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New legislation introduced for inland US waterways

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LNG Industry,

The ‘Waterway LNG Parity Act of 2015’ has been introduced by the US Senators, Bill Cassidy and Michael Bennet. The act would ensure that excise taxes on LNG for marine transportation on inland waterways are levied at a rate that is consistent with their energy output relative to diesel and gasoline respectively.

The current system puts LNG use at a disadvantage in inland waterways, despite being a cleaner, cheaper energy source.

Cassidy said: “It takes about 1.7 gal. of LNG to provide the same amount of energy as a gallon of diesel. Those who use LNG to power marine vessels would have to pay 50 cents in tax for the same amount of energy contained in a gallon of diesel fuel that is only taxed at 29 cents – that doesn’t make sense.

“By ensuring equal tax treatment for LNG, it encourages its use and its production – benefiting Louisiana’s economy and workers.

Bennet said: “Natural gas is a growing part of Colorado’s diverse energy industry, and this bill recognises the shift to alternative fuels in across transportation technologies.

“Providing parity to LNG for marine transportation – just as we recently did for cars and trucks – creates an opportunity to grow this market and encourages the use of domestically produced natural gas as a cleaner burning transportation fuel.”

The legislation has been supported by a number of prominent industry leaders, including: Matt Godlewski (President of NGVAmerica); Andrew J. Littlefair (President and CEO of Clean Energy Fuels Corp.); Lynn Lyon (President of Energy Connects); Scott Salmon (Senior Advisor at the Shell Oil Company); James Burns (President and CEO of Blu LNG); Steve Cittadine (President, Storage and Fuels, for AGL Resources); Greg Roche (VP Sales and Marketing for Applied LNG); and David Ludlam (Executive Director of West Slope Colorado Oil and Gas Association).

Godlewski said: “NGVAmerica commends Senators Bill Cassidy, M.D. (R-LA) and Michael Bennet (D-CO) for introducing the Waterway LNG Parity Act of 2015. This common-sense legislation would remove another barrier to the greater utilisation of clean-burning, low-cost domestic natural gas in the transportation sector by levelling the playing field for the taxation of LNG fuel used in marine vessels operating on inland waterways in the US.”

Littlefair said: “LNG has proven to be a viable fuel alternative in the over-the-road market. It's much cleaner, costs less and comes from the US. If given the chance to be on parity with diesel, it will prove to be the same in the marine application as well."

Lyon said: “In Texas, there is strong interest and activity related to natural gas powered shipping, and we applaud Senators Bill Cassidy, M.D. (R-LA) and Michael Bennet (D-CO) for introducing the Waterway LNG Parity Act of 2015."

Salmon said: “The marine industry holds great promise for increased utilisation of clean, affordable, and abundant natural gas. Eliminating the disparity that currently exists between LNG and diesel fuel for marine use on inland waterways will put the two fuels on a competitive level and be consistent with the equalised tax treatment of LNG and diesel for highway use.”

Burns said: “The US is now the number one producer of natural gas in the world, and American businesses and consumers continue to take advantage of low-cost natural gas in the transportation sector. Blu LNG applaud Senators Bill Cassidy, M.D. (R-LA) and Michael Bennet (D-CO) for introducing the Waterway LNG Parity Act of 2015.”

Cittadine said: “Pivotal LNG supports equalising the tax on LNG for inland waterway use. The excise tax for highway use was recently changed to tax LNG at the same rate as diesel. That modification made a huge difference in the trucking industry. Pivotal LNG believes that fuels should compete based on commodity cost and not be disadvantaged by an outdated tax code. The Waterway LNG Parity Act of 2015 addresses this long-standing issue in the maritime industry.”

Roche said: “Taxing LNG at a higher effective rate than diesel builds a barrier to using LNG in the marine industry. Tax policy should not penalise cleaner burning and lower carbon LNG. The Waterway LNG Parity Act of 2015 is a vital step to levelling the playing field for LNG.”

Ludlam said: “The US has the most efficient and robust natural gas transportation system in the world. We support this bill to create additional demand for natural gas, which has the potential to benefit producers nation-wide. Natural gas as a marine fuel has a dual benefit of cleaner air in our harbours and more drilling in western Colorado in the decades to come.”

Edited from press release by David Rowlands

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