It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Sunday, September 10, 2023
PANDEMIC DAY TRADERS
'Dumb Money' writers discuss their GameStop movie premiering at TIFF
Ben Cousins, BNN Bloomberg
The “meme stock” craze of 2021 is getting the Hollywood treatment.
In 2021, amateur investors bought mass shares of video game retailer GameStop and other struggling stocks, pitting them against the Wall Street executives who had shorted them. The GameStop stock then skyrocketed, leaving hedge fund managers losing billions while making headlines worldwide.
At their January 2021 peak, GameStop shares sold for more than US$81, compared to about $5 at the start of the month.
“This movie takes you on a wild ride,” Rebecca Angelo, one of the writers and executive producers of the movie, told BNN Bloomberg in a television interview. “You can walk out of the theatre realizing – as we all do – that there are big problems, terrible economic inequality all around us, but there is hope.”
Angelo wrote and produced the movie with Lauren Schuker Blum. The pair were coworkers at the Wall Street Journal at the time of the meme stock craze.
“We were baffled by what was happening, alarmed by it, intrigued and we immediately started researching it and saw it was much bigger than just about GameStop, it was actually about a movement happening,” Schuker Blum said in the interview.
The movie follows the recent releases of other business films “BlackBerry,” “Tetris” and “Air,” but while those movies took liberties with stories that inspired them, Angelo and Schuker Blum said they worked hard to get as many of the details as they could.
“It was really important for us to get the story right,” Schuker Blum said. “As reporters, we really wanted to get the facts out there, but also tell the story in a really entertaining way, because it is this wild ride.”
The film premieres at TIFF on Sept. 8, with a second public screening on Sept. 10.
Just eight exchanges handle 90% of all crypto trading volume
Vildana Hajric, Bloomberg News
Sep 8, 2023
In cryptocurrency markets, liquidity is uber-concentrated and has become more so over time, with nearly all of it found on just eight exchanges.
The top eight platforms account for nearly 92 per cent of depth — a measure of all bids and asks within 10 per cent of the mid price — and 90 per cent of volume, according to Kaiko. Binance, the largest crypto exchange, has this year accounted for more than 30 per cent of global market depth and more than 60 per cent of worldwide trade volumes. Besides Binance, the list also includes Coinbase, OKX and Huobi, among others. For context, there are hundreds of crypto exchanges, according to data from CoinGecko, though many of them see negligible or no trading at all.
“Highly concentrated crypto markets are both a good and bad thing. There is undoubtedly a shortage of liquidity, which when spread thin across many exchanges and trading pairs can exacerbate volatility and disrupt the price discovery process,” wrote Kaiko’s Dessislava Aubert and Clara Medalie in a note.
“Natural market forces have inevitably led to increasing concentration of this liquidity on a handful of platforms, which benefits the average trader. However, highly-concentrated crypto markets can create points of failure for the industry (ex: the FTX collapse),” they added.
Hoards of investors who collectively lost billions of dollars fled the market following last year’s implosion in prices and the downfall of a number of previously standout firms within the industry. Many crypto analysts have been paying close attention to measures of liquidity and trading volumes. That’s because moves, one way or the other, can be exaggerated when trading volumes are thinner.
In August, crypto trading volumes declined to the lowest level of the year, another sign of waning investor interest and a surprising one given the slew of positive news that the industry has seen come out, including exuberance over a potential Bitcoin ETF. The combined monthly volume of so-called spot and derivatives trading fell 11.5 per cent to $2.09 trillion, and was the second-lowest monthly total since October 2020, according to data compiled by CCData.
Volatility in crypto markets had remained subdued over the summer, with Bitcoin trading within a narrow range for months. However, the coin’s seven-day volatility this week hovered around three-month highs after it saw a couple of days of more outsize moves. Bitcoin on Friday traded little changed at around $25,800.
“The jumpy market over the last few weeks signals a changing volatility environment in BTC. This summer saw unusually low volatility, and while prices have yet to see any meaningful breakouts following the Aug. 17 push lower, climbing daily volatility reincentivizes participation from vol-thirsty day traders,” wrote K33’s Anders Helseth and Vetle Lunde in a note.
With assistance from Olga Kharif.
Virgin Galactic launches third commercial flight in step toward space tourism
Loren Grush, Bloomberg News
MOJAVE, CA - DECEMBER 7: Virgin Galactic unveils its new SpaceShipTwo spacecraft at the Mojave Spaceport on December 7, 2009 near Mojave, California. The eight-person VSS Enterprise, named after the Star Trek ship of the same name, is the first of a series of space-planes for customers of Virgin Galactic who have paid around $200,000 for a suborbital flight into space. British entrepreneur Sir Richard Branson is financing the spacecraft and aerospace designer Burt Rutan is building it through The Spaceship Company, a joint venture of Scaled Composites and Virgin Group. (Photo by David McNew/Getty Images) , Photographer: David McNew/Getty Images
Virgin Galactic Holdings Inc. said it launched its third commercial flight Friday morning, sending another crew of paying tourists to the edge of space and back.
The flight, called Galactic 03, marks the latest milestone for the venture, founded by billionaire Richard Branson, as it strives to reach a monthly cadence of launches for its commercial business.
The mission took off at 8:34 a.m. local time, the company said in a post on social media site X, with Virgin Galactic’s VMS Eve carrier aircraft hoisting the space plane VSS Unity into the sky from Spaceport America in New Mexico. Roughly 45 minutes later, Unity dropped from the aircraft and climbed to the edge of space, the company said in another X post.
On board this trip were two company pilots, three customers and one employee support astronaut, Virgin Galactic said.
After the flight, Virgin identified the passengers as U.S. real estate investor Ken Baxter, entrepreneur Tim Nash from South Africa and Adrian Reynard, an engineer from the United Kingdom. The company also released a short video of the astronauts floating while in space.
Galactic 03 comes a month after the company’s previous flight, which sent its first private tourists to space. Virgin Galactic kicked off commercial spaceflight operations in June with Galactic 01, a research mission for the Italian Air Force — a feat that came nearly two decades after the company’s founding.
Virgin Galactic’s shares closed down 2 per cent in New York. The stock is down 34 per cent so far this year.
“Glory Days”
The next generation of training platforms for U.S. mariners is being launched at Philly Shipyard.
(Article originally published in July/Aug 2023 edition.)
Maritime cadets have been trained on 50- and 60-year-old ships in the U.S. for too many decades. Well, that’s about to change as obsolete ships at the nation’s state maritime academies are being replaced with five next-generation training ships known as National Security Multi-Mission Vessels (NSMVs).
In June, Philly Shipyard launched the first of these vessels, the Empire State, for SUNY Maritime. Construction of the second and third vessels – for Massachusetts Maritime Academy (2024) and Maine Maritime Academy (2024) – is currently underway with Texas A&M Maritime Academy (2025) and California Maritime Academy (2026) ships next on the agenda.
The program is being sponsored and paid for by the U.S. Maritime Administration (MARAD) and marks a new beginning and a new era for U.S. maritime. It took me back to the old Bruce Springsteen hit, “Glory Days,” as a reminder of the good things to come. These vessels will pave the way for a renewal of the U.S.’s maritime leadership and train the next generation of merchant officers.
MARAD’s mission is to foster and promote the development of the U.S. maritime industry to meet the nation’s economic and security needs. Part of this mission entails educating the next generation of mariners through oversight of the U.S. Merchant Maritime Academy and the six state maritime academies. It’s also developed the Military to Mariner program, trade union-sponsored schools, community college certifications and high school maritime career path programs.
MARAD manages the Ready Reserve Force and the National Defense Reserve Fleet and has oversight of the deepwater Cargo Preference laws, which dictate that 50 percent of the gross tonnage of all civilian government-generated cargo – meaning cargoes procured, furnished, or financed by the U.S. – be transported on U.S.-flagged ships. And 10 percent of DOD cargo is also transported by U.S.-flagged operators.
MARAD also manages commercial Sealift programs that sustain the international trading fleet available to meet DOD requirements. A total of 72 ships are authorized stipends from the Maritime Security Program, Tanker Ship Program and Container Ship Program.
Today, only about two hundred U.S.-flagged deepwater vessels are available for cargo preference, which must also be in proximity and available to transport the cargo. Meanwhile, there are thirty-four U.S.-flagged companies registered with MARAD with vessels ranging from container ships and tankers to general cargo, ro-ro, tugs and barges that are available to support government mandates.
A Change in the Weather
The decline in the size of the U.S. deepwater fleet can be traced back to 1981 when Ronald Reagan arrived in Washington with a quixotic strategy for reducing the size and scope of the federal government.
The OMB pointed him in the direction of the maritime subsidies program, which had supported U.S. flag operators for nearly 50 years prior with a total of $10 billion. Meanwhile, the U.S. Navy had contracted out spending of over $90 billion during the next five years on building and repairing ships.
Reagan then appointed Harold E. Shear, a retired admiral, to head the Maritime Administration. Not only did Shear believe that maritime subsidies were both exorbitant and ineffective, he agreed with anti-subsidy factions that U.S.-flagged vessels could be built overseas for more than fifty percent less than in the states. He then went about gaining temporary approval for operators to build U.S. vessels overseas.
But it was clear to the U.S. maritime sector that the temporary provision had an ominous undercurrent, which put the Jones Act in the crosshairs of laissez-faire proponents. The shipyards, labor unions and operators could see the long game was to dismantle maritime laws. They either stood together or would have to deal separately with the consequences.
They stood together, and today more than 40,000 Jones Act vessels are considered the world's most modern fleet. U.S. cabotage also supports more than 650,000 American jobs and contributes about $1.5 billion in economic impact for the country. The civilian merchant fleet is considered a core strategic reserve of maritime power, which can transport logistical supplies for the military in wartime.
Evolution of the NSMV
The National Security Multi-Mission Vessel is a bold initiative of fixed-price construction, dating back to 2014 when Congress appropriated $5 million to develop a design. MARAD then hired Herbert Engineering to develop the design with various stakeholders including the maritime academies, Coast Guard and Navy, and the Federal Emergency Management Agency.
The NSMV ships are an off-the-shelf design with technologies currently employed on commercial ships. In 2017, then-Secretary of Transportation Elaine Chao allocated $300 million from DOT’s authorization budget to get the project underway. Senators Patty Murray (D-WA) and Susan Collins (R-ME) were influential in ensuring the training ship program was fully funded for all the ships.
Then-MARAD Administrator Rear Admiral Mark Buzby appointed Kevin Tokarski, Associate Administrator for Strategic Sealift, to develop a cross-agency team to implement congressional direction for a commercial entity to construct the ships. The Federal Acquisition Regulations (FAR) were in play for issuing a contract for the vessel construction manager (VCM), which mandated they had previously built Jones Act-compliant vessels.
TOTE Services met all the requirements and was selected through a competitive procurement to be the VCM for the project. TOTE was required to bid the complete design bids competitively, and Philly Shipyard was contracted to build the ships owned by MARAD.
While the “Build America” requirements were still valid and everyone would prefer the vessel be 100 percent-built with U.S. products, the reality is that many ship components are no longer made in this country. These ships are built with 98.5 percent of U.S. steel.
The Streets of Philadelphia
Philly Shipyard, formerly Aker Philadelphia Shipyard, is located on part of the original Philadelphia Naval Shipyard. Philadelphia’s Americana roots include Independence Hall and the birthplace of the U.S. Navy on the city’s Front Street Docks.
Philly Shipyard is listed on the Oslo Stock Exchange and is part of the Aker Group, controlled by Kjell Ingle Rokke. The yard was rebirthed in 1997 as a cooperation between Kvaerner ASA, the City of Philadelphia, the Commonwealth of Pennsylvania and the U.S. Government. The yard was reconstructed from the ground up with an investment of over $650 million. Twenty-six years later, it’s recognized as one of the world’s premier shipyards.
Steinar Norbovik is Philly’s President & CEO. He likes to say he’s been employed by the yard twice. First, as Vice President in 2003, but then transferred to the Norwegian Shipyard Vard Langsten. He returned to Philadelphia in 2013 as Senior Vice President of Operations and became President & CEO in 2014.
“We’re committed to seeking commercial and government newbuild projects while offering repairs and conversions on an opportunistic basis,” says Norbovik. “The five NSMVs are a government project, the first for Philly Shipyard, and the first government newbuilding in Philadelphia in almost fifty years.”
Since 2000, the shipyard’s stellar reputation for building deepwater Jones Act-compliant ships has become indisputable. The yard has recently received orders for a Subsea Rock Installation Vessel (SRIV) for Great Lakes Dredge & Dock and three new LNG-ready container ships for Matson. The Matson “green ships” will be delivered in 2026 and 2027.
Philly’s orderbook for the MARAD ships, Matson’s “green ships” and the Great Lakes SRIV totals $2 billion, the largest in the company’s 26-year history.
“The contracts are further evidence that our strategy of pivoting towards diversity with a mix of government and commercial contracts is working,” Norbovik notes. “We also ratified a new four-year collective bargaining agreement with the Philadelphia Metal Trades Council, which includes an apprenticeship program. There are 105 apprenticeships in our workforce with a total of 1,500 workers.”
So the NSMV program is in good hands, and the future of Jones Act shipping never looked brighter. The “Glory Days” are back. Kudos to MARAD, Tote and Philly Shipyard!
Tony Munoz is Publisher & Editor-in-Chief of The Maritime Executive.
NSMV specifications:
Length: 525 ft.
Beam: 88.7 ft.
Design draft: 21.4 ft.
Total berthing: 600 cadets, 100 officers, faculty & crew
Speed: 18 kts. full power- 12 kts. cruise
Deadweight: 8,487 MT
Diesel-electric drive with 4 main engines
Special note: We offer our gratitude to MARAD administrators Sean T. Connaughton (2006-2009), David T. Matsuda (2010-2014), Paul “Chip” Jaenichen (2014-2017) and Mark Buzby (2017-2021) for their commitment to the NSMV program. And John Graykowski and Jim Miller at Philly Shipyard, who made the impossible happen.
Libya Closes Four Major Oil Ports as Storm Daniel Sweeps Through
Libya has announced a temporary closure of four of its major oil ports as a precaution from Storm Daniel, which made a landfall in northeastern Libya on Sunday. The affected ports include Ras Lanuf, Zueitina, Brega and Es Sidra. The ports are expected to be closed for at least three days.
Meanwhile, the state-owned National Oil Corporation (NOC) has advised its affiliated companies to take utmost precaution and declare a state of maximum alert in preparation of the storm. “You are asked to monitor the ports and shipping movement and take measures to maintain the highest levels of safety…… and take measures to protect industrial units, production lines and storage units,” NOC said.
Last week, Storm Daniel swept across Greece, Bulgaria and Turkey leaving behind a trail of destruction. The storm has been hovering over the Mediterranean Sea for nearly a week, becoming a tropical-like depression. The system them moved south into Libya, making a landfall in Benghazi in the early hours of Sunday.
According to a report by the Arab Regional Weather Center, the presence of a storm with subtropical characteristics at the beginning of July/September in the central Mediterranean Sea is considered a rare event. This means that the subtropical system will be accompanied by warm temperatures, heavy rain, strong winds and waves turbulence. High-speed winds of 49- 74 mph and rains of as much as 50- 250 mm are expected, carrying immense risk of torrential floods. The sea will be rough on the Libyan coast from Ras Lanuf to Derna, with the possibility of limited coastal flooding, according to the Arab Weather Center.
WW3.0
Swarm of Chinese Vessels Tries - And Fails - to Block Philippine Convoy
The Philipping Coast Guard has completed a resupply mission to Second Thomas Shoal despite determined opposition from Chinese forces.
On Friday, the PCG deployed two 150-foot cutters to escort small resupply boats to support the Philippine garrison at the shoal. The Philippine military maintains an outpost aboard the wreck of the BRP Sierra Madre, a WWII-era landing ship that was run aground on the reef in order to create a base in 1999. The deteriorating ship needs regular supply runs, including the delivery of materials for repairs.
China - which contests Manila's claims in the Spratly Islands - maintains a flotilla of China Coast Guard and maritime militia forces near the reef, and the resupply runs are a regular source of friction. On Friday, the opposing force included four China Coast Guard cutters and four Chinese maritime militia trawlers. As during past runs, the CCG vessels intercepted the approaching PCG vessels, maneuvering aggressively to block their passage or intimidate the crews. In one case, a CCG cutter came within yards of ramming a PCG vessel.
This time, the CCG's methods did not feature the use of water cannons, and the supply vessels made it through unharmed. The Chinese task force also sustained a minor casualty when a China Coast Guard launch got entangled with a line from a fishing vessel, AFP spokesman Col. Medel Aguilar said Saturday. “It’s about the karma that they experienced when they tried to shadow our resupply vessel,” he said at a press conference in Quezon City.
Though successful, the mission was unacceptably hazardous because of Chinese forces' maneuvering, according to the PCG. "The routine [rotation and replenishment] mission was again subjected to dangerous maneuvers . . . jeopardizing the crew members' safety aboard the PCG vessels and Philippine resupply boats," said PCG spokesman Jay Tarriela. "Despite the challenging circumstances brought about by the illegal presence and activities of the CCG and CMM in our exclusive economic zone, the mission was carried out successfully."
Tarriella called for China's gray-zone maritime operations to cease in the Philippines' EEZ. "Doing so can foster a stable, secure, and rules-based maritime order conducive to regional cooperation and peace," he said.
Rig Removal Law Threatens Vibrant Artificial Reef off Peru
The ecosystem under the MX-1 platform (Yuri Hooker / CDO)
At five o’clock in the morning, the skies begin to clear over the Los Órganos docks in northern Peru, less than 200 kilometres from the border with Ecuador. As dozens of boats loaded with fish begin to arrive at the port, pelicans, turtles, sea lions and seagulls congregate to gorge on any leftover catch.
A few kilometres off shore, away from the buzz of activity in this small fishing hub, stands a rusting oil platform that has attracted attention after finding a new and unexpected purpose.
The MX-1 rig, which was retired in 2011 after more than two decades in operation, has since become a marine biodiversity hotspot, researchers say. “This is the habitat of many species, new to science as well as endemic,” says Yuri Hooker, a marine biologist with more than 30 years’ experience researching the Peruvian sea. He says manta rays, whale sharks and meadows of sea fan corals can be found around the platform, as well as a seemingly “infinite” abundance of fish species.
The ecosystem of the platform hosts damselfishes and other species vital to small-scale fishing in northern Peru, so it attracts many artisanal fishers and divers (Image: Yuri Hooker)
But soon, the accidental reef may have to be removed due to legal requirements. Marine biologists, conservationists and many in local communities are worried that this rich newfound ecosystem will disappear along with it.
An unexpected ecosystem
The MX-1 platform is one of seven disused oil platforms along Peru’s northern coast – all owned by state oil company Petroperú – that are currently facing removal. But, having emerged as an underwater sanctuary, it has attracted the most attention.
Anchored off Los Órganos since 1985, the end of the search for oil at MX-1 and its subsequent abandonment allowed the rig to flourish as the home of 26 fish species and 57 invertebrate species, according to the latest study by Hooker.
The rough surfaces of the MX-1 structure are ideal for marine organisms to attach to, Hooker explains. The solid piles anchored to the seabed encourage the habitation of corals, invertebrates and algae.
MX-1’s location among warm waters and the meeting of ocean currents has helped to create an abundant ecosystem. Though the region sees seasonal variations, the sea off Los Órganos has an average annual surface temperature of around 20C, while the warm South Pacific Current converges here with the cold Humboldt Current. The latter transports colder water and nutrients from the depths to the surface and helps biological productivity in the Los Órganos area, feeding the entire trophic chain.
The conditions of this part of the Peruvian sea have turned MX-1 into a habitat for millions of micro-organisms, which then serve as a feast for fish species such as jack mackerel.
There are also abundant damselfish and two species vital to small-scale fishing in northern Peru: threadfin bass and southern rock bass. For this reason, the platform has attracted artisanal fishers and divers. It has also become a resting point for coastal and oceanic birds, sea lions, dolphins and manta rays. Meanwhile, during their migration season of July to October, humpback whales may be seen leaping from nearby waters.
Many companies run diving tours around the platform, which is said to be one of the best spots for the activity in Peru. Local tourism businesses are calling for MX-1 to be conserved. (Image: Yuri Hooker)
“It is one of the best diving spots in Peru and to lose it would be a shame, both for ecotourism, conservation and artisanal fishing,” says Adriana Zavala, a marine biologist and founder of the Chelonia dive centre, which works in this part of the country. Companies such as hers have been running tours around the platform since 2012.
Zavala highlights the ambiguity of regulations surrounding MX-1’s removal, and a lack of specific regulations for artificial reefs in Peru. These may threaten the range of economic activities that have sprung up around the platform in its second life, she says.
Legal obligations
Since 2011 – the same year MX-1’s operations ceased – the concession for the platform has belonged to Savia Peru. The company, owned by US-based De Jong Capital, carries out offshore oil and gas extraction and exploration in Peruvian waters.
The MX-1, which ceased operating in 2011, has become a resting place for coastal and oceanic birds, sea lions, dolphins and manta rays (Image: Chelonia Dive Center)
Savia’s concession contract ends on 15 November 2023, following which it is obliged to remove all the infrastructure installed at the site under Peru’s Environmental Protection Regulations for Hydrocarbon Activities. This regulation establishes that the operator of a concession must submit an “abandonment plan” for the end of their contract to the Ministry of Energy and Mines (MINEM). The removal of MX-1 “is part of this plan and includes seven platforms, as well as underwater lines, tanks and land remediation,” Orlando Mercado, Savia Peru’s social responsibility manager, told China Dialogue Ocean.
Savia submitted its abandonment plan to MINEM’s General Directorate of Hydrocarbons in November 2018.
“We thought it would be approved in 2019, which would give us four years to carry out the removal of the facilities without problems. There are more than 500 tonnes of iron that cannot be removed overnight,” said Mercado.
However, the plan was only approved in April 2022. This established that Savia is obliged not to leave any environmental liabilities at the end of its contract. Otherwise, it would lose its US$20 million bond held by OEFA – the government’s environmental assessment and enforcement agency – for failing to comply with the abandonment plans.
Although the regulation orders the removal of infrastructure once its period of use is over, there are two exceptions: when there is an entity interested in keeping the facility, and when the removal would cause greater damage to the environment.
MX-1 is not the first piece of oil or gas infrastructure to have found a new lease of life once operations have ceased, thus forcing a nation to consider legal frameworks for their management. Countries such as Australia, Canada, the US, the UK, Malaysia, Norway and the Netherlands have policies related to abandonment that include, for example, permitting their ongoing use as an artificial reef.
Other initiatives have found creative uses for disused infrastructure. In the UK, a platform was renamed See Monster and converted into a temporary art installation before its eventual dismantling. Meanwhile, off the coast of Malaysia, another was renamed Seaventures Dive Rig and turned into a tourist centre.
See Monster is a retired oil platform in the North Sea. A local creative project in the UK brought it to the coast of Somerset and turned it into a temporary art installation. (Image: Andrew Gustar / Flickr, CC BY ND)
Against this background, Asetur Los Órganos, an association of local tourism businesses, has promoted efforts to conserve MX-1, seeking to get the state to implement policies related to artificial reefs.
“In Peru, although there is no legislation that regulates these types of practices on these spaces, there are many structures such as docks, sunken ships and, in this case, the platform, which when submerged in the water begin to attract a large number of organisms and eventually become artificial reefs,” says Hooker.
Should Savia not fulfil its obligation to dismantle MX-1, it remains unclear who may take responsibility for the structure’s maintenance and management once its concession ends, with no legal clarity over who this duty should pass to. Percy Grández, the legal advisor of the marine governance programme of the Peruvian Society of Environmental Law (SPDA), explains that abandoning such a large structure without a maintenance plan is a risk – not only for the ecosystem, but also for tourists and fishers.
Zavala echoes this point: “In the current situation, the platform is an environmental liability. It means that it does not extract anything, so it is not seen as an investment, but rather as a social responsibility. It is not seen as a productive infrastructure, so there is no real interest on the part of the companies.”
Bringing the debate to court
On 6 July, through the Coastal Marine Observatory (OMC), an organisation formed by ocean activists, an injunction was filed against MINEM, the Ministry of Environment, OEFA and Savia Peru to suspend the abandonment plan for the removal of the MX-1 platform.
“What should happen as soon as possible, due to the urgency of the matter, is that the judge admits the lawsuit and stops the decommissioning,” said legal expert Grández. He also confirmed that the decommissioning has been halted until the judge’s verdict is known.
Speaking to China Dialogue Ocean in July, Grández described the platform’s future as a “priority issue” that should be decided “in the next few weeks”. However, a date for the case to be concluded is still yet to be set.
The future of MX-1 is at a crossroads. On the one hand, tourism companies and civil society are campaigning for the platform not to be removed, but on the other, no clear proposals for who should take over its management have been put forward.
For Grández, if decommissioning the platform is avoided, every precaution should be taken to avoid a future environmental emergency. He said that sealing the wells and removing all levels of the platform should be the first step – tasks that had been completed as of August, according to Savia. What should not be moved is the submerged base of the structure that has become a major artificial reef, the legal expert added.
“The infrastructure that remains and is seen as an environmental liability has become so integrated into its surroundings that its removal could trigger unknown and even more damaging environmental consequences,” said Hooker. He called for further research and clear regulations for these structures, given the potential wave of future cases as oil and gas infrastructure reaches the end of its life.
On 7 August, Savia issued a statement outlining its intent to pause dismantling of the platform and called on authorities and civil society to identify an entity to assume the management of the platform at the expiry of its contract. At the time of writing, no such solution had yet been found.
María Elena Carbajal is a Peruvian journalist and sociologist specialising in socio-environmental issues with more than ten years of experience. She currently works at the Institute of Marine Sciences in Barcelona.
This article appears courtesy of China Dialogue Ocean and may be found in its original form here.
U$A
Ørsted Acquires Offshore Wind Assets as Eversource Pursues Strategic Exit
Orsted acquired a lease area, ports, and the charter for the SOV currently under construction as Eversource pursues a strategic exit (file photo)
Despite its recent statements questioning the economic viability of portions of the U.S. offshore wind energy sector, Ørsted reports it closed on a previously announced acquisition of assets from Eversource Energy. In a statement detailing in acquisition, Ørsted highlights it as a step to consolidate its position in the U.S. market and as a demonstration of its long-term commitment, while Eversource Energy continues to pursue a strategy to sell assets as part of its strategic review of the offshore wind segment.
Ørsted acquired Eversource Energy’s 50 percent interest in an uncontracted federal offshore wind lease area previously owned jointly by the two companies. The lease area, which includes Lease Area OCS-A 500, contains approximately 187,000 acres of seabed which is in early-stage development and has a potential capacity of up to 4 gigawatts. It is located approximately 25 miles off the coast of Massachusetts and according to the companies could be used to service key markets, including Massachusetts, Rhode Island, Connecticut, and New York.
The lease area is also significant because it is adjacent to other Ørsted leases and could be used in conjunction with other sites to create construction and operational efficiencies. According to Ørsted, the site also offers shallow water depth and favorable wind speeds compared to other sites in the U.S. and globally. They have proposed siting the Sunrise Wind 2 project for New York in this lease area, and report they are evaluating other opportunities including active offshore wind solicitations in the region.
Ørsted is also acquiring certain contracts and leases for strategic port facilities and other assets previously owned jointly by the two companies. Ørsted will take full ownership of partnerships with the Port of Providence, the Port of Davisville, and Quonset Point, all in Rhode Island, and with Connecticut's New London State Pier. Ørsted will also acquire ownership of the operations and maintenance hub in East Setauket, N.Y., and the charter agreement for the first American-built offshore wind service operations vessel, which is under construction at Edison Chouest’s facility in Houma, Louisiana.
It is an all-cash transaction for $625 million completing the deal that was first announced on May 25. The U.S. Treasury Department’s Committee on Foreign Investment approved the acquisition on July 27.
Eversource however is being engaged to provide services as an onshore construction manager to continue to support onshore scopes of all three projects through construction, and creating the opportunity for a Tax Equity Capital Contribution for South Fork Wind, the offshore wind farm that is already under construction to serve New York. Eversource will use a portion of the proceeds from the lease area sale to provide its anticipated tax equity investment for South Fork Wind. The contribution for Eversource’s new tax equity member interest is expected to be approximately $545 million.
Eversource expects to recover this tax equity member interest investment primarily in the form of investment tax credits as turbines are placed in service for South Fork Wind. These credits will be utilized to reduce federal tax liability, including refunds expected over the next nine months. Eversource also expects to receive approximately $273 million of this contribution as a distribution from the project prior to its commercial operations date, as it currently remains a managing member of the project, along with Ørsted. Eversource’s tax equity investment in South Fork Wind is expected to close in the third quarter.
Ørsted notes that securing the tax equity arrangement is a critical milestone for South Fork Wind ahead of its plan to begin operations and deliver renewable energy later this year. The company’s corporate management was critical of the execution of the tax credits promised by the U.S. citing it as one of the factors changing the economics of the projects.
Eversource announced last year it was reviewing its offshore wind energy portfolio and considering whether to sell related assets. In addition to selling its uncontracted seabed and other interests, Eversource reports it has determined that it is in the best long-term interest of the company to pursue the sale of its existing 50 percent interest in its three jointly owned contracted offshore wind projects, South Fork Wind, Revolution Wind, and Sunrise Wind. Eversource reports the process is continuing to progress and it expects to announce additional details of this transaction soon.
The ecosystem of the platform hosts damselfishes and other species vital to small-scale fishing in northern Peru, so it attracts many artisanal fishers and divers (Image: Yuri Hooker)
Many companies run diving tours around the platform, which is said to be one of the best spots for the activity in Peru. Local tourism businesses are calling for MX-1 to be conserved. (Image: Yuri Hooker) 
The MX-1, which ceased operating in 2011, has become a resting place for coastal and oceanic birds, sea lions, dolphins and manta rays (Image: Chelonia Dive Center)
See Monster is a retired oil platform in the North Sea. A local creative project in the UK brought it to the coast of Somerset and turned it into a temporary art installation. (Image: Andrew Gustar / Flickr, CC BY ND)