The Maritime Executive Magazine - September/October 2010 by Maritime Executive Magazine

Frank Coles, President & CEO, Globe Wireless THE MARITIME EXECUTIVE 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

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Volume 14, Edition 5

SEpTEMbER/OCTObER 2010

8 | Frank Coles

President & CEO, Globe Wireless by niCholE williAmson

washington insider

12 | washington overshadowed by midterm Election by lArry KiErn

marEx oP-ED

16 | The nabucco objective And Europe’s U.s. shale Gas Alternative by miChAEl J. EConomiDEs AnD PETEr GlovEr

Case Study:

THE MARITIME EXECUTIVE

Executive Achievement

Contents 28 34 Executive Interview:

The international salvage Union

The voice of the global salvage industry leads the way toward a greener planet.

A conversation with secretary General michael lacey and President Todd busch of the isU.

by Tony mUnoz

24 | Annals of safety: The Inflatable Life Raft

50 | bunker Update: The Price of Emissions

by JACK o’ConnEll

by bArry PArKEr

40 | The world’s marine highway

54 | Deck machinery Directory

by robErT C. sPiCEr

Upgrades & Downgrades

20 | Corporate reputations Take a hit

45 | The brave new world of subsea salvage

by JACK o’ConnEll

by riChArD CArrAnzA

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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) 3200 S. Andrews Avenue, Ste. 100 Fort Lauderdale, FL, USA 33316 Telephone: +1 954 848 9955 Toll-Free: 866 884 9034 Fax: +1 954 848 9948 www.maritime-executive.com TME: China Office No9 EPD, Yangzhou Export Processing Zone Yang Zi Jiang South Road Yangzhou, CHINA, 225131 Telephone: +86 514 8752 7700 or +86 159 9512 9423 For subscriptions please visit www.maritime-executive.com 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 part, without written permission. We cannot be responsible for the claims of manufacturers in any of the items. Editorial manuscripts and photos will be handled with care but no liability is assumed for them. POSTMASTER: Please send address changes to The Maritime Executive, 3200 S. Andrews Avenue, Suite 100, Fort Lauderdale, FL 33316. Change of address notices should be sent promptly with old as well as new address and with ZIP code or postal zone. Allow 30 days for change of address.

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editorial

SEpTEMbER/OCTObER 2010

Salvors to the rescue

Tony Munoz Editor-in-Chief

THE MARITIME EXECUTIVE

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 production 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. 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, and gave us a “good news” story to talk about. 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 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 for such services continues to increase. 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 midterm elections. Professor Michael Economides and colleague Peter Glover document European efforts to gain energy independence via the “Great Pipe Hope,” aka the Nabucco Pipeline, which will hopefully alleviate the Russian stranglehold on the Continent’s gas consumption. 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 the national spotlight, this is a must-read. 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 addresses 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 guaranteed 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

CMY

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.

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SEpTEMbER/OCTObER 2010 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.

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EXECUTIVE ACHIEVEMENT

A former ship’s master has what it takes to succeed in today’s technology-driven world. ClImbIng ThE hawsEpIpE

THE MARITIME EXECUTIVE

The View from Here Is Magnificent

SEpTEMbER/OCTObER 2010

Coles wasn’t always behind the desk. At the tender age of 17 he set sail, working as a deck cadet with Shell Tankers and spending the next 12 years on a variety of ships worldwide, eventually becoming a Master Mariner. The time at sea provided a solid groundwork for his “for mariners, by mariners” approach to business. He knows first-hand what mariners need at sea and what ship owners are looking for from their communications services provider. Upon returning to shore, he attended Cardiff University where he earned his Master’s Degree in Maritime Law. Giving law a shot, he joined Richards Butler in London and later Stephenson Harwood & Co. in Hong Kong. Taking his newly gained knowledge and experience with him, his next stop was as General Manager of Pacific Basin Bulk Shipping in Hong Kong. From there Coles launched himself into the communications side of the business when he accepted the CEO position at Rydex Industries Corporation, a marine communications company. He spent two years with Rydex and eventually moved on to Litton Marine Systems, serving as Vice President of Business Development and Information Technology. It seemed Frank Coles had finally found his niche in the maritime industry: New technologies were revolutionizing the business

of ship-to-shore communication, and he wanted to be part of it. Bursting with experience from virtually every corner of the maritime world, he joined Globe Wireless in 1999. That same year, just before Coles came onboard, Globe acquired Marinet Systems Ltd., based in Liverpool, and merged its HF radio network with Marinet’s satellite data communications technology. This opened the door for success at Globe, at the time making it the only company offering dual-pipe, real-time communications capability to the maritime industry. It was a huge leap forward, and Globe experienced a rapid increase in sales. The company quickly added to its sales and support staff and completed a $57 million private equity placement to support new services and rapid growth. While progress was fast and the pace of change furious, Globe still managed to stay true to its basic principles by providing worldwide, 24-hour, on-line customer support and its customary wide range of value-added services to the maritime community. There seemed no one better to manage this phase of the company’s growth and success than Coles. As Chief Operating Officer he charted the course to success, finding new and better solutions to aid ship owners and captains. In Coles’ first five years at Globe, when the industry was seeing many communications companies falter and fail, Globe grew at a compound annual rate of over 40 percent. Today Globe Wireless combines the best of satellite and global digital radio network technologies to bring the maritime industry reliable and low-cost communications solutions. Coles told Mar-

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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, 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 & Rydex, before joining Globe, and knew its IP router technology was just what Globe needed. Additionally, Globe acquired Zynetix, a UK-based company specializing in global system mobile communications solutions, which helped lower costs and provided private data transmission services for mariners.

iFUsIon – nEXT-GEnEraTIon TEChnoloGy Today

THE MARITIME EXECUTIVE

The company’s most recent innovation, launched in early September, is Globe iFusion, an innovative integrated system

specifically designed for IP satellite services and launched on the Inmarsat FleetBroadband platform. Coles says that “Globe iFusion is the way forward for maritime communications. It’s going to change everything.” The fully integrated iFusion network can make and receive voice calls using a GSM handset or normal fixed-line telephone; send/receive emails and faxes; browse the Internet, and upload/download files. It also offers full shoreside control of the solution, including the administration of user profiles, browsing capabilities, firewall settings, satellite gateways

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EXECUTIVE ACHIEVEMENT

SEpTEMbER/OCTObER 2010

and least-cost routing. When asked how the market has changed over the years, Coles reflects on the days when “It was great just to get an email. Now, ship owners expect connectivity, and they expect it to just work. If a ship is not connected, it is lost.” There are very few operators in the deep sea without satellite communications, and many couldn’t imagine operating without them. For the typical client, Globe sets up and maintains all the computers and the local area network and backs everything up. At the end of each month it provides ship

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 communications 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 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 development, coupled with strong alliances, will lead Globe Wireless into its next phase of success. He told MarEx that airtime is a commodity and the terminal is just a commodity, and the real nuts and bolts of his business is making those technologies and those satellites valuable to his customers. Without that, they are just satellites, just pipelines and just terminals. “We very much see communications as the means to an operational end, not just a way of providing dollars per minute for air time,” he concluded. Mar Ex Well said, and well done!

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

SEpTEMbER/OCTObER 2010

washington overshadowed by Midterm Election

THE MARITIME EXECUTIVE

The elephanT in The living room that everyone in Washington, D.C. can’t help but talk about is the prospect of a major electoral defeat for the Democratic majority in Congress. Following 18 months of historic legislative achievements, the Democrats face the threat of not just substantial losses at the polls, which is to be expected in a midterm election, but the actual loss of majority control. Former Speaker of the U.S. house of Representatives newt gingrich (R-ga), who led the Republican party to a 54seat gain in the 1994 midterm election, declared that he foresaw a gOp takeover of the house exceeding his 1994 triumph. On the other hand, Democratic Majority leader Steny hoyer (D-MD) predicted that the Democrats will retain control while admitting, “We’re going to lose seats.” For house Republicans the magic number is 40, which congressional election guru The Cook Report rates as achievable. Senate Republican leader Mitch McConnell (R-KY) appears less sanguine about the Senate, which would require a gain of ten seats. he cautioned Republicans that the american electorate does not like politicians “measuring . . . the drapes.” his caution arises from his understanding that, while there are likely to be substantial Republican gains in the Senate, a Republican majority is not as likely as it currently appears in the house. Moreover, McConnell is painfully aware that if his

party wins control of the Senate it will face the same 60-vote hurdle that has plagued Democratic Majority leader harry Reid (D-nv). Formal control of the Senate does not translate into effective control.

the impact of Predicted Republican gains

tricts. The Democratic house leadership understood from the start that it was unlikely to sustain its hold on these congressional districts and has expected to yield perhaps a score or more of those districts. So the battle is really over the remaining 20 or so seats that the Democrats have the best chance of defending and a handful of seats that Democrats hope to flip from Republicans. put in this context, one can appreciate the statements of Democratic leaders that they have the candidates, organization and campaign funds to retain control. november 2nd will tell the tale.

history teaches some basic lessons about midterm congressional elections. First, over the past 30 years the president’s party usually sustains losses in congressional midterm elections. The only recent exception was in the 2002 midterm election following the 9/11 substantive Change? tragedy and the start of the afghanistan predicting the substantive impact of War. Then-president george W. Bush’s significant Republican gains in Congress party registered a modest single-digit gain. is an inherently uncertain endeavor. if the Otherwise, presidents of both parties, party gains control of the house, as some including even Ronald Reagan, sustained experts have predicted is likely, prospecsignificant midterm losses. Therefore the tive Speaker John Boehner (R-Oh) prediction of Republican party gains this and his caucus will set a new legislative year is no surprise. Moreover, in the conagenda. They pledge to target repeal of the text of a severe economic downturn causprincipal legislative accomplishments of ing the loss of over eight million jobs and president Obama and the 111th Congress: with approximately 25 million americans health care reform, financial regulatory reeither unemployed or underemployed, the form, and increases in federal spending enpredictions are not surprising. Facing seacted in the economic stimulus measures. rious economic distress, presidents Carter as a practical matter, this will be very and Reagan each sustained significant difficult to accomplish, even if a new congressional losses in midterm elections. Republican majority in the house enjoys Second, Democratic losses have been a companion Republican majority in the expected since the 2008 election when they achieved remarkable gains in many Senate. Simply put, president Obama and TTS_MaritimeExec_86x51 27/4/09 pm Page 1 historically Republican congressional dishis remaining allies in6:17 the Senate will be

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washington insider

experts Predict Major electoral Losses for the democratic Majority

Runaway spending and the Bush tax Cuts

Beyond the major achievements of President Obama and the 111th Congress, the most important substantive reality likely to affect the next Congress, whether controlled by Republicans or Democrats, or neither, is the popular concern about excessive federal spending. Although, the Chairman of the Federal Reserve remains more concerned about the threat of deflation and a lack of demand in the American economy, the popular mood was profoundly affected by the financial crisis that struck Greece during 2010. Media coverage of the threatened collapse of the Greek economy and the resulting street violence and protests, coupled with fear that the Greek contagion would spread to other countries, e.g., Spain, Portugal, Italy, and Ireland, profoundly influenced popular attitudes. Fear of potential economic collapse appears to dominate much of the electorate. And both parties appear to have acknowledged this public fear. For his part, President Obama formed a bipartisan presidential commission to address the growing problem of America’s burgeoning debt. Sensing the shift in popular concerns, Republican leaders have pummeled the president and his Democratic allies with charges of fiscal irresponsibility. It therefore appears that in the 112th Congress the starting point will be to propose policies to restrain federal spending. As we know from having lived through

this cycle before, divided government can tackle the problem. President Clinton and the Republican-led Congress agreed on measures that reduced federal spending, increased federal revenues, and restored the nation’s financial footing following a difficult period of economic stagnation and mounting federal deficits. But this will mean cuts to federal programs, including programs affecting the maritime industry. Taxes will surely preoccupy the work of the next Congress, no matter which party wins. President George W. Bush’s tax cuts are set to expire at the end of the year, and in the midst of the midterm election the two parties are jockeying to cultivate their constituencies. Republicans Party has advocate extending the $3.8 trillion in tax cuts and argue that raising taxes in a time of almost ten percent unemployment makes no sense. President Obama proposed that $3.0 trillion of the tax cuts for the middle class should continue. But he contends that the $800 billion that applies to those earning more than $250,000 annually should end. He also argues that the $800 billion should be used to address that nation’s burgeoning deficit and that tax cuts to high-income earners do not stimulate the economy. These positions essentially represent a reprise of the positions of the parties during the 2008 national election. More recently, others have floated compromise proposals, e.g., increasing the annual “middle class” income threshold from $250,000 to $1,000,000 or extending the Bush tax cuts for two years. While the president and the House Democratic Caucus appear interested in forcing the issue before the midterm election, Senate Democrats appear less interested. No

THE MARITIME EXECUTIVE

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from fossil fuel states, who were being asked to raise their constituents’ energy costs in the midst of high unemployment. The timing for such an ambitions proposal proved inauspicious.

SEpTEMbER/OCTObER 2010

able to block such efforts. Of course, that is not to say there won’t be some tweaking of the measures around the edges, but the overriding concern with budget deficits will severely limit the options of a new Republican majority. Republicans will quickly experience the other side of the reality of the exercise of political power that they have wielded so effectively: It is easier to block than to pass legislation. Having enacted into law his most important priorities, President Obama and his allies will be able to block their repeal. Thus, if a new Republican leadership embarks on the path of repealing the president’s signature accomplishments, it will largely be for symbolic purposes to show their supporters that they fulfilled their campaign pledges. President Obama will wield his veto as a badge of honor. On President Obama’s favorite issue of climate change, however, a new Republican majority will be able to trim funding for the program underway at the Environmental Protection Agency (EPA) to regulate greenhouse gases. The net result will likely be to delay EPA’s program. But at the end of the day the future of the president’s proposals to combat climate change will turn more on his reelection prospects in 2012. If he is reelected and remains committed to the goal, then even with opposing Republican congressional majorities he will probably be able to achieve modest progress, although slower than with Democratic majorities in Congress. The political reality governing the climate change issue is that it is less a partisan issue than it is a regional and economic issue. Powerful obstacles arise from members of the Democratic Party

9/26/10 12:36 AM

washington insider

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doubt that is because they doubt they have 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 Congress. 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 will have the political advantage just as President Clinton enjoyed when he confronted Speaker Newt Gingrich following the 1994 Republican Revolution.

Maritime impacts will Vary

So how will these political dynamics likely affect the U.S. maritime industry? First, maritime programs depending on federal funding will likely suffer significant cuts. Likewise, agencies regulating the maritime industry will likely see their budgets cut and, notwithstanding the weaknesses recently highlighted in our regulatory system, the agencies will have fewer resources with which to regulate. During the Clinton Administration, for example, the U.S. Coast Guard was cut 12 percent, lost 4,000 personnel, closed scores of installations around the country, and delayed modernizing its fleet and aircraft. Importantly, the EPA’s climate change program will likely slow for lack of resources and increased congressional scrutiny. Second, as part of any grand compromise on budgetary policy, taxes will likely increase and the maritime industry will no doubt find itself included in those increases. The harsh reality for all of us is that solving our nation’s fiscal problems requires difficult economic and political choices, no matter which party or parties Mar Ex control the 112th Congress.

Larry Kiern is a partner at Winston & Strawn LLP, an international law firm of 900 lawyers. His practice concentrates on maritime issues, including legislative, regulatory, and litigation matters. Before joining Winston & Strawn, he was a Captain and law specialist in the U.S. Coast Guard who served as the Legislative Counsel and Deputy Chief of the Coast Guard’s Congressional Affairs Office.

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SEpTEMbER/OCTObER 2010 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.

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oped EconomidEs

SEpTEMbER/OCTObER 2010

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 community, 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. 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 Russiancontrolled reserves or from the Caspian Sea states, such as Azerbaijan and Turkmenistan. Caspian gas is critical to the success of the Nabucco venture. The problem is, while the Russian Federation speaks with a single voice on energy matters, Europe, for all its federal aspirations, does not. The resulting geopoliticking has seen internal EU divisions collude with Russian strategic pressure, resulting in Caspian gas piping east to China.

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THE MARITIME EXECUTIVE

The key problem for the European Union now, as then, is 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. Today work on Nabucco’s competition, the Russian-backed Nord and Sud Stream pipelines, is advancing apace. The European interests of Gazprom, Russia’s mammoth natural gas monopoly, are looked after by Gerhard Schroeder, the former German Chancellor. Meanwhile, the failure of the Nabucco backers to sign up a major country to supply gas has led European states to continue to prioritize their own national energy security arrangements – largely with Russia.

The sad fact is that, from the inception of Nabucco, European energy 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 RussoGerman 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 export commitments – a very real possibility since Gazprom has

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oped EconomidEs

THE MARITIME EXECUTIVE

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 below, 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 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. Equally, over-generous renewable energy subsidy regimes are currently being slashed across the board in Europe – all of which appears to leave Nabucco as Europe’s only real alternative to decades more of Russian energy dominance. Except, that is, for one major energy option the EU appears to be overlooking: the potential impact of nascent U.S. shale gas reserves.

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oped EconomidEs Marcellus Shale: How Big Is It?” 2010 IOGA of West Virginia Annual Conference). In June of this year, an MIT report predicted that U.S. gas production is on schedule to double – from 20 to 40 percent – its share of the U.S. energy market over the next few decades. That also leaves open the prospect of increasing U.S. gas reserves available for export. Whatever the longer-term future for U.S. gas, burgeoning production opens up the tantalizing prospect of an unexpected yet compelling subplot for Europe in the Nabucco saga: U.S. shale gas as a genuine alternative to Russian gas – and to Russia’s new energy-fuelled hegemony. Imagine an array of LNG liquefaction installations dotting the U.S. East Coast where the potentially massive shale gas production would be converted and shipped to Europe. This prospect is so logical that, under normal circumstances, a business-oriented Barack Obama Administration should be rushing into it. But it may be too much to expect from an alternative energy-focused, environmentalist-inundated government that has already imposed an offshore drilling moratorium. Stay tuned for the next episode of this Jason Bourne thriller! mar Ex

Dr. Michael J. Economides is a Professor at

SEpTEMbER/OCTObER 2010

break the Russian bear’s vise-like energy grip. The oft-quoted list of leading gas-rich states shows Russia on top with 23.7 percent of the world’s proved gas reserves. Next come Iran and Qatar with 15.8 percent and 13.5 percent, respectively. Then there is a gap before a variety of gas-producing states figure in the mix, with the U.S. at 3.7 percent and Canada at 0.9 percent, respectively. But that doesn’t tell the whole story. By December 2009, production of natural gas in Russia had fallen to 17.6 percent of total global production – down by a full 12 percent – from 601 billion cubic meters (Bcm) or 21.3 trillion cubic feet (Tcf) in 2008 to 527 Bcm (18.7 Tcf) in 2009. Over the same period, U.S. natural gas production rose by another 3.5 percent, peaking at a Russia-eclipsing 20.1 percent (541 Bcm or 19.2 Tcf) of total global production. At the end of 2009, for the first time, the U.S. stood as the world’s number one producer of natural gas. This astonishing turn of events is entirely due of the emergence of shale gas, arguably one of the most important stories in the international oil and gas business of the last decade. The term “reserves,” which in the U.S. is a legal term with unique meaning, does not necessarily reflect what other countries report. Estimates of “potential recoverable” shale gas, published by a number of authors, have been huge. The Marcellus Shale, covering the entire states of Pennsylvania and West Virginia, went from 1.5 Tcf of reserves to over 500 (!) Tcf of ultimate recovery in less than five years, from 2005 to 2009 (see Wrighstone, G. “The

the Cullen College of Engineering, University of Houston, and Editor-in-Chief of the Energy Tribune. peter Glover is the European Associate Editor of the Energy Tribune.

THE MARITIME EXECUTIVE

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JACkO’CONNELL JACKO’CONNELL

Upgrades Downgrades SEpTEMbER/OCTObER 2010

Corporate Reputations Take a Hit

THE MARITIME EXECUTIVE

In the wake of the fInancIal crisis, toyota’s gas pedal problems and the BP oil spill, corporate reputations across the board have taken a hit. In this regard, a recent article in the New York Times caught my eye. (Yes, loyal MarEx readers, this writer confesses to reading the New York Times. hopefully you are not too shocked. for his penance he also reads Barron’s and the Wall Street Journal. that way you can be assured of getting a completely balanced view.) now where was I? oh yes, the Times article. It focused on the travails of BP, Goldman Sachs and toyota and was basically a primer on what and what not to do in the event of a crisis.

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now crisis management happens to be a subject near and dear to my heart, and I’ve been through a number of them in my time – crises, that is – and so, in the spirit of good fellowship, I thought I’d share a few of the lessons learned along the way.

The MonsTer AT The BoTToM of The seA

BP’s problem was obvious: In addition to the 11 workers killed and 17 injured, it had this monster at the bottom of the sea that was spewing oil into the Gulf and being viewed daily by millions around the world on a live feed from underwater cameras. to make matters worse, it

had already gone through an explosion with even more deaths at its texas city refinery, the second largest in the U.S., in 2005 and all along was projecting itself as the environmental company – BP, “Beyond Petroleum.” from the outset it tried to minimize the size of the spill, saying it was no more than 1,000 barrels a day. a week later it was 5,000 barrels a day, a month later 15,000 barrels, and after a while people lost all faith in anything the company was saying as it was obvious from the live feeds that the spill was much worse than anyone was admitting. BP lost its credibility first and then whatever was left of its tarnished reputation. It will take years to get it back – if ever. toyota’s problem was equally obvious: 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 perfection” was viewed as the endless pursuit of deception. toyota showrooms emptied 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 benefiting – or at least was perceived as directly benefiting – from other people’s losses. and the perception in a situation like this

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It’s tough enough these days for companies to make a buck. What they don’t need is damage to their fragile egos.

So what are the key takeaways here? How could companies as large and successful as BP, Toyota and Goldman Sachs make so many mistakes in the management of a bad situation? How could they lose their gestalt? Didn’t they have crisis response plans and crisis communications plans in place along with a cadre of outside experts to consult? Of course they did, but in the heat of battle they somehow ignored all the right moves. » Accept Responsibility – This is first and foremost. When you’ve done something wrong or made a mistake, admit it. Stand up and accept responsibility. Denials (“stonewalling”) will only make the situation worse when the truth eventually comes out; and it will, as Toyota learned the hard way. Casting blame on others is just as bad, as BP learned when it tried to place responsibility for the spill on its suppliers and partners. Of course, accepting responsibility is easier said than done, as the lawyers on the case will fight hard against your admitting anything which could be later held against you in a court of law. And this is probably exactly

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pick the Right Spokesperson

– This can make all the difference. The spokesperson has to be credible, sympathetic, and hopefully likable – someone the public can relate to. Depending on the gravity of the situation, this is usually the CEO and, for consistency, it should be the same person throughout the crisis. And while words and what is said are important, in today’s media-savvy world body language can be just as important, along with tone of voice. Avoid arrogance and a condescending tone at all costs. Show understanding and humility. Sometimes being a milquetoast is better than playing the hero. Listen. Stick to the Script – Have a set of predetermined messages and keep repeating them. Craft the messages carefully to address all aspects of the crisis. Anticipate questions and have appropriate responses ready. If the facts of the case change, adjust the message. It’s okay to do that. Above all, avoid adlibs and spontaneous reactions to questions. This often derails a well-thought-out communications strategy and leads to embarrassment and regret. Humor, too, is a double-edged sword. Use it with care. A remark spoken in jest often reflects hidden beliefs and can

THE MARITIME EXECUTIVE

Rules of the Road

what happened, at least initially, with BP and Toyota. The lawyers won in the early going and gave ground grudgingly as additional facts came to light. Express Remorse – It’s okay to say you’re sorry. Just don’t leave it at that. Explain what you’re doing to correct the situation and provide updates, as needed, along the way. Speak the Truth – This seems so obvious, but it’s hard to do in practice. Prima i fatti – “first the facts” – as one of my old mentors used to say. Establish the facts of the case first and then communicate them accurately and completely. Hold nothing back, and keep embellishment and interpretation to a minimum.

SEpTEMbER/OCTObER 2010

is just as damaging as the reality. As Marshall McLuhan said many moons ago, “The medium is the message,” and the way we receive information is the way we interpret it. Goldman added fuel to the fire by assuming a “holier than thou” approach and defending its right to exorbitant profits at others’ expense. Its arrogance in the face of criticism (and for this point I am indebted to the Times article) was reflected in its chairman’s comment to the Sunday Times of London that the firm was doing “God’s work,” all of which helped make it the symbol of Wall Street greed and evil – Gordon Gekko in spades. When it finally settled fraud charges with the SEC by paying a record fine of $550 million, the public felt vindicated. But the taint over Wall St. remained, and the chasm between it and the rest of the country widened.

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JACKO’CONNELL come back to haunt you. Fix the problem – The best communications plan in the world won’t save you if you don’t fix the problem. If the problem can’t be fixed, say so and explain why. Good PR is not rocket science. It’s more like common sense. But common sense can be a rare commodity these days, and the real secret to success lies in the execution.

SEpTEMbER/OCTObER 2010

Okay, so what’s the best you can hope for? The best outcome is when the media loses interest after a day or so and turns its attention to new and ever more urgent news. Then you can go back to fixing the problem and repairing the hit to your corporate image. The worst outcome is when new revelations keep surfacing and the case drags on for days and weeks and even months. This is, unfortunately, what happened to BP and Toyota and, to a lesser extent, Goldman Sachs. It makes it even more difficult to fix the problem

THE MARITIME EXECUTIVE

OutCOmes

because (a) now everything you do is subject to scrutiny and second-guessing by the media and general public and (b) your attention is divided – you’re trying to fix the problem while at the same time fending off the press. It should be acknowledged right here that communications strategies and plans can do only so much, and it’s important to be realistic about what to expect. They cannot right a wrong. They cannot save a life that has been lost. They are not a cure-all for what ails you. What they can do is present your side of the situation in as clear and compelling a manner as possible. Because if you don’t tell your story, someone else will tell it for you – and it’s usually someone with a beef. And that can be disastrous.

WhAt AbOut shipping?

All of this has relevance to shipping because bad news can occur at any time and often when you least expect it: a fire or explosion on board, an oil spill or terrorist act, a hijacking or kidnapping or worse.

The possibilities are too numerous to list. Cruise ships, in particular, are coming under increasing scrutiny as a result of alleged crimes and suicides on board, sometimes involving crew members and often going unsolved. Cruise ships also make an excellent target for terrorist attacks, as many a security expert has noted. Exxon Valdez was a wake-up call to the industry 20 years ago. Deepwater Horizon is the most recent. The point is to be prepared and have a response plan in place – not just a plan to handle the crisis but also a plan to handle the media. Having a plan can make all the difference between making a bad situation worse and making marEx a bad situation manageable

Jack O’Connell, the senior editor of this

magazine and a former maritime executive, is a private investor who may own shares in some of the companies mentioned in his columns. The views expressed in this column are his and his alone and are not in any way to be construed as investment advice.

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ANNALS OF SAFETY: By Jack O’Connell 50-person covered raft.

The Inflatable Life Raft

THE MARITIME EXECUTIVE

Tucked away in a corner loT off i-95 in lake worTh, florida is a 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. countless 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 Governor 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 inflatable 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.

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A small company in Florida has been quietly saving lives for 63 years.

Tire tubes, life vests, inflatable toys and balloons – these are all things we take for granted and never give a second thought. They’ve been around us since childhood, and we often associate them with child-like activity. Yet there was actually a time when they didn’t exist. And it wasn’t that long ago. It took a tinkerer like Fred Patten to invent the first practical version of an inflatable life raft. Why inflatable? So it would collapse and fit into a small place, like strapped to the pilot’s back, where it would be instantly available when needed. The technology is simple, yet remarkably adaptable. You sew or glue together strips of rubber or rubber-like material, and then inflate the finished product. Heat-sealing and radio-frequency sealing are modern updates, yet old-fashioned glue is just as strong and reliable in most applications. The one-person raft is a single tube composed of individual units called “bladders.” For larger rafts, you add more tubes. Seven-, 20- and 50-person

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THE MARITIME EXECUTIVE

Bladders and Balloons

rafts employ “stacked” tubing to create a bigger and more stable platform. Most of the larger rafts are reversible, meaning it doesn’t matter which side is up. This comes in handy when your ship sinks or airplane crashes and you’re being tossed around in the waves with an upside-down raft. Because the company’s biggest customer is the military, quality control is all important, and the Patten Company puts all its products through a rigid series of tests before finally One-man inflatable life raft (1939). shipping them out. “We save lives,” said Bob Patten, son of “too dangerous. There are tons of people the founder and co-owner, with his brother with ideas out there waiting for me to Steve, of the company. “It’s very tangible, develop them. I just have to find the time.” very real.” Saving lives is not a responHe smiles and laughs a lot when talking sibility you take lightly, and the Pattens about his “creations,” one of which was have been doing it for years. That is one the giant boulder in an Indiana Jones reason why they have never been without a movie, and it’s obvious he’s having fun. government contract in the long history of In the Sago Mine disaster in 2006 in the company. Product failures are nonexWest Virginia the company was asked to istent. When the Deepwater Horizon oil rig build decontamination shelters that could exploded and sank in the Gulf of Mexico in be easily installed on site. It also provided April, the company received a large order inflatable habitats that could be lowered for its bladders, which were inserted into into the mine shafts to provide shelter the massive booms used to contain the for trapped miners. Noxious gases are a spill. The bladders keep the booms afloat. constant threat in underground operations, 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 Like his father, Bob Patten is a tinkerer, the mouth of the shaft to seal out deadly always thinking of new applications for fumes. For the recent earthquake in Haiti his inflatable technology. When MarEx the company shipped inflatable Quonset paid a visit in September, he had in his huts for use as temporary shelters. office a full-scale version of an Inflatable The use of 3D CAD has greatly simpliVehicle Jack, to be used by U.S. Marines in fied the design process and made measureIraq and Afghanistan to put air back into ments infinitely more precise and rapid. blown-out Humvee tires. “Ever try to jack This too is extremely important when up a car in the sand?” he quipped. “It ain’t making products that more often than not gonna happen. But with this gizmo, you’ve are the difference between life and death. got a steady foundation that won’t sink.” Sketches on napkins and note paper are fed He was once asked to design a balloon that would attach to a Procurement Contractors + bomb so that lowSpare Parts Brokers Since 1974 flying aircraft would have sufficient time ® to get out of the blast area before the bomb exploded. The balloon would inflate after the Tel: (1) - 450 - 465 - 2480 bomb was dropped sales@scardana.com and theoretically slow its descent. “We nixed that one,” he noted,

SEpTEMbER/OCTObER 2010

overseas and assembled by the military. General George S. Patton was put in command of the decoy army, which was strategically positioned along the shoreline near Dover, England, across the channel from Calais, France, some 150 miles from the actual invasion site. With General Patton in command, the Nazis could not have doubted the threat of this army. Nazi aircraft reported the Dover operation to their high command, and the enemy was sufficiently confused that it had to string out its defenses along the entire length of the Channel coast of France with a major portion assigned to the Calais area. Historians have credited the decoy operation with contributing immeasurably to the success of the D-Day invasion and saving countless lives. Following the war, Fred Patten struck out on his own and finally founded his own company in 1947 in Lowell, Massachusetts. Safety concerns – the low New England humidity was a cause of static electricity and made fire a constant threat in the manufacture of inflatable products – prompted him to move the operation to Florida in 1955, where the relatively high humidity provided an ideal, and safer, climate for production.

ANNALS OF safety

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ANNALS OF safety

THE MARITIME EXECUTIVE

bob patten, son of the founder, with an updated version of the original one-person raft (note the canopy to protect against the weather).

into a bank of computers and sophisticated engineering specs eventually emerge. This is how concepts are translated into reality. But Patten notes that precise mathematical calculations are not enough. There’s always a touch of the artist, of the intuitive, because rubber doesn’t always bend the way you want it to: “It always wants to go in a circle, but most of the time you don’t want a circle. So you have to design the

MarEx_40.indd 26

product in a way that allows for the material’s natural tendency.” He compares it to ductwork or dressmaking – every product is unique.

Ups and Downs

2009 was the worst year in the company’s history, when it got down to just 10 employees, but things are looking up. Orders are pouring in. Employment can range

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 government, 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 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 several times over the years before the family finally regained control for good in 1987. Now the third and even the fourth generation of Pattens are waiting in the wings, ready to take over when the time comes. 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 version, dozens of them per ship. NASA used the company’s inflatables on its first Apollo missions and continues to use them to this day on the Space Shuttle. Every astronaut has one. In an era of increasing consolidation and “size does matter” thinking, it’s good to see a private, family-owned company that can hold its own while remaining small. It restores one’s faith in the individual entrepreneur, in the power of ideas and the value of old-fashioned tinkering. Rugged individualism. Isn’t that what MarEx America was built on?

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THE MARITIME EXECUTIVE

Safeguarding the Environment:

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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 “Pillars 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 sometimes 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 intelligencegathering. 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.

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INTERNATIONALSALVAGEUNION

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The first modern text of the Lloyd’s Form of Salvage Agreement (universally known as the Lloyd’s Open Form or LOF) was adopted in 1892. By 1908 the text had been standardized. The bottom left-hand corner of every Lloyd’s Form lists dates on which previous editions of the form have been published, and the earliest date of this practice was January 15, 1908. LOF is administered in London by the Salvage Arbitration Branch of Lloyd’s. While there are alternative “national” forms of salvage contracts, such as the Japanese Form, Beijing Form, Moscow Form and the Turkish Form, LOF is the most widely used “no cure-no pay” salvage contract. Responding to the need for some sort of protection for salvors responding to oil spills and similar incidents of environmental pollution, the 1980 edition of the LOF (LOF 80) moved beyond the traditional no cure-no pay concept by providing a “Safety Net” for salvors responding to laden oil tankers requiring assistance. Article 14 of the International Maritime Organization’s Salvage Convention of 1989 further reinforced LOF 80 by introducing a new incentive scheme known as “Special Compensation.” Article 14 entitles a salvor who prevents or minimizes environmental damage to receive special compensation in the event the value of the salved property is insufficient to provide for a normal salvage award. The special compensation would equal the salvor’s expenses plus up to an additional 30 percent of those expenses if substan-

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tial environmental damage had been averted. While Article 14 restricts salvage services to “coastal waters and areas adjacent thereto,” LOF 80 applies to all waters. Article 14’s Special Compensation provision proved to be a cost-effective incentive scheme, but there were difficulties assessing the amount due under it. As a result, an alternative system was developed by salvors, P&I clubs (the shipowners’ liability insurers), underwriters and other parties known as the “Special Compensation P&I Clause” or SCOPIC. Under this arrangement, remuneration is based on pre-agreed tariff rates, and a salvor engaged to render salvage services under a Lloyd’s Form may invoke SCOPIC at any time, but there will be financial penalties if it is invoked in inappropriate circumstances. And an important caveat is that there is no requirement to demonstrate the existence of a pollution threat in a particular geographic region.

THE MARITIME EXECUTIVE

LLOyd’s OpEN FORm

ThE INTERNATIONAL sALvAgE UNION

Enter the International Salvage Union (ISU), whose role is to represent the interests of the marine salvage industry. Founded in 1934 and based in London, the ISU has 58 full members from 30 countries, 11 affiliated members, and 44 associate members, such as law firms, insurers, P&I clubs, and marine consultants. While the ISU’s principal objective is to promote the saving of life and salvage of property in danger at sea and further prevent or minimize environmental damage, the power of its single voice

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INTERNATIONALSALVAGEUNION

SEPTEMBER/OCTOBER 2010

for the membership is meant to strengthen and unite salvors in an alliance of best practices and responsibilities during salvage operations. Todd Busch is the ISU’s President, and Michael Lacey is its Secretary General. They are supported by a Vice President,

Since the early 1990s the ISU has conducted an annual Pollution Prevention Survey. The 2009 survey concluded that, in all categories (crude, bunkers, chemicals, other) of pollutants, salvage volumes were up 53 percent while the number of services 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 clearly demonstrate how our members prevent damaging pollution 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

THE MARITIME EXECUTIVE

30 Andreas Tsavliris; a General Manager, John Noble; and an Executive Committee of ten other representatives of the senior management of member companies. The Executive Committee meets 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 Salvage Convention of the IMO, has assisted in drafting all recent editions of Lloyd’s Open Form, and has worked closely with BIMCO on many of its initiatives, including 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 professional salvor is the most experienced and qualified attendee at the scene, and more often than not there are pollutants on the ship, such as bunkers and, in some cases, the entire cargo. The ISU has been dealing with the sensitive issue of pollutants and the modern reality of environmental concerns not being addressed in the salvors’ legal obligations from the very beginning, and this subject remains at the forefront of the organization’s agenda. With a salvor’s prime focus being the recovery of property, the system has long failed to recognize that the cost of a failure to prevent pollution can easily run into billions of dollars. From 1994 till 2009, ISU members have rendered salvage services to ships carrying 15,976,297 tons of potentially lethal pollutants. To put that number in perspective, the Exxon Valdez spill was about 37,000 tons.

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Brittany suffered great ecological damage, and all of Europe was angry. LOF 80 with its concept of a safety net for salvors responding to disabled laden oil tankers was in large part a response to these incidents. In the U.S., the Exxon Valdez spill in 1989 changed the whole response mechanism and led to the passage of the Oil Pollution Act of 1990, which placed responsibility squarely on the shoulders of the polluters. In Alaska, legislation was enacted to ensure that specialized escort vessels stayed with tankers through the length of their passage in and out of Prince William Sound. The French were again subjected to a massive spill when the Erika broke in two and sank in the Bay of Biscay in December 1999. When the tanker Prestige requested a place of refuge due to a crack in its hull in November 2002, both the French and

9/27/10 7:16:21 AM

INTERNATIONALSALVAGEUNION

SEPTEMBER/OCTOBER 2010

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SEPTEMBER/OCTOBER 2010

INTERNATIONALSALVAGEUNION

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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 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 Convention 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 remuneration being more equitable in environmental cases, particularly in view of the hazardous circumstances 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 LOFâ&#x20AC;&#x2122;s award procedure, based upon the 1989 Salvage Conventionâ&#x20AC;&#x2122;s Article

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INTERNATIONALSALVAGEUNION

FuTuRE ChALLENgEs

While environmental concerns remain at the top of ISU’s agenda, there are other pressing issues as well. One of these involves the salvage challenges presented by the new megacontainer ships. Many such vessels carry 12,000 to 14,000 twenty-foot equivalents (TEU), which require specialized cranes and removal equipment to load and unload. Obviously, the salvor must immediately deal with the bunkers, the tonnages of which

can be substantial and may require numerous barges and support tugs. The complexities of dealing with such large ships has presented salvors with incredible logistical challenges, and the ISU is working closely with container shipping companies, port authorities and government agencies to ensure that all parties understand the complexities involved and the variety of cargoes carried in containers. If the discharge rate is slow, the ship can be exposed to additional hazards, including the potential for fires and problems not dealt with in ordinary casualties. While the challenges are many, ISU’s member companies have the expertise to address and resolve them with comprehensive, innovative solutions – solutions that help protect and preserve the environment at the same time. In an increasingly green-conscious world, the salvors are doing their part. MarEx

SEPTEMBER/OCTOBER 2010

13, and SCOPIC are insufficient. Article 13 leaves the arbitrator no freedom to properly award the salvor who has rendered services 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, the risk of release, and the nature of the environment and the economic assets under threat. Shipping companies and insurance companies should realize that if they don’t voluntarily do something about the current arrangement for paying salvors for pollution work, then they will be forced in the future to pay a lot more. This is an area where being proactive, rather than reactive, will benefit all stakeholders.

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9/27/10 7:18:35 AM

Executive Interview: SEPTEMBER/OCTOBER 2010

Michael Lacey Secretary General and

Todd Busch THE MARITIME EXECUTIVE

President

International Salvage Union New challenges and some age-old issues keep the ISU leadership busy.

By Tony Munoz

MarEx: Tell our readers about your organization and its history. Lacey: It is not certain when ISU began as the earliest records were lost in the floods in The Netherlands in the 1950s. It is believed to have begun in 1934. The first members were European salvors. In 1963, when there were 22 members, the only non-European members were

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Nippon Salvage in Tokyo and Eastern Canada Towing in Halifax, Nova Scotia. This latter company is now part of the Svitzer Group. Today we have 58 full members based in 30 different countries. In addition, we have 57 affiliated and associate members located all over the world. Affiliated members are organizations similar to ISU such as INTERTANKO, the European Tugowners Association, the

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INTERNATIONALSALVAGEUNION

Some of the main issues the ISU is tackling include: (1) 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 suitable equipment to address the ever-increasing vessel sizes; (4) bringing solutions to greater water depths, and (5) reviewing the Lloyd’s Open Form (LOF) contract.

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fessional marine salvage industry. Governments, the European Union, the U.S. Coast Guard, the marine insurance industry, shipowners, etc. all recognize ISU as the body representing the marine salvage industry. In addition, we have observer status with the International Maritime Organization (IMO) and the International Oil Pollution Compensation Fund (IOPCF). MarEx: As the voice of the marine salvage industry, what major issues are being addressed at this time? Busch: Some of the main issues the ISU is tackling include: (1) 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 suitable equipment to address the ever-increasing vessel sizes; (4) bringing solutions to greater water depths, and (5) reviewing the Lloyd’s Open Form (LOF) contract. This last issue is of particular importance. With the everincreasing pressure to protect the environment, the ISU believes the LOF should be reviewed to ensure it is the best contract form for today’s realities. This means that the proper responsible parties are liable; that the mechanism for protection of the environment, as well as the ship and cargo, are in place; and that the salvor is getting an adequate reward for his efforts in protecting the environment, in addition to salving the ship and cargo. MarEx: Is it true that environmental damages are not covered in today’s LOF? What is being done to correct this

SEPTEMBER/OCTOBER 2010

American Salvage Association, etc. Associate members are companies with some involvement in the salvage business but who do not undertake marine salvage as contractors. They include lawyers, insurers, surveyors, etc. ISU is administered by a President, Vice President and ten other Executive Committee Members, all of whom are from the senior management of full member companies. Day-to-day affairs are handled by the ISU’s General Manager and Secretary General, assisted by a Legal Adviser and Communications Adviser. ISU is recognized worldwide as the “voice” of the pro-

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INTERNATIONALSALVAGEUNION

THE MARITIME EXECUTIVE

considering the greatest vessel from one location to another. TOWHIRE is a concern in a ship accident ISU believes it is logical to look at apportionsimilar agreement, but based is pollution? upon a tug owner’s providLacey: Under the 1989 Saling the salvage award between the services to vage Convention, in order for ing services on a daily hire the property and the services to the environthere to be a salvage reward, basis. ment. Such an approach would not automatithere has to be a useful result. The ISU also worked In other words, property has with BIMCO and others cally result in a greater reward to the salvor. to be salved. Once that hurdle in producing the Standard But it should result in a fairer distribution of has been overcome, the Wreck Removal Special the burden so far as the paying parties are arbitrator or tribunal is then Services Agreements. These concerned and provide the salvor with a better required to take into considwere first published by BIMeration the criteria set out in CO in 1993 as WRECKreward in cases where his services provide a 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 enviSubsequently, 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 is taken into consideration since arbitrators do not, as a matter published as WRECKHIRE (the daily hire agreement), WRECKof 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 agreewhole, 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 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 spillmarine insurance market with respect to salvage operations caring. 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 reagreed 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 salLacey: 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 salconcerned and provide the salvor with a better reward in cases vor’s claim, his maritime lien and right to arrest, the arbitration process, and similar matters. The third part of LOF 2000 is the where his services provide a real benefit to the environment. Procedural Rules, which deal with the conduct of the arbitration. MarEx: In addition to the Lloyd’s Form, are there other forms The shipowner and salvor only need to complete the seven used by salvors? boxes on the face of LOF, and only three of the boxes require Lacey: Lloyd’s Form is by far the most commonly used salvage 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 standardthan 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 Agreeinto 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

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THE MARITIME EXECUTIVE

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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 Convention there is limited scope to provide a salvor with a proper reward for his efforts and his success in preventing or minimizing 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 reward their efforts and success in preventing or minimizing damage to the environment. Property insurers are equally concerned 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 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 environment,” 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 environment. 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 environmental 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.

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THE MARITIME EXECUTIVE

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 provision 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 negligent acts. However, what has to be recognized is that salvage 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 cause damage or recklessly and with knowledge that such damage 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 European 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 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 requirements. 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 furthering the protection of the environment. MarEx: All good stuff. Thank you for your time and insights. MarEx

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MaritimeExecutive_203X276.pdf

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September/OCtOber 2010

Panama Canal

the WOrld’S marine highWay The expansion of The panama Canal is one of the great construction projects of our time. scheduled for completion on the 100th anniversary of the Canal’s opening in 1914, it will usher in a new era in east-West trade and bring untold prosperity to the people of panama. in september MarEx was privileged to speak about the project with Jorge l. Quijano, the panama Canal authority’s (aCp) executive Vice president of engineering and program management. Quijano began his career with the canal in 1975 and became its Director of maritime operations in 1999. after the transition from U.s. to panamanian control, he rose to become executive Vice president responsible for the $5.25 billion expansion program. he leads a team of about 500 professionals managing all aspects of the project.

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By Robert C. Spicer, CPT

a Big idea gets Bigger

The system of lakes and locks that make up the panama Canal allows ships from every nation to rise 26 meters above the sea to Gatun lake and then back down again, crossing the Continental Divide in the process. But the idea behind a “passage between the seas” is not new. it was in 1534 that Charles i of spain first ordered a survey to identify a route to the pacific following the Chagres River. although in 1534 the task was considered impossible, the advance of technology finally made it feasible, and the canal opened in 1914. nevertheless, it took enormous personal sacrifice to make the dream a reality. in 1906, president Theodore Roosevelt said, “This is one of the great works of the world. 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 american 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.

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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 volume and ship size, the ACP determined that expansion was mandatory if the canal was to continue its leading role in global trade.

The Challenges of exPansion

Dry excavation work continues as ships transit the waterway.

itself to much deeper excavations beyond a channel bottom of 9.14 meters above sea level as planned to be reached during the expansion program. Attempting to build a sea level canal would entail considerable back cuts to insure slope stability to prevent material slides. Such an effort would increase excavation and dredging costs exponentially.” The main components of the project are the construction of two separate three-step lock complexes and access channels to the new locks, a widening and deepening of the existing navigational channels, and the elevation of Gatun Lake to reach a maximum operational level of 27.1 meters. One set of locks will be located at the Atlantic end of the canal east of Gatun Locks and the other on the Pacific side southwest of the Miraflores Locks. Since each of the new lock complexes will have three chambers for lifting and

THE MARITIME EXECUTIVE

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 its land mass has been submerged beneath the sea on numerous occasions. The result is an isthmus that contains many diverse geological formations of hard rock interspersed with layers of softer rock and cavities of coral. This irregular patchwork creates a serious challenge to civil engineers and contractors. In addition to the difficulty of digging through the various formations, the region has six major fault lines and five major volcanic cores between the cities of Colon on the east and Panama City on the west, requiring engineers to consider the effects of earthquakes in their design calculations. The geological challenges make a sea level (sea-to-sea) cut across Panama to complement the lock system all but impossible. ACP’s Quijano explained, “I do not see the sea-to-sea cut as a feasible project even in the distant future. The geology of Panama, specifically through the Culebra Cut (the narrowest section of the canal that cuts through the Continental Divide), does not lend

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SEpTEMbER/OCTObER 2010

Panama Canal

THE MARITIME EXECUTIVE

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 close to 50 million cubic meters, which is about one-third of all of the material to be removed. Lake dredging is 35 percent 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 kilometers of fresh water 26 meters above sea level. Ships are materials to be removed from the water and land, and by the time it is complete there will have been fourteen dredges on the project, lifted up and then back down after crossing the Continental Diincluding one newly christened. vide with the plentiful lake water that flows by gravity, eliminating the need for pumps. A second use of the gravity flow is through New “Panama Class” ships will be able to transit the canal in turbines that drive electrical generators, which provide an ample lock chambers that measure 427 meters long by 55 meters wide source of electrical power, allowing the canal to operate efficiently and 18.3 meters deep. Quijano expects the canal to be open for and without interruption. business at the beginning of 2015 at a total cost of approximately

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Panama Canal situational change for the Isthmus of Panama for the foreseeable 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.

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With the drastic changes in regional weather patterns around the globe, MarEx asked about the consequences of climate change on the water supply to the lakes. Quijano replied, “We do not foresee that water will be a problem in our lifetime or the next generations after. In fact, this year we have had more than normal rainfall and the lakes are full.” But he also noted that ACP monitors the changing climate and is aware of the variations. For example, there has been much talk about the Northwest Passage as an alternative route for shipping between Europe and Asia. And certainly the thawing of the ice in the Arctic has been increasing since 2007. But Quijano does not envision a major

SEpTEMbER/OCTObER 2010

Jorge Quijano, EVp of Engineering & program Management, ACp.

The lock gates are the massive structures that frequently open and close, allowing ships to transit through the lock 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 rolling type, which will be used in the new locks. The miter type weighs 3,216 tons and the rolling type 4,580 tons. With such large structures called to operate continuously year after year and without flaw, the level of sophisticated engineering required in their design is enormous. The design phase modeling work was done by the contractor using the super computers at Purdue University. This work was recently completed, and construction of the gates will commence in April 2011. “It’s an opportune time because the gates are made of steel and the price for plate steel had been around $1,000 per ton but recently declined to $830 per ton,” Quijano observed. Each gate will be the same width, but there will be different

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Panama Canal heights and internal reinforcements depending on where the gate is used. The Pacific gates will have additional reinforcement 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.

SEpTEMbER/OCTObER 2010

Power to the PeoPle

THE MARITIME EXECUTIVE

Since the expansion began in 2007, about 95 percent of the workers have been Panamanian. In July of this year there 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 ships in its nearly completed facility even before the expansion newly constructed concrete batching plant will provide the project 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, which complements the one on the Atlantic side, will stimulate can pump out 540 cubic meters per hour. There are many initiacontinued business investment and growth opportunities in the tives for infrastructure projects in Panama, such as the metro, years ahead, promoting more and better paying jobs for the 3.3 airport improvements and hydroelectric power plants, and the million citizens of Panama. All in all, a tremendous accomplishbatching plant could be used to support those other projects after ment and a lasting source of pride for the citizenry. Well done, the canal expansion is completed.” Panama, and well done, ACP! marEx The expansion enables Panama to enhance its position as a center of world trade and will double annual tonnage through the Robert Spicer, who holds a Chief Engineer’s license, is studying canal. Ports on both ends are being expanded. On the Pacific side, for his Doctor of Education degree in organizational learning. the Singapore Port Authority is planning to dock post-Panamax

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

THE MARITIME EXECUTIVE

By Richard Carranza

The Brave New World of Subsea Salvage In the wake of the Deepwater Horizon disaster, the importance of subsea salvage operations cannot be overemphasized. MarEx_40.indd 45

Mention “subsea” to people and they usually think of underwater drilling operations for oil and gas. and while 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 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 maintenance to offshore rig repair. the technology is applied in the world’s oceans, lakes, and rivers and utilizes such innovations as cofferdams and portable hyperbaric habitats. a cofferdam is a watertight structure that can be used at water level or underwater to facilitate construction and repair work. hyperbaric habitats are used by divers for underwater construction, salvage and repair

9/26/10 12:40 AM

SEpTEMbER/OCTObER 2010

subsea salvage

THE MARITIME EXECUTIVE

operations. In all cases the goal is the same: repair or recover valuable assets while protecting human lives and preserving the environment. Oil rigs, underwater pipelines and installations, offshore terminals, cruise ships and cargo carriers cost enormous amounts of money. Routine maintenance, as well as major repairs, aid in keeping these expensive investments running smoothly. Submerged oil is obviously a threat to the environment, but if recovered in significant quantities it can also be a valuable asset. State agencies, along with the U.S. Coast Guard, use maritime salvage technology to keep their marshlands, intracoastal waterways and beaches clean and safe. Bottom line, this is an industry central to the preservation of the planet and on the cutting edge of technological innovation and achievement.

maintenance without the need for specialized cranes or advanced rigging equipment. Working with its OEM (original equipment manufacturers) partners, the Subsea Solutions Alliance engineering team creates the specialized flexible habitats for hyperbaric dry repairs to equipment underwater and advanced buoyancy control solutions for the safe and efficient exchange of propulsion thrusters underwater.” SSA says that the key to its success is two-fold. First, it maintains a large staff of diver technicians certified to Class Aapproved underwater wet welding procedures. Second, its project management team is staffed with professional engineers using new 3-D CAD systems to enhance the firm’s engineering and solutions capabilities.

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Detroit-based Marine Pollution Control Corporation (MPC) specializes in hazardous materials management and spill control. Incorporated in 1968, it is one of the oldest oil spill response organizations in the world, and it has been involved with some of the most famous cleanups in history, including the Amoco Cadiz and the Exxon Valdez. Projects range from offshore submerged oil recovery operations and railcar spill cleanup to the removal of underground storage tanks. One notable project involved oil recovery operations at the bottom of the Gulf of Mexico. In 2006 a tank barge struck a submerged oil platform that had been struck by Hurricane Rita the year before. The barge eventually capsized and spilled 65,000 barrels of slurry oil into the Gulf. The heavy oil sank to the sea floor. MPC was mobilized and responded with a crew of 24, including a 14-person dive team. The operation used a 250x50-foot barge as a work platform and relied on MPC’s patented KMA 333 hydraulic submersible pump, which is resistant to clogging and abrasives, to suck up the oil. The process yielded an oil, water and sediment mixture, and an on-board decanting system allowed clean water to be discharged overboard. The operation covered 100 square miles of ocean at depths ranging from 40 to 70 feet. Divers had to work directly on the sea floor, disturbing the sunken oil, thus mitigating the effectiveness of the recovery. This spurred MPC to seek a new solution with improved technology, a system using a manned submersible to facilitate recovery. Chairman Dave Usher proposed a new tool for the MPC toolbox: combining a two-person submarine with an underwater “skimmer” connected to the KMA 333 pump. In tests conducted on the Rouge River in Detroit, the system worked flawlessly.

The Subsea Solutions Alliance (SSA) is a global consortium of companies allied to provide rapid and cost-effective underwater solutions including propeller and thruster repairs, underwater maintenance and inspection services. In July, for example, SSA performed a welding repair on a punctured pontoon attached to an offshore semisubmersible rig. A semisubmersible is a floating structure held in place by ropes under tension. The tension has the effect of keeping the rig slightly submerged. Semisubmersibles are used for both oil drilling and oil and gas processing. SSA’s partner, All-Sea Enterprises Ltd., completed the job in two phases. The first phase utilized a cofferdam for the actual repair of the puncture. The damaged plate was cropped away and removed and a new plate welded into place, covering an area of about one square meter. The second phase utilized a specialized hyperbaric cofferdam for painting. The hyperbaric cofferdam is a portable habitat that keeps water out of the work area by using pressurized air at magnitudes slightly higher than the total hydrostatic pressure of the water at prescribed depths. The entire operation was conducted in parallel with routine repairs occurring on the topside of the rig. SSA also completed several other fixes to the rig in addition to the pontoon repair: thruster demounting and installation, complete hull cleaning, and replacement of depleted zinc anodes. Rick Shilling, Sales and Marketing Director for SSA, stated, “Developing effective repair strategies, as well as advanced buoyancy control solutions, for underwater propulsion equipment allows vessel operators to maintain their installations on station while, at the same time, performing preventative and emergency

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MPC used red clay to simulate the submerged oil. An MPC barge was mobilized as an operations platform, and the two-person submarine easily recovered all of the simulated oil. The innovation exemplified by MPC through its two-person submarine with underwater skimmer underlines an important fact: Oil on the sea floor will end up on shore. Sometimes too much emphasis is placed on surface cleanup. As we now know all too well in the aftermath of the Deepwater Horizon spill, submerged oil recovery is just as important.

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leaking from the Princess Kathleen off Lena Point, Alaska. The project was a tremendous success. The Princess Kathleen, a luxury liner built by John Brown and Co. of Glasgow, was launched in 1924. Her maiden voyage took her from Glasgow through the Panama Canal to service the West Coast from San Francisco to Vancouver. On September 7, 1952, the ship was traveling between Juneau and Skagway, Alaska and ran into a heavy storm, hitting ground at Lena Point north of Juneau. She eventually filled with water and sank at depths between 40 and 140 feet with a significant amount of fuel on board. Point Lena is a popular recreational spot for fishing and diving. Over the years the Princess Kathleen began leaking oil. To mitigate an environmental disaster, GDS was contracted by the U.S. Coast Guard to perform a survey of the integrity of the hull and tanks and develop an estimate of the oil that remained onboard. GDS used Remotely Operated Vehicles (ROVs) to probe the ship’s structure before sending divers in to tap the tanks and estimate the quantity of fuel that remained. After the survey was completed, a plan was developed for the safe removal of the fuel oil that remained on board. GDS divers penetrated the hull, inserted heat exchangers that allowed hot water to be circulated with the oil to improve its flow characteristics, and then pumped the oily water mixture onto a surface barge, where it was separated and the oil sent to Seattle for recycling/disposal. The Unified Command announced that a •Ad of G 123,575 3.375 xgallons 4.875:Layout 1 9/22/10 5:10 PM were Page total of oil and other petroleum products

recovered from the 14 fuel tanks aboard the Princess Kathleen. “Global Diving & Salvage is pleased to have been able to utilize its expertise and specialized equipment in partnering with Unified Command, thus creating a safe solution to a potentially disastrous release of oil into the waters of southeast Alaska,” noted David DeVilbiss, Alaska Regional Manager for GDS.

Toward a Greener PlaneT

Marine salvage and repair technology can produce amazing results. While it may not have the flair of deepwater offshore exploration, the technology is innovative and sophisticated all the same. The use of a device like the hyperbaric cofferdam is ingenious and an innovative use of positive pressure” in underwater welding applications. The two-person submarine with underwater skimmer exemplifies a technology developed in-house and used to excellent effect in the recovery of submerged oil. In the case of the Princess Kathleen, the ship had been underwater for nearly 60 years and whole sections had deteriorated and washed away. The innovative use of ROVs allowed a thorough survey of the damage before sending in divers. As environmental concerns become increasingly important and often paramount, so too will the work of subsea salvage and repair companies. Their contribution to the preservation of the planet should not be overlooked. MarEx

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Bunker update:

By Barry Parker

SEpTEMbER/OCTObER 2010

The Price of Emissions

THE MARITIME EXECUTIVE

While large overall, the marine fuels business is highly fragmented both geographically and economically. its large size and low concentration are a recipe for double trouble. its size makes it a target for politicians and regulators of all stripes, including those concerned with emissions. its fragmentation begets lack of industry leadership (on any issue), which in turn stymies any efforts to fight back against the regulatory tide. recent estimates from eu studies put shipping’s worldwide fuel consumption at 333 million metric tons (mt), with a possible low of 279 million mt and a high of 400 million mt. about one quarter of the fuel burn is distillate, with the lion’s share being residual fuel, implying a market turnover on the order of $150 billion. the fragmented nature of the business makes it difficult to gather meaningful market share information, even though any one supplier may loom large in a particular market. one listed company, World fuel services (nYse: int) sells

MarEx_40.indd 50

bunkers under a variety of brand names including World fuel, trans-tec, Bunkerfuels, oil shipping, marine energy, norse Bunker and Casa Petro. it reported top-line marine segment revenue of $5.1 billion in 2009, implying a market share of around three percent of the world total. Based on 21.1 million mt of marine fuels sold in 2009, its share is higher, over six percent of the mid-range market size. another public company, aegean marine Petroleum (nYse: anW), with a 6.2 million mt sales figure (worth $2.5 billion), comes in with a less than two percent share of the global market.

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tion (IMO) Convention on Pollution from Ships (MARPOL), Annex VI. The clock has already been ticking in Northern Europe, where Sulfur Emission Control Areas (SECAs), which took effect in 2006, mandate restrictions on the sulfur content of fuels for ships trading in the Baltic and North Seas. Earlier this year the IMO adopted amendments to Annex VI of 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 miles along the East and West Coasts of the U.S. and Canada as well as the Gulf of Mexico and Hawaii. In accord with the IMO’s amendment process, the global limit on sulfur in fuels is slated to decrease to 3.5 percent by the beginning of 2012, except for existing SECAs in Northern Europe, where the limit is already 1.0 percent. After January 1, 2015, the sulfur limit in ECAs ratchets down to 0.1 percent. Existing NOx requirements will apply to all new vessel construction, with stiffer requirements kicking in at the beginning of 2016. Industry-wide, the target for regions outside the ECAs moves down to 0.5 percent by 2020, subject to a look at the oil industry’s ability to actually supply the required amounts of low-sulfur fuel. The rules also allow for scrubber technology and specify maximum parts per million of particulate emissions, which could enable fuel with higher sulfur levels to be burned aboard vessels with scrubbers. The new rules bring additional complexities to an already complicated business. A bulletin from Lloyd’s Register, published

SEpTEMbER/OCTObER 2010

Guiamo, “Basically, our customers can include all vessels transiting or calling at ports in the southern Caribbean.” For Curoil, like many others in the business, marine bunkering is actually but one facet of a larger business. Guiamo explained, “We are involved in aviation fuelling as well as the marine side. We also sell entire cargoes to industrial customers around the Caribbean.” Curoil’s major supplier is Venezuelan oil giant PDVSA, which operates a refinery in Curaçao once owned by Shell. Over the past three decades, Curoil has made capital investments as needed. According to Guiamo, the company has invested in both storage capacity and pipelines and can deliver a full-service bunkering experience to vessels calling in the port or vessels at sea. She elaborated: “We can handle a wide range of requests from homogenous products to blended products. Our blends range between 30-380 cst (intermediate fuel oil), all according to customers’ requirements.” Guiamo further explained that bunkering operations are conducted on a 24/7 basis. The company’s capital investments have been both on and offshore. On land, Curoil runs the bunker operation through underground 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 deliveries, and owns two smaller vessels, Curoil I and Curoil II, with onboard blending capabilities for local deliveries, including to offshore oil rigs. Another company with years of experience is Glander International, a pioneer bunker broker (rather than a supplier), whose history dates back to 1961. Now based in Palm Beach Gardens, 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 manufacturers 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 Marine Gas Oil (MGO) bunkering through a worldwide network of major oil suppliers as well as independent suppliers.

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9/15/09 8:53:13 AM 9/27/10 1:33 PM

SEpTEMbER/OCTObER 2010

bunker update

THE MARITIME EXECUTIVE

shortly after the IMO meetings this past March, states: “Ships will be required to have written changeover procedures 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 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, “Among the complexities that we’ve encountered are that a lot of ports in the U.S. do not have low-sulfur fuels available yet.” He added, “In ports where the fuel is available, not all suppliers have it. This reduces the number of players.” The Glander executive also described another constraint that he’s observed, a mismatch between required quantities and tank configurations aboard vessels: “On some older vessels, the fuel oil tanks cannot take larger quantities or segregate the different types of fuels without mixing to get to the next port.” The result, in some cases, has been highly inefficient opera-

tions. “Some vessels end up burning LS in the Atlantic and then stop again before entering the SECA,” McKenna noted. “Recently, we had a vessel that wanted four types of fuel – RMG380, RMG380LS, MGO DMA and MGO DMA LS – to save money.” He stressed the importance of advising clients on the different fuel specifications required but cautioned that “Some ships do not have the extra fuel tanks, and that will be a problem. And some owners are cleaning out fuel tanks designed for heavy fuels in order to handle diesel.” Looking ahead, a number of uncertainties loom. Some analysts have expressed concern as to the refining industry’s ability to

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supply the requisite amounts of low-sulfur fuels. In the interim, a technological workaround, scrubbers, are being considered by many in the industry. One vendor, Hamworthy Krystallon, offers an economic analysis of the alternatives facing owners. At an indicative cost of $2.4 million to $3.4 million for the upfront investment in a scrubber on a deep sea vessel, payback would be achieved on the savings from buying IFO 380 fuel (a high-sulfur grade) versus paying more for a low-sulfur grade. Glander’s McKenna observes, “A lot of our customers are looking into the scrubber technology and seem to be waiting for the latest and greatest form of that technology.” In particular, he said, “The

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 plans for carbon-trading platforms analogous to those in the aviation industry, where a mode-specific trading platform is linked into a broader marketplace for industrial emissions. Another alternative is some form of carbon tax, likely paid by the refiner and then passed down the distribution chain. Because the maritime industry is both fragmented and fractious, many executives are worried that it will be on the receiving end of regulatory dictates rather than leading the conversation and exerting a prevailing influence on the eventual outcome. One thing is certain: Change is coming, and coming soon, and it will be expensive. Better to be in on the discussion MarEx than left out in the cold.

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914 962 4544 FAX : 914 962 5418 E - M AIL : INFO @ DAVITSALESINC.COM

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SEpTEMbER/OCTObER 2010

deck machinery Directory

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

coastal marine equipment

davit sales

The company was formed exclusively to furnish quality deck machinery to the marine industry at a reasonable price, with design, engineering and service support not available at the time. Coastal Marine Equipment is the leading provider of quality Marine Deck Machinery including, Anchor Windlasses, Mooring Winches, Anchor Winches, Hose Reels, Capstans, Escort Winches, Towing Winches, Tugger Winches, as well as much more…

Davit Sales Inc. established in 1980 to sell and service high quality products to the marine industry and to provide Naval Architect / Marine services. One of the foremost dealers in the US for Custom Marine Pedestal Cranes, Oil Boom containment systems, Oil recovery equipment, Boom storage and rapid deployment equipment.

THE MARITIME EXECUTIVE

coastal marine equipment T: +1 228 832 7655 F: +1 228 832 7675 coastalmarineequipment.com

davit sales inc. t: +1 914 962 4544 info@davitsalesinc.com www.davitsalesinc.com

hypac marine

intercontinental engineering

HYPAC is a world leading Australian designer and ABS approved manufacturer of high performance lightweight and conventional deck machinery. The product range includes anchor winches, ramp winches, mooring winches and capstans, rescue and tender boat davits. These standard and tailor made solutions are delivered worldwide in accordance with ABS, BV, DNV, GL & LRS requirements.

Intercon is the trade name for Intercontinental Engineering Manufacturing Corporation located in Kansas City, Missouri - a company specializing in the design and manufacture of heavy machinery for industrial, marine and defense markets.

hypac t: +61 8 8333 0222 info@hypac.com.au www.hypac.com.au

intercon T: +1 816 741 0700 F: +1 816 741 5232 srheams@intercon.com www.intercon.com

markey machinery company

nabrico

Designers and builders of high performance Hawser and escort winches, towing winches, dual purpose anchor handling/escort winches, anchor windlasses, capstans and specialized oceanographic winches. Available as electric, hydraulic or diesel power. Whatever your needs, Markey provides the solution!

Nabrico Marine Products/NABRICO is a supplier of deck fittings and other marine hardware for use on the world’s inland waterways and oceans. Products include a complete line of castings; manual, electric, hydra electric, anchor and positioning winches, plus capstans, enclosures and assorted accessory items. A catalog is available.

markey machinery co, inc. t: +1 206 622 4697 info@markeymachinery.com www.markeymachinery.com

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nabrico T: +1 615 442 1300 F: +1 615 442 1313 nabrico@trin.net www.nabrico-marine.com

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MITA

Maritime Operational

Research

Developing Practical Solutions for Todayâ&#x20AC;&#x2122;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, MITAGSâ&#x20AC;&#x2122; expert staff can program a model of virtually any port/vessel combination in the world. Multiple, largescale 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. n Ship-to-Ship Interactions. 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 MITAGS is internationally certified as a Maritime Simulation & Training Center by Det Norske Veritas

MITAGS Ops Research MarEx_40.indd 55 FP Ad v1.indd 1

United States Coast Guard Approved Courses

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SEpTEMbER/OCTObER 2010

deck machinery Directory

THE MARITIME EXECUTIVE

palfinger SyStemS

rapp hydema

We are global marine and offshore crane experts (up to 750 Mt) for flexible standard and special applications customized at the highest level. We offer a wide range of foldable knuckle boom, stiff boom, telescopic boom and heavy duty cranes for the most diverse applications also under tough conditions.

Founded in 1907, Rapp has a distinguished record in the worldwide marine industry, supplying deck machinery—electric or hydraulic winches especially—for a wide range of operations. Rapp also manufactures equipment on either side of the winch, such as its own line of gearboxes and the PTS Pentagon winch control systems. Rapp has new and refurbished equipment, with an expert corps of field techs, supporting clients--coast to coast.

palfinger Systems T: +43 (0) 662 88 00 33 F: + 43 (0) 662 88 00 33 -2770 office@palfingersystems.com www.palfingersystems.com

rapp hydema T: +1 206 286 8162 F: +1 206 286 3084 sales@rappus.com www.rappus.org

Smith berger

timberland equipment

Smith Berger is a leading designer and manufacturer of mooring and towing equipment for all types of vessels. Standard products include fairleads, guide sheaves, flag blocks, chain stoppers, towing pins, shark jaws and stern rollers. Our engineering experience allows us to customize any of our products to suit your particular application. Contact Smith Berger for your next project!

TIMBERLAND EQUIPMENT LIMITED custom engineers and manufactures dependable and durable marine winches, designed to improve efficiency and safety. TIMBERLAND’s engineering experience with hoisting and winching equipment dates back to 1947 and also extends to electrical transmission and distribution, offshore marine, construction and mining markets. TIMBERLAND sells equipment to over 50 countries through a worldwide service network.

Smith berger marine, inc. 7915 10th Avenue South Seattle, WA 98108 T: +1 206 764 4650 tomp@smithberger.com www.smithberger.com

timberland equipment limited t: +1 519 537 6262 sales@tewinch.com www.timberland.on.ca

ttS marine inc.

wintech

OEM Service, Spares and Sales for Marine and Offshore Winches and Cranes, Hatch Covers, RoRo Ramps, Cargo Doors and Cargo Handling Equipment. We handle all TTS equipment and former brand names: Kvaerner Ships Equipment, Kvaerner Brug, Hamworthy KSE, Hydralift, Norlift, O&K, Krupp Fˆrdertechnik, LMG, Friedrich Kocks, Maritime Hydraulics, Mongstad Engineering, Velle Systemer and Von Tell.

Manufacturing, Winches-Blocks-Fairleads-Sheaves, For the Marine Industry. Deck Winches • Barge Positioning Systems • Anchor Winches • Mooring Winches • Hand Winches Standard and Custom available for all Winches Blocks Fairleads and Sheaves. Made in the USA

ttS marine inc. T: +1 954 493 6405 F: +1 954 493 6409 service@tts-se.us www.tts-group.com

C-MAR group offer a full range of services including technical management of specialized offshore vessels. In addition the group can offer marine manpower and crewing.

www.c-mar.com

wintech international T: +1 888 946 8325 F: +1 318 929 1245 winches@wintech-winches.com www.wintech-winches.com

We provide: • FMEA • Audits • Damage & mechanical failure investigations • Technical auditing • Development, implementation & maintenance of safety management systems in accordance with the ISM Code.

Global marine and enerGY SerViCeS

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specialist

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Frank Coles, President & CEO, Globe Wireless THE MARITIME EXECUTIVE 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

GLOBAL SALES AND SUPPORT EXTENSIVE RANGE OF PRODUCTS AND SERVICES

Panama Canal: Bigger Is Better

Brave New World of Subsea Salvage September/October 2010

Todd Busch President, ISU

Michael Lacey Secretary General, ISU

ONGOING PRODUCT DEVELOPMENT

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 Industrieterrein Avelingen West 20

4202 MS Gorinchem

P.O. Box 1 4200 AA Gorinchem

Member of the DAMEN SHIPYARDS GROUP phone +31 (0)183 63 91 74 fax +31 (0)183 63 77 62

VOLUME 14, EDITION 5, SEPTEMBER/OCTOBER 2010

CLOCKWISE FROM TOP LEFT

americas@damen.nl www.damen.nl

The Netherlands

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