The Committee on Marine Transportation System’s Public-Private Partnerships and the Federal Arctic

The Committee on the Marine Transportation System (CMTS)—a federal policy coordinating committee—was tasked by Anthony Foxx, Secretary of the U.S. Department of Transportation (DOT) to complete three tasks for the National Strategy on the Arctic Region Implementation Plan.

As part of a response to task 1.1.3, CMTS hosted a webinar to learn of existing or planned infrastructure public-private partnerships (P3) related to the marine transportation system and to receive recommendations and ideas regarding the use of P3s.

The webinar was presented by Captain Kirsten Martin, Senior Maritime Advisor to Sec. Foxx and Dr. Alyson Azzara, Arctic Maritime Advisor to the CMTS. It was moderated by Helen Brohl, CMTS executive director.

Capt. Martin said the National Strategy for the Arctic region (NSAR) is to safely and sustainably prepare for changes in the region. Its tasks include a 10 year projection of maritime activity, which can be downloaded here.

Arctic-related tasks include establishing a prioritized framework for Arctic infrastructure. The webinar’s purpose was to receive P3 recommendations for the federal government.

About developing recommendations for pursuing activities in federal Arctic waters, Dr. Azzara said infrastructure procurement projects can potentially deliver high quality products at a lower price than traditional procurement.

To have a better understanding of past successful or unsuccessful projects, she said to keep in mind a number of considerations, including:

• The scope of the infrastructure project.
• The security needs in the region where it is being developed.
• The operations and maintenance the potential infrastructure would require.
• Performance indicators.
• Life cycle costs of the parts of the infrastructure.
• The amount of revenue the project could generate.

One webinar participant brought up Shell’s integrated communication system storage in Alaska—and asked about leasing this system to other sectors in Alaska.

Laura Morse, a Shell employee, said Shell is working through the process of identifying all of its resources and determining internally what it will do with them.

Deryl Own said his organization—which works on offshore vessel support—is the largest vessel charterer for the U.S. government. He said his company could provide a class three icebreaker that it no longer needs and that his model should fit U.S. Coast Guard needs because it has worked very well in other areas.

Another webinar participant said a lot of private funds are available to invest in Arctic infrastructure. The possibilities include port facilities, marine transportation, telecommunications, and salvage ports.

The owner of Arctica Shipping Ltd of Finland talked about Russia’s broad engagement and how other countries have P3s that may be applicable. Russia’s multipurpose icebreakers are working in Arctic waters to ensure safe operations in offshore oil and gas fields. Arctica would be glad to share with American colleagues its experiences in public-private partnerships in the Baltic Sea, he said. He gave one example that can be found here. He said he can be contacted directly about his comments at eero.hokkanen@arctica.fi.

Another webinar participant discussed the difficulties with modeling port economics. This is relevant to the Bering Strait, a pass through point for all vessels traveling to or from the Arctic.

The Coast Guard is retaining property at its former LORAN station at Port Spencer, but has no plans to construct any on shore infrastructure in the foreseeable future.

One plan would be to move forward on the infrastructure projects at Nome and Port Clarence.

The Bering Straits Native Corporation has formed an alliance with the NANA Regional Corporation and the Arctic Slope Regional Corporation to work on their mutual interest in Arctic infrastructure development.

Anita Parlow shared some of the work she did previously, which can be found here. She said she is now working on a shipping project with the Wilson Center. So far, they have found that the bestem—now sitting in ideas come from looking at relationships with other countries.

Mead Treadwell of Pt Capital added that the study’s mission could be broadened to include more international elements.

He added that P3s are only possible when there is a revenue stream. Right now what occurs in the Arctic is available for free. That could change if U.S. assets were encouraged or allowed to collect a revenues from international traffic. Russia, Canada and other countries, for example, now collect aviation fees for air traffic control services.

A question was asked if anyone engaged in land-side infrastructure activities engaged in P3. In response, a participant stated that the Coast Guard leases space in the aviation center for search and rescue activities and air support.

Asked if any lessons can be drawn from ongoing work on gas pipeline development within Alaska, Treadwell made three points:

1. A lot of wholesale marine transportation is present in the Arctic in order to ship goods to the communities and bring out lead and zinc from the Red Dog Mine. The Canadians and Russians can supply their Arctic regions. Gas pipeline construction will require the transport of a lot of equipment. The direct export of gas products from the North Slope has been discussed. The ships that Shell paid for may be available for the development of an Arctic shipping system.
2. The Russians are going ahead on shipping gas from the Yamal Peninsula to China at least six months of the year, which presents both hazards and opportunities for U.S. shipping.
3. ConocoPhillips had announced that it may do more shipping in the Arctic. Some are perplexed that only American trade within American ports is being considered. This is confusing and narrow, and needs to be changed.

Looking at P3s in the Gulf of Mexico, several different facilities are supporting the region’s marine transportation system. A large number of private investors in the port system at present are providing some support for fuel, salvage, etc. International revenue availability helps keep many of these projects afloat.

A strong federal partner is needed to drive together the varied interests. Several huge cruise ships will be present in the Arctic next year, which—in the form of a large visiting community—highlights the need for infrastructure.

Laura Morse said that when find the right public and private sectors express interest in working together as partners, they should identify challenges beforehand so they can avoid them once the procurement process begins.

Questions about the webinar may be answered by contacting arcticmts@cmts.gov.