Overseas Shipholding Group Awarded Federal Grant to Design Marine Transport For Liquified CO2 Captured by Florida’s Largest Emitters

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Overseas Shipholding Group (OSG) has been awarded a $3,000,000 grant from the US Department of Energy to design a new vessel for transporting liquified carbon dioxide (LCO2) captured by emitters in Florida. The vessel grant is part of OSG's efforts to develop a complete CO2 storage and transport solution for industrial emitters in the region. OSG previously received a grant for the Tampa Regional Intermodal Carbon Hub (T-RICH) to study an intermediate storage hub at Port Tampa Bay for captured CO2. The new ATB vessel will transport captured CO2 from the T-RICH hub to sequestration sites in the Gulf of Mexico. OSG aims to support the US goal of achieving net zero carbon emissions by 2050 through carbon capture and storage systems.

Energy Sector Analyst

The announcement from Overseas Shipholding Group (OSG) regarding the receipt of a federal grant marks a strategic advancement in the company's venture into the emerging market of carbon capture and storage (CCS). OSG's move to design a new vessel for liquefied carbon dioxide transport aligns with the broader industry trend towards decarbonization and could position the company as a forerunner in this niche sector. The grant can be viewed as a vote of confidence in OSG's capability to innovate within its core domain of energy transportation, potentially creating new revenue streams and diversifying its service offerings. The focus on CCS systems, which are projected to account for up to a 30% reduction in the nation's carbon emissions, indicates a clear trajectory towards clean energy solutions. For investors, this could signal long-term growth potential as OSG taps into a market driven by environmental regulatory frameworks and the global push for net-zero emissions. However, the capital-intensive nature of shipbuilding and the nascent stage of the CCS market suggest that investors should be cognizant of the risks associated with pioneering technologies and potential cost overruns during the development phase.

Environmental Policy Expert

From an environmental policy standpoint, the involvement of the Department of Energy in funding OSG's initiative underscores the federal commitment to reducing carbon emissions, reflecting the priorities set forth in the United States' climate goals. This project not only aligns with national interests but also addresses Florida's specific environmental challenges. With no existing infrastructure for CO2 transport, the state faces unique hurdles in managing its emissions. The proposed ATB and T-RICH hub represents a targeted solution that could potentially serve as a model for other regions lacking in CO2 pipeline infrastructure. The CO2 transportation logistics support the overarching policy goals of carbon reduction by enabling the sequestration of emissions from key industrial sources. The environmental benefits mentioned, such as the improved health of communities and the protection of sensitive ecosystems, may resonate with socially responsible investors and could enhance OSG's corporate image. These factors tend to positively influence investor perception and can, in the long term, translate into a more stable and favorable investment climate for the company.

Maritime Transport Analyst

The deployment of an articulated tug and barge (ATB) unit for transporting liquefied CO2 is indicative of the maritime industry's adaptive approach to evolving environmental imperatives. The transition from traditional energy cargoes to green alternatives represents a critical pivot point for the sector. OSG's proactive strategy to develop a marine transportation solution tailored to CCS requirements demonstrates foresight in capitalizing on emerging opportunities. The design of such a vessel, specific to the transport of CO2, requires technical prowess and an understanding of the regulatory landscape governing marine emissions and safety standards. The successful operation of this fleet could establish a new benchmark in the maritime transportation of hazardous materials, which is likely to become more stringent as international environmental standards tighten. For investors, this suggests that OSG is not only expanding its operational capabilities but is also potentially setting industry standards that could lead to a competitive advantage in a rapidly evolving market space.

TAMPA, Fla.--(BUSINESS WIRE)-- Overseas Shipholding Group, Inc. (NYSE: OSG) (the “Company” or “OSG”), a leading provider of energy transportation services, announced today that the Company has been awarded a $3,000,000 grant from the United States Department of Energy for the engineering and design of a new vessel that will transport liquified carbon dioxide (LCO₂). The award will be used to develop the design of an articulated tug and barge unit (ATB) to be used to transport CO₂ captured by emitters in the Greater Tampa Bay region and across the State of Florida to sequestration sites in the Gulf of Mexico.

The new vessel grant provides further resources towards the development of a complete CO₂ storage and transport solution for industrial emitters in Florida. This grant follows the Company’s announcement in December 2023 of an award by the Department of Energy of another grant for the development of OSG’s proposed Tampa Regional Intermodal Carbon Hub (T-RICH). The T-RICH grant funds a study led by OSG to develop an intermediate storage hub at Port Tampa Bay for captured CO₂. T-RICH would initially receive, store, and process two million metric tons of CO₂ per year and could be scaled in the future to meet expanded volumes of captured CO₂. The ATB which is the focus of the current grant would provide a marine transport solution for captured CO₂ aggregated at the T-RICH hub terminal in Tampa, to be shipped in liquified form to developed, approved sequestration sites in the northern Gulf of Mexico region.

“The Department of Energy has encouraged the development of carbon capture and storage (CCS) systems as part of the United States’ goal to reduce CO₂ emissions to achieve net zero carbon by 2050,” said Sam Norton, OSG’s President, and CEO. “CCS systems are expected to provide up to 30% of that total carbon emission reduction. OSG has an extensive track record as a leading provider of energy transportation of adopting new technologies and developing innovative solutions to meet our country’s energy needs,” Mr. Norton explained. “Transporting liquified CO₂ is a natural next step into an exciting emerging market, consistent with OSG’s expertise with liquid cargoes.”

Jeff Williams, OSG’s Director of CO₂ Transport Solutions, added, “The development of a CO₂ transport ATB, along with the previously awarded hub storage terminal grant at Port Tampa Bay, provides a comprehensive solution for Florida’s largest emitting industrial facilities to be part of the nation’s response to the impacts of climate change to which Florida’s residents and sensitive ecosystems are most vulnerable. OSG’s solution will help accelerate the adoption of carbon emission reduction plans in Florida, result in improved health of affected communities, create hundreds of new jobs, and bring innovative and transformative technologies to Florida.”

“The State of Florida presents a unique opportunity for the transportation of liquified CO₂. Florida has the country’s fourth largest CO₂ emissions from power generation and industrial facilities but has no pipeline system capable of transporting captured CO₂ out of state,” Williams continued. “OSG’s proposed T-RICH hub site at Port Tampa Bay would aggregate and store CO₂ captured for loading into the LCO₂ ATBs operated by OSG. The cargoes would then be delivered to the northern Gulf of Mexico, which has the largest confirmed capacity for safe, deep, permanent underground sequestration of captured CO₂.”

About Overseas Shipholding Group, Inc

Overseas Shipholding Group, Inc. is a publicly traded company providing liquid bulk transportation services for crude oil and petroleum products in the U.S. Flag markets. OSG’s U.S. Flag fleet consists of Suezmax crude oil tankers, conventional and lightering ATBs, shuttle and conventional MR tankers, and non-Jones Act MR tankers that participate in the U.S. Tanker Security Program.

Headquartered in Tampa, Florida, OSG is committed to setting high standards of excellence for its quality, safety, and environmental programs and is recognized as one of the world’s most customer-focused marine transportation companies. More information is available at www.osg.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240422994797/en/

Investor Relations & Media Contact:

Susan Allan, Overseas Shipholding Group, Inc.

(813) 209-0620

sallan@osg.com

Source: Overseas Shipholding Group, Inc.

FAQ

What grant did Overseas Shipholding Group (OSG) receive from the US Department of Energy?

Overseas Shipholding Group (OSG) received a $3,000,000 grant from the United States Department of Energy for the engineering and design of a new vessel to transport liquified carbon dioxide (LCO2).

What is the focus of the grant awarded to OSG by the Department of Energy?

The focus of the grant awarded to OSG by the Department of Energy is the development of an articulated tug and barge unit (ATB) to transport CO2 captured by emitters in Florida to sequestration sites in the Gulf of Mexico.

What does the Tampa Regional Intermodal Carbon Hub (T-RICH) grant fund?

The Tampa Regional Intermodal Carbon Hub (T-RICH) grant funds a study led by OSG to develop an intermediate storage hub at Port Tampa Bay for captured CO2.

What is the purpose of the CO2 transport ATB developed by OSG?

The purpose of the CO2 transport ATB developed by OSG is to provide a marine transport solution for captured CO2 from the T-RICH hub in Tampa to sequestration sites in the northern Gulf of Mexico region.

How does OSG's solution contribute to carbon emission reduction in Florida?

OSG's solution accelerates the adoption of carbon emission reduction plans in Florida by providing a comprehensive transport solution for captured CO2, creating new jobs, and bringing innovative technologies to the state.