OPA '90 - The Oil Pollution Act of 1990

Crude Carriers & Product Tankers and Barges OPA '90 requires the complete replacement of single hulled tank ves- sels to be used in the U.S. petroleum crude and product carrier and related trades in five-year intervals at the end of 2005, 2010 and 2015. The current U.S.

flag tanker fleet is comprised of 103 vessels.

Sixty-seven of these are product tankers and 36 are crude carriers. Ten of these vessels are double hulled and of recent construction. The remaining 93 vessels will be phased out at the abovementioned five-year intervals. The replacement of Alaska crude carrier tonnage by the major energy companies involved in North Slope production is underway. The replacement of product carriers, the greater number of which are owned by independent operators, has hardly begun.

Alaska Crude Carriers General Dynamics, National Steel & Ship Building Company (NASSCO) has orders for four double-hulled 185,000 dwt tankers for British Petroleum's Alaska service with deliveries scheduled for 2003 through 2006. The purchaser holds options for two additional vessels.

Northop Grumman Ship Systems — Avondale, has a five vessel series of 125,000 dwt double hulled crude oil tankers underway for use by Phillips Petroleum with deliveries scheduled to commence during the last quarter of this year and run through 2006. Taken together these deliveries should fill a substantial portion of the OPA '90 Alaska crude transportation needs in the absence of the opening and development of additional Alaskan acreage for petroleum production.

Oil Product Carriers Apart from an initial four vessel group of OPA '90 product carrier rebuilds by AHL Shipping Company at Avondale, and a five vessel series completed in 1999 by Newport News Shipbuilding & Dry Dock Company, very little of this construction has been placed under contract.

The Jones Act product carrier fleet is currently fully employed. OPA '90 requirements will remove four vessels from service in 2003, two vessels in 2004, two vessels in 2006, one vessel in 2007 and three vessels in 2008. There are no vessels under contract for current construction. The Kvaerner Philadelphia Shipyard , Inc. has letters of intent for two projects representing a total of six product carriers. However, each of these projects, one for Keystone Shipping Company and one for AHL, is apparently conditioned upon financing arrangements which include MarAd Title XI awards. And, MarAd is said to be unwilling to proceed with either project in the absence of energy company charters that would assure the vessels' long term employment. So it appears that these transactions are on hold.

There have been warnings from the Shipbuilders Council of America and others that current tanker construction is not proceeding at a pace which will be sufficient to meet OPA '90 replacement requirements, and of a coming product tanker construction crunch. There has also been speculation that energy company potential users are withholding charters which might support this domestic product tanker construction, with the expectation that these companies will be able to obtain waivers which will allow them to charter foreign built product tankers to meet their carriage needs in the coastwise trade.

Some product carrier vessel needs could be met by double hulled barges. There is substantial construction of this sort.

The vessel tonnage requirements might also be lessened to the extent that U.S.

product needs are met by imports of foreign refined products on non-U.S. flag vessels. However, by almost any calculation one arrives at a figure of no fewer than 12 to 14 product tanker newbuildings being contracted for completion in the current decade.

Oil Supply and Infrastructure Support Vessels & Other Oil and gas deep water drilling developments in the Gulf of Mexico appear likely to require some number of floating petroleum storage and operating vessel platforms (FPSOs). While these FPSOs can be of foreign construction, the shuttle vessels necessary for the transport of the crude petroleum to shore-side will require U.S. construction.

There is talk of a need for 500,000 bbl capacity small tankers and/or articulated tug barge units for this service, perhaps two to four such shuttle vessels for each of perhaps four or five FPSOs.

This could produce orders for perhaps as many as 16 to 20 vessels.

It may be that these vessels can be financed based upon energy company charters and without MarAd Title XI guarantees. But if energy company charters cannot be obtained by Keystone and AHL for their current product carrier transactions at Kvaerner, it is difficult to see why energy company charters should be forthcoming in this FPSOs setting. Perhaps these crude carrier shuttle vessels will be financed by the energy companies themselves in the same fashion as the Alaska tankers. The timing for the environmental approvals and shipyard work necessary to put the FPSOs themselves in place seems somewhat uncertain.

Any additional petroleum or gas start-up production in the Gulf of Mexico or Alaska will require support vessels or barges for the construction and start-up in addition to the tanker needs for the follow-on crude transport.

Oil Product Carriers for U.S. Navy Needs There is a pressing need for fleet fuel supply vessels for the U.S. Navy and its Military Sealift Command. The existing fleets of U.S. Navy fuel supply vessels are nearing the ends of their useful lives. There is no apparent current plan for vessel replacement. Beyond this, there is no capacity to meet any expanded Navy needs which might result from any of a number of causes. The existing fuel supply fleet was created under "build and charter" programs which involved private sector operators, and private sector financing using the Mar Ad Title XI program.

A program to address these needs might have been a matter of priority for the new Secretary of the Navy and the new Maritime Administrator.

However, given that the Navy is now reported to have even cut back on the funding of the routine maintenance of the Ready Reserve Force, which is managed for the Navy by the Maritime Administration (with the result that several ROS-5 ships, which are fully crewed and supposed to be ready to go on 5 days' notice, have had to be reclassified as ROS-IO and their crews sent home) auxiliary support vessels do not appear to be a likely priority.

It has also been reported that when the Military Sealift Command recently needed a tanker in the Indian Ocean it was forced to resort to chartering one with an Iraqi crew. And, the question has been asked "Why was the USS COLE refueling at an Aden dockside location instead of at sea?" The Military Sealift Command has stated that in a war emergency they would need 46 such vessels for fuel supply. Today, there are only a total of 48 product carriers in the Jones Act fleet. This number will drop to 36 in 2008. Perhaps 16 to 20 vessels are needed.

Other stories from June 2002 issue


Maritime Reporter

First published in 1881 Maritime Reporter is the world's largest audited circulation publication serving the global maritime industry.