October 2009

October 15
Marine Money Finance Forum

October 16
2009 World Maritime Day Parallel Event

October 26
9th Annual Port Industry Day

November 2009

November 13
40th Annual Admiral of the Ocean Sea Awards

NYMAR Officers
Peter Shaerf, Chair
Lawrence Rutkowski, Vice-Chair
Keith W. Heard, Secretary
Kathleen C. Haines, Treasurer
Frederic London
David Martowski
Michael J. Mitchell
Clay E.C. Maitland
Simon Rose
John Stratakis
Stefanie Kasselakis

NYMAR
For more information about NYMAR, please visit our web site: www.nymar.org

October 15, 2009	www.nymar.org

NYMAR Interviews USCG Commandant Allen.

Admiral Thad W. Allen assumed the duties of the 23rd Commandant of the U.S. Coast Guard...
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Dahlman Rose Indices

Dahlman Rose & Co has agreed to provide NYMAR readers with its Dry Bulk Shipping and Tanker Shipping Indices.
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Monthly News

Citigroup sells Phibro to Occidental
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Ofer aid?
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ConocoPhillips plans may affect venture with Origin, analysts say
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NOAA calls on Interior to scale back plans on offshore drilling
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Read more Monthly News stories (continued)
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Financial Performance Charts
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Taste of NYC | Events & Entertainment

Upcoming events & entertainment in the Big Apple.
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NYMAR Interviews USCG Commandant Allen.

Admiral Thad W. Allen, Commandant, U. S. Coast Guard
Admiral Thad W. Allen assumed the duties of the 23rd Commandant of the U.S. Coast Guard on May 25th, 2006. As such, he leads the largest component of the Department of Homeland Security (DHS), comprised of about 42,000 men and women on Active Duty, 7,000 civilians, 8,000 Reservists and 34,000 volunteer Auxiliarists. The Coast Guard is "Semper Paratus" - Always Ready to respond to All Hazards - All Threats.

In this environment, we will not do more with less, but rather we will more deliberately manage risk. We are considering many options to achieve savings, and we are doing our best to preserve critical current capability, as well as future capability through continued re-capitalization and sustainment of the workforce. The global economy will eventually recover, and we need to have the baseline capabilities and competencies necessary to meet growing demands, and be able to expand capacity as required.

The primary issue on the table right now is capacity, and how much of it can we afford in the current fiscal environment, balanced against mission risk. We are working with the Administration to identify the right Coast Guard footprint for the Nation, and how best to manage risk and mitigate threats consistent with the current fiscal environment and dynamic maritime mission demands.

Each year the Coast Guard discovers approximately 10,000 deficiencies on foreign flag vessels and 32,000 on U.S. flag vessels. Those may appear high but equate to less than one deficiency per inspection conducted. In 2009, we have not seen a spike in the number of deficiencies for U.S. or foreign flag vessels and actually a decrease in the number of deficiencies identified on foreign flag vessels. If companies are in fact scaling back on preventative maintenance programs, it would take months before we begin to see that deterioration on vessels.

Facility Inspections:
The economic downturn does not appear to have affected maintenance or operational standards at domestic waterfront facilities. In fact, our data shows that safety and security deficiencies at these facilities have decreased by 19% since 2007. This downward trend over the past few years could be attributed to the Coast Guard quadrupling the number of facility inspections performed since 2001.

Because of the Maritime Transportation Security Act, Coast Guard facility inspectors, who are qualified in both safety and security inspection criteria, visit regulated facilities more frequently. The increased presence and visibility of the Coast Guard contributes to increased regulatory compliance with both domestic and international standards.

Despite crew reductions, the overhead required to run a safe ship remains substantial; reduction may in effect reduce underway maintenance and other planned activities needed to maintain the ship's overall condition. Furthermore, if an emergency occurs, the crew still must be able to adequately respond. In the end, while up front operating costs may be reduced by minimizing crew sizes, risk factors for safety and security may be negatively impacted. For these reasons, vessel operators and flag administrations must be aware of all associated risks and consequences before reducing crew sizes.

As the host for this year's parallel event, we plan to showcase the multinational and interagency cooperation between the International Maritime Organization, U.S. Department of State, Environmental Protection Agency, Maritime Administration, National Oceanic and Atmospheric Administration, and the Coast Guard to combat Climate Change and reduce greenhouse gas emissions within the maritime sector.

This year's event is scheduled to take place October 16 - 18 at Chelsea Pier in New York City. The New York event will include a conference for delegates from around the world to discuss options to reduce greenhouse gas emissions from ships and will have portions of the event open to the public to include tours of environmentally friendly ships, a marine environmental science fair, and a Green Ship exhibition.

In addition, twelve ports around the country will hold observances on or near our celebration of World Maritime Day. More information on the 2009 World Maritime Day Parallel Event can be found online at www.uscg.mil/worldmaritimeday.

In 2005, the Kyoto Protocol left the reduction of greenhouse gas from the maritime sector in the hands of the IMO. Since then the IMO has been working hard to develop a robust regulatory scheme for the shipping industry. The IMO has been requested to present a report on the work the organization and its member states has accomplished at the Copenhagen meeting. It is our hope that the international community sees the progress made by the organization and continues to entrust the IMO with the regulation of greenhouse gas emissions from international shipping.

The Convention on Climate Change will use the fifteenth session of the Conference of the Parties (COP-15) as a forum to attempt to reach an agreed outcome to the Kyoto Protocol and Bali Plan. A stated goal of the session is to adopt an ambitious climate change implementation plan as a follow on to the first phase of the UN's Kyoto Protocol, which expires in 2012. The session further seeks to provide clarity on four key issues:

1. Ambitious emission reduction targets for developed countries;
2. Nationally appropriate mitigation actions of developing countries;
3. Scaling up financial and technological support for both adaptation and mitigation;
4. An effective institutional framework with governance structures addressing needs of developing countries.

As recently as this past July, the U.S. proposed to the Marine Environment Protection Committee an Energy Efficiency Design Index (EEDI) for new ships. The EEDI was considered a viable option to stimulate technical development for fuel efficiency regardless of ship types or sizes.

The U.S. also took part in international discussions on generating Ship Energy Management plans. Domestically, the U.S. has made great strides over the past year with the ratification and implementation of MARPOL Annex VI to limit sulfur oxide, nitrogen oxide emissions and particulate matter from ship exhausts, and prohibit deliberate emissions of ozone depleting substances.

The Coast Guard's Environmental Standards Division has several regulatory projects in various stages of development:

• Ballast Water Discharge Standard. On August 27, 2009, the Coast Guard released a Notice of Proposed Rulemaking, Draft Programmatic Environmental Impact Statement and Regulatory Analysis entitled Standards for Living Organisms in Ballast Water Discharged in U.S. Waters. This proposed rulemaking establishes a national discharge standard in two phases. The first phase adopts the IMO's discharge standards and timelines for implementation.
  
  The second phase - to commence in 2016 - establishes a standard 1000 times more stringent than the IMO standard. A practicability review will be conducted prior to implementation of phase two to determine if the more stringent standard is achievable. The rulemaking also includes a rigorous type approval process to ensure systems can meet the standards with a high degree of statistical and scientific certainty.
  
  
• Dry Cargo Residue. The Coast Guard is completing phase two of its Dry Cargo Residue discharge requirements study for the Great Lakes. The phase two study gathered data from the shipping industry, in addition to CG-led field studies, to determine if additional regulations are necessary for dry bulk carriers transporting non-hazardous materials in the Great Lakes.
  
  
• MARPOL ANNEX V. The Coast Guard is participating on an IMO Correspondence Group focusing on changes and improvements to MARPOL ANNEX V for regulating garbage discharge from vessels.
  
  
• Ship Recycling. The Coast Guard was actively involved in the development of the IMO's recently passed Convention for the Safe and Environmentally Sound Recycling of Ships. The Convention establishes requirements for safe and environmentally sound ship breaking as well as operational, design, maintenance and record keeping requirements during the life of the ship.

Reductions in heavy fuel oil (HFO) (also known as residual or bunker fuel) sulfur levels would lead to significant sulfate particulate matter (PM) and SO2 emission reductions and provide dramatic environmental and public health benefits. However, in most cases, fuels that meet the long-term fuel sulfur standards will likely be distillate fuels, rather than HFO. In addition to reductions in sulfate PM, switching from HFO to distillate fuel may reduce black carbon emissions, fine particle counts, organic carbon, and metallic ash particles.

There is an associated risk when ships switch from high sulfur fuels to low sulfur fuels as they begin to operate in an ECA. When switching fuel oil, some ships have experienced propulsion losses linked to procedural errors or fuel oil incompatibility. However, this risk can be mitigated. To increase awareness and to prevent casualties associated with fuel oil switching, the Coast Guard issued Marine Safety Alert 03-09. This alert encourages vessel operators to follow their written fuel oil change-over procedures required by Annex VI.

Additionally, the Safety Alert recommends vessel operators review the guidance developed by the American Petroleum Institute (API) entitled "Technical Considerations of Fuel Switching Practices," which discusses problems that lead to propulsion loss while switching fuel and recommends solutions. Marine Safety Alert 03-09 may be viewed on the web on Homeport at: http://homeport.uscg.mil by selecting the following tabs - Missions > Investigations > Safety Alerts > Engineering > Fuel Switching Information.

There is the potential for wastes related to air emission control efforts to be generated on-board ships operating in an ECA. Regulations in MARPOL Annex VI require Member States ensure ports are able to provide adequate reception facilities to receive such wastes from ships.

2008 Amendments to the Act to Prevent Pollution from Ships (APPS) grants authority for implementing these and other provisions in Annex VI and the Coast Guard is working with the Environmental Protection Agency to develop a memorandum of understanding regarding enforcement of Annex VI provisions. U.S. ports will be required to ensure adequate reception facilities for Annex VI wastes are available to ocean going ships calling at those ports.

The majority of ships will comply with this regulation by switching from high to low sulfur fuel before entering the ECA. Other ships may use after-treatment systems to clean exhaust. If fuel switching is not done properly, the ship could lose propulsion. Some ships may have difficulty with this initially; we have seen this in California where the state enacted its own requirements similar to the ECA. We are conducting an outreach campaign and working with industry to develop fuel switching guidance before the IMO ECA takes effect.

How can we encourage investment in technological development to further emissions controls?

The Coast Guard coordinated an IMO intercessional correspondence group developing an IMO approval standard and wash water criteria for sulfur oxide exhaust gas cleaning systems. Major groups involved in this were the OCIMF, EUROMOT engine manufacturers (Wartsila, MAN), Norway, Sweden, UK, Japan, CLIA, others. We also have formal agreement of this process with the guidelines from EPA (both air and water quality).

Other work includes coordination by the Coast Guard of the IMO intercessional correspondence groups to develop guidelines for nitrogen oxide on-board monitoring and recording devices to help ensure on-board compliance with Annex VI. This was done in cooperation with EPA, and in working with IACS, EUROMOT, Korea, Japan, UK, other members.

Hull Forms: During the design phase, efficiency was a huge consideration in the hull designs of our new acquisitions. The hull designs used maximized efficiency that met operational requirements while minimizing fuel-wasting drag. On legacy assets, we have retrofitted many of these with "stern flaps" that raise the efficiency of our existing hulls.

In conjunction with these hull designs, we have employed the use of the latest technology propellers. These propellers are designed to minimize cavitation and noise. Since cavitation creates approximately 80% of the noise a ship generates, these propellers minimize the effect on marine animals. This elimination of noise also increases propulsion efficiency and lowers energy consumption.

Feasibility study of utilizing Bio Fuels: There is currently a fuel quality work group looking at the feasibility and requirements of implementing the use of bio fuels in the cutter fleet. The Coast Guard is actively pursuing how to accomplish this while minimizing operational impacts.

Environmentally friendly oils and greases: The Coast Guard is prototyping less harmful oils and greases. The most recent is a low-toxicity stern tube oil for 225' WLB Seagoing Buoytenders and "biodegradable" oil in their controllable pitch propeller system.

Minimizing employment of Ozone Depleting Substances (ODS): These include CFC refrigerants as well as some installed firefighting systems (HALON). All new acquisitions will not employ ODS in any of their systems on board. Legacy cutters utilizing ODSs are currently being retrofitted with ozone-friendly alternatives.

ELC Baltimore/YARD Co-generation plant: Coast Guard Yard now operates a co-generation plant (Renewable Energy Center) using methane from a nearby landfill for fuel. The new plant provides 4.6 megawatts of output and will provide power to the Yard for the next 17 years, with an annual savings of over $2 M. The plant fulfills DHS's renewable energy requirements for the next three years and is the first Coast Guard facility worldwide to be 100% self-powered by renewable energy.

Renewable Energy Uninterruptible Power Supply (REUPS): Electronics Support Detachment (ESD) Southwest Harbor has installed wind turbines and solar panels to feed backup batteries. Uninterruptible Power Supplies (UPS) are meant to provide constant power to protect data in the event of commercial power losses. The station receives unreliable power at the end of the grid and is also exposed to extreme weather.

The REUPS system combines wind and solar power to provide the UPS units with an alternative, renewable energy source. The system produces 278 kilowatts of renewable power per month, providing 26% of the station's electrical consumption. This system increases the reliability of available power during casualties and extreme weather, allowing the station to continue critical operations in support of the Coast Guard's missions.

ESD Southwest Harbor has demonstrated great ingenuity to apply available technology to create a practical solution; which may very well become a best practice for applicable stations.

Enforcement of International/National Environmental Regulations:

Facility/Container Activities:
The Coast Guard maintains an aggressive stance on conducting facility and container inspections to safeguard the pubic as well as those ports, facilities and vessels handling cargo that can damage the environment. Efforts have been undertaken in cooperation with the international maritime community to develop guidance on steps facilities can take to protect the environment - for example, raising awareness at facilities on best practices for accepting and managing shipboard generated wastes will help ensure the waste is dealt with in a responsible manner.

Container inspections are equally important given the tremendous quantity of goods, especially those labeled as hazardous materials, which flow in and out of our ports. The operation of the Coast Guard's Container Inspection Training and Assistance Team, or CITAT, has been critical to our success. CITAT is a specialized unit comprised of subject matter experts who continually help Coast Guard nationwide achieve technical and regulatory expertise in these types of inspections.

And finally, the continued operation of our Marine Safety educational programs, such as those offered by Training Center Yorktown, help give our forces the competence and resources needed to expertly execute their inspection duties.

Vessel Activities:
The Coast Guard continues to pay close attention to MARPOL requirements during Port State Control exams of foreign vessels arriving into U.S. ports. In calendar year 2008, 69 of the 176 ships detained in the U.S. for substandard conditions were attributable to MARPOL Annex I violations. Furthermore, potential environmental crimes discovered by the Coast Guard were referred to the Department of Justice.

Following convictions of environmental crimes of shipping operators, the Coast Guard would monitor the Environmental Compliance Programs (ECP) for those companies during the duration of their probationary period. Currently, the Coast Guard overseas 53 ECPs which encompass 1255 vessels.