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Volume 14, Edition 5

SEpTEMbER/OCTObER 2010
3

Contents
THE MARITIME EXECUTIVE
Executive Achievement
8 | Frank Coles
President & CEO, Globe Wireless
28 34 Case
Study:
The international
Executive
Interview:
A conversation with sec-
by niCholE williAmson salvage Union retary General michael
The voice of the global salvage industry lacey and President Todd
washington insider leads the way toward a greener planet. busch of the isU.
12 | washington overshadowed by Tony mUnoz by Tony mUnoz
by midterm Election
by lArry KiErn
24 | Annals of safety: 50 | bunker Update:
marEx oP-ED The Inflatable Life Raft The Price of Emissions
16 | The nabucco objective by JACK o’ConnEll by bArry PArKEr
And Europe’s U.s. shale Gas
Alternative 40 | The world’s marine 54 | Deck machinery Directory
by miChAEl J. EConomiDEs AnD PETEr GlovEr highway
by robErT C. sPiCEr
Upgrades & Downgrades
20 | Corporate reputations 45 | The brave new world of
Take a hit subsea salvage
by JACK o’ConnEll by riChArD CArrAnzA

MarEx_40.indd 3 9/27/10 12:44 PM


Half Page Vert 1/18/10 3:29 PM Page 1

publisher / editor-in-Chief
Tony Munoz :: tonymunoz@maritime-executive.com
senior editor
Jack O’Connell :: harvardjo@maritime-executive.com
AssistAnt editor
Nichole Williamson :: nwilliamson@maritime-executive.com
Art direCtor
Evan Naylor :: enaylor@maritime-executive.com
AssistAnt Art direCtor
Daniel Bastien :: dbastien@maritime-executive.com
senior ViCe president, sAles & MArketing
Brett Keil :: bkeil@maritime-executive.com
direCtor of sAles - AsiA
Philipho Yuan :: fyuan@maritime-executive.com
direCtor–interACtiVe MediA
Carlos Dominicis :: cdominicis@maritime-executive.com
internet serViCes MAnAger
Steven Gonzalez :: sgonzalez@maritime-executive.com
CirCulAtion MAnAger
Natasha Thomas :: nthomas@maritime-executive.com

The Maritime Executive, LLC


(ISSN 1096-2751)
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The Maritime Executive (ISSN 1096-2751) is published bi-monthly


by The Maritime Executive, LLC, 3200 S. Andrews Avenue,
Suite 100, Fort Lauderdale, FL 33316, Tel. +1 954 848 9955.
SUBSCRIPTIONS: Domestic subscription rates are $36, per year.
International subscription rates are $86, per year. For single copies
of the magazine or reprints of articles appearing in this magazine,
contact The Maritime Executive at (866) 884-9034. COPYRIGHT:
© Copyright 1996-2010 by The Maritime Executive. All rights
reserved. The Maritime Executive is fully protected by copyright
law, and nothing that appears in it may be reproduced, wholly or in
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50

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9:22 AM
MarEx_40.indd 9/26/10 AM
editorial

Salvors to the rescue


it has been a tough year in the United States. Unemployment is still hovering around
ten percent from the Great Recession that began in late 2007; the BP oil spill caused enormous
ecological damage along the Gulf Coast; and now the Obama Administration intends to add
more federal oversight of oil companies, which will ultimately impact jobs and increase produc-
tion costs. And guess who pays for it? Making matters worse, the $787 billion infused into the
economy by the American Recovery Act was supposed to create jobs; but huge percentages of
the monies went to foreign firms, which created foreign jobs but only a handful in the States.
SEpTEMbER/OCTObER 2010

The U.S. maritime industry got almost nothing from it (.08 percent) and even less from the
recent Obama infrastructure plan. And to top it all off the American Marine Highways program
got a measly $7 million to replace the 15.5 million trucks congesting the highways and polluting
the air. Fortunately, the International Salvage Union (ISU) came to the rescue, as it often does,
Tony Munoz and gave us a “good news” story to talk about.
Editor-in-Chief MarEx is proud to feature ISU on this issue’s cover. The organization was founded in 1934
and has 58 full members from 30 countries and 57 affiliated and associate members. It is led by
Secretary General Michael Lacey and President Todd Busch and supported by Vice President
Andreas Tsavliris, General Manager John Noble, and an Executive Committee of ten chosen
from member companies. Since 1994 ISU’s members have rendered salvage services to ships
6
carrying 15,976,297 tons of potentially lethal pollutants. Moreover, the organization’s annual
Pollution Prevention Survey showed salvage volumes up 53 percent in 2009, meaning the need C

for such services continues to increase. M

This issue’s good news continues with a sterling lineup of supporting stories. Washington
Insider columnist Larry Kierns has crafted another gem and takes us inside the upcoming mid-
Y

term elections. Professor Michael Economides and colleague Peter Glover document European CM

efforts to gain energy independence via the “Great Pipe Hope,” aka the Nabucco Pipeline,
THE MARITIME EXECUTIVE

MY

which will hopefully alleviate the Russian stranglehold on the Continent’s gas consumption.
CY
Upgrades & Downgrades columnist Jack O’Connell hits a home run with his latest contribution
dealing with corporate reputations. With companies like BP and Toyota suffering meltdowns in CMY

the national spotlight, this is a must-read. K

The Panama Canal is currently the world’s greatest construction project and Bob Spicer, a
frequent MarEx contributor, brings us up to date on its progress, scheduled for completion on
its 100th anniversary in 2014. Jorge L. Quijano, Executive Vice President of Engineering and
Project Management for the Canal, spent a great deal of time ensuring the article was accurate
and loaded with essential information for our readers. Barry Parker and Richard Carranza, both
regular contributors, hit their usual strides with two timely and important articles. Parker ad-
dresses the fragmented world of bunkers and the industry’s efforts to meet deadlines for strict
new global emissions standards, while Carranza fills us in on the latest doings in the world of
subsea salvage. After months of watching ROVs hovering around the BP wellhead, this article
will absolutely need to be on your must-read agenda.
While it’s been a tough year in the States, knowing the global maritime industry is moving
and shaking again gives us cause for hope. This edition of The Maritime Executive is guaran-
teed to not only increase your intellectual capital but put you in a better mood along the way.
One final note: In our last edition, the article “Is There a Corpsman Onboard?” inadvertently
reported that EMS Offshore Medical Services is owned by American Medical Resources. It is in
fact owned by American Medical Response. We apologize for this rare error and feel better now
that it’s duly corrected.
Mar Ex

tony Munoz can be contacted at tonymunoz@maritime-executive.com with comments, input and


questions on this editorial or any other piece in this magazine. The Maritime Executive welcomes
your participation in our editorial content.

MarEx_40.indd 6 9/26/10 12:34 AM


SEpTEMbER/OCTObER 2010

8
THE MARITIME EXECUTIVE

ExecutiveAchievement
By Nichole Williamson

President and CEO, Globe Wireless


It’s not often that a company can look to Its top executIve
for both business development savvy and hands-on deck experience. Globe Wireless is
fortunate to have found just that combination in president and ceo frank coles. since
joining the company eleven years ago, coles has been working hard to position Globe,
which takes pride in its 100 percent dedication to customers, at the top of the maritime
communications industry. coles explains, “We are for mariners by mariners. We think
about the ship owner’s business. I walk around the table and look the other way and say
‘okay, what do you need?’” today, this strategy is keeping Globe Wireless fully occupied
in providing communication and It services to more than 10,500 ships, up from 2,000
when coles first came aboard.

MarEx_40.indd 8 9/27/10 12:04 PM


EXECUTIVE ACHIEVEMENT
A former ship’s master has what
it takes to succeed in today’s of ship-to-shore communication, and he wanted to be part of it.
Bursting with experience from virtually every corner of the mari-
technology-driven world. time world, he joined Globe Wireless in 1999. That same year,
just before Coles came onboard, Globe acquired Marinet Systems
ClImbIng ThE hawsEpIpE Ltd., based in Liverpool, and merged its HF radio network with
Coles wasn’t always behind the desk. At the tender age of 17 he set Marinet’s satellite data communications technology. This opened
sail, working as a deck cadet with Shell Tankers and spending the the door for success at Globe, at the time making it the only
next 12 years on a variety of ships worldwide, eventually becoming company offering dual-pipe, real-time communications capability
a Master Mariner. The time at sea provided a solid groundwork for to the maritime industry. It was a huge leap forward, and Globe
his “for mariners, by mariners” approach to business. He knows experienced a rapid increase in sales. The company quickly added
first-hand what mariners need at sea and what ship owners are to its sales and support staff and completed a $57 million private

SEpTEMbER/OCTObER 2010
looking for from their communications services provider. equity placement to support new services and rapid growth. While
Upon returning to shore, he attended Cardiff University where progress was fast and the pace of change furious, Globe still man-
he earned his Master’s Degree in Maritime Law. Giving law a aged to stay true to its basic principles by providing worldwide,
shot, he joined Richards Butler in London and later Stephen- 24-hour, on-line customer support and its customary wide range
son Harwood & Co. in Hong Kong. Taking his newly gained of value-added services to the maritime community.
knowledge and experience with him, his next stop was as General There seemed no one better to manage this phase of the
Manager of Pacific Basin Bulk Shipping in Hong Kong. From company’s growth and success than Coles. As Chief Operating
there Coles launched himself into the communications side of the Officer he charted the course to success, finding new and better
business when he accepted the CEO position at Rydex Indus- solutions to aid ship owners and captains. In Coles’ first five years
tries Corporation, a marine communications company. He spent at Globe, when the industry was seeing many communications
9
two years with Rydex and eventually moved on to Litton Marine companies falter and fail, Globe grew at a compound annual rate
Systems, serving as Vice President of Business Development and of over 40 percent.
Information Technology. Today Globe Wireless combines the best of satellite and global
It seemed Frank Coles had finally found his niche in the mari- digital radio network technologies to bring the maritime industry
time industry: New technologies were revolutionizing the business reliable and low-cost communications solutions. Coles told Mar-

THE MARITIME EXECUTIVE


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EXECUTIVE ACHIEVEMENT

Ex that equipping a ship with Globe’s communications services is


both highly cost-effective and relatively inexpensive, considering
the many benefits.
Since 2005, he has been navigating Globe through the rapidly
changing world of communications technology as President &
CEO and also as a member of the Board of Directors. Obtaining
the most advanced equipment and software has been paramount
to Globe’s success, but facilitating the needs of clients and being
a total solutions provider has been Frank Coles’ specialty. To this
end Globe has formed alliances over the years with more than a
dozen providers of communications services, including satellite,
SEpTEMbER/OCTObER 2010

airtime and data networks, to give ship owners more personalized


solutions for their business.
In addition to alliances and cutting-edge technology, Globe
Wireless also acquired SeaWave & Rydex in 2007. Coles had
once headed up Rydex, which was now part of SeaWave & Ry-
dex, before joining Globe, and knew its IP router technology was
just what Globe needed. Additionally, Globe acquired Zynetix, a specifically designed for IP satellite services and launched on the
UK-based company specializing in global system mobile commu- Inmarsat FleetBroadband platform. Coles says that “Globe iFu-
nications solutions, which helped lower costs and provided private sion is the way forward for maritime communications. It’s going
data transmission services for mariners. to change everything.” The fully integrated iFusion network can
10
make and receive voice calls using a GSM handset or normal
iFUsIon – nEXT-GEnEraTIon fixed-line telephone; send/receive emails and faxes; browse the
TEChnoloGy Today Internet, and upload/download files. It also offers full shore-
The company’s most recent innovation, launched in early side control of the solution, including the administration of user
September, is Globe iFusion, an innovative integrated system profiles, browsing capabilities, firewall settings, satellite gateways
THE MARITIME EXECUTIVE

MarEx_40.indd 10 9/27/10 12:04 PM


EXECUTIVE ACHIEVEMENT

owners a CD with a searchable database of all the transactions to


and from the ship. Owners can take that and search by captain
or by date and pinpoint where something may have gone wrong.
“We’ve had ships where the crews have gone overboard, and the
company can trace where the problem occurred,” says Coles.
Globe also tracks the movements of the ships it services by
using large monitors that provide the ship’s location for the last
15 days, along with its course and speed. When hijackings occur,
Globe helps its clients locate the ship and can continue communi-
cations with the crew so long as the pirates don’t “cut the cord.”
Right now Globe is monitoring a ship that’s been under siege for

SEpTEMbER/OCTObER 2010
the last three months, and because the pirates haven’t yet found
where the position data is coming from, Globe has been able to
continue monitoring its position.
Frank Coles’ brand of customer-oriented business develop-
ment, coupled with strong alliances, will lead Globe Wireless
into its next phase of success. He told MarEx that airtime is a
and least-cost routing. commodity and the terminal is just a commodity, and the real
When asked how the market has changed over the years, Coles nuts and bolts of his business is making those technologies and
reflects on the days when “It was great just to get an email. Now, those satellites valuable to his customers. Without that, they are
ship owners expect connectivity, and they expect it to just work. If just satellites, just pipelines and just terminals. “We very much see
11
a ship is not connected, it is lost.” There are very few operators in communications as the means to an operational end, not just a
the deep sea without satellite communications, and many couldn’t way of providing dollars per minute for air time,” he concluded.
imagine operating without them. For the typical client, Globe sets Well said, and well done! Mar Ex
up and maintains all the computers and the local area network and
backs everything up. At the end of each month it provides ship Nichole Williamson is an Assistant Editor of the magazine.

THE MARITIME EXECUTIVE


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washington insider
Written by Larry Kiern,
Winston & strawn LLP

washingtoninsider
washington overshadowed
by Midterm Election
The elephanT in The living party wins control of the Senate it will face tricts. The Democratic house leadership
room that everyone in Washington, D.C. the same 60-vote hurdle that has plagued understood from the start that it was un-
SEpTEMbER/OCTObER 2010

can’t help but talk about is the prospect Democratic Majority leader harry Reid likely to sustain its hold on these congres-
of a major electoral defeat for the Demo- (D-nv). Formal control of the Senate sional districts and has expected to yield
cratic majority in Congress. Following 18 does not translate into effective control. perhaps a score or more of those districts.
months of historic legislative achievements, So the battle is really over the remaining
the Democrats face the threat of not just the impact of Predicted 20 or so seats that the Democrats have the
substantial losses at the polls, which is to Republican gains best chance of defending and a handful
be expected in a midterm election, but the history teaches some basic lessons about of seats that Democrats hope to flip from
actual loss of majority control. midterm congressional elections. Republicans. put in this context, one can
Former Speaker of the U.S. house of First, over the past 30 years the appreciate the statements of Democratic
Representatives newt gingrich (R-ga), president’s party usually sustains losses leaders that they have the candidates,
12
who led the Republican party to a 54- in congressional midterm elections. The organization and campaign funds to retain
seat gain in the 1994 midterm election, only recent exception was in the 2002 control. november 2nd will tell the tale.
declared that he foresaw a gOp takeover midterm election following the 9/11
of the house exceeding his 1994 triumph. tragedy and the start of the afghanistan substantive Change?
On the other hand, Democratic Majority War. Then-president george W. Bush’s predicting the substantive impact of
leader Steny hoyer (D-MD) predicted party registered a modest single-digit gain. significant Republican gains in Congress
that the Democrats will retain control while Otherwise, presidents of both parties, is an inherently uncertain endeavor. if the
THE MARITIME EXECUTIVE

admitting, “We’re going to lose seats.” For including even Ronald Reagan, sustained party gains control of the house, as some
house Republicans the magic number is significant midterm losses. Therefore the experts have predicted is likely, prospec-
40, which congressional election guru The prediction of Republican party gains this tive Speaker John Boehner (R-Oh)
Cook Report rates as achievable. year is no surprise. Moreover, in the con- and his caucus will set a new legislative
Senate Republican leader Mitch Mc- text of a severe economic downturn caus- agenda. They pledge to target repeal of the
Connell (R-KY) appears less sanguine ing the loss of over eight million jobs and principal legislative accomplishments of
about the Senate, which would require a with approximately 25 million americans president Obama and the 111th Congress:
gain of ten seats. he cautioned Republi- either unemployed or underemployed, the health care reform, financial regulatory re-
cans that the american electorate does not predictions are not surprising. Facing se- form, and increases in federal spending en-
like politicians “measuring . . . the drapes.” rious economic distress, presidents Carter acted in the economic stimulus measures.
his caution arises from his understanding and Reagan each sustained significant as a practical matter, this will be very
that, while there are likely to be substan- congressional losses in midterm elections. difficult to accomplish, even if a new
tial Republican gains in the Senate, a Second, Democratic losses have been Republican majority in the house enjoys
Republican majority is not as likely as it expected since the 2008 election when a companion Republican majority in the
currently appears in the house. Moreover, they achieved remarkable gains in many Senate. Simply put, president Obama and
McConnell is painfully aware that if his historically Republican congressional dis- his remaining
TTS_MaritimeExec_86x51 allies in6:17
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MarEx_40.indd 12 9/26/10 12:35 AM


washington insider
experts Predict Major electoral
Losses for the democratic Majority
able to block such efforts. Of course, that from fossil fuel states, who were being this cycle before, divided government can
is not to say there won’t be some tweaking asked to raise their constituents’ energy tackle the problem. President Clinton and
of the measures around the edges, but the costs in the midst of high unemployment. the Republican-led Congress agreed on
overriding concern with budget deficits The timing for such an ambitions proposal measures that reduced federal spending,
will severely limit the options of a new proved inauspicious. increased federal revenues, and restored
Republican majority. the nation’s financial footing following a
Republicans will quickly experience Runaway spending and difficult period of economic stagnation
the other side of the reality of the exercise the Bush tax Cuts and mounting federal deficits. But this will
of political power that they have wielded Beyond the major achievements of mean cuts to federal programs, including

SEpTEMbER/OCTObER 2010
so effectively: It is easier to block than to President Obama and the 111th Congress, programs affecting the maritime industry.
pass legislation. Having enacted into law the most important substantive reality Taxes will surely preoccupy the work of
his most important priorities, President likely to affect the next Congress, whether the next Congress, no matter which party
Obama and his allies will be able to block controlled by Republicans or Democrats, wins. President George W. Bush’s tax cuts
their repeal. Thus, if a new Republican or neither, is the popular concern about are set to expire at the end of the year,
leadership embarks on the path of repeal- excessive federal spending. Although, and in the midst of the midterm election
ing the president’s signature accomplish- the Chairman of the Federal Reserve the two parties are jockeying to cultivate
ments, it will largely be for symbolic remains more concerned about the threat their constituencies. Republicans Party
purposes to show their supporters that of deflation and a lack of demand in the has advocate extending the $3.8 trillion
they fulfilled their campaign pledges. American economy, the popular mood was in tax cuts and argue that raising taxes in
13
President Obama will wield his veto as a profoundly affected by the financial crisis a time of almost ten percent unemploy-
badge of honor. that struck Greece during 2010. Media ment makes no sense. President Obama
On President Obama’s favorite issue of coverage of the threatened collapse of the proposed that $3.0 trillion of the tax cuts
climate change, however, a new Republi- Greek economy and the resulting street for the middle class should continue. But
can majority will be able to trim funding violence and protests, coupled with fear he contends that the $800 billion that ap-
for the program underway at the Envi- that the Greek contagion would spread to plies to those earning more than $250,000
ronmental Protection Agency (EPA) to other countries, e.g., Spain, Portugal, Italy, annually should end. He also argues that

THE MARITIME EXECUTIVE


regulate greenhouse gases. The net result and Ireland, profoundly influenced popular the $800 billion should be used to address
will likely be to delay EPA’s program. But attitudes. Fear of potential economic col- that nation’s burgeoning deficit and that
at the end of the day the future of the lapse appears to dominate much of the tax cuts to high-income earners do not
president’s proposals to combat climate electorate. And both parties appear to have stimulate the economy.
change will turn more on his reelection acknowledged this public fear. For his These positions essentially represent
prospects in 2012. If he is reelected and part, President Obama formed a bipartisan a reprise of the positions of the parties
remains committed to the goal, then presidential commission to address the during the 2008 national election. More
even with opposing Republican congres- growing problem of America’s burgeoning recently, others have floated compromise
sional majorities he will probably be able debt. Sensing the shift in popular con- proposals, e.g., increasing the annual
to achieve modest progress, although cerns, Republican leaders have pummeled “middle class” income threshold from
slower than with Democratic majorities in the president and his Democratic allies $250,000 to $1,000,000 or extending
Congress. The political reality governing with charges of fiscal irresponsibility. the Bush tax cuts for two years. While
the climate change issue is that it is less It therefore appears that in the 112th the president and the House Democratic
a partisan issue than it is a regional and Congress the starting point will be to pro- Caucus appear interested in forcing the
economic issue. Powerful obstacles arise pose policies to restrain federal spending. issue before the midterm election, Senate
from members of the Democratic Party As we know from having lived through Democrats appear less interested. No

MarEx_40.indd 13 9/26/10 12:36 AM


washington insider

doubt that is because they doubt they have


2010
Marine Finance the 60 votes needed to prevail.
Thus, notwithstanding President
Obama’s prodding, it appears the future
of the Bush tax cuts will be decided by the
112th Congress, not the current Con-
gress. Against the backdrop of the budget
deficit, it would not be surprising to see
the fate of these tax cuts wrapped into a
broader budgetary compromise. In that
context, history teaches that the President
SEpTEMbER/OCTObER 2010

will have the political advantage just as


WorkBoat Executive Summit President Clinton enjoyed when he con-
fronted Speaker Newt Gingrich following
the 1994 Republican Revolution.

Forecasting and understanding the marine financial marketplace is critical


Maritime impacts will Vary
So how will these political dynamics likely
for a maritime CEO, COO and CFO but can be difficult in times like these.
affect the U.S. maritime industry?
The WorkBoat Executive Summit allows you to hear directly from highly- First, maritime programs depending on
qualified maritime professionals and get a gauge on what senior financial federal funding will likely suffer significant
14
“weathermen” and industry insiders are forecasting for the future. This cuts. Likewise, agencies regulating the
exclusive forum offers a private setting for critical information sharing, maritime industry will likely see their bud-
idea generation and rare business to business collaboration. gets cut and, notwithstanding the weak-
nesses recently highlighted in our regula-
Who should attend tory system, the agencies will have fewer
resources with which to regulate. During
■ CEO ■ Chairman ■ President the Clinton Administration, for example,
THE MARITIME EXECUTIVE

■ CFO ■ Owner ■ Managing Director the U.S. Coast Guard was cut 12 percent,
■ COO ■ General Manager ■ Controller lost 4,000 personnel, closed scores of in-
■ CIO ■ Vice President ■ Director stallations around the country, and delayed
modernizing its fleet and aircraft. Impor-
tantly, the EPA’s climate change program
Registration & Pricing will likely slow for lack of resources and
The WorkBoat Executive Summit is a full day event that includes panel increased congressional scrutiny.
discussions, roundtable sessions, a keynote address, networking luncheon, Second, as part of any grand com-
promise on budgetary policy, taxes will
reception and five networking opportunities.
likely increase and the maritime industry
will no doubt find itself included in those
Seating is limited to the first 75 registrants. increases. The harsh reality for all of us is
that solving our nation’s fiscal problems
■ $600 Early Bird ■ $700 Regular requires difficult economic and political
(Before October 29th) (October 29th or later) choices, no matter which party or parties
control the 112th Congress. Mar Ex

November 30, 2010 Larry Kiern is a partner


Morial Convention Center at Winston & Strawn
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SEpTEMbER/OCTObER 2010

16
THE MARITIME EXECUTIVE

MarEx OP-ED: By Michael J. Economides and Peter Glover

The Nabucco Objective


And Europe’s U.S. Shale Gas Alternative
EnErgy gEopolitics at its rawEst is shaping up over
a potential battle to provide Europe with a semblance of energy
security, especially as it applies to natural gas supply diversity. in
early 2009 we highlighted how the international intrigues behind
the proposed nabucco natural gas pipeline, Europe’s “great pipe
hope” to free the continent from the russian energy stranglehold,
read like a Bourne-style political thriller. More than a year later
nabucco’s plot line is no nearer reaching a dénouement.

MarEx_40.indd 16 9/26/10 12:36 AM


oped EconomidEs

pact of alternative energy sources. And it is in the


natural gas marketplace and associated geopolitical
pipeline wars that Europe’s energy diversification
program will succeed or fail. In that regard, and
leaving aside the relatively minor impact of renewable
energy sources, Europe is already switching to gas.
According to estimates by Eurogas, the EU currently
gets 38 percent of its gas from within the European com-
munity, largely from the UK and the Netherlands. Russia
supplies another 25 percent, with Norway (outside the
EU) and Algeria chipping in 18 and 10 percent, respectively.

SEpTEMbER/OCTObER 2010
Russian supply is by no means uniform, with East European
states more heavily dependent while Spain receives no Russian
gas at all. Cognizant of this disparity of supply, the EU has had
great difficulty establishing a common energy policy, especially
towards Russia.
But with rising rates of gas consumption, Europeans know
that an increasing supply will either have to come from Russian-
controlled reserves or from the Caspian Sea states, such as
Azerbaijan and Turkmenistan. Caspian gas is critical to the suc-
cess of the Nabucco venture. The problem is, while the Russian
17
Federation speaks with a single voice on energy matters, Europe,
for all its federal aspirations, does not. The resulting geopolitick-
ing has seen internal EU divisions collude with Russian strategic
pressure, resulting in Caspian gas piping east to China.

playinG pipElinE politics


The sad fact is that, from the inception of Nabucco, European en-

THE MARITIME EXECUTIVE


ergy policy has been usurped by Europe’s big hitters, particularly
Italy and Germany. Italy is today Russia’s chief energy ally inside
the EU, and many believe Rome can be relied upon to use its
EU veto whenever Russo-Italian energy interests are threatened.
Germany is Russia’s main trading partner in Europe. The Russo-
German special relationship has led German business leaders to
undermine the Nabucco project at every turn.
Russian Prime Minister Vladimir Putin’s strategic success in
frustrating EU efforts to find a Caspian gas supply for Nabucco
cannot be underestimated. Moscow’s routing of the Nord and Sud
Stream pipelines under the Baltic and Black Seas has enabled the
Kremlin to keep pressure on Nabucco’s potential transit countries.
Another concern for Europe is Russia defaulting on its energy
The key problem for the European Union now, as then, is export commitments – a very real possibility since Gazprom has
twofold: an inability to secure regular and stable gas supplies, and
EU nations – in particular Germany and Italy – undermining
energy policy unity by cutting individual deals with Moscow. To- MARINE BUSINESS EXCHANGE
day work on Nabucco’s competition, the Russian-backed Nord Mergers, Acquisitions, Divestitures & Auctions
and Sud Stream pipelines, is advancing apace. The European
interests of Gazprom, Russia’s mammoth natural gas monopoly, www.marinebusinessexchange.com
are looked after by Gerhard Schroeder, the former German
Chancellor. Meanwhile, the failure of the Nabucco backers to Are you ready to sell your business or are you ready to expand
sign up a major country to supply gas has led European states to your business through a merger or acquisition? We presently
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MarEx_40.indd 17 9/26/10 12:36 AM


oped EconomidEs

long been suspected of having over-committed its


production capacity. Natural gas supply promises
that were made to the Chinese with new, under
construction, west-to-east pipelines are exacerbating
the problem. The supply shortage fear is borne out by
falling Russian production figures, as we shall see be-
low, a situation that could lead to Moscow’s picking
and choosing which European countries could buy its
gas. There’s also the prospect of Russian ambitions
toward heading up a new gas OPEC to consider.
Russia has gone to great lengths to safeguard its
SEpTEMbER/OCTObER 2010

European dominance in what we have labelled before


as “energy imperialism.” Just over two years ago, in
July 2008, Alexei Miller, Gazprom’s CEO, shocked
the energy world by making an all-too-public blanket
offer to Libya’s Muammar Kaddafi to buy all of
Libya’s would-be exports of oil and gas. Russia has
no interest in competition.
While some European countries have boosted
their LNG imports, it is an expensive option. Equal-
ly, over-generous renewable energy subsidy regimes
18
are currently being slashed across the board in Europe – all of U.s. shalE Gas – a Way oUt for EUropE?
which appears to leave Nabucco as Europe’s only real alternative In an energy-logical, trans-Atlantic world, the U.S. could be the
to decades more of Russian energy dominance. Except, that is, natural gas savior for Europe. BP statistics for proved reserves
for one major energy option the EU appears to be overlooking: and production of natural gas in 2009 make interesting reading,
the potential impact of nascent U.S. shale gas reserves. not least for an EU Commission desperate to buy itself time to
THE MARITIME EXECUTIVE

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oped EconomidEs

break the Russian bear’s vise-like energy grip. The oft-quoted list Marcellus Shale: How Big Is It?” 2010 IOGA of West Virginia
of leading gas-rich states shows Russia on top with 23.7 percent Annual Conference). In June of this year, an MIT report pre-
of the world’s proved gas reserves. Next come Iran and Qatar dicted that U.S. gas production is on schedule to double – from
with 15.8 percent and 13.5 percent, respectively. Then there is 20 to 40 percent – its share of the U.S. energy market over the
a gap before a variety of gas-producing states figure in the mix, next few decades. That also leaves open the prospect of increasing
with the U.S. at 3.7 percent and Canada at 0.9 percent, respec- U.S. gas reserves available for export.
tively. But that doesn’t tell the whole story. Whatever the longer-term future for U.S. gas, burgeoning
By December 2009, production of natural gas in Russia had production opens up the tantalizing prospect of an unexpected yet
fallen to 17.6 percent of total global production – down by a compelling subplot for Europe in the Nabucco saga: U.S. shale
full 12 percent – from 601 billion cubic meters (Bcm) or 21.3 gas as a genuine alternative to Russian gas – and to Russia’s new
trillion cubic feet (Tcf) in 2008 to 527 Bcm (18.7 Tcf) in 2009. energy-fuelled hegemony. Imagine an array of LNG liquefaction

SEpTEMbER/OCTObER 2010
Over the same period, U.S. natural gas production rose by installations dotting the U.S. East Coast where the potentially
another 3.5 percent, peaking at a Russia-eclipsing 20.1 percent massive shale gas production would be converted and shipped to
(541 Bcm or 19.2 Tcf) of total global production. At the end of Europe. This prospect is so logical that, under normal circumstanc-
2009, for the first time, the U.S. stood as the world’s number es, a business-oriented Barack Obama Administration should be
one producer of natural gas. This astonishing turn of events is rushing into it. But it may be too much to expect from an alter-
entirely due of the emergence of shale gas, arguably one of the native energy-focused, environmentalist-inundated government
most important stories in the international oil and gas business that has already imposed an offshore drilling
of the last decade. moratorium. Stay tuned for the next episode of
The term “reserves,” which in the U.S. is a legal term with this Jason Bourne thriller! mar Ex
unique meaning, does not necessarily reflect what other countries
19
report. Estimates of “potential recoverable” shale gas, published Dr. Michael J. Economides is a Professor at
by a number of authors, have been huge. The Marcellus Shale, the Cullen College of Engineering, University
covering the entire states of Pennsylvania and West Virginia, went of Houston, and Editor-in-Chief of the Energy
from 1.5 Tcf of reserves to over 500 (!) Tcf of ultimate recovery in Tribune. peter Glover is the European As-
less than five years, from 2005 to 2009 (see Wrighstone, G. “The sociate Editor of the Energy Tribune.

THE MARITIME EXECUTIVE

MarEx_40.indd 19 9/26/10 12:36 AM


JACkO’CONNELL
JACKO’CONNELL

Upgrades Downgrades
Corporate Reputations Take a Hit
In the wake of the fInancIal now crisis management happens to be had already gone through an explosion
SEpTEMbER/OCTObER 2010

crisis, toyota’s gas pedal problems and the a subject near and dear to my heart, and with even more deaths at its texas city
BP oil spill, corporate reputations across I’ve been through a number of them in my refinery, the second largest in the U.S., in
the board have taken a hit. In this regard, time – crises, that is – and so, in the spirit 2005 and all along was projecting itself
a recent article in the New York Times of good fellowship, I thought I’d share a as the environmental company – BP, “Be-
caught my eye. (Yes, loyal MarEx readers, few of the lessons learned along the way. yond Petroleum.” from the outset it tried
this writer confesses to reading the New to minimize the size of the spill, saying
York Times. hopefully you are not too The MonsTer AT The it was no more than 1,000 barrels a day.
shocked. for his penance he also reads BoTToM of The seA a week later it was 5,000 barrels a day,
Barron’s and the Wall Street Journal. that BP’s problem was obvious: In addition a month later 15,000 barrels, and after a
way you can be assured of getting a com- to the 11 workers killed and 17 injured, while people lost all faith in anything the
20
pletely balanced view.) now where was it had this monster at the bottom of the company was saying as it was obvious
I? oh yes, the Times article. It focused sea that was spewing oil into the Gulf and from the live feeds that the spill was much
on the travails of BP, Goldman Sachs and being viewed daily by millions around worse than anyone was admitting. BP lost
toyota and was basically a primer on what the world on a live feed from underwa- its credibility first and then whatever was
and what not to do in the event of a crisis. ter cameras. to make matters worse, it left of its tarnished reputation. It will take
years to get it back – if ever.
toyota’s problem was equally obvious:
THE MARITIME EXECUTIVE

faulty gas pedals were causing unintended


acceleration, leading to accidents and
deaths. It addressed the problem by first
saying there was no problem. then it
was the floor mats that were the problem,
then some combination of the floor mats
and gas pedal, and then finally the gas
pedal mechanism itself. the series of false
starts and “fixes” that didn’t work steadily
eroded the company’s credibility and
undermined its standing as a firm that had
built its reputation on quality. then when
internal company documents revealed that
the company had known for a long time
that there was a problem with unintended
acceleration, “the endless pursuit of per-
fection” was viewed as the endless pursuit
of deception. toyota showrooms emp-
tied out and the company lost its newly
acquired status as the world’s biggest car
company. a reputation for reputation and
quality built up over decades was gone in
a matter of months.
Goldman Sachs had a different but
no less serious problem: It was making
money while others were losing it. not
only that, but it was directly benefit-
ing – or at least was perceived as directly
benefiting – from other people’s losses.
and the perception in a situation like this

MarEx_40.indd 20 9/26/10 12:36 AM


It’s tough enough these days
for companies to make a
buck. What they don’t need is
damage to their fragile egos.
is just as damaging as the reality. As what happened, at least initially,
Marshall McLuhan said many moons with BP and Toyota. The lawyers
ago, “The medium is the message,” and won in the early going and gave
the way we receive information is the ground grudgingly as additional
way we interpret it. Goldman added fuel facts came to light.
to the fire by assuming a “holier than » Express Remorse – It’s okay to

SEpTEMbER/OCTObER 2010
thou” approach and defending its right say you’re sorry. Just don’t leave it
to exorbitant profits at others’ expense. at that. Explain what you’re doing
Its arrogance in the face of criticism (and to correct the situation and provide
for this point I am indebted to the Times updates, as needed, along the way.
article) was reflected in its chairman’s » Speak the Truth – This seems so
comment to the Sunday Times of London obvious, but it’s hard to do in prac-
that the firm was doing “God’s work,” tice. Prima i fatti – “first the facts”
all of which helped make it the symbol – as one of my old mentors used to
of Wall Street greed and evil – Gordon say. Establish the facts of the case
Gekko in spades. When it finally settled first and then communicate them ac-
21
fraud charges with the SEC by paying a curately and completely. Hold noth-
record fine of $550 million, the public ing back, and keep embellishment
felt vindicated. But the taint over Wall St. and interpretation to a minimum.
remained, and the chasm between it and » pick the Right Spokesperson
the rest of the country widened. – This can make all the difference.
The spokesperson has to be cred-
Rules of the Road ible, sympathetic, and hopefully

THE MARITIME EXECUTIVE


So what are the key takeaways here? likable – someone the public can
How could companies as large and suc- relate to. Depending on the gravity
cessful as BP, Toyota and Goldman Sachs of the situation, this is usually the
make so many mistakes in the manage- CEO and, for consistency, it should
ment of a bad situation? How could they be the same person throughout the
lose their gestalt? Didn’t they have crisis crisis. And while words and what
response plans and crisis communica- is said are important, in today’s
tions plans in place along with a cadre media-savvy world body language
of outside experts to consult? Of course can be just as important, along with
they did, but in the heat of battle they tone of voice. Avoid arrogance and
somehow ignored all the right moves. a condescending tone at all costs.
» Accept Responsibility – This is Show understanding and humility.
first and foremost. When you’ve Sometimes being a milquetoast is
done something wrong or made better than playing the hero. Listen.
a mistake, admit it. Stand up and » Stick to the Script – Have a set of
accept responsibility. Denials predetermined messages and keep
(“stonewalling”) will only make repeating them. Craft the messages
the situation worse when the truth carefully to address all aspects of the
eventually comes out; and it will, as crisis. Anticipate questions and have
Toyota learned the hard way. Cast- appropriate responses ready. If the
ing blame on others is just as bad, facts of the case change, adjust the
as BP learned when it tried to place message. It’s okay to do that. Above
responsibility for the spill on its all, avoid adlibs and spontaneous
suppliers and partners. Of course, reactions to questions. This often
accepting responsibility is easier derails a well-thought-out com-
said than done, as the lawyers on munications strategy and leads to
the case will fight hard against your embarrassment and regret. Humor,
admitting anything which could be too, is a double-edged sword. Use
later held against you in a court of it with care. A remark spoken in jest
law. And this is probably exactly often reflects hidden beliefs and can

MarEx_40.indd 21 9/26/10 12:37 AM


JACKO’CONNELL

come back to haunt you. because (a) now everything you do is The possibilities are too numerous to list.
» Fix the problem – The best com- subject to scrutiny and second-guessing Cruise ships, in particular, are coming
munications plan in the world won’t by the media and general public and (b) under increasing scrutiny as a result of al-
save you if you don’t fix the problem. your attention is divided – you’re trying leged crimes and suicides on board, some-
If the problem can’t be fixed, say so to fix the problem while at the same time times involving crew members and often
and explain why. fending off the press. going unsolved. Cruise ships also make
Good PR is not rocket science. It’s It should be acknowledged right here an excellent target for terrorist attacks, as
more like common sense. But common that communications strategies and plans many a security expert has noted.
sense can be a rare commodity these days, can do only so much, and it’s important Exxon Valdez was a wake-up call to the
and the real secret to success lies in the to be realistic about what to expect. They industry 20 years ago. Deepwater Horizon
execution. cannot right a wrong. They cannot save is the most recent. The point is to be pre-
SEpTEMbER/OCTObER 2010

a life that has been lost. They are not a pared and have a response plan in place
OutCOmes cure-all for what ails you. What they can – not just a plan to handle the crisis but
Okay, so what’s the best you can hope do is present your side of the situation in also a plan to handle the media. Having a
for? The best outcome is when the media as clear and compelling a manner as pos- plan can make all the difference between
loses interest after a day or so and turns sible. Because if you don’t tell your story, making a bad situation worse and making
its attention to new and ever more urgent someone else will tell it for you – and it’s a bad situation manageable marEx
news. Then you can go back to fixing usually someone with a beef. And that can
the problem and repairing the hit to your be disastrous. Jack O’Connell, the senior editor of this
corporate image. The worst outcome is magazine and a former maritime execu-
when new revelations keep surfacing and WhAt AbOut shipping? tive, is a private investor who may own
22
the case drags on for days and weeks All of this has relevance to shipping be- shares in some of the companies men-
and even months. This is, unfortunately, cause bad news can occur at any time and tioned in his columns. The views expressed
what happened to BP and Toyota and, to often when you least expect it: a fire or in this column are his and his alone and
a lesser extent, Goldman Sachs. It makes explosion on board, an oil spill or terrorist are not in any way to be construed as
it even more difficult to fix the problem act, a hijacking or kidnapping or worse. investment advice.
THE MARITIME EXECUTIVE

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SEpTEMbER/OCTObER 2010

24

ANNALS OF SAFETY:
By Jack O’Connell
50-person covered raft.
The Inflatable Life Raft
Tucked away in a corner loT off i-95 in lake worTh, florida is a
THE MARITIME EXECUTIVE

60,000 square foot facility with the name “Patten company” on the door. its founder,
fred Patten, who died two years ago at the age of 96, is generally credited with inventing
the one-man inflatable life raft. That was back in 1939, five years after his older brother
robert, a naval academy graduate, died off the coast of Panama after his plane crashed
into the sea and he awaited rescue. he had no life raft. Pilots in those days had a life
vest at best, and often nothing. rafts were rigid structures, made of wood or cork, and
impractical for aircraft.
The rest, as they say, is history.
fred went on to join u.S. rubber, just in time for world war ii, where he became
head of Product development. The company produced thousands of one-person rafts
for the army air corps and u.S. navy. The seven-person raft followed in 1942. count-
less lives were saved, including that of a future president. when George h. w. Bush’s
avenger bomber was shot down over the Pacific on September 2, 1944, he drifted for
hours in his one-man inflatable before being rescued by the submarine Finback. Many
years later, when fred Patten turned 90, he received a letter from then-florida Gover-
nor Jeb Bush that read, in part: “Thank you for designing and developing the inflatable
life raft. This remarkable raft has been responsible for saving many lives. i am told that
number includes my father.”

The Untold Story of the D-Day Invasion


one of the little-known and all-but-forgotten stories of world war ii is the elaborate
attempt to deceive the nazis on the eve of the normandy invasion. To disguise the actual
landing site, the u.S. government commissioned fred Patten – and u.S. rubber – to
construct a series of life-size decoys of airplanes, tanks and landing craft, all made of in-
flatable rubber. at a meeting in dayton, ohio, in 1943, the four major rubber companies
– B.f. Goodrich, firestone, Goodyear and u.S. rubber – divvied up the assignments,
all under the leadership of fred Patten. Secrecy was of the utmost importance, and the
workers didn’t know what they were working on until the individual pieces were shipped
Robert M. patten’s death in 1934
inspired the first inflatable life raft.

MarEx_40.indd 24 9/26/10 12:37 AM


A small company in Florida ANNALS OF safety
has been quietly saving lives
for 63 years.
overseas and assembled by the military. rafts employ “stacked” tubing to
General George S. Patton was put in create a bigger and more stable
command of the decoy army, which was platform. Most of the larger
strategically positioned along the shoreline rafts are reversible, meaning it
near Dover, England, across the channel doesn’t matter which side is up.
from Calais, France, some 150 miles from This comes in handy when your ship
the actual invasion site. With General sinks or airplane crashes and you’re
Patton in command, the Nazis could not being tossed around in the waves
have doubted the threat of this army. Nazi with an upside-down raft. Because the

SEpTEMbER/OCTObER 2010
aircraft reported the Dover operation to company’s biggest customer is the military,
their high command, and the enemy was quality control is all important, and the
sufficiently confused that it had to string Patten Company puts all its products
out its defenses along the entire length of through a rigid series of tests before finally
One-man inflatable life raft (1939).
the Channel coast of France with a major shipping them out.
portion assigned to the Calais area. His- “We save lives,” said Bob Patten, son of “too dangerous. There are tons of people
torians have credited the decoy operation the founder and co-owner, with his brother with ideas out there waiting for me to
with contributing immeasurably to the Steve, of the company. “It’s very tangible, develop them. I just have to find the time.”
success of the D-Day invasion and saving very real.” Saving lives is not a respon- He smiles and laughs a lot when talking
countless lives. sibility you take lightly, and the Pattens about his “creations,” one of which was
25
Following the war, Fred Patten struck have been doing it for years. That is one the giant boulder in an Indiana Jones
out on his own and finally founded his reason why they have never been without a movie, and it’s obvious he’s having fun.
own company in 1947 in Lowell, Mas- government contract in the long history of In the Sago Mine disaster in 2006 in
sachusetts. Safety concerns – the low New the company. Product failures are nonex- West Virginia the company was asked to
England humidity was a cause of static istent. When the Deepwater Horizon oil rig build decontamination shelters that could
electricity and made fire a constant threat exploded and sank in the Gulf of Mexico in be easily installed on site. It also provided
in the manufacture of inflatable products April, the company received a large order inflatable habitats that could be lowered

THE MARITIME EXECUTIVE


– prompted him to move the operation to for its bladders, which were inserted into into the mine shafts to provide shelter
Florida in 1955, where the relatively high the massive booms used to contain the for trapped miners. Noxious gases are a
humidity provided an ideal, and safer, spill. The bladders keep the booms afloat. constant threat in underground operations,
climate for production. When not saving lives, the company is busy so the company designed an airtight Mine
protecting the environment. Shaft Barrier that could be stretched across
Bladders and Balloons Like his father, Bob Patten is a tinkerer, the mouth of the shaft to seal out deadly
Tire tubes, life vests, inflatable toys and always thinking of new applications for fumes. For the recent earthquake in Haiti
balloons – these are all things we take for his inflatable technology. When MarEx the company shipped inflatable Quonset
granted and never give a second thought. paid a visit in September, he had in his huts for use as temporary shelters.
They’ve been around us since childhood, office a full-scale version of an Inflatable The use of 3D CAD has greatly simpli-
and we often associate them with child-like Vehicle Jack, to be used by U.S. Marines in fied the design process and made measure-
activity. Yet there was actually a time when Iraq and Afghanistan to put air back into ments infinitely more precise and rapid.
they didn’t exist. And it wasn’t that long blown-out Humvee tires. “Ever try to jack This too is extremely important when
ago. It took a tinkerer like Fred Patten to up a car in the sand?” he quipped. “It ain’t making products that more often than not
invent the first practical version of an inflat- gonna happen. But with this gizmo, you’ve are the difference between life and death.
able life raft. Why inflatable? So it would got a steady foundation that won’t sink.” Sketches on napkins and note paper are fed
collapse and fit into a small place, like He was once asked
strapped to the pilot’s back, where it would to design a balloon
be instantly available when needed. that would attach to a
The technology is simple, yet remark- bomb so that low- Procurement Contractors +
ably adaptable. You sew or glue together flying aircraft would Spare Parts Brokers Since 1974
strips of rubber or rubber-like material, have sufficient time

SCARDANA
and then inflate the finished product. to get out of the blast ®

Heat-sealing and radio-frequency sealing area before the bomb


are modern updates, yet old-fashioned exploded. The balloon
glue is just as strong and reliable in most would inflate after the Tel: (1) - 450 - 465 - 2480
applications. The one-person raft is a bomb was dropped
single tube composed of individual units and theoretically slow
sales@scardana.com
called “bladders.” For larger rafts, you add its descent. “We nixed www.scardana.com
more tubes. Seven-, 20- and 50-person that one,” he noted,

MarEx_40.indd 25 9/26/10 12:37 AM


ANNALS OF safety

between 10 and 200 and currently stands


at close to 100. The company’s warehouse
is full of products in various stages of
production, and cartons of finished items
stand ready for shipment. “We have no
marketing or sales department,” Patten
said, “never have. Companies, the govern-
ment, the Air Force, the Navy – they all
come to us.” The company does employ
a third-party contractor to handle foreign
military sales and service, but only to
SEpTEMbER/OCTObER 2010

those countries which buy their equipment


from the U.S. government. “We’re used to
ups and downs,” Patten remarked. “We’ve
had our share of them.” And indeed the
company has, having changed hands sev-
eral times over the years before the family
finally regained control for good in 1987.
Now the third and even the fourth genera-
tion of Pattens are waiting in the wings,
ready to take over when the time comes.
26
The U.S. Navy is still the company’s
biggest customer, and the one-person raft
its biggest product. Seven- and 20-person
rafts are used by the Air Force on C-130s
and the Navy on small vessels. Larger
vessels – destroyers, frigates, battle ships,
aircraft carriers – use the 50-person
THE MARITIME EXECUTIVE

version, dozens of them per ship. NASA


bob patten, son of the founder, with an updated version of the original used the company’s inflatables on its first
one-person raft (note the canopy to protect against the weather).
Apollo missions and continues to use them
to this day on the Space Shuttle. Every
into a bank of computers and sophisticated product in a way that allows for the mate- astronaut has one.
engineering specs eventually emerge. This rial’s natural tendency.” He compares it to In an era of increasing consolidation
is how concepts are translated into reality. ductwork or dressmaking – every product and “size does matter” thinking, it’s good
But Patten notes that precise mathemati- is unique. to see a private, family-owned company
cal calculations are not enough. There’s that can hold its own while remaining
always a touch of the artist, of the intuitive, Ups and Downs small. It restores one’s faith in the indi-
because rubber doesn’t always bend the 2009 was the worst year in the company’s vidual entrepreneur, in the power of ideas
way you want it to: “It always wants to go history, when it got down to just 10 em- and the value of old-fashioned tinkering.
in a circle, but most of the time you don’t ployees, but things are looking up. Orders Rugged individualism. Isn’t that what
want a circle. So you have to design the are pouring in. Employment can range America was built on? MarEx

Curoi
MarEx_40.indd 26 9/26/10 12:37 AM
Curoil Bunkering ad full page 1 7/23/10 4:51:35 PM
MarEx_40.indd 27 9/26/10 12:37 AM
The voice of the worldwide salvage industry is leading the way in ensuring that
salvors are properly compensated for their efforts, particularly when it comes to
environmental cleanup. By Tony Munoz
SEPTEMBER/OCTOBER 2010

28

Safeguarding the Environment:


THE MARITIME EXECUTIVE

ince man first wielded tools he began exploring the world around him. The oceans and
horizons inspired his curiosity, and he built primitive floating craft and ventured into the seas. From
crude dugout canoes to keeled oared boats to keeled ships with sails and oars, man set sail in search of
new worlds. The most well-known of these earliest explorers were the Phoenicians, who sailed beyond the “Pil-
lars of Hercules” traveling south to West Africa and north to the British Isles. The Carthaginians, the Greeks of
Corinth and the Vikings were followed by the empire-building nations of England, Spain and Portugal.
Fame and fortune came to many ship captains as rulers invested in the risky enterprise of sending ships into
the great unknown. Only the bravest set sail, and only the fittest made it safely back home; but new worlds
were discovered and soon flotillas of ships plied the four corners of the earth in search of trade and commerce
and riches. This is where the story begins of salvors assisting distressed ships and saving their prized cargoes,
in return for which they expected to receive a huge share of the booty. Men have always negotiated deals for
services and goods in the marketplace, and on the high seas salvage operations were no exception. But some-
times those in distress would agree to terms they later disputed.
In the 1680s Edward Lloyd opened a coffeehouse near the docks on Tower Street in London. He sought
to attract the shipping clientele and those underwriting marine insurance. His business grew, and in 1691 he
moved the coffeehouse to Lombard Street where he also began providing shipping intelligence. After his death
in 1713, a succession of sailing masters carried on the business. In 1734, the group started publishing Lloyd’s
List, a newspaper dedicated to shipping news. The paper still publishes daily today and is the most widely read
and respected journal of its kind in the world.
During the first half of the nineteenth century the Lloyd’s committee was mostly engaged with intelligence-
gathering. A group of Lloyd’s agents was eventually formed, and while its members received no remuneration
except for surveying damages for underwriters, the group grew due to the commercial advantage of being
associated with Lloyd’s. The enterprise was little more than a loosely run club until 1871, when “The Lloyd’s
Act” was passed and made Lloyd’s a corporation named the Society of Lloyd’s. The society’s objective was to
provide marine insurance underwritten by its members and to collect and publish maritime intelligence.

MarEx-40-ISU-CS-Int-092610.indd 28 9/27/10 7:15:20 AM


INTERNATIONALSALVAGEUNION

SEPTEMBER/OCTOBER 2010
29

THE MARITIME EXECUTIVE


LLOyd’s OpEN FORm tial environmental damage had been averted. While Article 14
The first modern text of the Lloyd’s Form of Salvage Agree- restricts salvage services to “coastal waters and areas adjacent
ment (universally known as the Lloyd’s Open Form or LOF) thereto,” LOF 80 applies to all waters.
was adopted in 1892. By 1908 the text had been standardized. Article 14’s Special Compensation provision proved to be a
The bottom left-hand corner of every Lloyd’s Form lists dates on cost-effective incentive scheme, but there were difficulties assess-
which previous editions of the form have been published, and the ing the amount due under it. As a result, an alternative system
earliest date of this practice was January 15, 1908. was developed by salvors, P&I clubs (the shipowners’ liability
LOF is administered in London by the Salvage Arbitration insurers), underwriters and other parties known as the “Special
Branch of Lloyd’s. While there are alternative “national” forms Compensation P&I Clause” or SCOPIC. Under this arrange-
of salvage contracts, such as the Japanese Form, Beijing Form, ment, remuneration is based on pre-agreed tariff rates, and a sal-
Moscow Form and the Turkish Form, LOF is the most widely vor engaged to render salvage services under a Lloyd’s Form may
used “no cure-no pay” salvage contract. Responding to the invoke SCOPIC at any time, but there will be financial penalties
need for some sort of protection for salvors responding to oil if it is invoked in inappropriate circumstances. And an important
spills and similar incidents of environmental pollution, the 1980 caveat is that there is no requirement to demonstrate the existence
edition of the LOF (LOF 80) moved beyond the traditional no of a pollution threat in a particular geographic region.
cure-no pay concept by providing a “Safety Net” for salvors
responding to laden oil tankers requiring assistance. Article 14 of ThE INTERNATIONAL sALvAgE UNION
the International Maritime Organization’s Salvage Convention of Enter the International Salvage Union (ISU), whose role is to
1989 further reinforced LOF 80 by introducing a new incentive represent the interests of the marine salvage industry. Founded
scheme known as “Special Compensation.” Article 14 entitles in 1934 and based in London, the ISU has 58 full members from
a salvor who prevents or minimizes environmental damage to 30 countries, 11 affiliated members, and 44 associate members,
receive special compensation in the event the value of the salved such as law firms, insurers, P&I clubs, and marine consultants.
property is insufficient to provide for a normal salvage award. While the ISU’s principal objective is to promote the saving of
The special compensation would equal the salvor’s expenses life and salvage of property in danger at sea and further prevent
plus up to an additional 30 percent of those expenses if substan- or minimize environmental damage, the power of its single voice

MarEx-40-ISU-CS-Int-092610.indd 29 9/27/10 7:15:55 AM


INTERNATIONALSALVAGEUNION

for the membership is meant to strengthen and unite salvors in Since the early 1990s the ISU has conducted an annual Pol-
an alliance of best practices and responsibilities during salvage lution Prevention Survey. The 2009 survey concluded that, in
operations. all categories (crude, bunkers, chemicals, other) of pollutants,
Todd Busch is the ISU’s President, and Michael Lacey is salvage volumes were up 53 percent while the number of services
its Secretary General. They are supported by a Vice President, performed was down five percent. The main change over 2008
was in the crude oil category, where volumes jumped 61.5
percent pursuant to providing services on two distressed large
tankers. Meanwhile, salving other pollutants rose 57 percent.
The LOF was used in 56 services for wreck removals, and a
total of 18 casualties needed ship-to-ship transfers of hazardous
cargos. ISU President Todd Busch commented, “These numbers
SEPTEMBER/OCTOBER 2010

clearly demonstrate how our members prevent damaging pol-


lution to the marine environment. While the number of services
provided has dropped, the volume of pollutants has risen due to
the size of the vessels salved.”

REspONdINg TO A WORLd Of TROubLE


France has seen its share of oil spill disasters such as the Amoco
Cadiz in 1978 and the Tanio in 1980. While salvors worked
heroically to prevent and minimize these spills, the coastline of
30
Andreas Tsavliris; a General
Manager, John Noble; and an
Executive Committee of ten other
representatives of the senior man-
agement of member companies.
The Executive Committee meets
THE MARITIME EXECUTIVE

four times a year. The full body


meets annually. Over the years,
the ISU has had a major influence
in the creation of the 1989 Sal-
vage Convention of the IMO, has
assisted in drafting all recent edi-
tions of Lloyd’s Open Form, and
has worked closely with BIMCO
on many of its initiatives, includ-
ing TOWCON, TOWHIRE,
WRECKSTAGE, WRECKFIXED
and WRECKHIRE. Additionally,
the ISU was a central voice in the
creation of the SCOPIC clause.
In a casualty event the profes-
sional salvor is the most experienced and qualified attendee at the Brittany suffered great ecological damage, and all of Europe
scene, and more often than not there are pollutants on the ship, was angry. LOF 80 with its concept of a safety net for salvors
such as bunkers and, in some cases, the entire cargo. The ISU responding to disabled laden oil tankers was in large part a
has been dealing with the sensitive issue of pollutants and the response to these incidents.
modern reality of environmental concerns not being addressed In the U.S., the Exxon Valdez spill in 1989 changed the whole
in the salvors’ legal obligations from the very beginning, and this response mechanism and led to the passage of the Oil Pollution
subject remains at the forefront of the organization’s agenda. Act of 1990, which placed responsibility squarely on the shoul-
With a salvor’s prime focus being the recovery of property, the ders of the polluters. In Alaska, legislation was enacted to ensure
system has long failed to recognize that the cost of a failure to that specialized escort vessels stayed with tankers through the
prevent pollution can easily run into billions of dollars. From length of their passage in and out of Prince William Sound.
1994 till 2009, ISU members have rendered salvage services to The French were again subjected to a massive spill when the
ships carrying 15,976,297 tons of potentially lethal pollutants. To Erika broke in two and sank in the Bay of Biscay in December
put that number in perspective, the Exxon Valdez spill was about 1999. When the tanker Prestige requested a place of refuge due
37,000 tons. to a crack in its hull in November 2002, both the French and

MarEx-40-ISU-CS-Int-092610.indd 30 9/27/10 7:16:21 AM


INTERNATIONALSALVAGEUNION

SEPTEMBER/OCTOBER 2010
31

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MarEx-40-ISU-CS-Int-092610.indd 31 9/27/10 7:17:12 AM


INTERNATIONALSALVAGEUNION

Spanish authorities refused, and the ship was lost in


stormy seas. The outcome of their denial for a place
of refuge was that the coastlines of both countries
were damaged from the oil leaked by the ship.
In response to the Prestige spill the IMO adopted
SEPTEMBER/OCTOBER 2010

International Guidelines on Places of Refuge for


ships, and the ISU had a hand in its development
and drafted broader guidelines on Marine Casualty
Management for its members. The Salvage Conven-
tion of 1989 and the LOF require salvors to use their
best endeavors to recover property and, while doing
so, to prevent or minimize pollution.
The ISU has been extremely vocal about remu-
neration being more equitable in environmental
cases, particularly in view of the hazardous circum-
32
stances of the endeavor and the liability attached to
a failed attempt. P&I clubs have paid out substantial
amounts of money on pollution-related claims, and
the ISU has been pushing for Environmental Salvage
Awards and asserts that LOF’s award procedure,
based upon the 1989 Salvage Convention’s Article

MarEx-40-ISU-CS-Int-092610.indd 32 9/27/10 7:17:22 AM


INTERNATIONALSALVAGEUNION

13, and SCOPIC are insufficient. Article 13 leaves the arbitrator


no freedom to properly award the salvor who has rendered ser-
vices resulting in an environmental benefit. Meanwhile, SCOPIC
is not a reward system.
ISU maintains the P&I clubs could save money by funding
environmental awards because (1) pollution claims will continue
to rise, (2) governmental regulations have done all they can to
prevent accidents, and (3) salvage is a commercial endeavor
and being paid to protect the environment is reasonable. Salvors
want award payments to be fair and based on criteria such as
the amount of pollutants onboard, their toxicity and persistence,

SEPTEMBER/OCTOBER 2010
the risk of release, and the nature of the environment and the
economic assets under threat. Shipping companies and insur-
ance companies should realize that if they don’t voluntarily do can be substantial and may require numerous barges and sup-
something about the current arrangement for paying salvors for port tugs. The complexities of dealing with such large ships has
pollution work, then they will be forced in the future to pay a lot presented salvors with incredible logistical challenges, and the
more. This is an area where being proactive, rather than reactive, ISU is working closely with container shipping companies, port
will benefit all stakeholders. authorities and government agencies to ensure that all parties
understand the complexities involved and the variety of cargoes
FuTuRE ChALLENgEs carried in containers. If the discharge rate is slow, the ship can
While environmental concerns remain at the top of ISU’s be exposed to additional hazards, including the potential for fires
33
agenda, there are other pressing issues as well. One of these and problems not dealt with in ordinary casualties.
involves the salvage challenges presented by the new mega- While the challenges are many, ISU’s member companies
container ships. Many such vessels carry 12,000 to 14,000 have the expertise to address and resolve them with compre-
twenty-foot equivalents (TEU), which require specialized cranes hensive, innovative solutions – solutions that help protect and
and removal equipment to load and unload. Obviously, the salvor preserve the environment at the same time. In an increasingly
must immediately deal with the bunkers, the tonnages of which green-conscious world, the salvors are doing their part. MarEx

The 2010 API


Tanker Conference
Featuring the U.S. Coast Guard’s William M. Benkert Awards
December 6 -7, 2010
San Diego, California

For more information or to register, go to www.api.org /meetings


or contact Madeleine Sellouk: 202-682-8332 /sellouk@api.org

Copyright © 2010 – American Petroleum Institute, all rights reserved.

MarEx-40-ISU-CS-Int-092610.indd 33 9/27/10 7:18:35 AM


Executive
Interview:
Michael Lacey
SEPTEMBER/OCTOBER 2010

Secretary General
and

34

Todd Busch
President
THE MARITIME EXECUTIVE

International
Salvage New challenges and some
age-old issues keep the

Union
ISU leadership busy.

By Tony Munoz

MarEx: Tell our readers about your organization Nippon Salvage in Tokyo and Eastern Canada
and its history. Towing in Halifax, Nova Scotia. This latter com-
Lacey: It is not certain when ISU began as the pany is now part of the Svitzer Group. Today
earliest records were lost in the floods in The we have 58 full members based in 30 different
Netherlands in the 1950s. It is believed to have countries. In addition, we have 57 affiliated and
begun in 1934. The first members were Eu- associate members located all over the world. Af-
ropean salvors. In 1963, when there were 22 filiated members are organizations similar to ISU such as
members, the only non-European members were INTERTANKO, the European Tugowners Association, the

MarEx-40-ISU-CS-Int-092610.indd 34 9/27/10 7:21:03 AM


INTERNATIONALSALVAGEUNION

American Salvage Association, etc. Associate members are com- fessional marine salvage industry. Governments, the European
panies with some involvement in the salvage business but who Union, the U.S. Coast Guard, the marine insurance industry,
do not undertake marine salvage as contractors. They include shipowners, etc. all recognize ISU as the body representing the
lawyers, insurers, surveyors, etc. marine salvage industry. In addition, we have observer status
ISU is administered by a President, Vice President and ten with the International Maritime Organization (IMO) and the
other Executive Committee Members, all of whom are from International Oil Pollution Compensation Fund (IOPCF).
the senior management of full member companies. Day-to-day MarEx: As the voice of the marine salvage industry, what
affairs are handled by the ISU’s General Manager and Secre- major issues are being addressed at this time?
tary General, assisted by a Legal Adviser and Communications Busch: Some of the main issues the ISU is tackling include: (1)

SEPTEMBER/OCTOBER 2010
Adviser. ISU is recognized worldwide as the “voice” of the pro- ensuring we have properly trained personnel today and in the
future; (2) improving how financial guarantees are addressed
on large containership salvages; (3) being ready with suit-
Some of the main issues the ISU is tack- able equipment to address the ever-increasing vessel sizes; (4)
ling include: (1) ensuring we have properly bringing solutions to greater water depths, and (5) reviewing
trained personnel today and in the future; the Lloyd’s Open Form (LOF) contract.
This last issue is of particular importance. With the ever-
(2) improving how financial guarantees are increasing pressure to protect the environment, the ISU believes
addressed on large containership salvages; the LOF should be reviewed to ensure it is the best contract
(3) being ready with suitable equipment to form for today’s realities. This means that the proper responsible
35
parties are liable; that the mechanism for protection of the envi-
address the ever-increasing vessel sizes; (4)
ronment, as well as the ship and cargo, are in place; and that the
bringing solutions to greater water depths, salvor is getting an adequate reward for his efforts in protecting
and (5) reviewing the Lloyd’s Open Form the environment, in addition to salving the ship and cargo.
(LOF) contract. MarEx: Is it true that environmental damages are not
covered in today’s LOF? What is being done to correct this

MarEx-40-ISU-CS-Int-092610.indd 35 9/27/10 7:21:13 AM


INTERNATIONALSALVAGEUNION

considering the greatest vessel from one location to


concern in a ship accident another. TOWHIRE is a
is pollution? ISU believes it is logical to look at apportion- similar agreement, but based
Lacey: Under the 1989 Sal- ing the salvage award between the services to upon a tug owner’s provid-
vage Convention, in order for ing services on a daily hire
the property and the services to the environ-
there to be a salvage reward, basis.
there has to be a useful result. ment. Such an approach would not automati- The ISU also worked
In other words, property has cally result in a greater reward to the salvor. with BIMCO and others
to be salved. Once that hurdle But it should result in a fairer distribution of in producing the Standard
SEPTEMBER/OCTOBER 2010

has been overcome, the Wreck Removal Special


arbitrator or tribunal is then the burden so far as the paying parties are Services Agreements. These
required to take into consid- concerned and provide the salvor with a better were first published by BIM-
eration the criteria set out in reward in cases where his services provide a CO in 1993 as WRECK-
Article 13 for the purpose of CON and WRECKHIRE,
real benefit to the environment.
making an award. There are one being the lump sum
ten criteria, and one of them fixed price contract and the
relates to the skill and efforts other a daily rate agreement.
of the salvors in preventing or minimizing damage to the envi- Subsequently, at the request of the International Group of P&I
ronment. The problem is no one knows to what extent this factor Clubs, these agreements were revised in 1999 and were then
36
is taken into consideration since arbitrators do not, as a matter published as WRECKHIRE (the daily hire agreement), WRECK-
of practice, make their awards by allowing so many dollars for STAGE (a stage payment agreement), and WRECKFIXED (a
this and so many dollars for that. They look at the services as a lump sum, “no cure no pay” agreement). Each of these agree-
whole, taking into consideration all the facts, all the skills and ments is currently being reviewed, given that they have been in
efforts, all the time, all the expenses, and the results. use for over 10 years.
An element that causes difficulties is that frequently, if the There are other forms in use in specific countries. For
casualty is ashore, the coastal state will require the salvor to example, in Japan the Japan Shipping Exchange has its form
THE MARITIME EXECUTIVE

remove the bunkers before he undertakes any salvage operations. of salvage agreement, which is based on Lloyd’s Form and the
There are many instances where it is not necessary to remove SCOPIC tariff and is used by Japanese salvors and the Japanese
the bunkers since there is no risk of the bunkers actually spill- marine insurance market with respect to salvage operations car-
ing. The property insurers look upon this expense as activities ried out in Japanese waters. In Germany there is the Hamburg
undertaken for the benefit of the environment, whereas it could Form. The next most commonly used agreement is the Turkish
also be said that the bunkers are being removed in order to allow Salvage Form, which is an award-based agreement subject to
the property to be salved, since the salvor has to comply with the arbitration in Istanbul.
coastal state’s orders. MarEx: LOF has a number of strong features that can be
At the end of the day it is a matter of achieving a balanced re- agreed on by the master or the owner. Explain how LOF 2000
sult, which is fair to all the parties concerned. It is for this reason can streamline a salvage agreement.
that the ISU believes it is logical to look at apportioning the sal- Lacey: The Lloyd’s Form 2000 or LOF 2000 comes in three
vage award between the services to the property and the services parts. There is the LOF Form itself, which consists of a single
to the environment. Such an approach would not automatically page with a BIMCO-style box layout. Then there are the Lloyd’s
result in a greater reward to the salvor. But it should result in a Standard Salvage & Arbitration Clauses, and these are in effect
fairer distribution of the burden so far as the paying parties are the “small print” of the LOF dealing with security for the sal-
concerned and provide the salvor with a better reward in cases vor’s claim, his maritime lien and right to arrest, the arbitration
where his services provide a real benefit to the environment. process, and similar matters. The third part of LOF 2000 is the
MarEx: In addition to the Lloyd’s Form, are there other forms Procedural Rules, which deal with the conduct of the arbitration.
used by salvors? The shipowner and salvor only need to complete the seven
Lacey: Lloyd’s Form is by far the most commonly used salvage boxes on the face of LOF, and only three of the boxes require
agreement throughout the world. There are, however, other any decision/discussion. They are the “agreed place of safety” to
forms of standard agreement in use, and the ISU has played a which the casualty is to be taken; the “Currency of the Award”
leading role, together with BIMCO – the Baltic & International if the salvor wishes to have the award in some currency other
Maritime Conference – and other marine interests in standard- than U.S. dollars; and lastly box seven, which asks whether the
izing agreements for use by shipping interests. These standard SCOPIC Special Compensation Clause is to be incorporated
agreements include the International Ocean Towage Agree- into the agreement. It is a “yes” or “no” answer, and it is for the
ments – TOWCON and TOWHIRE, which were first published salvor to decide.
by BIMCO in 1986 and updated in 2008. TOWCON is an This is the major attraction of a Lloyd’s Form. It enables a
agreement for providing a lump sum price for the towage of a ship owner to engage a salvor with a minimum of discussion and

MarEx-40-ISU-CS-Int-092610.indd 36 9/27/10 7:21:27 AM


INTERNATIONALSALVAGEUNION

delay. It also enables a salvor to mobilize without delay and, if


he has any concerns as to his ability to salve the ship and cargo,
he may incorporate and then invoke the SCOPIC Clause to
safeguard his position so far as his expenses are concerned.
MarEx: Please explain your efforts to adopt a new Salvage
Convention to succeed the current 1989 Convention.
Lacey: The ISU is concerned that under the 1989 Salvage Con-
vention there is limited scope to provide a salvor with a proper
reward for his efforts and his success in preventing or minimiz-

SEPTEMBER/OCTOBER 2010
ing damage to the environment. The reason is that the award
under Article 13 of the 1989 Salvage Convention is based upon
the salved value of the vessel and other property. There are many
occasions when the greater the services in terms of duration
and expense, the smaller the salved value, and that is a cap on
the award a salvor can receive. In reality, awards under Lloyd’s
Form, including negotiated settlements over the last 30 years
and nearly 3,000 LOF cases, have averaged out at just over eight
percent of the damaged property values.
Salvors are concerned regarding the ability of the system to
37
reward their efforts and success in preventing or minimizing
damage to the environment. Property insurers are equally con-
cerned that any such award incorporates an element for which
they do not provide cover. As matters stand, there has been a
longstanding agreement between the property insurers and the
liability insurers that, in return for the liability insurers paying
the SCOPIC remuneration, the property insurers would pay the

THE MARITIME EXECUTIVE


Article 13 remuneration.
Today, however, property insurers are more concerned that,
as the environment takes on a greater element of every salvage
operation, so it must become a greater part of the expenditure
and figure more prominently in any award or settlement. They
believe the time has come to review the matter and for there to
be a change in the system.
Both salvors and property insurers are proposing that Article
13 (i)(b), the provision dealing with “the skill and efforts of
the salvors in preventing or minimizing damage to the environ-
ment,” should be removed. If this were done, any award under
Article 13 would clearly relate only to the salvor’s efforts in
salving the property itself without any consideration to the time
and money spent in dealing with protection of the environ-
ment. At the same time, the salvors propose that there should
be a separate fund out of which the salvor could be paid for his
environmental services. In effect, there would be an environmen-
tal award.
MarEx: In late 2008 the IMO’s Bunker Spills Convention took
effect. Please explain its impact on the salvage industry.
What is ISU’s position on this particular issue?
Lacey: The Bunker Convention requires ships over 1,000 gt
registered in a member state of the IMO to carry on board
a certificate certifying that the ship has insurance or other
financial security to cover the liability of the owner for pollution
damage. It fills the last significant gap in the international regime
for compensating victims of oil spills, and it covers liability and
compensation for pollution damage caused by such spills when
carried as fuel in ships’ bunkers.

MarEx-40-ISU-CS-Int-092610.indd 37 9/27/10 7:21:41 AM


INTERNATIONALSALVAGEUNION

However, unlike the Civil Liability Convention dealing with


oil cargo spills and the HNS Convention dealing with spills by
hazardous and noxious substances, which make specific provi-
sion for responder immunity, the Bunker Convention specifically
excludes responder immunity and thereby places salvors in the
potential position of becoming a target in the event of a bunker
spill taking place before or during a salvage operation.
Salvors do not seek to avoid their liability for their own neg-
ligent acts. However, what has to be recognized is that salvage
SEPTEMBER/OCTOBER 2010

is a very dangerous operation, very often carried out under


difficult weather conditions, in rough seas, on vessels which
have suffered damage and are in a hazardous condition. One
solution proposed by the IMO to its member states is that they
should seriously consider passing a resolution on “Protection
for persons taking measures to prevent or minimize the effects
of oil pollution.” It recommends that persons taking reasonable
measures to prevent or minimize the effects of oil pollution be
exempt from liability, unless the liability in question resulted
from their personal act or omission committed with the intent to
38
cause damage or recklessly and with knowledge that such dam-
age would result.
The ISU hopes that as many coastal states as possible will
adopt this resolution. We know it is the intention of the U.K.
government to do so, and we believe a number of other Euro-
pean governments will do likewise. We hope it will be adopted
by other coastal states as well. In the alternative, it will of course
introduce a further element of concern in a salvage operation
THE MARITIME EXECUTIVE

and may result in needless delays while salvors take what they
consider to be the necessary action to protect themselves and
their personnel against any matters arising due to the lack of
responder immunity.
MarEx: Salvors, like other mariners, are required to be
licensed by coast guards and must meet STCW-95 require-
ments. Does the ISU promote training for salvors?
Busch: A salvor is not a licensed position. A professional salvor
will have licensed personnel with certifications, such as a master
mariner’s license, a naval architect degree, a marine engineer
degree, diving certification, welding certification, crane operator
certification, or a dive medical technician endorsement. The ISU
does promote the training and safety of its members’ employees.
Recently the ISU started looking at the possibility of developing
a Salvage Master certification. This idea is still being discussed
to determine the best way to implement a program that would be
acceptable to the industry.
MarEx: Some 8,500 wrecks with about 4.3 billion gallons of
oil languish in worldwide waters. Is the ISU involved with the
discussions concerning these environmental threats?
Busch: The ISU has consulted with several groups with regard
to wrecks around the world, and has given presentations at
many conferences and before several coastal states’ agencies.
ISU members offer the best source of expertise for the removal
of these pollutants and wrecks, and we are committed to fur-
thering the protection of the environment.
MarEx: All good stuff. Thank you for your time and insights.
MarEx

MarEx-40-ISU-CS-Int-092610.indd 38 9/27/10 7:22:05 AM


MaritimeExecutive_203X276.pdf 1 9/21/10 9:45 AM

CM

MY

CY

CMY

MarEx_40.indd 39 9/26/10 12:38 AM


Panama Canal

the
September/OCtOber 2010

WOrld’S
marine
highWay 40
By Robert C. Spicer, CPT

The expansion of The panama Canal is one of the a Big idea gets Bigger
great construction projects of our time. scheduled for completion The system of lakes and locks that make up the panama Canal
on the 100th anniversary of the Canal’s opening in 1914, it will allows ships from every nation to rise 26 meters above the sea to
usher in a new era in east-West trade and bring untold prosperity Gatun lake and then back down again, crossing the Continental
to the people of panama. in september MarEx was privileged to Divide in the process. But the idea behind a “passage between
speak about the project with Jorge l. Quijano, the panama Canal the seas” is not new. it was in 1534 that Charles i of spain first
authority’s (aCp) executive Vice president of engineering and ordered a survey to identify a route to the pacific following the
program management. Quijano began his career with the canal Chagres River. although in 1534 the task was considered impos-
in 1975 and became its Director of maritime operations in 1999. sible, the advance of technology finally made it feasible, and the
after the transition from U.s. to panamanian control, he rose to canal opened in 1914. nevertheless, it took enormous personal
become executive Vice president responsible for the $5.25 billion sacrifice to make the dream a reality. in 1906, president Theo-
expansion program. he leads a team of about 500 professionals dore Roosevelt said, “This is one of the great works of the world.
managing all aspects of the project. it is a greater work than you yourselves at the moment realize.”
and his words still ring true today.
The canal unites the atlantic and pacific oceans at one of the
narrowest points of both the isthmus of panama and the ameri-
can continent and provides a vital link in east/West trade. in fact,
the canal reported in september the one millionth transit since
its opening, and it carries about four percent of world trade and
16 percent of U.s. trade. its importance in promoting global
waterborne commerce is such that in august of this year the aCp
and the Tennessee-Tombigbee Waterway signed a memorandum
of Understanding to foster economic growth, spur international
trade, and promote the “all-Water Route” from asia to the U.s.
east and Gulf Coasts via the panama Canal.

MarEx_40.indd 40 9/26/10 12:39 AM


Panama Canal

SEpTEMbER/OCTObER 2010
Today, the maximum dimensions of ships that can transit the
canal are 32.3 meters in beam, 294.3 meters in length and 12.04
meters in draft. But with the recent increases in global trade vol-
41
ume and ship size, the ACP determined that expansion was man-
datory if the canal was to continue its leading role in global trade.

The Challenges of exPansion


The geology of Panama comprises one of the most complex
land masses in the world, and it’s no easy feat to slice through it.
Panama’s mountains were born of frequent volcanic activity, and

THE MARITIME EXECUTIVE


its land mass has been submerged beneath the sea on numerous Dry excavation work continues as ships transit the waterway.
occasions. The result is an isthmus that contains many diverse
geological formations of hard rock interspersed with layers of itself to much deeper excavations beyond a channel bottom of
softer rock and cavities of coral. This irregular patchwork creates 9.14 meters above sea level as planned to be reached during the
a serious challenge to civil engineers and contractors. In addi- expansion program. Attempting to build a sea level canal would
tion to the difficulty of digging through the various formations, entail considerable back cuts to insure slope stability to prevent
the region has six major fault lines and five major volcanic cores material slides. Such an effort would increase excavation and
between the cities of Colon on the east and Panama City on the dredging costs exponentially.”
west, requiring engineers to consider the effects of earthquakes in The main components of the project are the construction of
their design calculations. two separate three-step lock complexes and access channels to the
The geological challenges make a sea level (sea-to-sea) cut new locks, a widening and deepening of the existing navigational
across Panama to complement the lock system all but impossible. channels, and the elevation of Gatun Lake to reach a maximum
ACP’s Quijano explained, “I do not see the sea-to-sea cut as a operational level of 27.1 meters. One set of locks will be located
feasible project even in the distant future. The geology of Panama, at the Atlantic end of the canal east of Gatun Locks and the other
specifically through the Culebra Cut (the narrowest section of the on the Pacific side southwest of the Miraflores Locks. Since each
canal that cuts through the Continental Divide), does not lend of the new lock complexes will have three chambers for lifting and

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MarEx_40.indd 41 9/26/10 12:39 AM


Panama Canal

lowering, they will be similar to the existing Gatun Locks.


But the result will be the creation of a new lane with one
lock on each side of the isthmus, providing a capacity to
handle larger vessels up to 49 meters wide, 366 meters long
and 15 meters deep with cargo loads of up to 13,000 TEUs.
“The project is scheduled for completion in the fourth
quarter of 2014 with the lock projects being the critical path
to completion,” observed Quijano. “The other components
of the program are scheduled for completion by October
2013, giving us another year to concentrate on the locks.”
The dry excavation and dredging work has already reached
SEpTEMbER/OCTObER 2010

close to 50 million cubic meters, which is about one-third of


all of the material to be removed. Lake dredging is 35 per-
cent complete while both the Atlantic and Pacific entrances
Clearing the way for an expanded panama Canal.
are past the halfway mark. The project employs trailing
hopper suction dredges, backhoes and cutter suction dredges $5.25 billion.
with some underwater drilling and blasting on the Pacific side
and in certain areas of Gatun Lake and Culebra (Galliard) Cut. Water: the heart of the Canal
In total, the project will require about 150 million cubic meters of At the heart of the canal is Gatun Lake with its supply of 5.2 cubic
materials to be removed from the water and land, and by the time kilometers of fresh water 26 meters above sea level. Ships are
it is complete there will have been fourteen dredges on the project, lifted up and then back down after crossing the Continental Di-
42
including one newly christened. vide with the plentiful lake water that flows by gravity, eliminating
New “Panama Class” ships will be able to transit the canal in the need for pumps. A second use of the gravity flow is through
lock chambers that measure 427 meters long by 55 meters wide turbines that drive electrical generators, which provide an ample
and 18.3 meters deep. Quijano expects the canal to be open for source of electrical power, allowing the canal to operate efficiently
business at the beginning of 2015 at a total cost of approximately and without interruption.
THE MARITIME EXECUTIVE

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MarEx_40.indd 42 9/26/10 12:39 AM


Panama Canal

situational change for the Isthmus of Panama for the fore-


seeable future.
The new locks have been designed to conserve as much
water as possible. There will be three water-saving basins
for each lock chamber and nine basins for each of the two
lock complexes, resulting in the recycling of 60 percent of
the water for each ship transit.

The loCk GaTes


The lock gates are the massive structures that frequently
open and close, allowing ships to transit through the lock

SEpTEMbER/OCTObER 2010
chamber. Once closed, they must hold back all the water
that is used to float the ship. There are two types of gates
used in the locks: the current hinged miter type, and the
Jorge Quijano, EVp of Engineering & program Management, ACp.
rolling type, which will be used in the new locks. The miter
With the drastic changes in regional weather patterns around type weighs 3,216 tons and the rolling type 4,580 tons. With such
the globe, MarEx asked about the consequences of climate large structures called to operate continuously year after year
change on the water supply to the lakes. Quijano replied, “We and without flaw, the level of sophisticated engineering required
do not foresee that water will be a problem in our lifetime or the in their design is enormous. The design phase modeling work
next generations after. In fact, this year we have had more than was done by the contractor using the super computers at Purdue
normal rainfall and the lakes are full.” But he also noted that ACP University. This work was recently completed, and construction
43
monitors the changing climate and is aware of the variations. For of the gates will commence in April 2011. “It’s an opportune time
example, there has been much talk about the Northwest Pas- because the gates are made of steel and the price for plate steel
sage as an alternative route for shipping between Europe and had been around $1,000 per ton but recently declined to $830
Asia. And certainly the thawing of the ice in the Arctic has been per ton,” Quijano observed.
increasing since 2007. But Quijano does not envision a major Each gate will be the same width, but there will be different

THE MARITIME EXECUTIVE


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MarEx_40.indd 43 9/27/10 3:17 PM


Panama Canal

heights and internal reinforcements depending on where the


gate is used. The Pacific gates will have additional reinforce-
ment due to the seismic requirements, so the gates on the
Atlantic and Pacific side will be quite different in weight
from one another. The gates will be manufactured in a
shipyard selected by Heerema Fabrication Group of The
Netherlands, the subcontractor for this phase of the project.

Power to the PeoPle


Since the expansion began in 2007, about 95 percent of the
workers have been Panamanian. In July of this year there
SEpTEMbER/OCTObER 2010

were about 5,000 people working on the project with a peak


of 8,400 in any one month since work began. In addition to
providing jobs, the new technology used in the expansion
New Pacific Locks rendering.
will benefit Panama in the future. Quijano noted that “A
newly constructed concrete batching plant will provide the project ships in its nearly completed facility even before the expansion
with about 1.2 million tons of cement for the next three years and project is completed. The new free trade zone on the Pacific side,
can pump out 540 cubic meters per hour. There are many initia- which complements the one on the Atlantic side, will stimulate
tives for infrastructure projects in Panama, such as the metro, continued business investment and growth opportunities in the
airport improvements and hydroelectric power plants, and the years ahead, promoting more and better paying jobs for the 3.3
batching plant could be used to support those other projects after million citizens of Panama. All in all, a tremendous accomplish-
44
the canal expansion is completed.” ment and a lasting source of pride for the citizenry. Well done,
The expansion enables Panama to enhance its position as a Panama, and well done, ACP! marEx
center of world trade and will double annual tonnage through the
canal. Ports on both ends are being expanded. On the Pacific side, Robert Spicer, who holds a Chief Engineer’s license, is studying
the Singapore Port Authority is planning to dock post-Panamax for his Doctor of Education degree in organizational learning.
THE MARITIME EXECUTIVE

MarEx_40.indd 44 9/26/10 12:40 AM


Technicians performing an underwater
hyperbaric aft stern seal exchange, allowing
the vessel to continue operation with an
approved permanent repair.

SEpTEMbER/OCTObER 2010
45

THE MARITIME EXECUTIVE


By Richard Carranza

The Brave New World


of Subsea Salvage
In the wake of the Mention “subsea” to people and they usually
think of underwater drilling operations for oil and gas. and while

Deepwater Horizon offshore drilling is a major component of such activities, it is not


by a long shot the only one. subsea salvage and repair is just

disaster, the importance


as important, and it encompasses a wide range of underwater
activities, not the least of which is the recovery of submerged oil.
other applications range from hull surveys to propeller main-
of subsea salvage tenance to offshore rig repair. the technology is applied in the
world’s oceans, lakes, and rivers and utilizes such innovations

operations cannot be as cofferdams and portable hyperbaric habitats. a cofferdam is a


watertight structure that can be used at water level or underwater

overemphasized. to facilitate construction and repair work. hyperbaric habitats are


used by divers for underwater construction, salvage and repair

MarEx_40.indd 45 9/26/10 12:40 AM


subsea salvage

operations. In all cases the goal is the same: repair or recover maintenance without the need for specialized cranes or advanced
valuable assets while protecting human lives and preserving the rigging equipment. Working with its OEM (original equipment
environment. manufacturers) partners, the Subsea Solutions Alliance engineer-
Oil rigs, underwater pipelines and installations, offshore ing team creates the specialized flexible habitats for hyperbaric
terminals, cruise ships and cargo carriers cost enormous amounts dry repairs to equipment underwater and advanced buoyancy
of money. Routine maintenance, as well as major repairs, aid in control solutions for the safe and efficient exchange of propulsion
keeping these expensive investments running smoothly. Sub- thrusters underwater.”
merged oil is obviously a threat to the environment, but if recov- SSA says that the key to its success is two-fold. First, it
ered in significant quantities it can also be a valuable asset. State maintains a large staff of diver technicians certified to Class A-
agencies, along with the U.S. Coast Guard, use maritime salvage approved underwater wet welding procedures. Second, its project
technology to keep their marshlands, intracoastal waterways and management team is staffed with professional engineers using
SEpTEMbER/OCTObER 2010

beaches clean and safe. Bottom line, this is an industry central to new 3-D CAD systems to enhance the firm’s engineering and
the preservation of the planet and on the cutting edge of techno- solutions capabilities.
logical innovation and achievement.
Marine Pollution control
subsea solutions alliance Detroit-based Marine Pollution Control Corporation (MPC)
The Subsea Solutions Alliance (SSA) is a global consortium of specializes in hazardous materials management and spill control.
companies allied to provide rapid and cost-effective underwater Incorporated in 1968, it is one of the oldest oil spill response
solutions including propeller and thruster repairs, underwater organizations in the world, and it has been involved with some of
maintenance and inspection services. In July, for example, SSA the most famous cleanups in history, including the Amoco Cadiz
performed a welding repair on a punctured pontoon attached to and the Exxon Valdez. Projects range from offshore submerged
46
an offshore semisubmersible rig. A semisubmersible is a floating oil recovery operations and railcar spill cleanup to the removal
structure held in place by ropes under tension. The tension has of underground storage tanks. One notable project involved oil
the effect of keeping the rig slightly submerged. Semisubmersibles recovery operations at the bottom of the Gulf of Mexico.
are used for both oil drilling and oil and gas processing. In 2006 a tank barge struck a submerged oil platform that
SSA’s partner, All-Sea Enterprises Ltd., completed the job in had been struck by Hurricane Rita the year before. The barge
two phases. The first phase utilized a cofferdam for the actual eventually capsized and spilled 65,000 barrels of slurry oil into the
repair of the puncture. The damaged plate was cropped away and Gulf. The heavy oil sank to the sea floor. MPC was mobilized and
THE MARITIME EXECUTIVE

removed and a new plate welded into place, covering an area of responded with a crew of 24, including a 14-person dive team.
about one square meter. The second phase utilized a specialized The operation used a 250x50-foot barge as a work platform and
hyperbaric cofferdam for painting. The hyperbaric cofferdam relied on MPC’s patented KMA 333 hydraulic submersible pump,
is a portable habitat that keeps water out of the work area by which is resistant to clogging and abrasives, to suck up the oil.
using pressurized air at magnitudes slightly higher than the total The process yielded an oil, water and sediment mixture, and an
hydrostatic pressure of the water at prescribed depths. The entire on-board decanting system allowed clean water to be discharged
operation was conducted in parallel with routine repairs occurring overboard. The operation covered 100 square miles of ocean at
on the topside of the rig. SSA also completed several other fixes depths ranging from 40 to 70 feet. Divers had to work directly on
to the rig in addition to the pontoon repair: thruster demount- the sea floor, disturbing the sunken oil, thus mitigating the effec-
ing and installation, complete hull cleaning, and replacement of tiveness of the recovery. This spurred MPC to seek a new solution
depleted zinc anodes. with improved technology, a system using a manned submersible
Rick Shilling, Sales and Marketing Director for SSA, stated, to facilitate recovery.
“Developing effective repair strategies, as well as advanced Chairman Dave Usher proposed a new tool for the MPC
buoyancy control solutions, for underwater propulsion equipment toolbox: combining a two-person submarine with an underwater
allows vessel operators to maintain their installations on station “skimmer” connected to the KMA 333 pump. In tests conducted
while, at the same time, performing preventative and emergency on the Rouge River in Detroit, the system worked flawlessly.

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MarEx_40.indd 46 9/26/10 12:40 AM


subsea salvage

Defueling operations off Lena point, Alaska.

SEpTEMbER/OCTObER 2010
MPC used red clay to simulate the submerged oil. An MPC barge Global Divin
DivinG
G an
anD
D salva
salva
alvaGe
was mobilized as an operations platform, and the two-person Seattle-based Global Diving & Salvage, Inc. (GDS) is the largest
submarine easily recovered all of the simulated oil. diving contractor on the West Coast, a leading provider of marine
The innovation exemplified by MPC through its two-person construction and support services in the U.S., and an internation-
47
submarine with underwater skimmer underlines an important ally recognized casualty responder. Its specialties include marine
fact: Oil on the sea floor will end up on shore. Sometimes too salvage, underwater construction, upland and marine environ-
much emphasis is placed on surface cleanup. As we now know all mental response, offshore support services and ROV operations.
too well in the aftermath of the Deepwater Horizon spill, sub- In 2010 GDS worked in conjunction with the U.S. Coast Guard
merged oil recovery is just as important. and the State of Alaska’s Unified Command to recover fuel oil

THE MARITIME EXECUTIVE


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MarEx_40.indd 47 9/26/10 12:40 AM


subsea salvage

leaking from the Princess Kathleen off Lena Point, Alaska. The recovered from the 14 fuel tanks aboard the Princess Kathleen.
project was a tremendous success. “Global Diving & Salvage is pleased to have been able to
The Princess Kathleen, a luxury liner built by John Brown and utilize its expertise and specialized equipment in partnering with
Co. of Glasgow, was launched in 1924. Her maiden voyage took Unified Command, thus creating a safe solution to a potentially
her from Glasgow through the Panama Canal to service the West disastrous release of oil into the waters of southeast Alaska,”
Coast from San Francisco to Vancouver. On September 7, 1952, noted David DeVilbiss, Alaska Regional Manager for GDS.
the ship was traveling between Juneau and Skagway, Alaska and
ran into a heavy storm, hitting ground at Lena Point north of Ju- Toward a Greener PlaneT
neau. She eventually filled with water and sank at depths between Marine salvage and repair technology can produce amazing results.
40 and 140 feet with a significant amount of fuel on board. While it may not have the flair of deepwater offshore exploration,
Point Lena is a popular recreational spot for fishing and div- the technology is innovative and sophisticated all the same. The use
SEpTEMbER/OCTObER 2010

ing. Over the years the Princess Kathleen began leaking oil. To of a device like the hyperbaric cofferdam is ingenious and an inno-
mitigate an environmental disaster, GDS was contracted by the vative use of positive pressure” in underwater welding applications.
U.S. Coast Guard to perform a survey of the integrity of the hull The two-person submarine with underwater skimmer exemplifies
and tanks and develop an estimate of the oil that remained on- a technology developed in-house and used to excellent effect in the
board. GDS used Remotely Operated Vehicles (ROVs) to probe recovery of submerged oil. In the case of the Princess Kathleen, the
the ship’s structure before sending divers in to tap the tanks and ship had been underwater for nearly 60 years and whole sections
estimate the quantity of fuel that remained. After the survey was had deteriorated and washed away. The innovative use of ROVs
completed, a plan was developed for the safe removal of the fuel allowed a thorough survey of the damage before sending in divers.
oil that remained on board. As environmental concerns become increasingly important
GDS divers penetrated the hull, inserted heat exchangers that and often paramount, so too will the work of subsea salvage and
48
allowed hot water to be circulated with the oil to improve its flow repair companies. Their contribution to the preservation of the
characteristics, and then pumped the oily water mixture onto a planet should not be overlooked. MarEx
surface barge, where it was separated and the oil sent to Seattle
for recycling/disposal. The Unified Command announced that a Richard Carranza is a chemical engineer and frequent contribu-
total
•Ad ofG 123,575
3.375 xgallons of oil and other
4.875:Layout petroleum products
1 9/22/10 5:10 PM were
Page 1tor to The Maritime Executive.
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Bunker update: By Barry Parker

The Price of Emissions


SEpTEMbER/OCTObER 2010

50
THE MARITIME EXECUTIVE

While large overall, the marine fuels business is bunkers under a variety of brand names including World fuel,
highly fragmented both geographically and economically. its large trans-tec, Bunkerfuels, oil shipping, marine energy, norse
size and low concentration are a recipe for double trouble. its size Bunker and Casa Petro. it reported top-line marine segment rev-
makes it a target for politicians and regulators of all stripes, in- enue of $5.1 billion in 2009, implying a market share of around
cluding those concerned with emissions. its fragmentation begets three percent of the world total. Based on 21.1 million mt of
lack of industry leadership (on any issue), which in turn stymies marine fuels sold in 2009, its share is higher, over six percent
any efforts to fight back against the regulatory tide. of the mid-range market size. another public company, aegean
recent estimates from eu studies put shipping’s worldwide marine Petroleum (nYse: anW), with a 6.2 million mt sales
fuel consumption at 333 million metric tons (mt), with a pos- figure (worth $2.5 billion), comes in with a less than two percent
sible low of 279 million mt and a high of 400 million mt. about share of the global market.
one quarter of the fuel burn is distillate, with the lion’s share
being residual fuel, implying a market turnover on the order of Small IS BeautIful
$150 billion. the fragmented nature of the business makes it the smaller and mid-sized suppliers are typically private compa-
difficult to gather meaningful market share information, even nies, often with a regional concentration. in the Caribbean mar-
though any one supplier may loom large in a particular market. ket, Curaçao-based Curoil, celebrating its 25th anniversary this
one listed company, World fuel services (nYse: int) sells year, is a leading player. according to marketing Director angela

MarEx_40.indd 50 9/26/10 12:41 AM


bunker update
A fragmented industry
will need to get its act tion (IMO) Convention on Pollution from Ships (MARPOL), An-
nex VI. The clock has already been ticking in Northern Europe,
together if it hopes to where Sulfur Emission Control Areas (SECAs), which took effect
in 2006, mandate restrictions on the sulfur content of fuels for
comply with strict new ships trading in the Baltic and North Seas.
Earlier this year the IMO adopted amendments to Annex VI of
air pollution standards. MARPOL instituting a North American Emission Control Area
(ECA). Taking effect in August 2012, a 1.0 percent sulfur limit
would apply in the area, which encompasses swaths of up to 200
Guiamo, “Basically, our customers can include all vessels transit- miles along the East and West Coasts of the U.S. and Canada as
ing or calling at ports in the southern Caribbean.” For Curoil, like well as the Gulf of Mexico and Hawaii. In accord with the IMO’s

SEpTEMbER/OCTObER 2010
many others in the business, marine bunkering is actually but one amendment process, the global limit on sulfur in fuels is slated
facet of a larger business. Guiamo explained, “We are involved to decrease to 3.5 percent by the beginning of 2012, except for
in aviation fuelling as well as the marine side. We also sell entire existing SECAs in Northern Europe, where the limit is already 1.0
cargoes to industrial customers around the Caribbean.” Curoil’s percent. After January 1, 2015, the sulfur limit in ECAs ratchets
major supplier is Venezuelan oil giant PDVSA, which operates a down to 0.1 percent. Existing NOx requirements will apply to all
refinery in Curaçao once owned by Shell. new vessel construction, with stiffer requirements kicking in at
Over the past three decades, Curoil has made capital in- the beginning of 2016.
vestments as needed. According to Guiamo, the company has Industry-wide, the target for regions outside the ECAs moves
invested in both storage capacity and pipelines and can deliver a down to 0.5 percent by 2020, subject to a look at the oil industry’s
full-service bunkering experience to vessels calling in the port or ability to actually supply the required amounts of low-sulfur fuel.
51
vessels at sea. She elaborated: “We can handle a wide range of The rules also allow for scrubber technology and specify maximum
requests from homogenous products to blended products. Our parts per million of particulate emissions, which could enable fuel
blends range between 30-380 cst (intermediate fuel oil), all ac- with higher sulfur levels to be burned aboard vessels with scrub-
cording to customers’ requirements.” Guiamo further explained bers. The new rules bring additional complexities to an already
that bunkering operations are conducted on a 24/7 basis. complicated business. A bulletin from Lloyd’s Register, published
The company’s capital investments have been both on and
offshore. On land, Curoil runs the bunker operation through un-

THE MARITIME EXECUTIVE


derground pipelines with fuel connections on most wharfs in the
Port of Curaçao. From five different fuel tanks with sizes ranging
from 33,000 – 96,000 barrels located in the bunker department,
pipelines run underground to the different pits. Curoil leases a
10,000-ton fuel tanker, the Angeles B, used for offshore deliver-
ies, and owns two smaller vessels, Curoil I and Curoil II, with Cost-effective access to high-speed data services.
onboard blending capabilities for local deliveries, including to n Simultaneous voice and IP data up to 432kps
offshore oil rigs. n Global coverage
Another company with years of experience is Glander Inter- n Unrivalled reliability
national, a pioneer bunker broker (rather than a supplier), whose n Easy IP network integration
history dates back to 1961. Now based in Palm Beach Gardens, n Highly cost-effective
n Completely secure
Florida, the firm was originally located in New York. Glander
“works with shipping companies and oil suppliers from all over
the world,” stated Todd McKenna, a Kings Point graduate with
experience at sea as well as with two large marine engine manu-
facturers and a major oil company. The firm’s worldwide scope
can be seen from its lengthy list of suppliers, including Curoil.
Glander is also well known for its market report, which provides
buyers of fuel with daily price comparisons at nearly 50 delivery
points across multiple continents. The reports support its business
of offering IFO 380, IFO 180, Marine Diesel Oil (MDO) and Delta Wave is a mobile satellite services provider.
Marine Gas Oil (MGO) bunkering through a worldwide network Products and Services include:
of major oil suppliers as well as independent suppliers. Inmarsat®, Iridium®, Asset Tracking,
Systems Integration
Meeting the eMissions Challenge Delta Wave CommuniCations, inC.
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The marine fuels business faces challenges going way beyond
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and associated particulate matter have been in the regulatory email: sales@deltawavecomm.com | www.deltawavecomm.com
crosshairs for years. The regulatory time clock is calibrated in a
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set of regulations known as the International Maritime Organiza-

Delta Wave 4P Ad.indd 1 9/15/09 8:53:13 AM

MarEx_40.indd 51 9/27/10 1:33 PM


bunker update

shortly after the IMO meetings this past March, states:


“Ships will be required to have written changeover proce-
dures and to change over fuels prior to entry into the ECA
and to maintain that usage until after exit.” In discussing
ships trading in North America (but not the Baltic, where
SECA operations are familiar), the class society cautions:
“For these ships the changeover procedures will be new,
and they will need to be developed and appropriate training
to ships’ crew provided. It may also require modification
to fuel storage and handling arrangements to deal with
storage and use of low-sulfur fuels.” The rules have been a
SEpTEMbER/OCTObER 2010

long time in the works, and suppliers are adapting. Curoil’s


Guiamo says that her firm has been adding lower sulfur
fuels to its sales mix over a decade-long phase-in period.
Brokers such as Glander are dealing with a changed
landscape due to all the new rules. McKenna told MarEx, tions. “Some vessels end up burning LS in the Atlantic and then
“Among the complexities that we’ve encountered are that a lot of stop again before entering the SECA,” McKenna noted. “Recent-
ports in the U.S. do not have low-sulfur fuels available yet.” He ly, we had a vessel that wanted four types of fuel – RMG380,
added, “In ports where the fuel is available, not all suppliers have RMG380LS, MGO DMA and MGO DMA LS – to save
it. This reduces the number of players.” The Glander executive money.” He stressed the importance of advising clients on the dif-
also described another constraint that he’s observed, a mismatch ferent fuel specifications required but cautioned that “Some ships
52
between required quantities and tank configurations aboard ves- do not have the extra fuel tanks, and that will be a problem. And
sels: “On some older vessels, the fuel oil tanks cannot take larger some owners are cleaning out fuel tanks designed for heavy fuels
quantities or segregate the different types of fuels without mixing in order to handle diesel.”
to get to the next port.” Looking ahead, a number of uncertainties loom. Some ana-
The result, in some cases, has been highly inefficient opera- lysts have expressed concern as to the refining industry’s ability to
THE MARITIME EXECUTIVE

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MarEx_40.indd 52 9/27/10 1:10 PM


bunker update

U.S. flag fleet, running along the coast, will be impacted,


and owners will need to make some economic decisions.”
He pointed to the experience of coastal California, where
restrictions on sulfur content are already in effect, and told
MarEx: “We talk to many of the suppliers in that region,
and the ships are already burning diesel. Going forward,
the ships are likely to be burning mainly diesel fuel.”
Additional regulations governing maritime emissions
of carbon dioxide, a compound in the greenhouse gas
category, have been the subject of much discussion but
little agreement thus far. Policymakers are considering

SEpTEMbER/OCTObER 2010
plans for carbon-trading platforms analogous to those in
the aviation industry, where a mode-specific trading plat-
form is linked into a broader marketplace for industrial
emissions. Another alternative is some form of carbon
supply the requisite amounts of low-sulfur fuels. In the interim, tax, likely paid by the refiner and then passed down the distribu-
a technological workaround, scrubbers, are being considered tion chain. Because the maritime industry is both fragmented
by many in the industry. One vendor, Hamworthy Krystallon, and fractious, many executives are worried that it will be on
offers an economic analysis of the alternatives facing owners. At the receiving end of regulatory dictates rather than leading the
an indicative cost of $2.4 million to $3.4 million for the upfront conversation and exerting a prevailing influence on the eventual
investment in a scrubber on a deep sea vessel, payback would be outcome. One thing is certain: Change is coming, and coming
53
achieved on the savings from buying IFO 380 fuel (a high-sulfur soon, and it will be expensive. Better to be in on the discussion
grade) versus paying more for a low-sulfur grade. Glander’s than left out in the cold. MarEx
McKenna observes, “A lot of our customers are looking into the
scrubber technology and seem to be waiting for the latest and barry parker is a consultant and frequent commentator on mari-
greatest form of that technology.” In particular, he said, “The time developments.

THE MARITIME EXECUTIVE


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MarEx_40.indd 53 9/27/10 1:43 PM


deck
machinery
burrard iron works
BURRARD IRON WORKS LTD. who have been in the marine

Directory equipment business in Vancouver since 1912 recently delivered the


HJ 250 HP electric hawser winch for the SEASPAN RESOLUTION
which carries 1,000 ft of 3-1/4” diam. line.

burrard iron works


t: +1 604 684 2491
sales@burrardironworks.com
www.burrardironworks.com
SEpTEMbER/OCTObER 2010

coastal marine equipment davit sales


The company was formed exclusively to furnish quality deck ma- Davit Sales Inc. established in 1980 to sell and service high quality
chinery to the marine industry at a reasonable price, with design, products to the marine industry and to provide Naval Architect /
engineering and service support not available at the time. Coast- Marine services. One of the foremost dealers in the US for Custom
al Marine Equipment is the leading provider of quality Marine Marine Pedestal Cranes, Oil Boom containment systems, Oil recov-
Deck Machinery including, Anchor Windlasses, Mooring Winches, ery equipment, Boom storage and rapid deployment equipment.
54 Anchor Winches, Hose Reels, Capstans, Escort Winches, Towing
Winches, Tugger Winches, as well as much more…

coastal marine equipment davit sales inc.


T: +1 228 832 7655 t: +1 914 962 4544
F: +1 228 832 7675 info@davitsalesinc.com
coastalmarineequipment.com www.davitsalesinc.com
THE MARITIME EXECUTIVE

hypac marine intercontinental engineering


HYPAC is a world leading Australian designer and ABS approved Intercon is the trade name for Intercontinental Engineering
manufacturer of high performance lightweight and conventional deck Manufacturing Corporation located in Kansas City, Missouri - a
machinery. The product range includes anchor winches, ramp winch- company specializing in the design and manufacture of heavy
es, mooring winches and capstans, rescue and tender boat davits. machinery for industrial, marine and defense markets.
These standard and tailor made solutions are delivered worldwide in
accordance with ABS, BV, DNV, GL & LRS requirements.

hypac intercon
t: +61 8 8333 0222 T: +1 816 741 0700
info@hypac.com.au F: +1 816 741 5232
www.hypac.com.au srheams@intercon.com
www.intercon.com

markey machinery company nabrico


Designers and builders of high performance Hawser and escort Nabrico Marine Products/NABRICO is a supplier of deck fittings
winches, towing winches, dual purpose anchor handling/escort and other marine hardware for use on the world’s inland water-
winches, anchor windlasses, capstans and specialized oceano- ways and oceans. Products include a complete line of castings;
graphic winches. Available as electric, hydraulic or diesel power. manual, electric, hydra electric, anchor and positioning winches,
Whatever your needs, Markey provides the solution! plus capstans, enclosures and assorted accessory items. A
catalog is available.

markey machinery co, inc. nabrico


t: +1 206 622 4697 T: +1 615 442 1300
info@markeymachinery.com F: +1 615 442 1313
www.markeymachinery.com nabrico@trin.net
www.nabrico-marine.com

MarEx_40.indd 54 9/27/10 2:29 PM MITA


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Developing Practical Solutions for Today’s Toughest Piloting Challenges

The Maritime Institute of Technology and Graduate Studies (MITAGS) is a proven


worldwide leader in the area of Full-Mission Ship Simulation (FMSS). With over twenty
years of experience, and state-of-the-art simulation technology, MITAGS’ expert staff can
program a model of virtually any port/vessel combination in the world. Multiple, large-
scale simulators allow tug masters, captains, and pilots to work together in the same
scenario as part of a highly-accurate, interactive environment. In fact, ship simulation is
now the most practical and cost-effective way for professional mariners to develop safe
operational limits for vessel transits within restricted waters.

A variety of factors can be assessed within the virtual scenario; including:


n Environmental Conditions (such as Wind, Waves, Current, Visibility, etc.).
n Shallow Water and Bank Effects.
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n Mooring, Terminal, Channel, and Storage Arrangements.

For additional information on Maritime Operational Research, please contact Captain


Robert Becker via e-mail at rbecker@mitags.org.

692 Maritime Boulevard, Linthicum Heights, Maryland 21090


Toll-Free: (866)-656-5569 | Website: www.mitags.org
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MarEx_40.indd 55
MITAGS Ops Research FP Ad v1.indd 1 9/27/10
9/23/09 2:27 PM
5:54:35 PM
deck machinery Directory

palfinger SyStemS rapp hydema


We are global marine and offshore crane experts (up to 750 Mt) Founded in 1907, Rapp has a distinguished record in the world-
for flexible standard and special applications customized at the wide marine industry, supplying deck machinery—electric or hy-
highest level. We offer a wide range of foldable knuckle boom, draulic winches especially—for a wide range of operations. Rapp
stiff boom, telescopic boom and heavy duty cranes for the most also manufactures equipment on either side of the winch, such as
diverse applications also under tough conditions. its own line of gearboxes and the PTS Pentagon winch control sys-
tems. Rapp has new and refurbished equipment, with an expert
corps of field techs, supporting clients--coast to coast.

palfinger Systems rapp hydema


T: +43 (0) 662 88 00 33 T: +1 206 286 8162
F: + 43 (0) 662 88 00 33 -2770 F: +1 206 286 3084
office@palfingersystems.com sales@rappus.com
SEpTEMbER/OCTObER 2010

www.palfingersystems.com www.rappus.org

Smith berger timberland equipment


Smith Berger is a leading designer and manufacturer of mooring TIMBERLAND EQUIPMENT LIMITED custom engineers and manufac-
and towing equipment for all types of vessels. Standard products tures dependable and durable marine winches, designed to improve
include fairleads, guide sheaves, flag blocks, chain stoppers, tow- efficiency and safety. TIMBERLAND’s engineering experience with
ing pins, shark jaws and stern rollers. Our engineering experience hoisting and winching equipment dates back to 1947 and also extends
allows us to customize any of our products to suit your particular to electrical transmission and distribution, offshore marine, construc-
56
application. Contact Smith Berger for your next project! tion and mining markets. TIMBERLAND sells equipment to over 50
countries through a worldwide service network.

Smith berger marine, inc. timberland equipment limited


7915 10th Avenue South t: +1 519 537 6262
Seattle, WA 98108 sales@tewinch.com
T: +1 206 764 4650 www.timberland.on.ca
tomp@smithberger.com
THE MARITIME EXECUTIVE

www.smithberger.com

ttS marine inc. wintech


OEM Service, Spares and Sales for Marine and Offshore Winch- Manufacturing, Winches-Blocks-Fairleads-Sheaves, For the
es and Cranes, Hatch Covers, RoRo Ramps, Cargo Doors and Marine Industry. Deck Winches • Barge Positioning Systems •
Cargo Handling Equipment. We handle all TTS equipment and Anchor Winches • Mooring Winches • Hand Winches
former brand names: Kvaerner Ships Equipment, Kvaerner Brug,
Hamworthy KSE, Hydralift, Norlift, O&K, Krupp Fˆrdertechnik, Standard and Custom available for all Winches Blocks Fairleads
LMG, Friedrich Kocks, Maritime Hydraulics, Mongstad Engineer- and Sheaves. Made in the USA
ing, Velle Systemer and Von Tell.

ttS marine inc. wintech international


T: +1 954 493 6405 T: +1 888 946 8325
F: +1 954 493 6409 F: +1 318 929 1245
service@tts-se.us winches@wintech-winches.com
www.tts-group.com www.wintech-winches.com

C-MAR group offer a full range of services including We provide:


technical management of specialized offshore • FMEA
vessels. In addition the group can offer marine • Audits
manpower and crewing. • Damage & mechanical failure investigations
• Technical auditing
• Development, implementation & maintenance of
www.c-mar.com safety management systems in accordance with
the ISM Code.

Global marine and enerGY SerViCeS

MarEx_40.indd 56 9/27/10 1:36 PM


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MarEx-40-ISU-C1-C4-092210.indd 2 9/27/10 10:41:03 AM MarEx-40-ISU-C1-C4-092210.indd 3 9/27/10 12:25:58 PM


Frank Coles, President Panama Canal: Brave New World
& CEO, Globe Wireless Bigger Is Better of Subsea Salvage

THE MARITIME EXECUTIVE


September/October 2010

M I C H A E L L AC E Y – TO D D B U S C H / I N T E R N AT I O N A L S A LVAG E U N I O N
STANDARD OF EXCELLENCE

Todd Busch Michael Lacey


President, ISU Secretary General, ISU
„ GLOBAL SALES AND SUPPORT

„ EXTENSIVE RANGE OF PRODUCTS AND SERVICES

„ ONGOING PRODUCT DEVELOPMENT

VOLUME 14, EDITION 5, SEPTEMBER/OCTOBER 2010


CLOCKWISE FROM TOP LEFT
JOINT SUPPORT SHIP DUTCH NAVY
DAMEN STAN TUG 1605
DAMEN STAN TUG 2208
DAMEN STAN TUG 2909
DAMEN ASD TUG 2810
DAMEN STAN PATROL 4708 - BUILT UNDER LICENSE BY BOLLINGER SHIPYARDS

D A M E N S H I P YA R D S G O R I N C H E M Member of the DAMEN SHIPYARDS GROUP

Industrieterrein Avelingen West 20 P.O. Box 1 phone +31 (0)183 63 91 74 americas@damen.nl


4202 MS Gorinchem 4200 AA Gorinchem fax +31 (0)183 63 77 62 www.damen.nl
The Netherlands

MarEx-40-ISU-C1-C4-092210.indd 4 9/27/10 10:41:17 AM


MarEx-40-ISU-C1-C4-092210.indd 1 9/27/10 10:39:48 AM