nov2010 news
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nov2010 newsTRANSCRIPT
Port Bureau News Port Bureau News November 2010 www.txgulf.org
What’re Wrong with These Pictures?
Spotlight on Don Welch
Managing Partner—Midpoint Partners, LLC
Bilge Management & MARPOL
Bill Diehl
Jeannie Angeli
Al Cusick
Cristina Gomez
Janette Molina
Patrick Seeba
John Smith
Board of Directors *Tom Marian—Chairman
*Dennis Hansell—1st Vice Chair.
*Mike Drieu—2nd Vice Chair.
*John Taylor—Secretary /Treas.
*Robert H. Blades
*Alec Dreyer
*Charles H. Flournoy
*Thomas C. Pace
*Capt. John G. Peterlin III
*Richard Russell
*Steve Stewart
*Nathan Wesely
Jim Black
Ken Burnett
Jan Crittenden
Celeste Harris
Jason Hayley
Kevin Hickey
Guy W. Hitt
Charlie Jenkins
Shareen Larmond
Kathy Murray
Jerry Nagel
Vinny Pilegge
Nolan Richardson
Lloyd Schwing
Earl Smith
Tim Studdert
Lawrence Waldron
Armando Waterland
Don Welch
Contents/Port Bureau Mission/Staff/Board of Directors 1
St Joseph Medical Center 2
Captain’s Corner 3
2010 Captain’s Cup Golf Tournament 4
Bilge Management & Inspection_ ___________ 5-7
Port Watch 8
Case Studies in MARPOL Violations 9-10
2010 Breakbulk Americas Conference 11
Spotlight on Don Welch—Midpoint Partners 12
October Commerce Club Photos 13
HarborLights Vessel Tracking Program 14
TWIC Card Replacement Update Back Cover
Port Bureau Staff
Our mission is to foster economic growth and regional cooperation across a diverse in-
terest of public and private stakeholders that rely upon or benefit from the commercial
synergy of the greater Houston port community
To be knowledgeable of all aspects of the port so that we can provide our members
information and assistance to grow their businesses.
Services
To our valued members, we provide:
Real-Time and Historical Vessel Traffic Information for Houston, and the Ports of Texas
Expertise, Consulting, and Assistance in Maritime Affairs
Business Relationships and Networking Opportunities in the Houston Port Community
Vision
Mission
Port Bureau News
1
Captain’s Corner “Protect our Environment and our Marine Lives”
In December, 2009, an engineer on the M/V Iorana passed a note to a Customs
and Border Patrol (CBP) officer, informing them of an illegal discharge of oily water from
the bilge tank. The Coast Guard later interviewed the engineer, who detailed how it was
done and requested governmental assistance – you can read the entire letter on page 9 of
the newsletter. As you’ll read, the shipping company was fined $4 million dollars with the
four whistleblowers dividing up $500,000.
I was recently in India, speaking with the Masters and Chief Engineers of Executive Ship Management
(a member company of the Port Bureau) about MARPOL compliance. They were holding their annual 3 day
officers’ seminar at their beautiful training facility in Lonavla, India, just north of Mumbai, focusing on ship
source pollution, bilge management techniques, and potential legal retributions. It was a great experience
for me to visit India and spend time with these international mariners that so frequently call on our port.
In this newsletter you’ll read a basic overview of some of the MARPOL topics we discussed and see
three cases that highlight the penalties incurred from committing a crime and then attempting to cover it
up. Even though less than 1% of all MARPOL cases investigated elevate to a criminal nature, when they do
they have a sizable impact on the company. As I explained to the mariners, environmental management
must become part of your corporate culture; if you lie about an incident, coerce others into lying about an
incident, or cover up evidence, you will be held liable with the potential for criminal prosecution.
In the letter the engineer on the M/V Iorana wrote, he begged the inspectors to “protect our envi-
ronment and our marine lives.” Take that with a grain of salt if you’d like, given the amount of money he
made off the report, but the point is valid: we
have an inherent duty to protect our environ-
ment. Do it because of the imposing fine that
looms on the horizon, do it because of how tar-
nished your public reputation can be after a $4
million dollar lawsuit, or do it because it’s the
right thing to do, but, whatever the reasoning
behind it, we must all take responsibility for the
stewardship of the waters we do
business on. –Bill Diehl, GHPB 3
2010 Captain’s Cup
Thank you to all our
Sponsors & Participants
Aaron Oil
Accutrans
Alexander/Ryan Marine
Alliant
Amegy Bank
Baumann Marine Service
Bell Ryniker & Latourneau
Blessey Marine Services
Bludworth Marine
Briggs & Veselka Company
Buffalo Marine Service
CLM Towing, LLC
Coating Systems & Supply
Cummins
Danner’s Inc.
ECHO Marine, LTD
Emerson
EmKay Marine Services, LLC
Frost National Bank
Garner Environmental
Gulf Winds International
HDR
Hines Furlong Line, Inc.
Houston Fuel Oil Terminal
Houston Mooring Company
Houston Pilots
HUMANA Inc.
J2S Services
John Bludworth Shipyard
Kirby Inland Marine, LP
Marine Compliance
Marine Healthcare Services
Moran Gulf Shipping
Port Terminal Railroad Assn.
Port of Texas City
Rickmers Linie (Americas)
Rio Marine, Inc.
SAVAGE Marine
Sneed Shipyard
Southwest Ocean
Southwest Shipyard
Suderman & Young Towing
Team Services
Texas Mooring, Inc.
Trinity Marine Products, Inc.
Vopak Terminals
Wells Fargo
Wholesale Electric
What is MARPOL?
MARPOL, or the International Convention for the Pre-vention of Pollution from Ships 73/78 publishes a set of regula-tions to address marine pollution on the high seas. The inter-national accords address dumping, oil pollution, and represent 169 countries, including over 98% of the world’s vessel ship-ping tonnage.
MARPOL annexes address six areas of focus including: I. Oil II. Noxious Liquid Substances Carried in Bulk III. Harmful Substances Carried in Packaged Form IV. Sewage V. Garbage VI. Air Pollution
MARPOL is a series of international agreements which bind the member countries to enforce agreed-upon standards. In the United States, the MARPOL agreements are codified into the Federal Water Pollution Control Act, the Oil Pollution Act, the Comprehensive Environmental Response Compensation and Liability Act, and the Act to Prevent Pollution from Ships. The US Coast Guard, with the right to inspect and examine vessels upon the high seas for the purpose of suppressing violations of US law, is tasked with boarding vessels to ensure compli-ance with US laws and regulations. Because the costs of sludge and oil disposal is high and oily water separators and incinerators have a tendency to be difficult and costly to maintain, inspectors realize there is a temptation for vessel owner/operators to cut corners and discharge their waste at sea.
What Happens During an Inspection?
The Coast Guard marine inspection team generally begins their inspection by going to talk to the Master of each vessel. The inspecting officer then takes an initial look at the vessel’s documentation such as their certificates, deck log, and equipment logs. The inspection then moves into the engine room, where the inspector will usually ask to run the equipment such as the vessel’s oily water separator
Bilge Management
5
Keeping Your Engine Room Clean
What do the regulations say?
For all oil tankers and any other vessel over
400 GRT, discharge of oil from machinery
spaces is PROHIBITED except when the fol-
lowing conditions are met:
1) Ship must be proceeding en route
2) The oil content of discharged effluent
must be less than 15 parts per million
3) The ship must have, in operation, an oil
discharge monitor & control system, oily
water separating or filtering equipment
4) Bilge water cannot be mixed with oil car-
go residue or cargo pump room bilges
or incinerator.
During an in-spection, the in-specting officer pays attention to the first impressions he gets of a vessel, the atti-tudes of on-board personnel, vessel equipment and any inconsistencies that can be found. The Master and Mates are professionals, so
the inspector expects and assesses their knowledge of the ship’s condition and equip-ment. Appraising the condition of machinery, the inspector will carefully watch the ship’s crew when running equipment to make sure the engineering team is profi-cient in following procedure and safety requirements. The inspection team also will take account of spares and
machine parts on board to see if they are consistent with the vessel’s re-ported equipment usage.
Common problems during an inspection have to do with inconsist-encies between vessel written records and the observed state of equip-ment. For example, if records indicate that the incinerator has been in constant operation during a particular voyage, however there are no ma-chine spares on board, and no record of alarms or equipment failures, the inspector will begin to look further into the pattern of fuel usage, accumu-lated oil records, and discharge reports.
But How Would Inspectors Ever Know?
The rate of fuel consumption versus oil/sludge creation can be mathe-matically modeled. In the same manner, the rate of burning/separation and discharge can be calculated and tracked. After calculating fuel usage and sludge buildup, an inspector can analyze the records visually on a graph and have a vis-ual record of inconsistencies. This is another clue that spurs the inspecting officer to take a closer look at the engine room, machinery, and question the crew more thoroughly.
What If I don’t Comply?
When an inspector finds a discrepancy and begins an investigation, the Coast Guard has several avenues to address the grievance:
Notice of Violation: A notice of violation, also known as an NOV or Ticket, and operates much like a moving violation in a motor vehicle written out by traffic police. There are instructions that include the penalty assessed and the proce-dure for appeal.
Class I/II & Judicial Civil Penalties: Civil penalties that can be assessed come with
(Continued on page 7)
a graduated scale of maximum penalties and are generally measured by a dollar amount per barrel of oil or report-able quantity of a hazardous substance.
Criminal Prosecution: When engaging in criminal prosecution, the Coast Guard gathers as admissible evidence for prosecution, maintains a chain of custody of all relevant material, and attempts to prove beyond a shadow of a doubt that a crime has occurred. When this happens, the company is subject to large fines, and those persons re-sponsible can be subject to prison sentences. After criminal prosecution, the company is often subject to a lengthy probationary period which involves constant auditing and oversight over the company’s practices and policies.
The Coast Guard does not reach out puni-tively to discipline the hard working men and women of the sea. Rather, enforcement measures taken by the government are there to prevent egregious violations of US law and to safe-guard mariners. There are provisions in the law that reward operators who have problems and report them and then work to correct the system-ic problems that allowed them to occur in the first place. The government and regulators work to ensure that these destructive crimes against the environment are dealt with for if left unchecked,
they would threaten future generations, not only of mariners, but of nations and the world. –Patrick Seeba, GHPB 7
Three Quarters Down—Not Too Hot, Not Too Cold September’s vessel arrival numbers continued the regrouping trend that
seems to embody regional maritime commerce in 2010. Houston experienced its se-
cond-highest month for the year in terms of vessel arrivals with a very small increase
of less than 1% over the previous month. Yet, this was still noteworthy since Septem-
ber’s 30 days is a day shy of August. While there were only two other Texas ports
that experienced vessel arrival gains from August to September (i.e., Sabine up 13%
and Corpus Christi with a 8% increase), all of these ports – with the exception of Free-
port – are well above 2009’s numbers.
It is interesting to note that Sabine’s September arrivals which largely consists
of tank vessels was contrary to a decrease in tank vessel calls in the Ports of Houston,
Freeport and Texas City. Overall, the tank vessel calls appear to balance out lower
demand against firmer pricing that is most likely tied to the weakening dollar. Anoth-
er worthy bright spot in the numbers is the fact that Sabine put up its strongest numbers for the year and Corpus
Christi had its second strongest month.
Closer to home, the Port of Houston’s break bulk numbers were down 14% over the last month but saw a
gain of 12% on the bulk carrier side. Steel, chemi-
cals and containers were all very positive as each
category matched or exceeded last month’s per-
formance with chemical tank vessels leading the
charge. The fact that there appears to be more
than base inventory replenishment on the chemi-
cal products side of the ledger lends credence to
the notion that a recovery is at hand albeit mod-
est in nature.
Thus, as the final quarter of the year un-
folds, no big surprises appear to be in store as
consumers slowly re-enter the market place in
preparation for the holiday season. –Tom Marian,
Buffalo Marine Service
Port Watch Tom Marian—Buffalo Marine Service
Violating MARPOL Three Case Studies in Violation & Prosecution
Though many companies are taking specific, forward-thinking measures to ensure compliance with US & Internation-al laws, there are still organizations that take the chance that they won’t get caught. Furthermore, vessel owners, masters, and engineers that violate the law sometimes take their efforts a step farther and attempt to cover up their indiscretions. Though opinions differ on the egregiousness of environmental violations, the crimes of obstruction of justice, coercion, and destruction of evidence are simply not tolerated by judges and juries. Increasingly, the ability to bring criminal prosecutions against vessel masters and engineers responsible for discharges is raising the stakes for violating the law.
In January 2010, Customs & Border Protection inspectors in Baltimore boarded the M/V Iorana where they were passed a note asking inspectors to “protect our environment and our marine lives”. The note led inspectors to inspect the vessel’s oily water separator which was discovered to have used a 103 foot bypass hose to route oily discharge through the vessel’s boiler blow-down system and pump sludge overboard. After a crew member’s cellphone camera video revealed de-tails of the bypass, the vessel owners released this joint statement:
Approximately 23 cubic meters of oil contaminated sludge and bilge waste (approximately 6,000 gallons) were dumped overboard in December 2009 during the voyage from Gibraltar to Baltimore using the 103-foot bypass hose. The flanges where the bypass hose was connected were repainted before arriving in port in order to cover up tool marks caused when the bypass hose was connect-ed and disconnected. The bypass was used at night, and plastic bags filled with oil soaked rags used to clean the bilge tank, which was contaminated with sludge and cleaned with diesel fuel, were dumped overboard at night. Additional episodes of illegal discharges took place after the ship's first voyage in June 2009 and contin-ued through the middle of December 2009. … Senior ship officers made false statements to the Coast Guard, crew members were told to lie to the Coast Guard, and evidence of illegal dumping was destroyed.
The company, Irika Shipping, SA was fined $4 million of which $500,000 was distributed to the four whistleblowing crew members. The company was also sentenced to serve a five year probation which includes a detailed compliance and auditing program and oversight by court appointed inspectors.
“There should be no tolerance for those who deliberately despoil the environment” noted Judge Reginald Lindsay as he pronounced a record-setting $37 million dollar penalty against Overseas Shippinng Group (OSG) for criminal violations of the Clean Water Act, Oil Pollution Act, and the Act to Prevent Pollution from Ships as well conspiracy and obstruction of jus-tice.
Between 2001-2003, OSG deliberately con-cealed illegal discharges of sludge and oily waste by falsifying their oil record books and hiding the equip-ment used for their transgressions. During the three year investigation, OSG continued to commit criminal infractions on six different vessels. An example of the infractions from the Justice Department’s report:
“OSG made illegal releases of oily waste from approxi-
Case One: The M/V Iorana
Case Two: Overseas Shipping Group
mately August 2001 to October 2003 from the M/T Uranus into waters off the coast of New England, in close proximity to Maine and Massachusetts, including Mt. Desert Island and the island of Nantucket. Discharges were made from the M/T Uranus through a long flexible hose trailed overboard at night, then through a hard bypass pipe that the ship’s fitter was forced to make, and at a later point in time, by flushing an oil detecting sensor with fresh water. In another case, OSG violated the Clean Water Act by know-ingly discharging approximately 2,640 gallons of oily waste and sludge from the M/T Neptune off the coast of North Carolina.”
The case was assisted by crew members including an engi-neer from the M/T Overseas Shirley who testified that the ship’s chief engineer habitually discharged sludge in excess of 40,000 gallons to sea. Also testifying were crew members from
the M/T Ania, M/T Alcesmar, M/T Overseas Portland, and M/T Pa-cific Sapphire. In all, over 12 OSG tankers were found to have com-mitted criminal environmental violations, and the fine plus proba-tionary period is the largest fine issued to a shipper to date for envi-ronmental violations.
When the chief engineer and second engineer of the M/V Cygnus, a roll-on roll-off car carrier found to be discharging contami-nated oily water and sludge into the ocean, they were both sen-tenced to prison terms, followed by deportation. US officials found a flexible hose used to bypass the vessel’s oily water separator and fresh paint on the overboard valve where the crew had attempted
to cover up the evidence of their discharge. When asked by inspectors if the bypass hose was used for illegal discharge, Duk Jo Jeong, the chief engineer replied that no discharge had occurred, that all of the accumulated sludge had been burned off in the vessel’s incinerator. During the trial, Jeong admitted that this had been a false report and that all of the waste oil had been discharged into the ocean.
The number of cases for environ-mental violations is increasing. More notice-ably, other countries are prosecuting viola-tions of local laws that echo MARPOL agree-ments. Venezuela, the UK, Pakistan, Thai-land, France, Australia, Canada and Denmark are just a sample of the nations which have become increasingly aggressive in going after polluters. Several states, including Ger-many, the UK, and the Netherlands have been publically active in pursuing satellite surveillance programs that allow regulators to watch vessels pollute on the high seas. In 2002, a member of Boyang Marine’s corporate board was prosecuted on the grounds that he had knowledge of the violations. In the same prosecution, the Master of a Boyang vessel was sentenced to six months in prison. As enforcement strategies tighten and penalties increase, vessel owners and operators are under increasing pressure to ensure their own compliance—lest they be held responsible for and subject to civil and criminal penalties. –Patrick Seeba, GHPB
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Case Three: M/V Cygnus
Growing Trends
With over 3,800 attendees and 265 exhibitors, the 21st
Annual Breakbulk Transportation Conference & Exhibition held
at the George R. Brown Convention Center was a resounding
success. Planned in Houston for the first time, the 2010 Break-
bulk Conference’s exhibitors included Port Bureau members
American Shipping and Chartering, Bertling Logistics, Ceres,
Chipolbrok, Clipper, Gulf Stream Marine, Intermarine, Morris
Export Services, the Port of Brownsville, the Port of Galveston,
the Port of Houston Authority, Ports America, Richardson Ste-
vedoring & Logistics, Rickmers-Linie, and SSA Marine.
During the two-and-a-half day event, attendees heard
speakers such as David Hammerle from Bechtel, and Robert Drew from
Tata Steel International as well as panel discussions about the role of
freight forwarders in logistics management, the outlook for heavy-lift/
project cargo, capital investment in South America, and evolving con-
tract strategies. Side sessions and impromptu meetings also sprang up
around the exhibit hall and conference facility.
As a transportation hub of both sea and air traffic, the Houston
conference offered companies the opportunity to easily bring employ-
ees from around the world and the wide spectrum and background of attending organizations was striking.
Not only did the 2010 conference boast a record number of attendees, but the tone and tenor of the week was
set by a businesslike environment. Starting with boat tours of the
Houston Ship Channel aboard the M/V Sam Houston, a business
run, golf tournament, and opening reception, sponsors such as
the Port of Houston Authority also insured that interested cus-
tomers were able to see and sample the Houston area industry
and atmosphere. With steady traffic through the exhibition halls
on both days, professional networking and socialization was bal-
anced with discussions business discussions and plans to move
forward as an industry to meet future challenges.
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Chipolbrok representatives prepare for the exposition
GHPB Staff use HarborLights to show the scope and
diversity of cargo and traffic in the Houston Port Region.
Gulf Stream Marine demonstrates their
breakbulk capabilities and expertise
“It all comes down to developing your idea. After that it takes pa-tience, persistence and perseverance.” Born in Okmulgee, OK, an hour south of Tulsa and an hour southwest of the tank farms of Cushing, Don Welch has oil in his blood. His grandfather was a driller in Pennsylvania, and his great-grandfather worked on teams moving oilfield equipment at the beginning of the last century.
In his early teens Don moved to Alabama where he began his studies at the University of Alabama. After a few years, Don had to leave his econom-ics classwork to support his family. He began working for Phillips Pipeline Company loading trucks and railcars with gas and diesel at their Birmingham facility.
From Alabama, Don moved to Tampa where he worked as a clerk, then moved on to Arlington, TX. In 1977, Don found himself in Houston. As the Pasadena terminal superintendent for Phillips, Don learned the Houston pipeline system by listening to old timers detailing various connections and choke points. Today, he knows the complete labyrinth of pipelines in Houston as well as a taxi driver would know a city map. “If you’re not in the pipeline business, you may not realize that there are almost as many pipelines in the Houston area as there are roads”, notes Don.
In 1992, Don was transferred to St. Louis as a terminal superintendent, but three years later, he resigned that position to come back to Houston where he worked as the Vice President — Operations for Oiltanking Hou-ston.
In 2001, Don began full time consulting, working to streamline terminal operations and use efficiency stud-ies to improve customers’ processes. During this time, he got involved with Coastal Caverns, a partnership that developed salt domes in the Spindletop area in East Texas for use as underground storage facilities for liquid hy-drocarbons.
Then in 2005 Don founded Midpoint Partners, LLC. and brought in Stephen Senter and Blake Trahan, associ-ates from Don’s prior positions. Their company works to help its partners and clients capture new business, advise on operations, and develop long-term strategies and business plans. With their track record of success from com-panies such as Oiltanking, Magellan, Vopak, Phillips, and Chevron/Unocal, Midpoint Partners is focused on using their knowledge of the petroleum and pipeline facilities along the gulf coast to focus on safe and profitable trans-portation logistics.
Midpoint Partners specializes in developing green field terminal and pipeline assets that create value while maintain-ing high standards of performance and safety as well as acquir-ing interests and managing underutilized assets that will be transformed into earnings contributors. With access to capital and decades of experience, Midpoint Partners manages assets
by improving their marketing, business development, and operating plans to meet the needs of refining, mar-keting, and trading customers.
Don and his wife Germaine have been married for 29 years are proud of their eight children and twelve grandchildren. In addition to his work at Midpoint Partners, Don is active in the Greater Houston Port Bureau, where he served as Chairman of the Board from 2001 to 2006. After stepping down as Chairman of the Board, Don has remained active as a board member, and when he finds the time, enjoys travelling and playing a round or two of golf.
Spotlight on Don Welch Managing Partner—Midpoint Partners, LLP
12
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Where’s Your Information Coming From?
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Greater Houston Port Bureau
W H E N I S Y O U R S H I P C O M I N G I N ?
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WWW.TXGULF.ORG Greater Houston Port Bureau—111 East Loop North—Houston, TX—77029 713.678.4300
GREATER HOUSTON PORT BUREAU
111 East Loop North
Houston, TX 77029
713.678.4300 ph
713.678.4839 fax
www.txgulf.org
Do You Have a Damaged TWIC Card? Replace Your Card for $60.00
The USCG, PHA, and other agencies have been investigating malfunc-
tioning TWIC cards, and earlier this month, USCG Sector Houston-Galveston
issued a Marine Safety Information Bulletin to announce that TWIC holders
can replace their card for $60.00.
While waiting time for a replacement card is normally between five
and ten days, the damaged cards will remain active until the new cards are
picked up and activated. If you believe you need to replace your TWIC card
because of a damaged internal antenna which prohibits you from using the
card in a contactless mode, please contact 1-866-DHS-TWIC (1-866-347-
8942), or if you have questions, please contact LT Castaneda, USCG at 713-
671-5165.
Reaching 1200+ Professionals in
the Houston Port Region, contact
the Port Bureau at (713) 678 4300,
or [email protected] to arrange
for either 1/6 page, 1/2 page, full
page, or back cover advertise-
ments.
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