Double-Hull Tanker Legislation

Committee on Oil Pollution Act of 1990
(Section 4115)
Implementation Review

Marine Board

Commission on Engineering and Technical Systems

National Research Council

NATIONAL ACAEMY PRESS
Washington, D.C.1998

NATIONAL ACADEMY PRESS • 2101 Constitution Avenue, N.W. • Washington, DC 20418

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the panel responsible for the report were chosen for their special competencies and with regard for appropriate balance.

This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.

The project is part of a program supported by interagency agreement No. DTMA91-94-G00003, which is managed on behalf of participating agencies by the Maritime Administration of the Department of Transportation; and grant No. N00014-95-1-1205 between the Navy and the National Academy of Sciences. Financial support from the American Bureau of Shipping to cover the costs of report publication is gratefully acknowledged. The views expressed herein do not necessarily reflect the views of the sponsors and no official endorsement should be inferred.

Limited copies are available from: Marine Board, Commission on Engineering and Technical Systems, National Research Council, 2101 Constitution Avenue, Washington, D.C. 20418

International Standard Book Number 0-309-06370-1

Printed in the United States of America

COMMITTEE ON OIL POLLUTION ACT OF 1990
(SECTION 4115)
IMPLEMENTATION REVIEW

DOUGLAS C. WOLCOTT (chair), Chevron Shipping Company (retired), Ross, California

PETER BONTADELLI (vice chair), California Department of Fish and Game, Sacramento

LARS CARLSSON, Concordia Maritime AB, Göteborg, Sweden

WILLIAM R. FINGER, ProxPro, Inc., Friendswood, Texas

RAN HETTENA, Maritime Overseas Corporation, New York, New York

JOHN W. HUTCHINSON, NAE/NAS, Harvard University, Cambridge, Massachusetts

SALLY ANN LENTZ, Ocean Advocates, Columbia, Maryland

DONALD LIU, American Bureau of Shipping, New York, New York

DIMITRI A. MANTHOS, Admanthos Shipping Agency, Inc., Stamford, Connecticut

HENRY MARCUS, Massachusetts Institute of Technology, Cambridge

KEITH MICHEL, Herbert Engineering Corporation, San Francisco, California

JOHN H. ROBINSON, Consultant, Santa Barbara, California

ANN ROTHE, Trustees for Alaska, Anchorage

DAVID G. ST. AMAND, Navigistics Consulting, Boxborough, Massachusetts

KIRSI K. TIKKA, Webb Institute, Glen Cove, New York

Marine Board Staff

CHARLES BOOKMAN, Director (until April 1997)

PETER JOHNSON, Acting Director (from May 1997)

DONALD PERKINS, Study Director (until June 1996), Consultant (from July 1996)

JILL WILSON, Study Director (from July 1996)

RICHARD WILLIS, Consultant

SHARON RUSSELL, Administrative Assistant (until June 1995)

MARVIN WEEKS, Administrative Assistant (from July 1995 to May 1997)

THERESA FISHER, Administrative Assistant (from May 1997)

Liaison Representatives

KEVIN BAETSEN, Military Sealift Command, U.S. Navy, Washington, D.C.

J. ROWLAND HUSS, Naval Sea Systems Command, U.S. Navy, Washington, D.C.

ZELVIN LEVINE, Office of Environmental Affairs, Maritime Administration, Washington, D.C.

FREDRICK SCHEER, Office of Standards Evaluation and Development, U.S. Coast Guard, Washington, D.C.

JAIDEEP SIRKAR, Office of Design and Engineering Standards, U.S. Coast Guard, Washington, D.C.

MARINE BOARD

JAMES M. COLEMAN (chair), NAE, Louisiana State University, Baton Rouge

JERRY A. ASPLAND (vice chair), The California Maritime Academy, Vallejo

BERNHARD J. ABRAHAMSSON, University of Wisconsin, Superior

BROCK B. BERNSTEIN, EcoAnalysis, Ojai, California

LILLIAN C. BORRONE, NAE, Port Authority of New York and New Jersey

SARAH CHASIS, Natural Resources Defense Council, New York, New York

CHRYSSOSTOMOS CHRYSSOSTOMIDIS, Massachusetts Institute of Technology, Cambridge

BILIANA CICIN-SAIN, University of Delaware, Newark

BILLY L. EDGE, Texas A&M University, College Station

JOHN W. FARRINGTON, Woods Hole Oceanographic Institution, Woods Hole, Massachusetts

MARTHA GRABOWSKI, LeMoyne College and Rensselaer Polytechnic Institute, Cazenovia, New York

JAMES D. MURFF, Exxon Production Research Company, Houston, Texas

M. ELISABETH PATÉ-CORNELL, NAE, Stanford University, Stanford, California

DONALD W. PRITCHARD, NAE, State University of New York at Stony Brook and Severna Park, Maryland

STEVEN T. SCALZO, Foss Maritime Company, Seattle, Washington

MALCOLM L. SPAULDING, University of Rhode Island, Narragansett

ROD VULOVIC, Sea-Land Service, Charlotte, North Carolina

E.G. "SKIP" WARD, Shell Offshore, Houston, Texas

Staff

CHARLES A. BOOKMAN, Director (until April 1997)

PETER A. JOHNSON, Acting Director (from May 1997)

DORIS C. HOLMES, Staff Associate

Preface

Since the end of World War II, industrialized nations have imported increasing quantities of oil from the Middle East, the North Sea, Nigeria, Indonesia, the Caribbean, and other parts of the world. More than 3,300 tankers, each with a capacity of more than 10,000 deadweight tons (DWT), now serve the world maritime oil trade; approximately 40 percent of these vessels call each year at U.S. ports. Although the maritime oil trade supports economic growth in many countries, it has also raised concerns about damage to the marine environment in the event of oil spills.

As the demand for maritime oil transportation increased rapidly in the postwar years, the average size of a tanker grew. A single cargo tank on today's large tankers can hold more than twice as much oil as an entire World War II tanker. The large size of tank vessels and major spillage from vessel accidents—such as the grounding and breakup of the Torrey Canyon off the Scilly Isles in 1967—stimulated international action to formulate tank vessel design and construction standards aimed at reducing oil outflow following tanker damage. These standards, which are incorporated in international conventions, were developed by representatives of governments of the major international maritime nations and by industry representatives, ship classification societies,¹ and other interested parties, working under the auspices of the International Maritime Organization (IMO), a specialized agency of the United Nations. The IMO standards in MARPOL 73/78² addressed ballast tank location in tank vessel designs and operational requirements such as ballast tank cleaning as a means of reducing oil outflow after ship collisions and during routine operations. Enforcement of these IMO standards was primarily dependent on the actions of flag states (nations where tank vessels are registered) and of classification societies. Since 1990, a review of procedures by both IMO and the classification societies has led to a strengthening of port-state enforcement options and increased stringency of internal classification society procedures aimed at increasing vessel quality.

The grounding of the Exxon Valdez in Prince William Sound in March 1989, and the subsequent spillage of more than 11 million gallons of crude oil into Alaskan waters, resulted in changes in both the character of tank vessel design standards and the manner in which they are formulated. In August 1990, the U.S. Congress promulgated P.L. 101-380, the Oil Pollution Act of 1990 (OPA 90). The intent of this law was, in part, to minimize oil spills through improved tanker design, operational changes, and greater preparedness. Section 4115 of OPA 90 focused on changes in ship design—notably double hulls—to prevent or minimize spillage when an accident occurs.³ Single-hull tank vessels of 5,000 gross tons or more will be excluded from U.S. waters after 2010 unless they are equipped with a double bottom or double sides, in which case they may be permitted to trade to the United States through 2015, depending on their age. An exemption allows single-hull tankers trading to the United States to unload their cargo offshore at deepwater ports or in designated lightering areas through 2015.^4,5

The fact that the United States, as a port state,⁶ unilaterally promulgated legislation that applies to all tankers operating in U.S. waters, not just to U.S.-flag vessels, had a worldwide impact. Following the passage of OPA 90, changes in the international regulatory regime in the form of two additions to MARPOL 73/78 mandated a worldwide transition to double-hull vessels or their equivalents. MARPOL 73/78, Regulation I/13F (MARPOL 13F) specifies hull configuration requirements for new tankers of 600 DWT⁷ capacity or greater contracted after July 1993; oil tankers of more than 5,000 DWT are required to have double hulls or the equivalent. MARPOL 73/78, Regulation I/13G (MARPOL 13G) addresses operational requirements to reduce oil outflow from single-hull vessels in the world tanker fleet and specifies a schedule for retrofitting or retiring such vessels 25 or 30 years after delivery.

ORIGIN OF THE STUDY

Congress anticipated that OPA 90 would have significant and wide-ranging effects on both the domestic and the world tanker fleets; more than 90 percent of the tank ships calling on U.S. ports operate under a foreign flag. Congress ordered the U.S. Secretary of Transportation, acting through the U.S. Coast Guard (USCG), to assess the impact of Section 4115 on the marine environment and on the economic viability and operational makeup of the maritime oil transportation industry. After the USCG requested the advice of the National Research Council (NRC) in preparing its report to Congress, the NRC convened the Committee on the Oil Pollution Act of 1990 (Section 4115) Implementation Review under the auspices of the Marine Board. Committee members were selected with expertise in the following areas: tanker fleet management; tank vessel design, construction, operation, and maintenance; economics of oil sourcing and oil transportation; marine safety; marine environmental law and policy; natural resource damage assessment; international maritime conventions; and federal regulations related to marine petroleum transportation and operations. Biographical sketches of committee members are provided in Appendix A.

STUDY SCOPE AND CONTEXT

The committee was charged with assessing the impact of the double-hull and related provisions of OPA 90, Section 4115 (see Appendix B) on three areas identified in the legislation:

Ship Safety and Protection of the Marine Environment. Determine the extent to which there has been a change (or the extent to which change can be anticipated) in oil pollution in U.S. waters; in the incidence of marine casualties; in the risk of oil spills resulting from, or influenced by, early retirement of tank vessels and exemptions to OPA 90; and in measures taken to modify single-hull tank vessels to reduce risk of accidental spillage (in compliance with OPA 90). Document the progress made in double-hull tank vessel design, construction, maintenance, and operations, and specifically identify any known safety problems that have occurred with double-hull tank vessel designs.

Economic Viability of the Maritime Oil Transportation Industry. Determine the effect of OPA 90, Section 4115 on industry as may be evidenced, for example, by the extent of shifts to other modes and means of transportation, trends in shipbuilding and chartering, and changes in chartering rates. Identify added costs of construction and maintenance of double-hull tank vessels compared to non-double-hull tank vessels.

Operational Makeup of the Maritime Oil Transportation Industry. Identify the nature and extent of changes within the industry and the safety implications that may be related to OPA 90, Section 4115—for example, changes in tank vessel ownership and tank vessel type utilization.

In addition, the USCG and the NRC agreed that the scope of the assessment should include the influence of international conventions on tank vessel design and operation. In particular, the committee was asked to review and comment on evidence regarding the influence of international conventions (primarily MARPOL 13F and 13G) concerning hull design (for reducing the risk of oil spills from tank vessels) on the composition and character of tanker fleets and the interaction of these conventions with Section 4115.

OPA 90 addresses not only structural design issues, but also oil pollution liability and compensation, spill response planning, manning standards, vessel traffic services, and other issues. As a result, the maritime oil transportation industry has revised its operations, particularly in light of the law's strict liability provisions for oil spills and the potential costs associated with cleanup and related third-party and natural resource damage if spills occur. These changes come at a time when both the market for construction of new tankers and oil shipping rates (freight rates) are emerging from a depressed period, during which income was usually insufficient to cover the cost of new investment.

Changes in the international regulatory environment are also affecting tank vessels. In addition to the structural and operational requirements of MARPOL 13F and 13G, initiatives of note include enhanced surveys by classification societies, increased audits and inspections of vessels by charterers and the sharing of this information through industry-sponsored programs, and more comprehensive port-state control activities. These factors combine to affect the safety of the overall fleet by preventing casualties that could result in oil spills, reducing oil outflow from casualties, or decreasing the number of tank vessels subject to casualties. Because the influence of Section 4115 on safety is intertwined with other factors, its effects are difficult to isolate, and this complexity is reflected in the committee's findings.

The committee's assessment, moreover, was subject to constraints inherent in the timing of the study. Insufficient data on actual incidents were available to evaluate the effect of Section 4115 on oil spills from vessels in U.S. waters. The committee's assessment, therefore, is based on an analytical comparison of the oil outflow characteristics of double-hull and single-hull designs. In accordance with its charge, the committee did not question the double-hull mandate or examine alternative designs potentially equivalent to double hulls. A more comprehensive discussion of alternative tank vessel designs can be found in Tanker Spills: Prevention by Design (NRC, 1991).

With respect to tank barges, the committee's assessment focused on barges engaged in the ocean transportation of petroleum. The spill data presented in Chapter 2 include spills from both inland and oceangoing barges, but the economic and structural analyses in Chapters 5 and 6 are limited to oceangoing barges.

Study Methods

The full committee met six times over the course of the study. In addition, several committee members held work sessions to analyze specific topics and data and to draft sections of the report. Several supplementary studies were conducted under subcontract (see Appendix D), most notably a comparative analysis of double-hull and single-hull tank vessel designs performed by Herbert Engineering Corporation (see Appendix K).

To obtain the necessary data, the committee made an exhaustive search of available data resources in the public and private sectors concerning the following: double-hull construction and safety; early retirement of single-hull vessels; tanker fleet composition and ownership; international maritime rules; the lightering and deepwater port exemption to OPA 90; oil spills and oil spill risk; oil supply and demand; single-hull modification; tanker economics and operations; and vessel casualties. In addition, publications and reports related to the study topic were reviewed by the committee. Files developed by the USCG since the initiation of OPA 90 were a significant resource, as were unpublished maritime accident data for 1994 and 1995 obtained with the assistance of the USCG.

Industry representatives provided the committee with current information on a number of topics, including maritime oil industry economics, tanker sale and purchase brokerage, shipbuilding trends and costs, trends in inspection practices for double-hull tank vessels, vessel finance and insurance, and the operational and economic characteristics of the oceangoing domestic barge fleet. A list of presentations made to the committee is provided in Appendix D. The committee also sent questionnaires to shipyard operators and to the owners and operators of double-hull tankers, designers of double-hull tankers, classification societies, and oceangoing tank-barge operators to solicit information on design trends, costs, problems with double-hull vessels, and any special concerns and practices unique to double-hull design (see Appendix C).

The committee requested public comments on its interim report (NRC, 1996) by means of a USCG announcement in the Federal Register in April 1996 (Federal Register, 1996). Comments were received from the American Institute of Merchant Shipping (now the U.S. Chamber of Shipping), VELA International Marine Ltd. of Saudi Arabia, the State of Washington Office of Marine Safety, and the Water Quality Insurance Syndicate, an association of companies that insures vessel owners and operators against statutory and third-party pollution liability.

Organization of the Report

The report is divided into seven chapters and a series of appendixes. Chapter 1 provides an overview of oil demand and supply factors that determine the need for maritime oil transportation and describes the hull design characteristics of the world tanker fleet. Chapters 2 and 3, respectively, address the safety and protection of the marine environment and the operational makeup of the marine oil transportation industry. The economic impact of OPA 90, Section 4115 on the world tanker fleet and on the domestic fleet of tankers and oceangoing barges is addressed in Chapters 4 and 5, respectively. Chapter 6 discusses issues concerning tank vessel safety, construction, maintenance, and operations that have been matters of concern since the early debates that led to the promulgation of OPA 90. The conclusions and recommendations stemming from the findings of Chapters 2 through 6 are given in Chapter 7.

ACKNOWLEDGMENTS

The committee gratefully acknowledges the efforts of the many individuals and organizations who contributed their time and effort to this study in the form of presentations to the committee, correspondence, telephone calls, and responses to questionnaires and other requests for information. Particular thanks are given to Jaideep Sirkar of the USCG Office of Design and Engineering Standards: Jack Klingel of the USCG Office of Marine Safety, Security, and Environmental Protection; Zelvin Levine of the Maritime Administration Office of Environmental Activities; and Fred Scheer of the USCG Office of Standards Evaluation and Development.

In addition, the committee appreciates the assistance of individuals from various sectors of the marine oil transportation industry, including information and publication services, ship classification societies, and engineering organizations. Many of these individuals, identified in Appendix D, traveled from Europe or Asia to make presentations to the committee.

Finally, the chairman wishes to thank all the members of the committee for their hard work during meetings, for reviewing drafts of the report, and for their individual efforts in gathering information and writing sections of the report.

REFERENCES

Federal Register. 1996. Interim Report on Tank Vessel Design, Construction, and Operation Under the Oil Pollution Act of 1990. Notice of availability of interim report; request for public comments. FR 61(81):18457—18458. April 25.

National Research Council (NRC). 1991. Tanker Spills: Prevention by Design. Marine Board. Washington, D.C.: National Academy Press.

NRC. 1996. Effects of Double-Hull Requirements on Oil Spill Prevention: Interim Report. Marine Board. Washington, D.C.: National Academy Press.

NOTES

¹For example, the American Bureau of Shipping, Lloyd's Registry of Shipping, and Det Norske Veritas.

²The International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978. This convention, known as MARPOL, addresses pollution from oil, chemicals, and other harmful substances, garbage, and sewage.

³OPA 90, Section 4115 (c)(2) states that tank vessels shall be equipped with a double hull or "with a double containment system determined by the Secretary of Transportation to be as effective as a double hull for the prevention of a discharge of oil." The Secretary has not approved an equivalently effective system as of the date of this report.

⁴The Louisiana Offshore Oil Port is currently the only offshore deepwater port in the United States.

⁵In practice, very large crude carriers (VLCCs) are the primary users of lightering zones and the deepwater port, although the exemption applies to all tankers regardless of size.

⁶A port state is a nation whose ports are called on by any vessels of any flag.

⁷OPA 90, Section 4115 defines vessel sizes in gross tons (GT), whereas MARPOL 13F and 13G use DWT. GT is a volumetric measure of a vessel's size as determined according to international convention. DWT is a measure of the weight of cargo plus water, fuel, and stores that a vessel can carry.

Contents

EXECUTIVE SUMMARY

1 INTRODUCTION

2 SHIP SAFETY AND PROTECTION OF THE MARINE ENVIRONMENT

3 OPERATIONAL MAKEUP OF THE MARITIME OIL TRANSPORTATION INDUSTRY

4 ECONOMIC IMPACT OF THE OIL POLLUTION ACT OF 1990 ON THE INTERNATIONAL TANKER FLEET

5 DOMESTIC (JONES ACT) TANKER TRADE

6 DESIGN, CONSTRUCTION, OPERATION, AND MAINTENANCE OF DOUBLE-HULL VESSELS

7 CONCLUSIONS AND RECOMMENDATIONS

APPENDICES

A Biographies of Committee Members

B Oil Pollution Act of 1990 (P.L. 101-380), Section 4115

C Questionnaires

D Committee Meetings and Activities

E Supplementary Data on Vessel Ownership for the U.S. Trading Fleet

F Methodology for Determining the International Tanker Supply

G Freight Rate Mechanism in the Short Run: A Theoretical Approach

H Seasonal Variations in Tanker Demand and Freight Rates

I Letter to the Committee from R.W. Porter

J Methodology for Determining Ship Replacement Costs

K Comparative Study of Double-Hull and Single-Hull Tankers

L Research on Double-Hull Vessel Technology since 1990

M Summary of Questionnaire Responses from Owners and Operators of Double-Hull Tank Vessels

ACRONYMS AND GLOSSARY

Tables, Figures, and Boxes

TABLES

2-1 Section 4115 Phaseout Schedule for Vessels without Double Hulls by Age of Vessel

2-2 Requirements of OPA 90 and IMO Regulation 13F for New Vessels

2-3 Requirements of OPA 90 and IMO Regulation 13G for Existing Vessels

2-4 OPA 90 and International Regulations for Tank Vessels without Double Hulls

2-5 Major Features of Regional Port-State Control Agreements

3-1 Change in Tonnage, by Coast and Vessel Size, 1990—1994

3-2 Change in Composition of World Fleet between 1990 and 1994, by Hull Type as Percentage of Total Tonnage

3-3 Tankers Scrapped per Year from World Fleet, 1990—1995

3-4 Changes in Age of U.S. Trading Fleet and World Fleet

3-5 Comparison of Average Age by Coast and Size Category

3-6 Average Size, Tonnage Carried, and Number of Port Calls, by Age of Vessel in the U.S. Trading Fleet for 1990 and 1994

3-7 World Tanker Sales, 1990 to 1994

3-8 Tonnage of Government-Owned Fleets Trading to the United States, 1990 and 1994

3-9 Tonnage of Oil Company Fleets Trading to the United States, 1990 and 1994

3-10 Change in Ownership of U.S. Trading Fleet by Coast, 1990 and 1994

3-11 U.S. Flag Vessels Sold or Scrapped, 1990—1995

4-1 Additional Fleet Capacity in Million DWT after Adoption of HBL

4-2 Two-Tier Markets after OPA 90

4-3 Tanker Fleet and Orderbook as of July 1, 1996

4-4 Number of Shipbuilding Berths or Docks for Vessels Exceeding 40,000 DWT

4-5 Tanker Newbuilding Prices as of April 1, 1996

4-6 Increased Cost of Building the Double-Hull Fleet

4-7 Comparison of Maintenance and Repair Costs ($/DWT/year) for Double-Hull and Single-Hull Tankers by Vessel Type

4-8 Increase in Operating Costs for Double-Hull Tankers

4-9 Incremental Costs of Double-Hull Fleet

4-10 Break-Even Special Survey Costs ($ million) for Pre-MARPOL Tankers in International Trade

5-1 Jones Act Tank Vessel Fleet by Hull Type

5-2 Projected ANS Crude Oil Exports

5-3 Product Supply Methods to the Eastern United States (MBD) 1993

5-4 Number of U.S. Industry Vessel Building Slots

5-5 Special Survey Break-Even Costs ($ million) for Jones Act Tank Vessels

5-6 Cost Impact of Early Retirement Due to Section 4115 on Jones Act Tank Vessel Fleet

6-1 Survivability Indices for Single-Hull and Double-Hull Tankers

6-2 Advantages and Disadvantages of Double-Hull Compared to Single-Hull Tankers

6-3 Comparison of Producibility Factors for Double-Hull and Single-Hull Tankers

6-4 Existing and Proposed Regulations Relating to Oil Outflow Intact Stability, and Survivability Performance of Double-Hull Tankers

E-1 Changes in Age of the U.S. Trading Fleet Based on Individual Ships by Ownership Category, 1990—1994

E-2 Changes in Age of the U.S. Trading Fleet Based on Port Calls by Ownership Category, 1990—1994

E-3 Size in Million DWT of the U.S. Trading Fleet by Age Range and Ownership Category, 1990 and 1994

H-1 Monthly Indices of Seasonal Variations in Crude Oil Exports, 1990—1995

H-2 Quarterly Indices of Seasonal Variations in Freight Rates of VLCCs Trading from Rotterdam, 1970—1995

H-3 Quarterly Indices of Seasonal Variations in Freight Rates of Suezmax Tankers Trading from the Arabian Gulf to Rotterdam, 1976—1995

H-4 Quarterly Indices of Seasonal Variations in Freight Rates of Aframax Tankers Trading from North Africa to Rotterdam, 1976—1995

H-5 Quarterly Indices of Seasonal Variations in Freight Rates of Product Tankers Trading from the Caribbean to the U.S. East Coast, 1976—1995

J-1 Data for Calculating the Cost of Tankers in International Trade ($ million)

J-2 Data for Calculating Costs for Jones Act Tankers ($ million)

K-1 Sizes and Hull Types of Tank Vessels Evaluated

K-2 Principal Particulars for 35,000 DWT—50,000 DWT Tankers

K-3 Oil Outflow Evaluation for 35,000 DWT—50,000 DWT Tankers

K-4 Survivability Evaluation for 35,000 DWT—50,000 DWT Tankers

K-5 Intact Stability Evaluation for 35,000 DWT—50,000 DWT Tankers

K-6 Ballast Condition Evaluation for 35,000 DWT—50,000 DWT Tankers

K-7 Principal Particulars for 80,000 DWT—100,000 DWT Tankers

K-8 Oil Outflow Evaluation for 80,000 DWT—100,000 DWT Tankers

K-9 Survivability Evaluation for 80,000 DWT—100,000 DWT Tankers

K-10 Intact Stability Evaluation for 80,000 DWT—100,000 DWT Tankers

K-11 Ballast Condition Evaluation for 80,000 DWT—100,000 DWT Tankers

K-12 Principal Particulars for 135,000 DWT—160,000 DWT Tankers

K-13 Oil Outflow Evaluation for 135,000 DWT—160,000 DWT Tankers

K-14 Survivability Evaluation for 135,000 DWT—160,000 DWT Tankers

K-15 Intact Stability Evaluation for 135,000 DWT—160,000 DWT Tankers

K-16 Ballast Condition Evaluation for 135,000 DWT—160,000 DWT Tankers

K-17 Principal Particulars for 265,000 DWT—300,000 DWT Tankers

K-18 Oil Outflow Evaluation for 265,000 DWT—300,000 DWT Tankers

K-19 Survivability Evaluation for 265,000 DWT—300,000 DWT Tankers

K-20 Intact Stability Evaluation for 265,000 DWT—300,000 DWT Tankers

K-21 Ballast Condition Evaluation for 265,000 DWT—300,000 DWT Tankers

K-22 Principal Particulars for Oceangoing Barges

K-23 Oil Outflow Evaluation for Oceangoing Barges

K-24 Survivability Evaluation for Oceangoing Barges

K-25 Allowable Still-Water Bending Moments as a Percentage of the ABS Standard Value

FIGURES

1-1 History of marine oil transportation and related legislation

1-2 Waterborne crude oil imports and domestic crude oil production, 1973—1994

1-3 Growth in international marine oil transportation, 1900—1993

1-4 Oil tanker fleet development, 1971—2000

1-5 Basic tank vessel designs

2-1 Number of oil spills and volume of spillage in U.S. waters, 1973—1995

2-2 Volume of oil spilled from tankers and barges in U.S. waters, 1973—1995

2-3 (a) Volume of oil spilled from tankers in U.S. waters and causes of spillage, 1991—1995. (b) Volume of oil spilled from barges in U.S. waters and causes of spillage, 1991—1995

2-4 Probability of zero outflow for single-hull and double-hull tankers

2-5 Effect of Section 4115 and IMO Regulations 13F and 13G on eligibility of existing vessels to operate in U.S. waters

2-6 Growth in petroleum tonnage in U.S. waters carried in double-hull vessels

3-1 Projections of U.S. crude oil imports through 2015

3-2 Projections of U.S. Gulf Coast lightered and deepwater port crude oil imports through 2015

3-3 Scrapping profile for the world fleet, 1990—1995

3-4 Age of tankers scrapped from world fleet, 1990—1995. (a) < 150,000 DWT. (b) 150,000 DWT

3-5 Freight rates and total tonnage scrapped from world fleet, 1982—1995

3-6 Deletions from world fleet due to OPA 90 and MARPOL, with and without lightering exemption for vessels of more than 150,000 DWT

3-7 Tonnage carried by vessels trading to the United States, by age of vessel for 1990 and 1994

3-8 Estimated scrapping profile for tankers trading to the United States

3-9 Changes in tonnage, by ownership category, for U.S. trading fleet between 1990 and 1994

3-10 Changes in number of port calls, by ownership category, for U.S. trading fleet between 1990 and 1994

4-1 Capacity of international tanker fleet by hull type as of October 1995

4-2 Age profile of international tanker fleet as of October 1995

4-3 Impact of OPA 90, Section 4115, on size of international tanker fleet eligible to trade in U.S. waters

4-4 Impact of MARPOL 13G on the size of the international tanker fleet

4-5 Impact of HBL alternative on the size of the international tanker fleet through 2015

4-6 Impact of MARPOL 13G on the international tanker fleet by size category through 2015

4-7 International tanker oil flows, 1995—2005

4-8 Interregional crude oil exports by region, 1995—2005

4-9 Tanker requirements for transportation of crude oil and petroleum products, 1994—2005

4-10 Aggregate supply-demand tanker balance with and without HBL, 1995—2005

4-11 Tanker newbuildings required under MARPOL 13G for 1995—2005 with and without HBL

4-12 International tanker requirements for all size segments, 1995—2005

4-13 International tanker requirements for individual size segments, 1995—2005

4-14 RFR by market segment, 1992—1996

4-15 Increase in shipbuilding capacity by geographic area, 1990—2000

4-16 Comparison of shipbuilding capacity and forecast newbuildings—European estimate

4-17 Comparison of shipbuilding capacity and forecast newbuildings—Japanese estimate

4-18 Estimated shipyard revenues for newbuildings, 1995—2006

4-19 Generalized distribution of scrapping

5-1 Age profile of Jones Act fleet

5-2 Jones Act tank vessel supply (vessels of more than 50,000 DWT)

5-3 Jones Act tank vessel supply (vessels of less than 50,000 DWT)

5-4 Jones Act tank vessel supply (tank barges and ITBs)

5-5 Forecasts of Alaskan oil production

5-6 ANS crude oil trade supply and demand

5-7 ANS crude oil supply and demand with alternative demand forecast, 1996—2005

5-8 ANS newbuilding conundrum

5-9 Jones Act tank vessel coastal product supply and demand

5-10 Comparison of historical scrapping pattern and OPA phaseout age for Jones Act tanker fleet

5-11 Average age of U.S.-flag tankers when scrapped

6-1 Probability of zero outflow for single-hull and double-hull tankers

6-2 Mean outflow for single-hull and double-hull tankers

6-3 Variation in mean outflow with longitudinal subdivision for double-hull tankers

6-4 Extreme outflow for single-hull and double-hull tankers

6-5 IMO pollution Index E for single-hull and double-hull tankers

6-6 Probability of zero outflow for single-hull and double-hull tank barges

6-7 Mean outflow for single-hull and double-hull tank barges

G-1 Quarterly average of daily time charter rates for VLCCs operating from the Arabian Gulf to Rotterdam

G-2 Conceptual VLCC supply function

G-3 VLCC time charter equivalent rates for 1988 and 1989

K-1 Cargo tank arrangements

K-2 Ballast tank arrangements

K-3 Longitudinal extent of grounding damage

K-4 IMO reference double hulls

K-5 Variation in intact stability

K-6 Effect of levels of internal subdivision on free surface effect

K-7 Effect of levels of liquid in tanks on free surface effect

K-8 Stability characteristics of a vessel

K-9 Typical arrangements for 50,000 DWT tanker

K-10 Typical arrangements for 80,000 DWT tankers

K-11 Typical arrangements for 150,000 DWT tankers

K-12 Typical arrangements for 280,000 DWT tankers

K-13 Typical arrangement for double-hull oceangoing barges

K-14 Probability of zero outflow for single-hull and double-hull tankers

K-15 Mean outflow for single-hull and double-hull tankers

K-16 Mean outflow data for 150,000 DWT double-hull tankers

K-17 Mean outflow for double-hull tankers with and without centerline bulkheads

K-18 Extreme outflow for single-hull and double-hull tankers

K-19 IMO pollution prevention Index E for single-hull and double-hull tankers

K-20 Mean outflow for single-hull and double-hull barges

BOXES

2-1 U.S. Port-State Control Initiative

2-2 Ship Inspection Report (SIRE) Program

6-1 Typical Cargo Tank Arrangements

6-2 Typical Ballast Tank Arrangements

Executive Summary

The passage of the Oil Pollution Act of 1990 (OPA 90) by the U.S. Congress and subsequent modifications of international maritime regulations—namely, the addition of Regulations 13F and 13G to the International Convention for the Prevention of Pollution from Ships, adopted in 1973 and amended in 1978 (MARPOL 73/78)—resulted in a far-reaching change in the design of tank vessels: double-hull rather than single-hull tankers are now the industry standard. Section 4115 of OPA 90 excludes single-hull tank vessels of 5,000 gross tons or more from U.S. waters from 2010 onward, apart from those with a double bottom or double sides, which may be permitted to trade to the United States through 2015, depending on their age. Commencing in the year 2000, however, all Aframax and most Suezmax tankers¹ without double bottoms or double sides that exceed 23 years of age will be barred from U.S. trade. An exemption to OPA 90 allows single-hull vessels to use U.S. deepwater ports or lightering areas² until 2015. The international fleet governed by MARPOL is to be composed entirely of double-hull vessels (or approved alternatives) no later than 2023. Thus, nearly all vessels in the world maritime oil transportation fleet are expected to have double hulls by about 2020. The proportion of double-hull tankers in the world fleet increased from 4 percent in 1990 to 10 percent in 1994. This percentage is expected to grow rapidly between now and 2000 as new double-hull vessels replace many of the single-hull tankers constructed during the building boom of the mid-1970s.

PROTECTION OF THE MARINE ENVIRONMENT

The promulgation of OPA 90 was in large part a response to public concern over the 1989 Exxon Valdez incident, in which more than 11 million gallons of crude oil were spilled into Alaskan waters. Such incidents involving spillage of more than a million gallons of oil have dominated spill statistics over the past two decades and have focused public attention around the world on the potential hazards of oil spills from large tankers. Compared to earlier five-year periods, there was a decline in the quantity of oil spilled from vessels in U.S. waters³ in the period 1991 to 1995, as well as a reduction in the number of spills of more than 100 gallons. In particular, there were no oil spills of greater than a million gallons from tank vessels in U.S. waters. Between 1991 and 1995, tankers accounted for only about 10 percent of the total oil spilled from vessels in U.S. waters. In contrast, inland and oceangoing barges together accounted for approximately half the total spillage from vessels and were involved in the majority of oil spills in U.S. waters during this period.

The reduction in oil pollution in U.S. waters between 1991 and 1995 cannot be attributed to the requirements of Section 4115, notably the double-hull mandate and the operational and structural requirements aimed at reducing the outflow of oil following incidents that involve single-hull tank vessels. The first compulsory retirements of single-hull vessels did not occur until 1995, and the final rules on operational and structural requirements were not issued until July 1996 and January 1997, respectively. Thus, the timing of actions relating to Section 4115 precludes the possibility that they had a significant impact on oil spills in U.S. waters between 1991 and 1995. Nonetheless, the committee's analytical comparison of double-hull and single-hull designs indicates that properly designed double hulls are potentially more effective than single hulls in preventing and mitigating oil outflow after a vessel casualty. As discussed later, some double-hull vessels (mostly less than 160,000 DWT [deadweight tons]) currently operating—specifically those without longitudinal subdivision through the cargo tanks—will not provide the enhanced environmental protection in all accident scenarios that would be provided by properly designed double hulls.

In the view of the committee, the reduction in oil spillage in U.S. waters between 1991 and 1995 was the result of a number of actions that are in process or emerging, notably: an increased awareness among vessel owners and operators of the financial consequences of oil spills and a resulting increase in attention to policies and procedures aimed at eliminating vessel accidents; actions by port states to ensure the safety of vessels using their ports; increased efforts by ship classification societies to ensure that vessels under their classification meet or exceed existing requirements; improved audit and inspection programs by charterers and terminals; and the increased liability, financial responsibility, and other provisions of OPA 90. There is a general perception within the maritime oil transportation community that the quality of vessels trading to the United States has improved in recent years, although the data available to the committee were insufficient to demonstrate any such improvement.

DESIGN OF DOUBLE-HULL TANK VESSELS

On the basis of its analytical comparison of single-hull and double-hull designs using probabilistic outflow methodology, the committee concluded that in the event of an accident involving a collision or grounding, an effectively designed double-hull tanker will significantly reduce the expected outflow of oil compared to that from a single-hull vessel. Similar analytical results were obtained for oceangoing barges. The committee concluded that complete conversion of the maritime oil transportation fleet to double hulls will significantly improve protection of the marine environment.

Despite the potential advantages of double hulls, not all double-hull vessels designed or built since 1990 provide the environmental protection and safe operation that were anticipated when the double-hull mandate was adopted. Certain designs, most notably those with "single-tank-across" cargo tank arrangements,⁴ may exhibit excessive oil outflow following an accident and encounter intact stability⁵ problems during cargo transfer operations even though they are in full compliance with design regulations of the International Maritime Organization (IMO) and major classification societies as of July 1997. The committee's analysis indicated that double-hull tankers with single-tank-across cargo tank arrangements have approximately twice the projected average outflow of tankers with longitudinal subdivision through the cargo tanks and also perform less well in the case of extreme outflow than single-hull vessels of pre-MARPOL or MARPOL design. In addition, of the nineteen double-hull designs analyzed, four—all with single-tank-across cargo tank configurations—can potentially become unstable during load and discharge operations. Several incidents involving instability of double-hull tankers at terminals in the United States and overseas have been reported. Intact stability and outflow concerns are significant because more than half of the vessels of less than 160,000 DWT in the current fleet of double-hull tankers have single-tank-across cargo tank arrangements.

These potential problems demonstrate clearly that the national and international design guidelines originally developed for single hulls are not suitable for double-hull designs. The committee is concerned that the United States, having taken the lead in mandating double hulls for vessels operating in its waters, has not assumed a leadership role in developing the technical guidelines needed to properly implement the legislation. Given the large number of new double-hull tankers likely to enter service within the next few years as tankers constructed during the mid-1970s boom are retired, there is a need to implement additional design guidelines as soon as possible. The use of performance-based design criteria would take account of the variations in performance of different double-hull designs and provide flexibility in developing potentially superior designs.

IMO has acted recently to address intact stability issues for both new and existing double-hull vessels. MARPOL Draft Regulation I/25A(2) establishes a "design-only" requirement to ensure the intact stability of new vessels; operational measures or a combination of design and operational measures are not acceptable options. The Marine Environment Protection Committee of IMO will circulate the draft regulation with a view toward adoption in September 1997. If the draft regulation is adopted, enforcement is expected in February 1999. In addition, an IMO circular⁶ provides guidance on the operational measures needed to ensure adequate intact stability for existing double-hull tankers.

Outflow regulations are currently under development at IMO. The committee considers new design guidelines for outflow essential to ensure that the potential for environmental protection afforded by double-hull designs is fully realized in all new vessels.

The tanker owners and operators surveyed by the committee reported significant differences between double-hull and single-hull tankers in terms of operational safety, inspection and maintenance, and cargo operations. Despite some concerns about access to and ventilation of ballast spaces and about intact stability, industry representatives generally believe that double-hull tankers can be operated safely, albeit with additional resources and more attention than are needed to operate single-hull tankers. In the view of the committee, mandatory operational measures are necessary to ensure the safe operation of existing double-hull tankers with single-tank-across cargo tank arrangements.

Recommendation. The U.S. Coast Guard (USCG) should expand and expedite research efforts and cost-benefit evaluations necessary to develop rules appropriate for the design of double-hull tankers and tank barges. The following are of particular importance:

• Design requirements should include an assessment of intact stability throughout the range of loading and ballasting conditions to identify potentially unstable conditions. Following the lead taken by IMO and to provide consistency with anticipated international requirements, adequate intact stability should be achieved by design.

Design rules should be implemented as soon as possible—if necessary in interim form—to ensure that all new double-hull tank vessels entering service do not pose a safety risk because of poor intact stability characteristics and have adequate internal subdivision to take full advantage of the spill-mitigating capabilities of double hulls.

Recommendation. The USCG should develop and implement operational procedures for existing double-hull tanker designs subject to intact stability problems. Such procedures should ensure adequate stability at all times during cargo transfer operations and should include appropriate crew training. Consistency between procedures for vessels in U.S. waters and corresponding international procedures is highly desirable.

OPERATIONAL MAKEUP OF THE MARITIME
OIL TRANSPORTATION INDUSTRY

Aside from an increase in the proportion of double-hull tankers in the world fleet between 1990 and 1994, the committee could not definitively attribute changes in the makeup of the maritime oil transportation fleet since 1990 to either OPA 90 or MARPOL 13F and 13G. Growth in the percentage of independent ownership in both the world and the U.S. trading fleets, primarily at the expense of oil company ownership, reflects a decision by some major oil companies to leave the tanker business, in large part to avoid high-liability exposure as well as for other economic reasons. The vessel size distribution of the fleet trading to the United States has changed because of an increase in short- and medium-haul oil imports from Latin America and the Caribbean, which are carried in vessels of 80,000 to 150,000 DWT, and a reduction in long-haul oil imports from the Middle East, which are carried in very large crude carriers (VLCCs) of 200,000 DWT or more. Changes in the age distribution of the fleet trading to the United States reflect both the aging of vessels built during the boom of the mid-1970s and the relatively large number of newly constructed VLCCs. Vessels between 20 and 24 years of age and those up to 4 years of age carried more tonnage in 1994 than they did in 1990.

OPA 90 and MARPOL 13F and 13G have not yet had a significant impact on the age of vessels trading to the United States. Before the implementation of OPA 90, few vessels over 25 years of age traded to the United States. This situation may change, however, as a result of the aging of the VLCC fleet, the deepwater port and lightering zone exemption of OPA 90, and actions by other nations (such as Japan and Korea) to prevent or discourage older vessels from calling at their ports. It is probable that under the OPA 90 exemption, large single-hull vessels up to 30 years of age will operate to the United States through 2015 (see below). Measures will be needed to ensure that such vessels are adequately maintained and that their operation does not pose an unacceptable risk to the marine environment.

Recommendation. The USCG should implement a vessel surveillance program to ensure that the physical condition, maintenance, and operating procedures of vessels that are permitted to discharge their cargo offshore, but are barred from shore ports by the phaseout provisions of Section 4115, are held to appropriate levels. For example, the frequency and standards of inspection defined in the Port State Inspection Program and applied to vessels using non-offshore ports might also be applied to vessels using lightering areas and the U.S. deepwater port.

ECONOMIC VIABILITY OF THE MARITIME
OIL TRANSPORTATION INDUSTRY

International Tanker Fleet

The impact of the double-hull requirement on the international tanker industry will be driven by MARPOL 13F and 13G and by Section 4115 of OPA 90. Although the latter will gradually bar single-hull tankers from trading to the United States, it will not necessarily force them into retirement from non-U.S. trade. MARPOL 13G, on the other hand, mandates the retirement of all single-hull tankers in international trade at 30 years of age. To trade beyond 25 years of age, pre-MARPOL tankers must retrofit protectively located spaces or make use of hydrostatically balanced loading (HBL)⁷ in selected cargo tanks.

If historical trends continue, many tankers in international trade are likely to be scrapped before their statutory (MARPOL) retirement dates. In other words, their life expectancy will not be affected by legislation requiring double hulls. However, the economic factors influencing tanker lifetime may change, in part because of the double-hull mandates of MARPOL and OPA 90. The capital cost of a double-hull tanker is estimated to be 9 to 17 percent higher than that of a corresponding single-hull tanker, and operating and maintenance costs run 5 to 13 percent higher.

In the light of these increased costs, some owners of single-hull VLCCs and other large tankers that can trade economically to the U.S. deepwater port and lightering areas are expected to adopt HBL as a means of extending the operating life of their vessels from 25 to 30 years. The combination of HBL and the deepwater port and lightering zone exemption has virtually nullified the OPA 90 age requirement for large single-hull tankers (150,000 DWT and more) that use HBL and are suitable for unloading within U.S. lightering areas or at the deepwater port. Without the OPA 90 exemption, such vessels over 25 years of age would be excluded from U.S. waters after 2010. Without the option of HBL life extension from 25 to 30 years (permitted by MARPOL 13G but not by OPA 90), such vessels would be excluded from international trade and would not be able to take on cargo for delivery to the United States. Smaller single-hull tankers, particularly those for which unloading offshore is not economical, may be forced into scrapping before the end of their expected economic life. Single-hull tankers of between 60,000 and 150,000 DWT (without double bottoms or double sides) will be excluded from trade to the United States when they reach 23 or 25 years of age, in accordance with the phaseout schedule of Section 4115.

The committee estimates that the cost of replacing the current single-hull world trading fleet of about 3,000 tankers—aggregating 280 million DWT—with new double-hull vessels and operating them through one 20-year life cycle will be about $30 billion greater than building and operating an equivalent single-hull fleet. This additional cost equates to approximately 10 cents per barrel of oil transported or about one-tenth of the cost of transportation, which is itself about 5 to 10 percent of the delivered cost of oil. Although current shipyard capacity is more than adequate to meet the world demand for new double-hull tankers, existing freight rates are insufficient to meet the full operating and construction costs of such vessels. Thus, freight rates are expected to rise as the industry transitions to double hulls. Given higher freight rates, the financial community expects that sufficient capital will be available to fund the conversion.

U.S. Domestic (Jones Act) Tank Vessel Trade

The impact of the double-hull requirement on the domestic (Jones Act) fleet⁸ is expected to be much greater than its impact on the international tanker fleet. One reason for this is that the construction costs of Jones Act vessels are significantly higher than those of vessels in the international fleet, regardless of whether a vessel has a single or a double hull. Unlike vessels in the international fleet, Jones Act vessels will generally reach their mandated retirement dates before reaching the end of their economic life. A second reason is that there is considerable uncertainty over future demand for vessels in both the Alaskan crude oil trade and the coastal products trade. A decline in demand may not provide a sustained freight level over the vessel's life sufficient to recover investment in double hulls. Hence, new construction or the conversion of single-hull vessels to double hulls will be discouraged, even though adequate shipyard capacity is available for these purposes.

The economic burden on the Jones Act fleet of transitioning to double-hull vessels and the resulting impact on domestic waterborne transportation capability—including possible disruptions in the supply of crude oil and products—are in urgent need of further review. In particular, concerns over national defense and the ability to meet the energy needs of the Northeast under extraordinary circumstances, such as severe winter weather and pipeline or refinery disruption, have to be addressed. The effect of uncertainties about the future state of the Jones Act market regulations should be included in the assessment.

Recommendation. The policy issues associated with the potential loss of domestic waterborne transportation capability should be carefully examined within the context of the double-hull mandate of Section 4115 and the committee's finding that properly designed double-hull vessels—including barges—are expected to offer enhanced environmental protection compared to single-hull designs. This examination should be undertaken by an independent body and should address the perspectives of all stakeholders, including tank vessel owners and operators, the oil industry and oil consumers, environmentalists, and state and federal regulators. The study should be initiated as soon as possible to ensure that policy determinations are made prior to potential supply disruptions or inefficient economic decisions.

NEED FOR BETTER DATA

The committee's analysis of oil spills in U.S. waters was complicated by difficulties in obtaining complete and reliable data. The USCG oil spill database is not readily available, even to technically competent, bona fide organizations interested in assessing progress in reducing the occurrence and severity of oil spill incidents. Data are of variable quality from year to year, in part because of major shifts in data system structure and emphasis over time. In the judgment of the committee, improvements in the USCG database in terms of consistency, completeness, and accessibility would be beneficial not only in quantifying progress toward national environmental goals but also in developing future regulations and facilitating industry planning.

The committee's efforts to identify changes in the quality of vessels trading to the United States since the promulgation of OPA 90 were also hampered by data deficiencies, including limitations in the USCG port-state inspection database. Many of the data available are subjective in nature, and it was difficult to establish valid comparisons between data for different years because of a lack of consistent metrics. An absence of data on individual vessels and operators also hindered the committee's assessment.

Recommendation. The USCG should ensure that its oil spill database—including information on cause—is capable of facilitating the analysis of trends and the comparison of accidents involving oil spills. This would benefit the development of future regulations aimed at preventing oil spills and would facilitate industry planning.

Recommendation. The USCG should ensure that its port-state inspection database permits meaningful comparisons and analyses of current and future port-state activities, particularly in regard to identification and assessment of trends in the quality of the tank vessel fleet.

NOTES

¹The size ranges for Aframax and Suezmax tankers are commonly defined as being 80,000 to 105,000 DWT (deadweight tons) and 120,000 to 165,000 DWT, respectively. The upper size limits, however, are sometimes quoted as 120,000 DWT for Aframax tankers and 200,000 DWT for Suezmax tankers.

²Lightering is the process of transferring cargo at sea from one vessel to another.

³U.S. waters are defined as waters subject to the jurisdiction of the United States, including the Exclusive Economic Zone.

⁴Such designs do not have longitudinal bulkheads through the cargo tanks.

⁵Stability when no damage has occurred is known as intact stability.

⁶The circular, entitled "Guidance on Intact Stability of Existing Tankers During Liquid Transfer Operations," does not constitute a regulation.

⁷For HBL, the level of cargo (e.g., crude oil) is limited to ensure that the hydrostatic pressure at the tank (and ship) bottom is less than the external sea pressure. Thus, if the tank is breached, seawater will flow in rather than oil flowing out.

⁸Under the terms of the Jones Act, shipping between any two points in the United States, including the movement of Alaskan oil, is restricted to U.S. registered vessels owned by U.S. citizens, crewed by U.S. seafarers, built in the United States without construction differential subsidies, and operated without operating differential subsidies.

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COMMITTEE ON OIL POLLUTION ACT OF 1990 (SECTION 4115) IMPLEMENTATION REVIEW