Friday, January 3, 2014

Port of Quincy Selling 200 Acres to Microsoft

By Mark Edward Nero

The Port of Quincy, Washington intends to sell about 200 acres of land to tech giant Microsoft for about $11 million, which would be one of the largest land deals in the port’s history.

The Port of Quincy announced in a statement that it would sell 60 acres it owns to Microsoft, plus resell an adjacent 142 acres owned by a private party that was recently annexed and now falls within city limits.

The pending sale, on which the port had been working for nearly a year, is expected to close in late January. Port commissioners announced it during their Dec. 23 meeting, following a public hearing to announce plans to sell the property. The sale will occur in two separate transactions.

First, Microsoft will pay $3.98 million for 60 acres the port already owns; the port is also buying 142 adjacent acres from Donald and Joyce Helsley for $6.63 million, and then selling it to Microsoft for $7.05 million, according to the purchase-and-sale agreement, which commissioners and Microsoft representatives have already signed.

The city of Quincy annexed the Helsley property into the city limits in mid-December.

The Quincy location would be the second for Microsoft, which built its first server farm on 75 acres of port property in 2007. However, the new development would be more than three times larger than the current property Microsoft owns locally.

“The impact to the area will be second-to-none,” port Commissioner Curt Morris said.

Construction on the new site is expected to begin this spring, according to the tech company, with the first phase completed by early 2015.

In most recent years, the port has attracted six server farms, which are digital warehouses that support Internet services. Along with Microsoft have come Yahoo!, Dell, Sabey, Vantage and Intuit.
The port says Quincy has been an attractive option for many of the companies partly because of low electrical costs.

New Assist Tug Docks at Grays Harbor Port

By Mark Edward Nero

The tractor tug Wynema Spirit arrived in late December at the Port of Grays Harbor, operated by Brusco Tug & Barge, the port’s ship-assist service provider.

The Wynema Spirit is a 78-foot by 31-foot ship-assist tug featuring twin Detroit Diesel 1,800 horsepower engines and Ulstein Z-drives. It is one of the more powerful tugboats of its size on the West Coast.

And in a first for Grays Harbor, the Wynema Spirit also has onboard fire-fighting capabilities. Its fire pump is capable of shooting 1,800 gallons of water per minute and up to 50 gallons of fire retardant per minute, according to Brusco.

The tug's azimuthing stern drives allow it to push or pull up to 101,000 pounds forward or backwards, a far greater bollard pull than the traditional tugs currently stationed on the harbor.

“We are extremely excited about the enhanced safety capabilities this brings to Grays Harbor,” port Executive Director Gary Nelson said in a prepared statement. “With vessel traffic projections expected to continue to increase, the Wynema Spirit’s features will be a benefit to our community and our customers.”

A second tractor tug, the Peter J, is being constructed for Brusco in Portland and is expected to join the Wynema Spirit on Grays Harbor in early spring 2014.

“The placement of the Wynema Spirit increases our capabilities on Grays Harbor to handle the larger vessels that are becoming the norm around the world,” vessel Capt. Kevin Campbell said.

WWL Extends Port of Hueneme Contract

By Mark Edward Nero

The Port of Hueneme and Norwegian/Swedish shipping and solutions company Wallenius Wilhelmsen Logistics have agreed to an extension of WWL’s contract that’s expected to keep the company at the port through the end of 2018.

News of the agreement came on the eve of WWL’s 26th anniversary as a tenant business at the Port of Hueneme.

“Wallenius Wilhelmsen Logistics is a vital long term community partner and a significant economic engine,” Harbor Board President Jason Hodge said. “Between the business it brings to the port, revenue contribution and local area workforce employment, WWL is a significant contributor to the port’s surrounding communities.”

Wallenius Wilhelmsen ships first began calling at the Port of Hueneme in late 1987. In 1991, WWL established Pacific Ro-Ro Stevedoring (Pac-Ro) to handle autos arriving at the port and Pacific Vehicle Processors (PVP) as part of a further expansion of the company’s logistics capabilities.

“WWL is pleased to continue its longstanding relationship with the port,” Len Mazzella, WWL America’s Vice President of West Coast Terminal Operations, said. “The Port of Hueneme represents a special part of our history as the first of WWL’s global hub ports offering ocean transportation, marine terminal and vehicle processing services.”

Tuesday, December 31, 2013

Fidley Watch: Blivet

By Chris Philips, Managing Editor

In late November, an “informational” meeting with the Washington State Department of Ecology (Ecology) regarding the establishment of a Puget Sound No-Discharge Zone was well attended by people representing the commercial maritime industries that operate in Puget Sound. Where the State had expected thirty people, more than 60 showed up. The tone was set about 45 minutes in, by the presenter, Amy Jankowiak with Ecology, when she snapped to the room in general, “Do you want me to leave or do you want to listen?”

The State of Washington is concerned that the levels of fecal coliform bacteria in Puget Sound are dangerous to humans. Ecology officials believe that commercial vessel traffic is a large contributor to these elevated levels. Unfortunately, as Ms. Jankowiak admitted to the assembled vessel operators, Ecology doesn’t actually have any data to back up the claim. Rather, Ms. Jankowiak explained to the group, the NDZ is needed because the State says it is.

The state’s solution is to petition the US EPA to create a No-Discharge Zone throughout Puget Sound, forbidding any discharge of waste, either treated or untreated.

The regulation will require all vessels to have a holding tank for sewage, or “black water” and will no longer allow the USCG-approved Type II marine sanitation devices carried by most vessels larger than 65 feet. This would include tugs, passenger vessels and fishing vessels.

When asked about the effect this legislation would have on the vessels calling at Puget Sound Ports, Ms. Jankowiak suggested that vessels currently utilizing approved Type II devices could simply add a holding tank to carry sewage onboard until it could be pumped out at existing shoreside treatment facilities. She seemed dismissive of industry protestations that there are currently not nearly enough existing shoreside facilities to serve the vessels affected by the rule. Ms. Jankowiak doesn’t know of any plans to increase the number of shoreside pump-out stations. Many questions were asked, including whether the State appreciated that a retrofit of a vessel for that kind of tankage would be in the $100,000 to $125,000-dollar range, if it could be accomplished at all, and would affect the tonnage of the vessel, as well as stability, cargo capacity and effective range.

“That’s the first I’ve heard of that problem,” Jankowiak said, admitting that the State hasn’t actually consulted with any shipyards or naval architects, and was unaware of stability or tonnage issues. “We’re trying to reach out to everyone we can,” she said.

The term “informational” applies to the meeting because, as was pointed out by Ms. Jankowiak, the decision to petition the EPA for the NDZ has already been made, and the “input” from the audience won’t have any bearing on the decision. Should the EPA declare the NDZ, vessel owners will be required to comply with the new regulations unless they receive an “exemption” due to unique challenges to retrofit, including engineering and certification. This exemption will only be valid until the next time the vessel is drydocked, or 3 years, whichever comes first. The State isn’t even required to have the comment period, according to Ms. Jankowiak. It is simply a courtesy Washington is providing to the stakeholders.

In reaction to the proposed NDZ, a coalition of affected stakeholders is producing a position paper with concerns that Ecology needs to address before moving forward:

Ecology needs to articulate a scientific basis for its determination that areas of Puget Sound are at ecological risk from vessels’ treated blackwater effluent.

Any proposed solution needs to be proportional to the scope of the problem and the degree of risk.

Vessels would need a fair and reasonable amount of time to retrofit their vessels with holding tanks, if necessary.

A regulatory scheme that permits onboard treatment systems that perform to best-achievable protection standards should be strongly favored and considered.

The State of Washington has moved the public comment period to the middle of this month to avoid the holiday crunch. The draft petition can be found on Ecology‘s NDZ website: We urge you to make your voice heard if you hold a stake in the West Coast maritime economy.

We believe the entire discussion should be tabled until Ecology has actual and reliable data. In the country’s current brittle economic conditions, the State of Washington’s baseless disruption of much of the robust West Coast maritime economy is shortsighted and destructive, with negligible, if any, environmental benefit.

Navigating legal waters of salvaging more treacherous than actual salvaging

By Michael A. Moore

The West Coast diving and salvage business has changed a lot since Mick Leitz was in charge of salvaging the Exxon Valdez. Mick is still in business with Portland's Fred Devine Diving and Salvage Company – and still uses Fred Devine's designed and built for salvage flagship, the M/V Salvage Chief with its 400-ton line pull.

The business these days is moving away from local masters of the trade like Mick Leitz and his Alaskan counterpart Dan Magone, and toward well-capitalized international big players – such as Resolve and Crowley – and high technology, such as remotely operated vehicles (ROV) and special software packages.

But big capital and high tech are not the biggest changes to hit the salvage and commercial diving industry – nor are rough seas and deep water the biggest challenges to successful salvage operations.

Mick Leitz says the legal shoals of myriad and often conflicting regulations are the biggest challenges salvors face these days. Some of those rules are a result of the Exxon Valdez grounding and subsequent oil spill.

In fact, Leitz wonders if the Exxon Valdez operation could be pulled off in today's regulatory climate. He says it was difficult enough in those pre-OPA90 times.

"Harbors of refuge was a problem before the Exxon Valdez ," he says. "It's still a major problem." Leitz says he had to write six different towing plans for taking the Valdez from Alaska to San Diego before the seventh was accepted.

"None of the harbors of refuge that were capable of handling the Valdez wanted anything to do with it," he said. "The final plan was to keep the tow route more than 200 miles offshore." Leitz lets the question of what would have happened if a problem arose during the tow remain unanswered.

Responder immunity is the biggest problem plaguing the industry from the fallout of the Exxon Valdez grounding says Leitz.

"It has to do with the way OPA90 is written," said Leitz. "The way things are now, the salvor is potentially liable, whereas environmental cleaners have responder immunity."

Leitz is referring to a responder immunity provision Congress included in the post-Exxon Valdez OPA90 legislation that was intended "to protect from liability those individuals or corporations who provide care, assistance, or advice in mitigating the effects of an oil spill."

"Unfortunately, the OPA 90 standard specific to responders has proven inadequate to protect responders from becoming entwined in such suits," writes Jonathan K. Waldron, a partner in law firm Blank, Rome, LLP, in the Fall 2011 edition of Soundings, published by the American Salvage Association. Waldron was referring to the legal problems encountered by emergency responders to the Deepwater Horizon oil platform disaster in the Gulf of Mexico.

"Immediately following the explosion on the Deepwater Horizon, emergency response vessels rushed to the rig to save lives, render assistance to those in peril and fight the fire.

"In the ensuing months, responder companies worked to clean up the oil that was pouring into the gulf in an effort to mitigate the spill. Notwithstanding these valiant efforts to help in the worst environmental disaster in US history, these emergency and cleanup responders are entwined in complex and protracted specialized multidistrict litigation (MDL) despite the fact that protections were put in place following lessons learned from the Exxon Valdez specifically to prevent such occurrences.

"Salvors could find themselves in the same situation in future incidents unless enhancements are made to current law," Waldron said. "Congress intended that responses to oil spills be immediate and effective and noted that without such a provision the substantial financial risks and liability exposures associated with spill response could deter a prompt, aggressive response.

"This immunity does not prevent any injured parties from recovering their full damages resulting from the spill incident, as OPA 90 provides that the responsible party (RP) is liable for any of the removal costs or damages that a responder is relieved of pursuant to this immunity consistent with the OPA 90 'polluter pays' principle," he said.

"This immunity does not apply if a responder acts with gross negligence or willful misconduct, or in cases involving personal injury or wrongful death."

That last sentence is the loophole big enough to tow the Exxon Valdez through when it comes to creating legal liability to salvors.

Which is what happened to emergency responders following the 2010 Deepwater Horizon explosion, which resulted in the deaths of 11 and injuries to 17 men working on the platform, plus the discharge of approximately five million barrels of oil.

Deepwater Horizon required thousands of responders working several months to contain and clean up under challenging conditions – numerous claims and lawsuits were filed.

"Unfortunately, the OPA 90 standard specific to responders has proven inadequate to protect responders from becoming entwined in such suits," said Waldron. "In these cases, plaintiffs have been successful in simply alleging gross negligence (without providing any supporting facts), and to cast "exposure" claims resulting from alleged exposure to released oil or from approved dispersants used to treat that oil as personal injury claims falling outside the scope of the specific responder immunity provisions."

The cases have been catalogued into pleading bundles called "Master Complaints" under various categories – including one bundle that named as defendants all the owners and/or operators of the rescue vessels that answered the Deepwater Horizondistress call and responded to the fire emergency after the explosion. This is similar to suits that could have been filed against salvors had there been salvage actions related to the incident, said Waldron.

Mick Leitz's way of dealing with the increased potential for lawsuits and liability in today's new world of marine salvage law is to be very selective about the jobs he takes on and the way the contracts on those jobs are worded.

"You try to protect yourself contractually, but you can still end up in court," said Leitz.

Leitz believes the increased regulatory and liability climate is counterproductive to the real mission of the salvor. "The sooner you get the vessel out of the water, the better – but the regulations slow you down," he said. "In the old days, you would use a sling to pick up a vessel and get rid of it.

"The risk the salvor runs now is if you get two drops of oil on the water, you are liable to get sued.

Anything goes wrong, debris, paint chips, oil – you can spend five years in court for a week's work."

Leitz's solution is to work for state agencies as much as possible. He says the states have funds to get rid of derelict vessels and they provide an umbrella of protection if something goes wrong.

Dan Magone took another tack to solving the perfect storm of challenges he found himself facing after more than 33 years of sailing into Alaska's wintry, storm-tossed seas to rescue fishing boats and other vessels in distress.

"We never had any competition until the big companies started to notice this neck of the woods," said Magone.

"Climate change and petroleum are bringing a lot larger vessel traffic up through Alaska's waters. The Arctic passage is spurring growth – next year they will be laying cable through the passage from Norway to Tokyo," he said.

Magone decided it was better to join the big salvage and diving companies than to compete with them. He joined forces this last August with Florida-based Resolve Marine Group.

"The result will be a greatly expanded, emergency response and marine services company that combines the long-standing, deep and local expertise massed by Magone Marine's Alaskan salvors with the extensive resources, personnel, and vast salvage & wreck removal experience of Resolve Marine Group," states the joint press release on the venture. "This newly-formed business will be named Resolve-Magone Marine Services (Alaska) and coincides with increased vessel traffic now in the environmentally-sensitive Aleutian Chain."

Magone's decision to hitch up with Resolve was not made on the spur of the moment.

"I decided to join forces with the best – plus I am friends with the co-owner of Resolve," he said. "We are like-minded guys, and had been discussing this move for several years. I knew I couldn't ante up to the level it's going to take to do business with the increased competition and regulations.

"We did all the wreck removals for the fishing fleet for 20 years. The big shipping companies that are coming up are way beyond my scope."

Magone says that another challenge his company and the rest of the industry is facing is finding reliable trades people and vessel crew.

Meanwhile, back in sunny Southern California, Richard Barta has built a niche for Long Beach-based Muldoon Marine Services.

"We do mostly ship repair and maintenance inspections," he said. "When we do emergency work it's with OPA90 partners. You have to have pollution insurance.

"It's the nature of the beast – when something happens, someone has to respond. Even with a small job like boat salvage, it can be a mess," he said.

Barta's strategy is to work as a member of a larger OPA90 responder team.

"Part of OPA90 is that ship operators of vessels over a certain size have to have an OPA90 responder," he said. 'We have worked with Marine Response Alliance – there are others, like Titan and Resolve.

"If something happens in LA or some other place like Ensenada, they call in small groups to help get the job done. We worked on the APL Panama."

Barta is referring to the hard grounding of the containership APL Panama in December of 2005 when it was attempting to enter the harbor at Ensenada, Mexico and missed the ship's channel.

"On big jobs, a large contractor steps in and brings in everyone who's got the right equipment and who can get there the fastest."

The salvage of the Costa Concordia by Crowley Maritime subsidiary Titan Salvage is the latest and greatest example of multi-contractor teamwork on a difficult salvage job.

Titan teamed up with Italian engineers Microperi – Titan brought its experience as a salvor and Microperi contributed their expertise at underwater construction and engineering.

The task of bringing the gigantic ship – which is twice the size of the Titanic – upright and off the rocks in one piece required the talents of 450 specialists from 19 countries working around the clock seven days a week. The project team included more than 100 specialized divers from more eight countries – who could only work 45 minutes at a time at the 150-foot depths before entering a hyperbaric chamber for decompression.

At the same time Titan and Microperi were taking care of the physical work, specialist representatives from Costa Crociere, Carnival Corporation, London Offshore Consultants and Standard P&I Club, with the collaboration of RINA and Fincantieri, worked behind the scenes to ensure that the project had the financial, legal and governmental support needed to move forward to a successful conclusion.

The final cost for the salvage of the Costa Concordia was approximately $400 million, according to Crowley.

Crowley's history in responding to maritime emergencies also goes back to the Exxon Valdez – Crowley Marine Services was the first on scene with high horsepower tugs positioned alongside the stricken tanker and these tugs were also used to assist Marine Pollution Control during the transfer of oil from the stricken tanker to lightering vessels.

That was the first step in a working partnership that eventually became today's Marine Response Alliance – Crowley's MRA partners include Marine Pollution Control, Titan Salvage, Marine Hazard Response and McAllister Towing.

Seattle-based Global Diving and Salvage may be closer to the new model for small and medium size salvors going forward.

The company's work mix consists of marine casualty response, marine construction and offshore support for the oil and gas industry. Global Diving has worked on projects from Alaska to Saudi Arabia.

Technology combined with top professionals and teamwork is the company's formula for confronting the challenges and minimizing the risks associated with marine emergency response and salvage operations.

"There have been a lot of technical changes in this industry," said Frank Immel, Global Diving's marketing director. " We use remotely operated vehicles (ROV) to do initial recons in salvage situations instead of risking a diver.

"We can put an ROV down to do a visual inspection and gather information that allows us to develop a salvage plan."

A major part of Global's salvage plan development involves the use of a software system that was developed for the design and evaluation of all types of ships and floating structures. The software addresses flotation, trim, stability and strength by calculating the forces involved using mathematical/geometrical models of the vessels.

"You could say we use the software in a reverse mode," said Immel. "Instead of using it to design a vessel, we input a shape for the hull line and other parameters – this enables weights and stability to be calculated to a greater degree of accuracy.

"This is really important when using a crane to do a vertical lift. You want to know where is the center of gravity, where do you connect for the pick, what's the weight of the vessel? The software makes the whole process more consistent and reliable," he said.

Global prefers to use cranes instead of lift bags when the water is deeper than 15 or 20 feet.

"A lift bag is great in shallow water," said Immel. "But you can't forget the laws of physics as you go deeper – you pressurize a lift bag at depth – as it rises the bag wants to go faster. It can get out of control – the bag comes up and then wants to go back down. With cranes you have more control, there is no volumetric expansion to deal with."

Immel says that Global's objective in every aspect of their operations is to minimize risk.

"Our first job is to minimize risk to keep people alive," Immel said. "We put people where they are not supposed to be."

Monday, December 30, 2013

K Line, NYK Fined for Shipping Act Violations

Two ocean carrier companies operating pure car carriers (PCCs) and roll on/roll off (ro/ro) vessels in US inbound and outbound trades, have been penalized a combined $2.3 million by the Federal Maritime Commission for allegedly breaking rules regarding commercial shipping.

Under separate agreements, Tokyo-based companies Kawasaki Kisen Kaisha Ltd. (K Line) and Nippon Yusen Kaisha (NYK Line), paid $1.1 million and $1.2 million, respectively, in civil penalties, the FMC revealed Dec. 23.

The fines resolved allegations that K Line and NYK Line had violated provisions of the Shipping Act by acting in concert with other ocean common carriers for the shipment of automobiles and other motorized vehicles by ro/ro or specialized car carrier vessels, but did not file such agreements with the Commission.

“These penalties underscore the seriousness with which the Commission views the carriers’ obligation to file with the Commission any agreement with other carriers affecting working relationships in the US trades, both for import and export traffic,” Commission Chair Mario Cordero said. “The shipping public has a right to know the subject matter and scope of any such agreement.”

The fines also addressed related activities and violations. Commission staff had alleged that the practices persisted over a period of several years and involved numerous US trade lanes, including to and/or from the Far East, Europe, the Middle East and South America.

In reaching the compromise agreements, K Line and NYK Line did not admit to guilt, but agreed to provide ongoing cooperation with other Commission investigations or enforcement actions with respect to these types of activities.

The Commission’s enforcement bureau is now investigating whether additional carriers are involved in similar agreement activities, Cordero said.

Kinder Morgan Buying Tanker Companies

Kinder Morgan Energy Partners said Dec. 23 that it is buying American Petroleum Tankers (APT) and State Class Tankers (SCT) from affiliates of The Blackstone Group and Cerberus Capital Management for $962 million in cash.

“This is a strategic and complementary extension of our existing crude oil and refined products transportation business,” John Schlosser, president of KMP’s Terminals division said in a statement.
APT and SCT are involved in the marine transportation of crude oil, condensate and refined products in the United States domestic trade.

APT’s fleet consists of five medium range product tankers, each with 330,000 barrels of cargo capacity. With an average vessel age of about four years, the APT fleet is one of the youngest in the industry. Each vessel is operating pursuant to long-term time charters with major integrated oil companies, major refiners and the US Navy.

Crowley Maritime operates APT's vessels.

SCT has commissioned the construction of four medium range product tankers, each with 330,000 barrels of cargo capacity. The vessels are scheduled to be delivered in 2015 and 2016 and are being built by General Dynamics’ NASSCO shipyard. Kinder Morgan says it plans to invest about $214 million to complete construction of the SCT vessels.

“Product demand is growing and sources of supply continue to change, in part due to the increased shale activity,” Schlosser explained. “As a result, there is more demand for waterborne transportation to move these products. We are purchasing tankers that provide stable fee-based cash flow through multi-year contracts with major credit worthy oil producers.”

The transaction, which is subject to standard regulatory approvals, is expected to close during the first quarter of 2014.

Hawaiian Tug & Barge Adopts Foss Name, Colors

Hawaiian Tug & Barge, which provides harbor support services at Hawaii ports, has a new name: Foss Maritime Co.

Hawaiian Tug & Barge officially came under the Foss name Dec. 11 at a rebranding ceremony at Harbor View Center at Pier 38 in Honolulu. The traditional green and white Foss colors have already replaced the HTB colors on many company vessels.

“We’ve updated the name and brand of HTB, but beyond those changes almost everything else will continue on as business as usual in Hawaii,” Paul Stevens, CEO and president of Seattle-based Foss Maritime explained. “We won’t lose any people or vessels.”

Hawaiian Tug & Barge was founded by Young Brothers Ltd. as a sister company to separate harbor operations and charter activities from Young Brothers’ inter-island freight operations. The company has since become Hawaii’s leading tug and barge transportation company, operating four tugs with 20 employees.

Young Brothers and HTB joined the Foss Maritime group of companies in 1999. The newly branded tugs will fall into Foss Maritime’s Harbor Service division.

“Adopting the Foss name and colors gives us tremendous exposure across the world,” Young Brothers President Glenn Hong said, adding that the change strengthens the company and its ability to provide services by being part of a global brand with a well-established name and maritime tradition.

“We are looking forward to further growth in mid-Pacific well into the future,” Stevens said.

Petrich Chosen as Tacoma Port Commission President

The Port of Tacoma Commission has named Clare Petrich its president for 2014. Petrich, who was first elected to the Commission in November 1995, succeeds Commissioner Don Meyer as president.

Petrich, owner of Petrich Marine Dock on the Thea Foss Waterway across from downtown Tacoma, is co-founder and chair of the Commencement Bay Maritime Fest, and is involved in maritime heritage research.

Among the other boards on which she serves are the Pacific Northwest Waterways Association, the Youth Marine Foundation, the Flood Control Zone District Committee, the Washington Council on International Trade and the Tacoma-Pierce County Economic Development Board.

Petrich is also a past president of the Puget Sound Regional Council’s Economic Development District Board and continues to serve on the board. She is also a past president and secretary for the Trade Development Alliance of Greater Seattle.

Port commissioners serve four-year terms on the five-member board, with officer positions rotated yearly. For 2014, the makeup of the board is: Clare Petrich, president; Don Johnson, vice president; Connie Bacon, secretary; Dick Marzano, first assistant secretary; and Don Meyer, second assistant secretary.