replaced with Americans under these recommendations.
11. Unions should make agreements with the Offshore Marine Service Association (OMSA) which represents existing US flagged vessel companies in the Gulf of Mexico not to make attempts to organize their mariners in order to ease their resistance to these proposed changes being made. OMSA is very strongly opposed to any unionization to occur in the offshore industry but it is also in their interest to not have more and more jobs go to foreign companies.
12. Lastly, the ultimate policy of the Federal Government should be to order the replacement of all foreign built vessels working on the Outer Continental Shelf with U.S. built ships. This will provide maximum benefit to the US economy, and both its military and energy security.
In closing, I wish to thank you for taking the time in reading this letter and to give due consideration to the facts as I know them and have stated for you today. I hope that it has made a heretofore unseen problem come into the light and become visible to yourself and as an extension, to hopefully the other members of the subcommittee. I believe that the magnitude of the problem effects a broad spectrum of constituents from both American labor and industry. There are many parties who have a stake in this and I am hopeful that there would be unified support from all the disparate elements that are obviously losing a considerably great amount with the status quo as it exists today and stand to lose more as the problem will become even greater in the future unless action is taken.
.jpg)
