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Los Angeles Port Lease Agreement Mandates Lower-Sulfur Marine Fuel, Cold-Ironing, LPG Yard Tractors

Berths 206-209, site for the greener agreement.

The Los Angeles Harbor Commission has approved an Environmental Impact Report (EIR) that will outline the most environmentally stringent lease agreement yet executed between a US port and a major shipping line. A ground-breaking component of the agreement is a requirement for cleaner fuels in calling vessels’ main and auxiliary engines.

The EIR for the Berths 206-209 Interim Container Terminal Reuse Project (site of the former Matson terminal) certifies that the container terminal operations by lease applicant P&O Nedloyd will be compliant with the latest in maritime environmental technology. Most notably, the lease terms will require that container ships calling at the terminal switch over to lower-sulfur (1.5% or 15,000 ppm or less) marine fuel in their main and auxiliary engines when they are within 40 nautical miles (nm) of the Port.

The EPA is mandating a transition to 500 ppm sulfur diesel fuel in 2007 for marine diesels—with the exception of Category 2 and Category 3 engines (greater than 5 liters in displacement). Category 3 engines (displacement > 30 liters, with output from about 2,500 to 70,000 kW (3,000 to 100,000 hp) are used in ocean-going vessels.

Sulfur-levels in fuel for ocean-going vessels may be as high as 45,000 ppm (4.5%) under the guidelines of MARPOL Annex VI, which came into effect in 2005. (The high sulfur levels result from the different production processes for different types of marine fuels, where distillate fuel (what we consider “diesel” for on road use) can be mixed with residuum from the refinery.)

The Annex provides for the designation of SOx Emission Control Areas, in which the sulfur content of fuel used must not exceed 1.5% (15,000 ppm). The first area so designated is the Baltic, where the restriction will come into force on 19 May 2006, to be followed by the North Sea. The Port of Los Angeles, is, in effect, applying the SOx Control Area restrictions of Annex VI to itself for this terminal.

The agreement with P&O Nedloyd to, among other things, reduce the pollution from their main engines steadily over the next five years is, indeed, a breakthrough in controlling the major source of pollution at the Port. If P&O Nedloyd can accomplish these green measures as part of a five-year lease agreement, there’s no reason why our other tenants with longer-term leases can’t do the same, and that's what we'll be asking them to do.

—Harbor Commission President S. David Freeman

P&O Nedloyd ships calling at the terminal also will be required to utilize AMP (Alternative Maritime Power) or cold-ironing shore-to-ship electrical connections while at berth. The AMP requirements will need to be used by 30% of the ships calling at the terminal by the completion of the second year of the lease, and the AMP requirement will increase to 70% compliance by the end of the third year. All other non-AMP-powered ships will utilize low sulfur fuel at berth.

To further limit the discharge of polluting emissions that impact the quality of air in the Southern California basin, ships calling at the terminal also will be required to observe the Port’s Voluntary Speed Reduction Program (VSRP) but do so at the 40 nm boundary of the Port (instead of the program’s customary 20 nm boundary).

Greener ground operations are also required. The final EIR calls for the purchase of Liquefied Petroleum Gas (LPG)-powered yard tractors, coupled with the use of emulsified fuel and Diesel Oxidation Catalysts (DOCs) on all older yard tractors and other yard equipment, where feasible.

The final EIR also provides for an Environmental Management Policy, which the Port implemented in 2004; maximizing the use of on-dock and near-dock rail for long-distance cargo; replacing compounds in refrigerated containers with non-ozone-depleting compounds; and instituting housekeeping/maintenance procedures that limit water use in order to minimize potential discharge to storm drains and harbor waters.

The leasing terms being negotiated in conjunction with the final EIR and draft lease agreement between P&O Nedloyd and the Port of Los Angeles are expected to be brought to the Harbor Commission for approval during its meeting on 15 February 2006.

Formerly occupied by Matson Navigation Company, the 86-acre terminal located at Berths 206-209 was the first container terminal to open at the Port of Los Angeles in 1970. The terminal has been vacant since Matson moved out in 2003.

The Port of Los Angeles set a nationwide container volume record in 2005 by handling nearly 7.5 million TEUs (twenty-foot equivalent units) in 2005. This represents a 2.23% increase over 2004. Representing the first half of the Port’s 2006-2007 fiscal year, container volumes during the past six months show an increase of 5.69%.


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