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Port Bureau News Port Bureau News

November 2010
What’re Wrong with These Pictures?
Spotlight on Don Welch
Managing Partner—Midpoint Partners, LLC
Bilge Management & MARPOL
Bill Diehl
Jeannie Angeli
Al Cusick
Cristna Gomez
Janete Molina
Patrick Seeba
John Smith
Board of Directors
*Tom Marian—Chairman
*Dennis Hansell—1st Vice Chair.
*Mike Drieu—2nd Vice Chair.
*John Taylor—Secretary /Treas.
*Robert H. Blades
*Alec Dreyer
*Charles H. Flournoy
*Thomas C. Pace
*Capt. John G. Peterlin III
*Richard Russell
*Steve Stewart
*Nathan Wesely
Jim Black
Ken Burnet
Jan Critenden
Celeste Harris
Jason Hayley
Kevin Hickey
Guy W. Hit
Charlie Jenkins
Shareen Larmond
Kathy Murray
Jerry Nagel
Vinny Pilegge
Nolan Richardson
Lloyd Schwing
Earl Smith
Tim Studdert
Lawrence Waldron
Armando Waterland
Don Welch

Contents/Port Bureau Mission/Staf/Board of Directors 1
St Joseph Medical Center 2
Captain’s Corner 3
2010 Captain’s Cup Golf Tournament 4
Bilge Management & Inspection_ ___________ 5-7
Port Watch 8
Case Studies in MARPOL Violations 9-10
2010 Breakbulk Americas Conference 11
Spotlight on Don Welch—Midpoint Partners 12
October Commerce Club Photos 13
HarborLights Vessel Tracking Program 14
TWIC Card Replacement Update Back Cover
Port Bureau Staf
Our mission is to foster economic growth and regional cooperaton across a diverse in-
terest of public and private stakeholders that rely upon or beneft from the commercial
synergy of the greater Houston port community
To be knowledgeable of all aspects of the port so that we can provide our members
informaton and assistance to grow their businesses.
To our valued members, we provide:
 Real-Time and Historical Vessel Trafc Informaton for Houston, and the Ports of Texas
 Expertse, Consultng, and Assistance in Maritme Afairs
 Business Relatonships and Networking Opportunites in the Houston Port Community
Port Bureau News
Captain’s Corner
“Protect our Environment and our Marine Lives”
In December, 2009, an engineer on the M/V Iorana passed a note to a Customs
and Border Patrol (CBP) ofcer, informing them of an illegal discharge of oily water from
the bilge tank. The Coast Guard later interviewed the engineer, who detailed how it was
done and requested governmental assistance – you can read the entre leter on page 9 of
the newsleter. As you’ll read, the shipping company was fned $4 million dollars with the
four whistleblowers dividing up $500,000.
I was recently in India, speaking with the Masters and Chief Engineers of Executve Ship Management
(a member company of the Port Bureau) about MARPOL compliance. They were holding their annual 3 day
ofcers’ seminar at their beautful training facility in Lonavla, India, just north of Mumbai, focusing on ship
source polluton, bilge management techniques, and potental legal retributons. It was a great experience
for me to visit India and spend tme with these internatonal mariners that so frequently call on our port.
In this newsleter you’ll read a basic overview of some of the MARPOL topics we discussed and see
three cases that highlight the penaltes incurred from commitng a crime and then atemptng to cover it
up. Even though less than 1% of all MARPOL cases investgated elevate to a criminal nature, when they do
they have a sizable impact on the company. As I explained to the mariners, environmental management
must become part of your corporate culture; if you lie about an incident, coerce others into lying about an
incident, or cover up evidence, you will be held liable with the potental for criminal prosecuton.
In the leter the engineer on the M/V Iorana wrote, he begged the inspectors to “protect our envi-
ronment and our marine lives.” Take that with a grain of salt if you’d like, given the amount of money he
made of the report, but the point is valid: we
have an inherent duty to protect our environ-
ment. Do it because of the imposing fne that
looms on the horizon, do it because of how tar-
nished your public reputaton can be afer a $4
million dollar lawsuit, or do it because it’s the
right thing to do, but, whatever the reasoning
behind it, we must all take responsibility for the
stewardship of the waters we do
business on. –Bill Diehl, GHPB
2010 Captain’s Cup
Thank you to all our
Sponsors & Participants
Aaron Oil
Alexander/Ryan Marine
Amegy Bank
Baumann Marine Service
Bell Ryniker & Latourneau
Blessey Marine Services
Bludworth Marine
Briggs & Veselka Company
Bufalo Marine Service
CLM Towing, LLC
Coatng Systems & Supply
Danner’s Inc.
ECHO Marine, LTD
EmKay Marine Services, LLC
Frost Natonal Bank
Garner Environmental
Gulf Winds Internatonal
Hines Furlong Line, Inc.
Houston Fuel Oil Terminal
Houston Mooring Company
Houston Pilots
J2S Services
John Bludworth Shipyard
Kirby Inland Marine, LP
Marine Compliance
Marine Healthcare Services
Moran Gulf Shipping
Port Terminal Railroad Assn.
Port of Texas City
Rickmers Linie (Americas)
Rio Marine, Inc.
Sneed Shipyard
Southwest Ocean
Southwest Shipyard
Suderman & Young Towing
Team Services
Texas Mooring, Inc.
Trinity Marine Products, Inc.
Vopak Terminals
Wells Fargo
Wholesale Electric
What is MARPOL?
MARPOL, or the Internatonal Conventon for the Pre-
venton of Polluton from Ships 73/78 publishes a set of regula-
tons to address marine polluton on the high seas. The inter-
natonal accords address dumping, oil polluton, and represent
169 countries, including over 98% of the world’s vessel ship-
ping tonnage.
MARPOL annexes address six areas of focus including:
I. Oil
II. Noxious Liquid Substances Carried in Bulk
III. Harmful Substances Carried in Packaged Form
IV. Sewage
V. Garbage
VI. Air Polluton
MARPOL is a series of internatonal agreements which bind the member countries to enforce agreed-upon
standards. In the United States, the MARPOL agreements are codifed into the Federal Water Polluton Control
Act, the Oil Polluton Act, the Comprehensive Environmental Response Compensaton and Liability Act, and the
Act to Prevent Polluton from Ships. The US Coast Guard, with the right to inspect and examine vessels upon the
high seas for the purpose of suppressing violatons of US law, is tasked with boarding vessels to ensure compli-
ance with US laws and regulatons. Because the costs of sludge and oil disposal is high and oily water separators
and incinerators have a tendency to be difcult and costly to maintain, inspectors realize there is a temptaton for
vessel owner/operators to cut corners and discharge their waste at sea.
What Happens During an Inspection?
The Coast Guard marine inspecton team generally begins their inspecton by going to talk to the Master of
each vessel. The inspectng ofcer then takes an inital look at the vessel’s documentaton such as
their certfcates, deck log, and equipment logs. The inspecton then moves into the engine room,
where the inspector will usually ask to run the equipment such as the vessel’s oily water separator
Bilge Management

Keeping Your Engine Room Clean
What do the regulations say?
For all oil tankers and any other vessel over
400 GRT, discharge of oil from machinery
spaces is PROHIBITED except when the fol-
lowing conditons are met:
1) Ship must be proceeding en route
2) The oil content of discharged efuent
must be less than 15 parts per million
3) The ship must have, in operaton, an oil
discharge monitor & control system, oily
water separatng or fltering equipment
4) Bilge water cannot be mixed with oil car-
go residue or cargo pump room bilges
or incinerator.
During an in-
specton, the in-
spectng ofcer pays
atenton to the frst
impressions he gets
of a vessel, the at-
tudes of on-board
personnel, vessel
equipment and any
inconsistencies that
can be found. The
Master and Mates
are professionals, so
the inspector expects and assesses their
knowledge of the ship’s conditon and equip-
ment. Appraising the conditon of machinery, the
inspector will carefully watch the ship’s crew when running equipment to make sure the engineering team is prof-
cient in following procedure and safety requirements. The inspecton team also will take account of spares and
machine parts on board to see if they are consistent with the vessel’s re-
ported equipment usage.
Common problems during an inspecton have to do with inconsist-
encies between vessel writen records and the observed state of equip-
ment. For example, if records indicate that the incinerator has been in
constant operaton during a partcular voyage, however there are no ma-
chine spares on board, and no record of alarms or equipment failures, the
inspector will begin to look further into the patern of fuel usage, accumu-
lated oil records, and discharge reports.
But How Would Inspectors Ever
The rate of fuel consumpton versus oil/sludge creaton can be mathe-
matcally modeled. In the same manner, the rate of burning/separaton and
discharge can be calculated and tracked. Afer calculatng fuel usage and sludge
buildup, an inspector can analyze the records visually on a graph and have a vis-
ual record of inconsistencies. This is another clue that spurs the inspectng
ofcer to take a closer look at the engine room, machinery, and queston the
crew more thoroughly.
What If I don’t Comply?
When an inspector fnds a discrepancy and begins an investgaton, the
Coast Guard has several avenues to address the grievance:
Notce of Violaton: A notce of violaton, also known as an NOV or Ticket, and
operates much like a moving violaton in a motor vehicle writen out by trafc
police. There are instructons that include the penalty assessed and the proce-
dure for appeal.
Class I/II & Judicial Civil Penaltes: Civil penaltes that can be assessed come with
(Continued on page 7)
a graduated scale of maximum penaltes and are generally measured by a dollar amount per barrel of oil or report-
able quantty of a hazardous substance.
Criminal Prosecuton: When engaging in criminal prosecuton, the Coast Guard gathers as admissible evidence for
prosecuton, maintains a chain of custody of all relevant material, and atempts to prove beyond a shadow of a
doubt that a crime has occurred. When this happens, the company is subject to large fnes, and those persons re-
sponsible can be subject to prison sentences. Afer criminal prosecuton, the company is ofen subject to a lengthy
probatonary period which involves constant auditng and oversight over the company’s practces and policies.
The Coast Guard does not reach out puni-
tvely to discipline the hard working men and
women of the sea. Rather, enforcement
measures taken by the government are there to
prevent egregious violatons of US law and to safe-
guard mariners. There are provisions in the law
that reward operators who have problems and
report them and then work to correct the system-
ic problems that allowed them to occur in the frst
place. The government and regulators work to
ensure that these destructve crimes against the
environment are dealt with for if lef unchecked,
they would threaten future generatons,
not only of mariners, but of natons and
the world. –Patrick Seeba, GHPB
Three Quarters Down—Not Too Hot, Not Too Cold
September’s vessel arrival numbers contnued the regrouping trend that
seems to embody regional maritme commerce in 2010. Houston experienced its se-
cond-highest month for the year in terms of vessel arrivals with a very small increase
of less than 1% over the previous month. Yet, this was stll noteworthy since Septem-
ber’s 30 days is a day shy of August. While there were only two other Texas ports
that experienced vessel arrival gains from August to September (i.e., Sabine up 13%
and Corpus Christ with a 8% increase), all of these ports – with the excepton of Free-
port – are well above 2009’s numbers.
It is interestng to note that Sabine’s September arrivals which largely consists
of tank vessels was contrary to a decrease in tank vessel calls in the Ports of Houston,
Freeport and Texas City. Overall, the tank vessel calls appear to balance out lower
demand against frmer pricing that is most likely ted to the weakening dollar. Anoth-
er worthy bright spot in the numbers is the fact that Sabine put up its strongest numbers for the year and Corpus
Christ had its second strongest month.
Closer to home, the Port of Houston’s break bulk numbers were down 14% over the last month but saw a
gain of 12% on the bulk carrier side. Steel, chemi-
cals and containers were all very positve as each
category matched or exceeded last month’s per-
formance with chemical tank vessels leading the
charge. The fact that there appears to be more
than base inventory replenishment on the chemi-
cal products side of the ledger lends credence to
the noton that a recovery is at hand albeit mod-
est in nature.
Thus, as the fnal quarter of the year un-
folds, no big surprises appear to be in store as
consumers slowly re-enter the market place in
preparaton for the holiday season. –Tom Marian,
Bufalo Marine Service
Port Watch
Tom Marian—Bufalo Marine Service
Violatng MARPOL
Three Case Studies in Violaton & Prosecuton
Though many companies are taking specifc, forward-thinking measures to ensure compliance with US & Internaton-
al laws, there are stll organizatons that take the chance that they won’t get caught. Furthermore, vessel owners, masters,
and engineers that violate the law sometmes take their eforts a step farther and atempt to cover up their indiscretons.
Though opinions difer on the egregiousness of environmental violatons, the crimes of obstructon of justce, coercion, and
destructon of evidence are simply not tolerated by judges and juries. Increasingly, the ability to bring criminal prosecutons
against vessel masters and engineers responsible for discharges is raising the stakes for violatng the law.
In January 2010, Customs & Border Protecton inspectors in Baltmore boarded the M/V Iorana where they were
passed a note asking inspectors to “protect our environment and our marine lives”. The note led inspectors to inspect the
vessel’s oily water separator which was discovered to have used a 103 foot bypass hose to route oily discharge through the
vessel’s boiler blow-down system and pump sludge overboard. Afer a crew member’s cellphone camera video revealed de-
tails of the bypass, the vessel owners released this joint statement:
Approximately 23 cubic meters of oil contaminated sludge and bilge
waste (approximately 6,000 gallons) were dumped overboard in December 2009
during the voyage from Gibraltar to Baltmore using the 103-foot bypass hose.
The fanges where the bypass hose was connected were repainted before arriving
in port in order to cover up tool marks caused when the bypass hose was connect-
ed and disconnected. The bypass was used at night, and plastc bags flled with oil
soaked rags used to clean the bilge tank, which was contaminated with sludge and
cleaned with diesel fuel, were dumped overboard at night. Additonal episodes of
illegal discharges took place afer the ship's frst voyage in June 2009 and contn-
ued through the middle of December 2009. … Senior ship ofcers made false
statements to the Coast Guard, crew members were told to lie to the Coast Guard,
and evidence of illegal dumping was destroyed.
The company, Irika Shipping, SA was fned $4 million of which $500,000
was distributed to the four whistleblowing crew members. The company was also
sentenced to serve a fve year probaton which includes a detailed compliance and
auditng program and oversight by court appointed inspectors.
“There should be no tolerance for those who
deliberately despoil the environment” noted Judge
Reginald Lindsay as he pronounced a record-setng
$37 million dollar penalty against Overseas Shippinng
Group (OSG) for criminal violatons of the Clean Water
Act, Oil Polluton Act, and the Act to Prevent Polluton
from Ships as well conspiracy and obstructon of jus-
Between 2001-2003, OSG deliberately con-
cealed illegal discharges of sludge and oily waste by
falsifying their oil record books and hiding the equip-
ment used for their transgressions. During the three
year investgaton, OSG contnued to commit criminal
infractons on six diferent vessels. An example of the
infractons from the Justce Department’s report:
“OSG made illegal releases of oily waste from approxi-
Case One: The M/V Iorana
Case Two: Overseas Shipping Group
mately August 2001 to October 2003 from the M/T Uranus into waters of the coast of New England, in close
proximity to Maine and Massachusets, including Mt. Desert
Island and the island of Nantucket. Discharges were made
from the M/T Uranus through a long fexible hose trailed
overboard at night, then through a hard bypass pipe that
the ship’s fter was forced to make, and at a later point in
tme, by fushing an oil detectng sensor with fresh water. In
another case, OSG violated the Clean Water Act by know-
ingly discharging approximately 2,640 gallons of oily waste
and sludge from the M/T Neptune of the coast of North
The case was assisted by crew members including an engi-
neer from the M/T Overseas Shirley who testfed that the ship’s
chief engineer habitually discharged sludge in excess of 40,000 gallons to sea. Also testfying were crew members from
the M/T Ania, M/T Alcesmar, M/T Overseas Portland, and M/T Pa-
cifc Sapphire. In all, over 12 OSG tankers were found to have com-
mited criminal environmental violatons, and the fne plus proba-
tonary period is the largest fne issued to a shipper to date for envi-
ronmental violatons.
When the chief engineer and second engineer of the M/V
Cygnus, a roll-on roll-of car carrier found to be discharging contami-
nated oily water and sludge into the ocean, they were both sen-
tenced to prison terms, followed by deportaton. US ofcials found
a fexible hose used to bypass the vessel’s oily water separator and
fresh paint on the overboard valve where the crew had atempted
to cover up the evidence of their discharge. When asked by inspectors if the bypass hose was used for illegal discharge,
Duk Jo Jeong, the chief engineer replied that no discharge had occurred, that all of the accumulated sludge had been
burned of in the vessel’s incinerator. During
the trial, Jeong admited that this had been a
false report and that all of the waste oil had
been discharged into the ocean.
The number of cases for environ-
mental violatons is increasing. More notce-
ably, other countries are prosecutng viola-
tons of local laws that echo MARPOL agree-
ments. Venezuela, the UK, Pakistan, Thai-
land, France, Australia, Canada and Denmark
are just a sample of the natons which have
become increasingly aggressive in going
afer polluters. Several states, including Ger-
many, the UK, and the Netherlands have
been publically actve in pursuing satellite
surveillance programs that allow regulators to watch vessels pollute on the high seas. In 2002, a member of Boyang
Marine’s corporate board was prosecuted on the grounds that he had knowledge of the violatons. In the same
prosecuton, the Master of a Boyang vessel was sentenced to six months in prison. As enforcement strategies
tghten and penaltes increase, vessel owners and operators are under increasing pressure to ensure their own
compliance—lest they be held responsible for and subject to civil and criminal penaltes. –Patrick Seeba, GHPB
Case Three: M/V Cygnus
Growing Trends
With over 3,800 atendees and 265 exhibitors, the 21st
Annual Breakbulk Transportaton Conference & Exhibiton held
at the George R. Brown Conventon Center was a resounding
success. Planned in Houston for the frst tme, the 2010 Break-
bulk Conference’s exhibitors included Port Bureau members
American Shipping and Chartering, Bertling Logistcs, Ceres,
Chipolbrok, Clipper, Gulf Stream Marine, Intermarine, Morris
Export Services, the Port of Brownsville, the Port of Galveston,
the Port of Houston Authority, Ports America, Richardson Ste-
vedoring & Logistcs, Rickmers-Linie, and SSA Marine.
During the two-and-a-half day event, atendees heard
speakers such as David Hammerle from Bechtel, and Robert Drew from
Tata Steel Internatonal as well as panel discussions about the role of
freight forwarders in logistcs management, the outlook for heavy-lif/
project cargo, capital investment in South America, and evolving con-
tract strategies. Side sessions and impromptu meetngs also sprang up
around the exhibit hall and conference facility.
As a transportaton hub of both sea and air trafc, the Houston
conference ofered companies the opportunity to easily bring employ-
ees from around the world and the wide spectrum and background of atending organizatons was striking.
Not only did the 2010 conference boast a record number of atendees, but the tone and tenor of the week was
set by a businesslike environment. Startng with boat tours of the
Houston Ship Channel aboard the M/V Sam Houston, a business
run, golf tournament, and opening recepton, sponsors such as
the Port of Houston Authority also insured that interested cus-
tomers were able to see and sample the Houston area industry
and atmosphere. With steady trafc through the exhibiton halls
on both days, professional networking and socializaton was bal-
anced with discussions business discussions and plans to move
forward as an industry to meet future challenges.
Chipolbrok representatives prepare for the exposition
GHPB Staf use HarborLights to show the scope and
diversity of cargo and trafc in the Houston Port Region.
Gulf Stream Marine demonstrates their
breakbulk capabilities and expertise
“It all comes down to developing your idea. Afer that it takes pa-
tence, persistence and perseverance.” Born in Okmulgee, OK, an hour south
of Tulsa and an hour southwest of the tank farms of Cushing, Don Welch has
oil in his blood. His grandfather was a driller in Pennsylvania, and his great-
grandfather worked on teams moving oilfeld equipment at the beginning of
the last century.
In his early teens Don moved to Alabama where he began his studies
at the University of Alabama. Afer a few years, Don had to leave his econom-
ics classwork to support his family. He began working for Phillips Pipeline
Company loading trucks and railcars with gas and diesel at their Birmingham
From Alabama, Don moved to Tampa where he worked as a clerk,
then moved on to Arlington, TX. In 1977, Don found himself in Houston. As
the Pasadena terminal superintendent for Phillips, Don learned the Houston
pipeline system by listening to old tmers detailing various connectons and
choke points. Today, he knows the complete labyrinth of pipelines in Houston
as well as a taxi driver would know a city map. “If you’re not in the pipeline
business, you may not realize that there are almost as many pipelines in the Houston area as there are roads”,
notes Don.
In 1992, Don was transferred to St. Louis as a terminal superintendent, but three years later, he resigned
that positon to come back to Houston where he worked as the Vice President — Operatons for Oiltanking Hou-
In 2001, Don began full tme consultng, working to streamline terminal operatons and use efciency stud-
ies to improve customers’ processes. During this tme, he got involved with Coastal Caverns, a partnership that
developed salt domes in the Spindletop area in East Texas for use as underground storage facilites for liquid hy-
Then in 2005 Don founded Midpoint Partners, LLC. and brought in Stephen Senter and Blake Trahan, associ-
ates from Don’s prior positons. Their company works to help its partners and clients capture new business, advise
on operatons, and develop long-term strategies and business plans. With their track record of success from com-
panies such as Oiltanking, Magellan, Vopak, Phillips, and Chevron/Unocal, Midpoint Partners is focused on using
their knowledge of the petroleum and pipeline facilites along the gulf coast to focus on safe and proftable trans-
portaton logistcs.
Midpoint Partners specializes in developing green feld
terminal and pipeline assets that create value while maintain-
ing high standards of performance and safety as well as acquir-
ing interests and managing underutlized assets that will be
transformed into earnings contributors. With access to capital
and decades of experience, Midpoint Partners manages assets
by improving their marketng, business development, and operatng plans to meet the needs of refning, mar-
ketng, and trading customers.
Don and his wife Germaine have been married for 29 years are proud of their eight children and twelve
grandchildren. In additon to his work at Midpoint Partners, Don is actve in the Greater Houston Port Bureau,
where he served as Chairman of the Board from 2001 to 2006. Afer stepping down as Chairman of the
Board, Don has remained actve as a board member, and when he fnds the tme, enjoys travelling and
playing a round or two of golf.

Spotlight on Don Welch
Managing Partner—Midpoint Partners, LLP
Take the Guesswork
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Greater Houston Port Bureau—111 East Loop North—Houston, TX—77029 713.678.4300
111 East Loop North
Houston, TX 77029

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713.678.4839 fax

Do You Have a Damaged TWIC Card?
Replace Your Card for $60.00
The USCG, PHA, and other agencies have been investgatng malfunc-
toning TWIC cards, and earlier this month, USCG Sector Houston-Galveston
issued a Marine Safety Informaton Bulletn to announce that TWIC holders
can replace their card for $60.00.
While waitng tme for a replacement card is normally between fve
and ten days, the damaged cards will remain actve untl the new cards are
picked up and actvated. If you believe you need to replace your TWIC card
because of a damaged internal antenna which prohibits you from using the
card in a contactless mode, please contact 1-866-DHS-TWIC (1-866-347-
8942), or if you have questons, please contact LT Castaneda, USCG at 713-
Reaching 1200+ Professionals in
the Houston Port Region, contact
the Port Bureau at (713) 678 4300,
or to arrange
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