Exxon Mobil lags competitors in building double-hulled tankers

By Alison Bate, September 2001

The words Exxon Valdez have become synonymous with oil spill disaster.

“We don’t want another Exxon Valdez,” is a phrase used repeatedly since the massive spill dumped 11 million gallons of oil into Prince William Sound.

So you’d expect Exxon Mobil, of all companies, to take the lead in preventing another major environmental disaster.

Instead, the biggest oil company in the U.S. lags behind its competitors in replacing single hulled tankers with double hulls plying the West Coast. The second skin is designed to protect against oil spills if the outer hull is punctured.

Exxon Mobil uses a subsidiary called SeaRiver Maritime to carry its crude oil. Twelve years after the spill, only one of SeaRiver’s eight tankers plying the West Coast has a double hull.

Worse, SeaRiver has made no firm commitment to build any new double-hulled tankers, but is juggling vessels to keep one step ahead of the law.

The U.S. Oil Pollution Act of 1990 brought in a bunch of regulations designed to prevent an accident like the Exxon Valdez ever happening again.

One of the regulations ordered all oil tankers trading in U.S. ports to have double hulls by 2015 at the latest. That date is now being adopted worldwide.
Admittedly, the Exxon Valdez hit Bligh Reef so hard when it grounded, it would still have spilled oil from a double hull.

But a U.S. Coast Guard study shortly afterward said a double hull could have cut the size of the spill by more than half. Other studies agree that double hulls do reduce or eliminate spills.

AGING FLEET OF TANKERS

Twenty-four tankers carry North Slope crude oil on a shuttle service up and down the West Coast. They are known colloquially as the TAPS tankers.

The crude oil travels via the Trans-Alaska pipeline from the North Slope to the Alyeska terminal in Valdez. From there, it’s loaded into TAPS tankers and taken to refineries in California and Washington State.

Following a wave of recent mergers, the big three Alaskan crude oil producers are now Phillips Petroleum, BP and Exxon Mobil.

Each uses a separate shipping company to carry its oil. Phillips uses subsidiary Polar Tankers; BP charters tankers through Alaska Tanker Company; and Exxon Mobil uses subsidiary SeaRiver Maritime.

Dealing with double hulls is an expensive proposition. They are more expensive to build and carry less cargo than single hulls.

The 1920 Jones Act also requires these tankers to be built in U.S. shipyards, so it costs more than building the same vessel in Asia. A new double-hulled Alaska tanker costs a cool $200 million, for example.

Until recently, there were also more TAPS vessels than needed to meet demand, and rates received for shipping oil products were low.

To delay building double hulls, some companies even took advantage of a loophole in the Oil Pollution Act.

Exxon and Chevron extended the life of four aging single hulls by simply reducing cargo capacity. They did this by converting one or more cargo tanks into ballast tanks, until the loophole was closed in 1997.

The net result is an aging fleet of tankers running up and down the West Coast. The oldest is, in fact, 29 years old.

Under the Oil Pollution Act, older vessels are generally retired or phased out first, and single hulls before vessels with double bottoms or double sides.
As the retirement dates kick in, Phillips and BP have begun ordering new double hulls. . . but not Exxon Mobil.

THE NEW DOUBLE HULLS

Let’s compare notes.

Phillips has a head start on the double hull scene, thanks to Atlantic Richfield Co. (Arco).

When the merger wave began, BP Amoco bought out Arco and sold off Arco’s Alaska assets to keep the Federal Trade Commission happy.

Phillips bought them up and set up Polar Tankers to run its fleet. It inherited three new double hulls under construction.

The first of these, the Millennium-class “Polar Endeavour”, arrived amid great fanfare in Valdez in July.

The “Polar Endeavour” is not the first double hull to trade in Alaska, but it’s the first new one since OPA 90 built specifically for this trade route.

Around 2,500 employees are also busy at the Northrop Grumman Avondale yard in New Orleans working on four more double hulls. Phillips also has options on a sixth and seventh vessel.

Meanwhile, BP charters ten tankers through Alaska Tanker Company. Of these, two are single hulls, five are double bottoms and three are older double hulls.
BP has ordered three new double hulls, with options to buy another three vessels. All its Alaska tanker fleet will have double hulls by 2006.

A small player in the Alaska market, Chevron Shipping, operates the single-hulled Chevron Mississippi. It’s due to be retired next year, and there are no plans to replace it.

Tesoro Petroleum’s situation is slightly different. The company has a refinery at Nikiski, Alaska and uses the three-year-old double hull Cape Lookout Shoals to carry crude oil to the refinery.

WHAT ABOUT SEARIVER?

SeaRiver’s fleet is another story.

Of its eight TAPS tankers, only the S/R American Progress is a double hull, acquired following Exxon’s merger with Mobil in 2000.

While its competitors are ordering new vessels, SeaRiver is replacing single hulls with older double bottom vessels built in the late 70s or early 80s.
SeaRiver spokesperson Ray Botto confirmed that the company does not have any new tankers on order, but pointed out it intends to comply fully with federal regulations.

“Newbuilds are a possibility, but we have made no firm commitments,” he added.
Secrecy doesn’t help the company’s reputation. There’s speculation that the company sees no need to build double hulls, because North Slope oil fields are declining. It may end tanker shipments out of Valdez before the double hull deadline.

Or it could charter other companies to carry its oil. Who knows? The company’s not saying.

Double hulls aren’t the panacea for everything.

Tough financial liability rules, detailed emergency response plans, more escort vessels, better training and other means of prevention are equally important.
Even then, oil spills will still happen. But stopping the oil getting into the water is paramount, and that starts with double hulls.

There’s another nine years to go before SeaRiver’s last single hull reaches its retirement date.

Imagine the uproar if any of SeaRiver’s single hulls causes a major spill in the intervening years?

Nine long years. Keep your fingers crossed.

© Marine Digest. September 2001.

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