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Danger on the Water

Many forign rust-bucket tankers entering the bay are oil spills waiting to happen Bernadette Tansey, Chronicle Staff Writer Sunday, December 31, 2000 ©2000 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2000/12/31/MN145812.DTL

Paul Martin had no cause for alarm as he and three other Coast Guard inspectors cut a wide circle in their water taxi around the huge oil tanker.

The ship didn't look bad, and a check of its records in a computer database as it steamed toward San Francisco Bay had raised no red flags.

But once aboard for the routine inspection, Martin got "a sinking feeling." Raw sewage oozed from the Singapore-flagged ship's sanitation system. Leaking oil coated boilers. The main engine was leaking fuel, and blowers designed to vent the volatile fumes didn't work.

Though Martin didn't realize it at the time, he was standing on a floating time bomb.

The Neptune Dorado's ballast tanks -- contaminated with a volatile mix of crude and oxygen -- held the equivalent of three bombs. A stray spark could have touched off an explosion and unleashed an environmental disaster that would have lingered in the bay for decades.

The odyssey of the Neptune Dorado sent a shudder through safety advocates, who see a rising threat of a major oil spill in San Francisco Bay. With more and more foreign-registered tankers -- monitored by a shaky network of international regulators -- steaming under the Golden Gate, the bay has become vulnerable to rust buckets loadedwith crude.

"This was one of the few ships where I was genuinely scared to be aboard," Martin said of the Neptune Dorado, which was carrying Australian crude to offload at Tosco's Rodeo refinery.

After the Exxon Valdez fouled the Alaskan coastline with 11 million gallons of oil in 1989, federal lawmakers enacted some of the strictest spill prevention measures in the world. Key provisions included greater liability for tanker owners, better preparedness for spill response and the phase-in of double-hulled tankers. Those laws are widely credited for a decrease in the frequency and volume of spills in the United States.

But safety advocates say attempts by the worldwide shipping industry to shave costs and reduce liability -- with the use of independent charter vessels -- are undermining the effectiveness of those spill prevention measures.

"When the Exxon Valdez crashed in 1989, there was a massive frenzy around oil spill prevention all over the world," said environmentalist Jonathan Kaplan of San Francisco BayKeeper. "Ever since then, attention has just ebbed. Now it's bumped the bottom, and people are realizing we are just not ready for an oil spill in California."

The biggest change has been the dramatic drop in the number of tankers registered under stringent U.S. flagship requirements. Nowadays, most of the world's fleet is controlled by independent firms, not the oil companies.

Over the past seven years, the number of foreign-flagged oil tankers entering the bay has surpassed the number of U.S. tankers.

Foreign flagships like the Neptune Dorado are still subject to U.S. laws when they sail into American ports. But their compliance is monitored not by the Coast Guard, but by a network of for-profit companies hired by overseas flag states that have no governmental marine safety agencies.

Some of those inspection companies, called classification societies, are widely regarded as unreliable, and ships approved by them are automatically boarded by the Coast Guard.

But even if a ship boasts a voucher from a reliable inspection company, that's no guarantee it's safe. The Neptune Dorado had been vouched for by two of the highest rated classification societies -- the venerable Lloyd's Register and Det Norske Veritas -- and it still made it as far as the bay.

Ships endorsed by those companies are not boarded under Coast Guard regulations unless the ship's history shows other problem signs or its documents are due for renewal.

Ships registered in the United States are subject to "cradle to the grave" oversight by the Coast Guard, which monitors their construction and continuing compliance with safety standards.

But the Coast Guard's boarding inspections of foreign ships are more cursory, because their flag states are responsible for in-depth monitoring, said Cmdr. Steven Boyle, chief of inspections at Coast Guard Island at Alameda.

And with only eight inspectors qualified to evaluate tankers, the station lacks the resources to board each of the 600 to 700 tankers that annually enter the bay, Boyle said. Of the 3,200 arriving vessels of all types in 1999, inspectors boarded 470, he said.

The Coast Guard's priority-setting method for boarding ships depends heavily on accurate compliance monitoring by reputable classification societies.

"When we can't trust that," Boyle said, "we really have a problem."

Coast Guard Island has a record of boarding nearly every tanker on the high- priority list, but Boyle does not rule out the possibility that more troubled tankers like the Neptune Dorado could slip through.

"Like I said, we have eight inspectors," Boyle said. "Occasionally we can't board one that should be boarded."

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The Neptune Dorado illustrates the potential danger of a world tanker fleet very different from decades ago, according to safety advocates.

Many of today's oil tankers belong to distant investors with little or no experience in the oil business. The investors register the ships with those nations that will pocket the fees but impose a minimum of supervision on safety compliance, said Barry Binsky, a tanker inspector for the International Transport Workers Federation.

The Neptune Dorado is owned by a Singapore corporation set up for the sole purpose of owning the vessel. It is operated by a Greek crew on behalf of a Liberian corporation.

Concerns over the adequacy of international inspections are shared not only by seamen's unions, environmentalists, government regulators and U.S. shipbuilders, but also by oil industry heavyweights.

Intertanko, a trade association of major tanker companies, and oil company executives say cargo owners must make diligent efforts to "vet," or evaluate, available tankers to avoid chartering dangerous foreign flagships.

Common problems aboard substandard tankers include defects in safety systems that prevent fires and explosions, and breakdowns in steering, navigation, propulsion or lifesaving equipment.

Foreign tankers sailing through the Golden Gate now outnumber U.S. flagships by a ratio of about 4 to 3. As recently as 1993, 7 of 10 were registered in the United States. The flip-flop came as the United States became more dependent on foreign oil and as some of Alaska's production was diverted to overseas markets.

Decades ago, most tankers were owned by major oil companies. Today, 76 percent of the world fleet is in the hands of independent firms that charter vessels -- through contracts that can reduce both costs and liability for oil firms.

Although some states such as California hold both the cargo owner and shipowner liable for spills, the federal act and international maritime law place legal responsibility only with the owner of the tanker. Some ship owners,

in turn, now make attempts to restrict liability even further by setting up separate corporations to own each ship.

"We have a lot of one-vessel fleets, and the only asset would be conceivably a ship at the bottom of the ocean," said Ed Armstrong of the Coast Guard's National Pollution Funds Center. The agency maintains a $1 billion backup fund for spill cleanup and verifies that vessels are insured for at least $10 million. But even California's higher insurance minimum -- $1 billion -- does not match the Exxon Valdez's $6 billion price tag for cleanup, environmental damage and private lawsuits.

Meanwhile, the number of U.S. flagships could dip even lower as Alaskan oil supplies continue to dwindle.

Bay Area refineries will have to make up for the decreasing oil supplies by importing even more foreign oil arriving in foreign flagships, said Warner Chabot of the Center for Marine Conservation.

"We started raising this concern a couple of years ago, that this would mean there would be an increase in rust-bucket tankers coming into the bay," Chabot said.

In addition, the benefits from one of the most powerful safeguards passed in the wave of marine safety legislation have yet to be fully realized. Federal law eventually will require all tankers calling in U.S. ports to be double-hulled. But the phase-out of single-hulled tankers will not be completed until 2015.

Single-hulled oil tankers still routinely arrive in San Francisco Bay, like the Neptune Dorado.

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Frustrated oil industry officials like Chevron Shipping Co. President Tom Moore say media coverage of the Neptune Dorado's nerve-wracking visit unfairly promoted a public perception that all tankers are just "an oil spill waiting to happen." Oil companies have spent billions of dollars to meet the new state and federal standards, he said.

Moore said a ship's safety is not automatically compromised by foreign registry if the owner chooses a responsible flag state. Most of the tankers Chevron owns are registered in the Bahamas or other foreign nations, because U. S. flagship requirements are onerous, Moore said. But Chevron avoids certain flag states.

"Some of them are just in it for the money," he said.

Moore said he sleeps better at night because half of Chevron's transport needs are met with tankers either owned outright by the shipping company or controlled through long-term contracts. Those ships and crews are devoted full- time to the oil trade and to the mission of a single company.

But Chevron also charters half its transport vessels on a per-voyage basis. Moore worries that one of those tankers might turn out to be like the Neptune Dorado.

The kind of ship to avoid, Moore said, is a second- or third-hand tanker bought sight unseen by a group of investors who hire a management company in another country to find a crew and a broker to book the cargo.

"It's got owners, crew, cargo, all trying to make a profit off one little ship," Moore said. "We call that the rogue ship."

Moore said Chevron would never have chartered the Neptune Dorado. The shipping company uses an elaborate "vetting" system including inspections, referrals and a database called SIRE, created five years ago by a consortium of major oil companies.

"That ship would have been a red flag to us," Moore said.

Tosco spokesman Duane Bordvick said the Neptune Dorado got past a Tosco screening process as good or better than any in the industry.

"We believe it was severely misrepresented," Bordvick said.

He could not say whether Tosco drew on the SIRE database, which provides ship inspection reports for a fee to nonmembers like Tosco.

Coast Guard inspectors say the Neptune Dorado's two classification societies should have detected the tanker's severe flaws, which did not arise overnight.

But Donna Grill of Lloyd's Register in Houston, a subsidiary of the classification society, said the inspection firms cannot be held accountable for tanker incidents that happen at sea.

"Our certification does not guarantee safety," Grill said. "Once the boat is in the water, there is a lot the captain and crew can do wrong."

The Coast Guard's initial inspection of the Neptune Dorado found 30 violations of U.S. and international regulations, and a later structural examination found multiple cracks in the bulkheads that had allowed crude oil to seep from the cargo holds into the ballast tanks.

Admitting they concealed the ship's dangers from the Coast Guard, the ship's captain, Kiriakos Daioglou, its operator and owner pleaded guilty to federal felony charges Dec. 19 and agreed to pay a total of $2.5 million in fines and penalties.

-- -- --

The Neptune Dorado incident also brought to light problems with California's preparedness program for oil spill cleanups.

The ship's contract with a U.S. oil spill response company -- apparently valid on its face -- turned out to have a loophole that may have left it without the required local plan to control a spreading oil slick.

The Neptune Dorado reportedly had not activated the contract by phoning ahead of its arrival in port, said Bud Leland of the state Office of Spill Prevention and Response.

The spill response company with the unusual contract provision, Clean Pacific Alliance, was already at the center of a controversy over the adequacy of the state's emergency cleanup provisions.

Clean Pacific Alliance, which relied heavily on local subcontractors to respond on an as-available basis, competed with established spill responders like the Bay Area oil industry cooperative Clean Bay, which has ships on standby throughout the bay.

Environmentalists like Chabot have raised the fear that cheaper contract- based firms would out-compete spill responders with dedicated equipment, resulting in a preparedness scheme that might look good on paper but might not materialize in the event of a spill.

In recent state drills, Clean Bay passed easily. But Clean Pacific Alliance and two other responders fell short, and Clean Pacific Alliance went out of business a short time later.

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Chronicle staff writer Stacy Finz contributed to this report. / E-mail Bernadette Tansey at btansey@sfchronicle.com.

MORE FOREIGN TANKERS The number of foreign tankers, many operating outside stringent U.S. guidelines, entering San Francisco Bay now surpasses the number of tankers registered in the United States.

Number of tankers entering S.F. Bay Total US Foreign 1993: 1,033 751 282 1999: 701 309 392

Tanker fleet by flag: Others 26% Liberia 20% U.S. 3% Panama 15% Greece 8% Norway 7% Bahamas 7% Malta 6% Singapore 5% Japan 3% Sources: Marine Exchange in San Francisco, Intertanko Chronicle Graphic

-- Martin Thompson (mthom1927@aol.com), December 31, 2000

Answers

Someone needs to send this ship to Neptune. Greek and Liberian ships are notorious for operating rust-buckets. Liberian tankers are usually American companies trying to avoid US regulations and taxes. This problem did not start recently, it started back in the 60's.

-- David williams (DAVIDWILL@prodigy.net), January 01, 2001.