Oily Water Separators Don’t Require Further Regulation

By MarEx 2015-10-11 15:29:39

Oily water separators that are compliant with MEPC 107(49) regulations are sufficient technology for their purpose, conclude the authors of the final report from MAX1 Studies, a six-month study commissioned by the National Fish & Wildlife Foundation and managed by the maritime consultancy firm Martin & Ottaway.

The study examined two questions:

1. How effective are shipboard oily water separators (OWS)?

2. What can be done to further increase the effectiveness of shipboard oily waste management?

Historically, improvements to these systems have been hampered by a lack of open communication and technical cooperation. Therefore, this effort particularly focused on cooperative evaluation and analysis, especially through identifying and engaging stakeholders to consolidate possible divergent points of view.

The study found that the majority of complaints with OWS technology involve problems generally associated with OWS designed to comply with MEPC 60(33). As ships constructed after 2005 must be fitted with units that comply with MEPC 107(49), MEPC 60(33) units are no longer manufactured.

Therefore, the authors conclude that improving OWS technology should not be a regulatory priority, since MEPC 60(33) units will eventually be overtaken by improved MEPC 107(49) units without any additional intervention.

With regard to making continual improvements to MEPC 107(49) equipment, the authors suggest that the best method to address remaining issues is not to amend regulations to make a particular technology required, but rather to incentivize manufacturers to continue to improve OWS technology.

To assist manufacturers with making OWS improvements, shipowners and crews must also work to improve the customer feedback loop, which continues to show insufficient reporting of issues back to the manufacturer.

Remaining issues include the time-intensive nature of OWS cleaning/maintenance and false negatives/positives with oil content meter (OCM) equipment. Specifically, technical advances in OCM oil detection accuracy would find a ready market in the industry. False OCM alarms can become a serious operational issue, since possible false alarms make OWS systems difficult to troubleshoot, which results in ineffective crew efforts at resolving the alarm.

Crews should be trained to recognize this reality and to stop using an OWS that does not respond properly, issue a service report, and request that it be resolved at the next port, states the report. The study indicates that port state control officials would welcome this type of report and operational feedback.

A number of reported issues with MEPC 107(49) units can also be improved through adequate crew training and ensuring that an appropriate OWS system is selected for its intended operational environment. For a shipowner, these types of systems considerations will likely provide the greatest improvements to MEPC 107(49) OWS operations, states the report.

“We emphasize that there is no indication that further regulatory efforts at improving OWS technology are required. In fact, any regulatory change would most likely be counterproductive, since it would be destabilizing, requiring many years for implementation and creating confusion and possibly new myths,” state the report authors.

The report offers the following pathways to increase the effectiveness of shipboard oily waste management, which were reached through review of existing literature, extensive consultation with stakeholders, and technical and systems analysis:

• Increasing and improving crew training (in OWS operations and MARPOL regulations)

• Addressing availability and cost issues with port reception facilities

• Moving towards drier bilges

• Increasing and improving crew dialogue with shore management (making crews feel comfortable as part of the solution)

• Exploring options for electronic record keeping

• Cultivating a “culture” of compliance/trust/communication/transparency

For the most part, these suggestions are best applied through reliable, data-driven, transparent implementation by shipowners in consultation with relevant stakeholders such as regulatory bodies, shore personnel and ships crews, within the existing regulatory structure.

The study found that some shipowners are already solving these problems effectively, reducing stress on the system for all stakeholders. “Today’s regulations are resulting in increasingly drier bilges and improved OWS capability, reducing discharge of oil to water by total volume. With improved compliance this trend of reduced total discharge will only accelerate.”

The report is available here.


China Finishes Lighthouses in Disputed South China Sea

By Reuters 2015-10-10 00:38:22

China has completed the construction of two lighthouses in the disputed South China Sea, the official Xinhua news agency reported, as tensions in the region mount over Beijing’s maritime ambitions.

A completion ceremony was held for the lighthouses on Cuateron Reef and Johnson South Reef in the Spratly islands, Xinhua said late on Friday. The United States and the Philippines have opposed the construction.

China claims most of the energy-rich South China Sea, through which $5 trillion in ship-borne trade passes every year, and the Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.

China said on Friday it would not stand for violations of its territorial waters in the name of freedom of navigation, as the United States considers sailing warships to waters inside the 12-nautical-mile zones around islands it has built in the Spratly chain.

Washington has signalled it does not recognize Beijing’s sovereignty over the several islands China has built on reefs in the Spratly archipelago and says the U.S. navy will continue to operate wherever international law allows.

The issue is central to increasingly tense relations between the United States and China, the world’s two largest economies.

Beijing has said construction in the region is to help maritime search and rescue, disaster relief, environmental protection and navigational security. It has also said it will continue to build other installations to better serve countries in the region and vessels navigating those waters.


The Last of the Old Generation or the Start of the New?

By Wendy Laursen 2015-10-10 00:28:02

Last week saw the announcement that the delivery of Allseas’ huge platform installation and decommissioning vessel, Pioneering Spirit, has been delayed until the first half of 2016.

The ship, formerly named the Peter Schelte, is the world’s largest vessel in terms of its gross tonnage, 403,342gt, its breadth, 123.75m (406 feet), and its displacement, 900,000 tons.

Ship broker Seabrokers says the 382m (1,250 feet) vessel, which has a maximum lift of 48,000 tonnes, was due to enter into service in the North Sea this summer but will now be delayed largely due to the late delivery of lift beam components.

Allseas has reportedly advised Shell and Statoil of the revised delivery schedule, as the vessel was due to remove platforms for Shell in the Brent field and to carry out an installation contract on the Johan Sverdup field for Statoil.

Douglas-Westwood analyst, Mark Adeosun, author of The World Subsea Vessel Operations Market Forecast 2016-2020, says the vessel has unique versatility. While it has been built largely for the decommissioning market, it is also capable of subsea construction and pipelay operations. “Decommissioning is where the uniqueness of the vessel shines through,” says Adeosun. “It will be used to lift the 24,000 tonne Brent Delta topside, something that no other vessel could achieve in a single lift. The weight and size that this vessel can lift really sets it apart from other vessels in the market.”

There’s a “but” though. “The competitiveness of the vessel, in terms of its daily charter rate (DCR), is unproven. The vessel’s DCR is likely to be high in order to offset its operating expenditure. The vessel is arguably over complicated and could price itself out of the pipelay and construction market. Until more actual contracts have been awarded, it is difficult to really draw a conclusion on its competitiveness,” says Adeosun.

Entering a Challenging Market

Pioneering Spirit will be entering challenging market conditions. Subsea vessel providers have been taking additional measures to help strengthen their financial position and stem oversupply in the market by deferring newbuilds.

Douglas-Westwood believes that it is unlikely that day rates have bottomed out. Instead, across the global subsea vessel fleet, a 2014-15 decline of at least 30 percent in day rates is not unlikely before prices stabilise.

Vessel supply has increased in recent years due to the current build cycle, which was originally driven by high oil prices and increased demand for higher specification vessels. Recent order intakes have been relatively low, and this is not expected to change for some time, marking an end to the current newbuild cycle.

“The most recent build cycle marked advancement in the vessel fleet with the delivery of larger and higher specification vessels which are required for the challenges of deepwater development,” says Adeosun. In recent years, subsea vessel owners have been more interested in building higher specification vessels which has led to under investment in low specification vessels.

Operators are also retiring older vessels with lower capacities and higher operating costs, particularly vessels delivered during the first build cycle that took place between 1973 and 1987.

The evolution of vessels supplied in the recent build cycle (2006-2015) has improved the capabilities and dynamism of available units. Vessels have become increasingly multi-purpose in order to reduce over-dependence on a specific market, says Adeosun. All vessel types except pipelay vessels are capable of carrying out both subsea construction and IRM services. Hence, the flexibility of Pioneering Spirit despite its primary purpose.

A New Start

With eventual market recovery towards 2020, subsea vessel day demand is set to grow at a 5.2 percent compound annual growth rate (CAGR) over the next five years. Global subsea vessel operations expenditure is expected to increase by 29 percent compared to the preceding five-year period, totalling $97.7 billion from 2016 to 2020.

Field development (36 percent) and inspection, repair and maintenance (IRM) (40 percent) are expected to remain the principal drivers of global subsea vessel demand and expenditure. As production in shallow water basins declines, activities in deeper water are set to increase.

North America, Africa and Latin America are to account for 47.5 percent of global expenditure between 2016 and 2020. The “golden triangle” remains vital to subsea vessel demand despite falling oil prices, project delays and political instability associated with Africa. The development of East African gas basins in the Indian Ocean will contribute to subsea vessel demand in the latter years of the forecast period.

“It is pertinent to state that a handful of big projects will not be able to turn the market around to recovery,” says Adeosun. “However, the further development of big projects is a good indication that exploration and production companies are expecting to see a recovery in the market environment at some point in the future.”

Big deepwater projects such as Shell’s Bonga South West in Nigeria, Petrobras’ Libra and Lula deepwater development in the Santos Basin, BP’s Mad Phase II and the commencement of offshore activities at ENI’s Area 4 in Mozambique are examples of deepwater development that will restore positivity in the market. Major pipeline projects such as the Nord Stream 2, the SAGE pipeline and the Sepat gas pipeline are also forecast to drive vessel demand until the end of the decade.

Asia will be the single largest market with an anticipated 18.7 percent of expenditure over the next five years, largely driven by shallow water IRM and pipelay-related activities. Australasia has the fastest growth rate of all of the regions at a 46.8 percent CAGR due to massive offshore gas field developments. Activity in the Middle East represents nine percent of the total predicted global subsea vessel expenditure.

Where Pioneering Spirit will be in 2020 is yet to be seen. It could be leading a new era of multi-purpose subsea construction vessels, or it could remain a reminder of past glory set to work almost exclusively in the decommissioning market.


Petronas Restates Commitment to Canadian LNG

By MarEx 2015-10-09 17:02:35

Malaysia’s Petroliam Nasional Bhd (Petronas) said it is committed to its Canadian LNG project despite the tumble in oil and gas prices which has hurt the state-owned oil company’s profitability.

The project would see Petronas build an export terminal near the British Columbia port city of Prince Rupert, a natural gas pipeline and ongoing gas development. Petronas had reached a deal with British Columbia in May on the proposed project, drawing it closer to its final investment decision.

“Petronas would like to reaffirm its commitment to deliver long term LNG supply to its customers through the Pacific NorthWest LNG project in Canada, despite the current market volatility for oil and gas,” its chief executive officer for Upstream, Wee Yiaw Hin, said in an emailed statement.

The Malaysian Reserve, quoting analysts, said this week the project may be deferred due to the tumble in oil and gas prices.

Petronas and its partners are ready to proceed with the project if it receives clearance from Canada’s environmental regulator, the Canadian Environmental Assessment Agency (CEAA), Wee said.

“Pacific NorthWest LNG has fulfilled the required technical and commercial components of the project and is looking forward to meeting future LNG market demands,” he said.

Petronas said in June it will move forward with the LNG project on the condition that it is approved by the CEAA.

Pacific NorthWest LNG is majority-owned by Petronas. Japex, Sinopec/Huadian, Indian Oil and PetroleumBRUNEI are also partners in Pacific NorthWest LNG and its associated natural gas supply.

The project is part of a larger $36 billion investment by Petronas and its partners in Canadian natural gas. The proposed facility will comprise an initial development of two LNG trains of approximately six million tons per annum (MTPA) each, and a subsequent development of a third train of approximately six MTPA. It will liquefy and export natural gas produced by Progress Energy Canada in northeastern British Columbia.

The project development has been opposed by aboriginal communities and environmentalists, who say it will harm a salmon habitat next to the site.

Global oil prices have plunged by more than half since mid-2014 on a supply glut, leading Petronas’ net profit to fall by 47 percent in the April to June quarter.


Tote Creating Fund for Lost Mariners

By Reuters 2015-10-09 15:48:16

The owners of the cargo ship El Faro that sank after it was trapped in the path of Hurricane Joaquin off the Bahamas last week announced the creation of a family relief fund on Friday to support the 33 mostly-American families of the crew.

“Over the last few days we have had hundreds of employees, mariners, customers and individuals from around the country inquire about where to donate in support of the families,” Anthony Chiarello, chief executive of New Jersey-based Tote Inc, owners of the El Faro, said in a statement.

The U.S. Coast Guard on Wednesday called off its search for survivors of what authorities have called the worst cargo shipping disaster involving a U.S.-flagged vessel in more than 30 years.

The body of only one presumed crew member was found during the nearly week-long search. El Faro was carrying 28 U.S. crew members and five Polish contractors when it disappeared.

The family relief fund will be administered by the Seamen’s Church Institute, North America’s largest mariners’ service agency, Tote said.

“We continue to keep the families and loved ones of the crew of the El Faro in our thoughts and prayers,” Chiarello said.

Tote said it will also establish an education fund for the children of the El Faro crew members.

The 790-foot (240 meter) container ship vanished in ferocious winds and seas up to 50-feet (15 meters) high on October 1 while on a regular weekly cargo run between Jacksonville, Florida, and Puerto Rico, the Coast Guard said.

In a final distress call, before all communication with the ship was lost, El Faro reported that it had lost propulsion, was taking on water and listing. No reason was given for the loss of power.


Chinese Protest Deployment of U.S. Warships

By MarEx 2015-10-09 13:52:10

Beijing has warned the U.S. after announcing it would deploy warships in the South China Sea and close to the artificial islands recently built by the Chinese.

China and its South China Sea neighbors have disputing maritime territorial boundaries, in which China has been called an aggressor. Meanwhile, the U.S. says it does not acknowledge a lot of China’s maritime claims and navy will be operating in international waters.

The U.S. has recently participated in a number of military exercises in the South China Sea with a number of its allies this year, but Beijing has been vocal about what it calls the militarization by the U.S. of the region. Japan, Vietnam, Malaysia and the Philippines have all called for the Chinese to cease construction of artificial islands, which includes reclamation projects and offshore platforms in the South China Sea.

In August, the Japanese released 14 photos pinpointing 16 offshore construction projects located in disputed maritime territories between the Chinese and Japanese shorelines. While the structures appear to be in China’s territories, Japan raised concerns that the platforms could possibly serve as auxiliary military bases. The Chinese say the facilities are simply to be used natural gas production.

While the Chinese have said it will cease the reclamation projects, Japan pointed out that this was likely because the projects had been completed.

Last month, the U.S. released a report that Chinese are continuing to dredge in the Spratley archipelago. But Chinese Foreign Minister Wang Yi said the construction work was needed to improve conditions on the island.

“The Nansha islands are China’s territory. In this regard, China possesses ample historical and legal basis,” Wang said, using the Chinese name for the Spratly Islands.

The U.S. and its allies have speculated that China could swiftly militarize these islands, though Beijing says it has no intention to do so. However, the U.S. reports that at least one of Chinese islands have already been outfitted with a hanger for fighter aircrafts.

Additionally, Chinese fishing vessels are continuing to press the outer boundaries of its territorial claims. And those vessels often clashed with Vietnamese and Filipino fishing boats in the region.

Ramping Up Funding

The U.S. announced this week that it was increasing funding for maritime law enforcement for Vietnam, the Philippines, Indonesia and Malaysia. The U.S. said it will contribute more than $100 million per year for maritime enforcement in Southeast Asia. The U.S previously spent about $25 million in the region.

Last month, Japan promised warships and a $1.7 billion donation to Vietnam to strengthen its maritime forces.

While not specifically naming China, Japanese Prime Minister Shinzo Abe cited stability-threatening, large-scale land reclamation projects and the building of outposts as the primary motivators for the donations.


New forwarding giant formed

Danish freight forwarding group DSV plans to push further up into the top league of global cargo agents with the signing of an agreement today to take over US-based logistics group UTi Worldwide. In the seafreight/container segment, the combined group will control aboit 1.4 million TEU of cargo,

Hsu Chih-chien exits Courage Marine

Taiwanese shipping veteran Hsu Chih-chien has sold his shares in Singapore-listed Courage Marine, ending his association with the company he founded.
Courage Marine, founded in 2001 at the start of the last shipping boom has been struggling in the last two years, posting losses from 2013-2014.