(U.S. Navy photo by Mass Communication Specialist 2nd Class Bryan Blair/Released)

(May 21, 2013) – Combined Task Force 521 conducts convoy escort operations with a large natural gas tanker during International Mine Countermeasures Exercise 2013 (IMCMEX). IMCMEX 13 includes navies from more than 40 countries and will exercise a wide spectrum of defensive operations designed to protect international commerce and trade.

(May 19, 2013) – (U.S. Navy photo by Mass Communication Specialist 2nd Class Bryan Blair/Released)

Lt. Bryan Wolfe, operations officer for CTF 521, speaks with the commanding officer of a large natural gas tanker, about plans for an upcoming mission during International Mine Countermeasures Exercise 2013 (IMCMEX 13).

IMB 2013 Piracy Map. Click HERE to interact.

The EU has pledged some €37 million (US $47.77) to strengthen counter piracy efforts in several Eastern and Southern African countries, the European Commission announced Tuesday.

The money comes through support for the support for the Programme to promote Regional Maritime Security (MASE), part of a wider package of development and political efforts by the European Union in Somalia and the Horn of Africa region

“This new European support marks a step forward in the fight against piracy because it demonstrates the EU’s on-going commitment to combatting this complex problem. Strengthening security in the maritime routes is crucial for us because it will help boosting trade and growth in the region, which would enormously improve people’s lives.” said Development Commissioner Andris Piebalgs.

The EU has been present in the region already since 2008 to address the deteriorating situation and to harden ships against attack. Thanks in part to these efforts piracy has decreased from 299 attacks in 2011 to 111 in 2012 (a reduction of over 62%), while the number of hijackings dropped from 25 to 12.

“This new European support marks a step forward in the fight against piracy because it demonstrates the EU’s on-going commitment to combatting this complex problem. Strengthening security in the maritime routes is crucial for us because it will help boosting trade and growth in the region, which would enormously improve people’s lives.” said Development Commissioner Andris Piebalgs.

“This new funding is another sign of our commitment to stamping out piracy. It forms part of our comprehensive approach to assisting countries in the region, which means that we deal with the causes as well as the symptoms of piracy. We have made huge strides over last few years, and this money will help to build on the progress we have made by strengthening legal systems, improving financial controls and training young men to find alternatives to piracy.” said High Representative Catherine Ashton.

The new programme will help to develop the legal and judicial system of countries in the region, so that they are better equipped for the arrest and transfer of pirates. Financial oversight systems will also be strengthened, by providing training for the authorities to prevent the movement of funds contributing to, or resulting from piracy. Capacity-building (for example, sharing expertise and implementing training), and providing material logistic support on security, will help to improve surveillance and patrol of the coastline.

In Somalia, in particular, the programme will also carry out anti-piracy awareness campaigns in areas where piracy is prevalent; as well as providing vulnerable groups of young men with training so that they successfully pursue alternative vocations. In this way, Somali administration and communities will be helped to initiate home-grown solutions to these problems.

John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, “The sale of our Inland rigs is consistent with our on-going efforts to rationalize non-core assets.  Market challenges in this segment have been significant over the past several years, making it difficult to generate a positive return from these assets.  We do not expect these challenges to materially abate.  The sale will generate cash proceeds that can be reinvested in higher returning assets that are strategic to our growth objectives.”

14 May, 1942, U. S. Army Air Corps photographs of the burning tanker Potrero del Llano location. Photo Credit: Images courtesy of National Archives, College Park, MD

Report presented to U.S. Coast Guard for use in contingency plans

NOAA on Monday presented the U.S. Coast Guard with a new report on the pollution threat posed by the thousands of shipwrecks scattered across the U.S. seafloor.

The report, which is part of NOAA’s Remediation of Underwater Legacy Environmental Threats (RULET) project, identifies the location and nature of potential sources of oil pollution from sunken vessels, which could help oil response planning efforts and in the investigation of reported mystery spills.

In total, NOAA identified 36 “worst case” shipwrecks that could pose a oil pollution threat to the U.S.’s coastal marine resources. Of those, NOAA says, there are 17 that are recommended for further assessment and potential removal of both fuel oil and oil cargo.

The sunken vessels are a legacy of more than a century of U.S. commerce and warfare. They include a barge lost in rough seas in 1936; two motor-powered ships that sank in separate collisions in 1947 and 1952; and a tanker that exploded and sank in 1984. The remaining sites are 13 merchant marine ships lost during World War II, primarily along the Atlantic Seaboard and Gulf of Mexico.

“This report is the most comprehensive assessment to date of the potential oil pollution threats from shipwrecks in U.S. waters,” said Lisa Symons, resource protection coordinator for NOAA’s Office of National Marine Sanctuaries. “Now that we have analyzed this data, the Coast Guard will be able to evaluate NOAA’s recommendations and determine the most appropriate response to potential threats.”

“The Coast Guard is pleased to receive these risk assessments from our partner agency NOAA and looks forward to our continued coordination on the matter of potential pollution associated with sunken vessels in U.S. waters,” said Capt. John Caplis, the Coast Guard’s chief of marine environmental response. “Coast Guard federal on-scene coordinators receiving the risk assessments will carefully review the data and incorporate it into their area contingency plans.”

Over 20,000 shipwrecks exist in U.S. waters. Image Credit: NOAA

In 2010, Congress appropriated $1 million for NOAA to develop a list of the most significant potentially polluting wrecks in U.S. waters, including the Great Lakes, specifically addressing ecological and socio-economic resources at risk.  NOAA maintains the internal Resources and UnderSea Threats (RUST) database of approximately 30,000 sites of sunken material, of which 20,000 are shipwrecks. The remaining items are munitions dumpsites, navigational obstructions, underwater archaeological sites, and other underwater resources.

An initial screening of these shipwrecks revealed that 573 could pose substantial pollution risks, based on the vessel’s age, type, and size. This includes vessels built after 1891, when U.S. vessels began using fuel oil; vessels built of steel; vessels over 1,000 gross tons, and any tank vessel.

NOAA says that additional research about the circumstances of each vessel’s loss narrowed that number to 107 shipwrecks. Of those, some were deemed navigational hazards and demolished, and others were salvaged. Most of the 107 wrecks have not been directly surveyed for pollution potential, and in some cases little is known about their current condition.

To prioritize and determine which vessels are candidates for further evaluation, NOAA used a series of risk factors – total oil onboard, type of oil, nature of sinking, etc. – to assess the likelihood of substantial amounts of oil remaining onboard, and the potential ecological and environmental effects if that oil spills.

After this third level of screening, 87 wrecks remained on the list developed for the Coast Guard’s area contingency plans. Among this group, NOAA determined that 36 shipwrecks are candidates for a “Worst Case” discharge event in which the shipwreck’s entire fuel oil and oil cargo would be released simultaneously, and recommended that 17 of these wrecks be considered for further assessment and feasibility of oil removal.

In addition, six wrecks are potential candidates for a “Most Probable” discharge event, where a shipwreck could lose approximately 10 percent of its fuel oil or oil cargo. To date, known oil discharges from shipwrecks are typically in the “Most Probable” category or smaller, NOAA says.

The report, including 87 risk assessments, is not intended to direct Coast Guard activities, but rather provide the Coast Guard with NOAA’s scientific and technical assessment and guidance as a natural resource and cultural heritage trustee.

The locations of the 17 wrecks NOAA is recommending be considered for in water assessment and pollution recovery if necessary (CLICK IMAGE TO ENLARGE). Image Credit: NOAA

The Coast Guard, as the federal On-scene Coordinator for mitigating oil spills in the coastal marine environment, the Regional Response Teams, and local Area Committees, as established under the Oil Pollution Act of 1990, will review and incorporate the assessments into regional and area marine environmental response contingency plans. The individual risk assessments not only highlight concerns about potential ecological and socio-economic impacts, but also characterize most of the vessels as historically significant and many of them as grave sites, both civilian and military.

NOAA notes, however, that those funding was intended for oil or vessel removal. Funding for any assessment or recovery operations is dependent upon the unique circumstances of the wreck, including if a wreck still has an identifiable owner. If no responsible party exists, however, the Oil Spill Liability Trust Fund would likely be accessed.

View Report: 2012 Risk Assessment for Potentially Polluting Wrecks in U.S. Waters.

On behalf of the American Maritime Partnership, Joseph H. Pyne, Chairman and Chief Executive Officer of the Kirby Corporation, testified before the Subcommittee on Coast Guard and Maritime Transportation of the House Transportation and Infrastructure Committee and said that preserving the Jones Act is essential to the nation’s economic growth as well as its national and homeland security.

“The domestic U.S.-flag maritime industry is one of the most robust, dynamic and productive in the world today, numbering more than 40,000 vessels, supporting more than 500,000 workers, and contributing more than $100 billion to the U.S. economy,” said Mr. Pyne. “AMP member companies are investing in this country and creating jobs in virtually every sector of the economy. That is only possible because the Jones Act provides the foundation for making that investment with confidence.”

The Jones Act is U.S. maritime law that mandates the use of vessels that are American-crewed, -built, and -owned to move cargo between two U.S. ports. The law is critical for American economic, national, and homeland security, which is why it has enjoyed the support of the U.S. Navy, many Members of Congress of both parties, and every President in modern history.

Mr. Pyne stated that Congress must remain steadfast and vocal in its support for the Jones Act and reject overtures by those seeking to change or repeal the law for their own benefit. He added that the domestic U.S.-flag maritime industry has “demonstrated time and again that it can, and will, continue to meet America’s transportation needs” and that “maintaining the law is essential to sustaining a U.S.-flag fleet which is vital to our national security.”

“The Jones Act provides a layer of protection to this nation that many do not recognize and also provides capability to assist in times of national emergency,” said Mr. Pyne. “Please help us keep the confidence we need to continue investing in America by telling the world America’s security is not for sale and the Jones Act will remain the foundation of our U.S. fleet.”

A copy of the AMP written testimony can be downloaded HERE.

American Maritime Partnership is the voice of the U.S. domestic maritime industry, a pillar of our nation’s economic, national, and homeland security. More than 40,000 American vessels built in American shipyards, crewed by American mariners, and owned by American companies, ply our waters 24/7, and this commerce sustains nearly 500,000 jobs, $29 billion in labor compensation, and more than $100 billion in annual economic output according to a study by PricewaterhouseCoopers for the Transportation Institute. So efficient are these vessels that they carry a quarter of the nation‘s cargo for only 2 percent of the national freight bill, and being American owned, built and crewed helps make America more secure.

Carnival Triumph adrift in the Gulf of Mexico in February, 2013. US Coast Guard Photo

Christopher Palmeri

May 21 (Bloomberg) — Carnival Corp. fell the most in more than 16 months after the world’s largest cruise operator lowered its forecast for the rest of the year, saying price cuts undertaken following a series of mishaps will hurt margins.

Carnival dropped 5.2 percent to $33.47 at 9:45 a.m. in New York and earlier fell 6.8 percent for the biggest intraday decline since Jan. 17, 2012, after delivering the lower view for the second half of 2013 yesterday. Before today, the shares had fallen 3.9 percent this year while the Standard & Poor’s 500 Index added 17 percent.

The lower forecast demonstrates the continuing fallout from several incidents at sea involving ships operated by Miami-based Carnival that attracted news coverage. They included an engine- room fire on the Triumph in February that left 3,100 passengers with limited food and toilet service for several days.

Full-year profit will total $1.45 to $1.65 a share, Carnival said yesterday in a statement. That’s down from a previous forecast of $1.80 to $2.10. Analysts were projecting $1.99, the average of 27 estimates compiled by Bloomberg.

The company began cutting prices to fill cabins, dropping the fare for some trips in April to as little as $38 a night per person.

While bookings increased, the amount of revenue captured from each customer has declined, Carnival said yesterday. Cancellations were also higher than expected, the company said.

Higher fuel and marketing costs, as well as less-favorable exchange rates, will also crimp profit, the company said.

Copyright 2013 Bloomberg.

A NASA photograph shows the extend of the Gulf Oil Spill in 2010. Photo: NASA

Jonathan Stearns

May 21 (Bloomberg) — The European Union tightened safety rules for offshore oil and natural-gas exploration to curb the risk of a major accident after BP Plc’s 2010 spill in the Gulf of Mexico, the largest in U.S. history.

The European Parliament approved legislation that forces oil and gas companies to submit special hazard reports and emergency-response plans before offshore operations can start. The law also requires operators of offshore platforms to prove their ability to cover potential liabilities and extends the zone in which businesses would be liable for damage to 370 kilometers (230 miles) off the coast from the current 22 kilometers.

“The rules we are currently coming up with can be used as a template at international level,” said Ivo Belet, a Belgian member who steered the legislation through the 27-nation EU assembly today in Strasbourg, France. EU governments have already signaled support for the law, making their final approval a formality in the coming weeks or months.

The tighter regulation marks the EU’s effort to improve safety and bolster the “polluter pays” principle in the energy industry following the Gulf of Mexico spill three years ago. Eleven rig workers died and more than 4.1 million barrels of crude gushed into the Gulf after the Deepwater Horizon rig exploded and sank while drilling BP’s Macondo well off the Louisiana coast.

The EU has almost 1,000 offshore oil installations, including 486 in the U.K., 181 in the Netherlands and 61 in Denmark, the European Commission, the bloc’s regulatory arm in Brussels, said when proposing the new rules in October 2011. The average cost of offshore oil and gas accidents in the EU ranges from 205 million euros ($264 million) to 915 million euros a year, the commission said at the time.

Representatives of the International Association of Oil and Gas Producers weren’t immediately reachable by telephone at the group’s London and Brussels offices to comment on the new EU legislation.

Copyright 2013 Bloomberg.

Image (c) Shutterstock/Cardens Design

“Have we placed the mariner in a no-win situation?” asked Captain Anuj Chopra at yesterday’s Mare Forum conference in Washington, DC.  Chopra, the President of Anglo-Eastern LLC describes a frustrating situation unfolding offshore as mariners are drowning in a sea of paperwork.

Some call it a Regulatory Tsunami.

He notes that in a recent poll that 100% of the mariners polled agree that documentation is needed, however that same group also believe that this documentation needs to be simple, brief, and effective.  Which it currently isn’t.

Another issue is a lack of OPEX for training.  As new technologies and regulations are delivered to the ship, a mere 1 to 2 percent of a shipowner’s budget is allocated to training.  For many companies, the percentage is likely less than 1 percent.  Meanwhile, shipowners have seen insurance rates increase 15 to 20 percent, mostly attributed to problems stemming to a a “failure of basic seamanship” according to Chopra.

From the mariner’s perspective, it’s easy to point fingers at “the office,” but what the mariners perhaps don’t see is the fact that most shipowners suffer from a serious lack of cash and are finding these issues equally difficult to deal with.  Adding more regulations such as Ballast Water Treatment and more stringent emissions standards is an incredibly expensive undertaking, in many cases the technology isn’t proven yet, and the enforcement of these rules is unclear.

The bottom line is, shipowners could be put at a serious competitive disadvantage by investing in new technology to meet requirements, while others could sneak by under the radar and cash in on the fact the issue of enforcement hasn’t been sorted out yet.

Putting this in perspective, retired USCG Rear Admiral Bob North commented in his presentation yesterday that it costs at least $1 million per ship to outfit it with ballast water treatment, and GENCO Shipping has 53 ships.  It’s a huge investment, but one that they are currently evaluating for their fleet.

Meeting air emissions requirements is another huge hurdle.

Kenneth Vareide, Director of Operations for DNV noted yesterday that Particulate Matter, SOx and NOx emissions from the maritime sector will become a much greater piece of the national emissions contribution from mobile sources over the next 20 years.  He referenced the following graphs from the Environmental Defense Fund as an example of the regulator’s perspective and background for their focus on shipping.

The IMO has come down with extremely tight restrictions to be implemented over the next 7 years, ones that have their own host of significant issues and potential solutions including Ultra-Low Sulfur Fuel, LNG-newbuilding, LNG-conversion, scrubbers, and all the other factors to go along with this such as training, unit costs, maintenance, and enforcement.

Philip Brooks, Director of the EPA’s Air Enforcement Division commented yesterday that planes might even be used to fly through the plumes of smoke emitted from ships to determine the sulfur content of the fuel they were using as a method of enforcing standards inside Emissions Control Areas (ECAs).

And other non-GHG regulations are on the horizon notes Vareide such as hull biofouling, black carbon emissions, and underwater noise.

On top of all this, across many regions around the world, demand for oil is increasing faster than refineries can produce it according to Gary Morgan, Head Analyst at Clarkson’s.  With the majority of refinery expansion happening east of the Suez, and pressure to close refineries in key refining centers West of Suez, this combination is helping to generate longer product tanker voyages and is one of the factors supporting the current newbuildings of product tankers, notes Morgan.

Higher fuel prices are clearly not good for shipowners however, and combined with low freight rates and new, costly regulations, many owners face the very real prospect of bankruptcy.

The good news is, we’re likely at the bottom of the cycle according to C.R. Weber’s Basil Mavrolean and 2014 looks to be a growth year for the dry cargo sector which has been hit extremely hard in recent years.

Regulatory compliance remains however, an extremely costly, and unavoidable issue, one that will likely only be solved by extraordinary cooperative efforts by owners, regulators, state and regional stakeholders, and environmental agencies.

Spot rates surged 47 percent this month to $70.86 a metric ton, according to the Baltic Exchange, the London-based publisher of shipping costs. The benchmark rate will set a new all-time high, Miguel de Potter, chief executive officer of Antwerp, Belgium-based Exmar, said by phone today.

Expanding natural-gas output in the U.S. is creating more LPG as a byproduct while shipments of the cooking and heating fuel to Latin America rise on winter demand, de Potter said. Congestion at Indian ports also is tying up ships for longer, leaving fewer available to compete for cargoes, he said. While rates rallied for one to three months around this time in the past three years, the current increase will probably last longer, he said.

“Some of my colleagues are more bullish this year because of the additional exports out of the U.S. and the additional imports into Latin America,” de Potter said. “It will definitely break the record.”

Rates reached $81.64 in July 2008, according to the exchange. The U.S. produced a record 29.8 trillion cubic feet of natural gas last year and exported 71.9 million barrels of LPG, according to Energy Department data. Shipments rose 15 percent to 5.9 million barrels in the year to February, the most recent data show.

- Isaac Arnsdorf, Copyright 2013 Bloomberg.