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Vol. 15, No. 41 Week of October 10, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Dual tanker tugs affirmed

Coast Guard bill mandates continued escorts for double-hull ships in Alaska trade

Wesley Loy

For Petroleum News

Congress has passed legislation mandating that two powerful tug boats must continue escorting oil tankers — even those with double hulls — hauling crude through Alaska’s Prince William Sound.

It’s one of several provisions important to the oil industry included in the $10.2 billion Coast Guard Authorization Act of 2010 (H.R. 3619).

The oil industry for years has escorted laden tankers through the Sound with two tugs, which can tow or nudge the ships should they lose power or otherwise get into trouble.

Oil company representatives generally have denied speculation they might scale back the escorts now that the tanker fleet has converted from mostly single hulls to almost all double hulls. Double-hull ships are supposed to be more resistant to oil spills.

Unwilling to take the industry’s word for it, watchdogs groups urged Congress to make sure the dual tug escorts continue.

“The dual escort tugs have proved their worth many times over the years responding when tankers had mechanical problems or other difficulties,” said U.S. Sen. Mark Begich, D-Alaska. “Retaining this service was priority for Prince William Sound residents and its inclusion in this bill is a victory for the long-term protection of this important watershed.”

The Coast Guard bill cleared the full Congress on Sept. 30 and was sent to President Obama, who was expected to sign it into law.

The Coast Guard is a key regulator of Alaska’s tanker fleet, with a substantial presence in Valdez where tankers take on North Slope crude at the southern end of the trans-Alaska oil pipeline. The tankers typically deliver the oil to West Coast refineries.

The Alaska fleet now numbers about 16 tankers that regularly call on the Valdez oil terminal. The bulk of them carry crude for BP, ConocoPhillips and ExxonMobil.

Crowley Maritime Corp. maintains a fleet of modern tugs at Valdez to support the Alaska tanker trade.

Almost all the tankers today are equipped with double hulls, the result of reforms Congress passed after the wreck of the single-hull tanker Exxon Valdez in 1989. BP and ConocoPhillips each built fleets of new double-hull tankers in recent years, while ExxonMobil cobbled a fleet of used double hulls.

Language in the Coast Guard bill will upgrade existing law, which specifies that only single-hull tankers in Prince William Sound need an escort of at least two tow boats.

The Coast Guard bill also contains a section thought to be helpful to Shell, which hopes to drill in the Beaufort and Chukchi seas off Alaska.

The provision allows oil companies to charter foreign-flag vessels known as anchor handlers to work in Alaska’s arctic waters.

These vessels handle the heavy anchors and mooring lines associated with offshore drilling rigs. Normally, foreign anchor handlers would be prohibited under the Jones Act, but the Coast Guard bill makes an exception through 2017 if U.S. vessels are unavailable and the oil company contracts to build an American boat.

When Shell first prepared to drill in the Beaufort Sea in 2007, it brought in foreign-flagged anchor handlers to tend its two planned drilling platforms.

In 2009, Shell awarded a contract to Louisiana-based Edison Chouest Offshore to design and build a 342-foot icebreaking anchor handler to support the Beaufort and Chukchi exploration, which has yet to commence due to legal challenges and other complications.

A Shell executive said the anchor handler would be a $150 million project.

The lengthy Coast Guard bill contains more provisions of importance to the Alaska oil and gas industry.

The bill calls for an independent, nongovernmental party to “conduct a comparative cost-benefit analysis” on improving the nation’s fleet of polar icebreakers.

The legislation also gives the Coast Guard a year to prepare a vessel traffic risk assessment for Cook Inlet. The assessment will look at “the amount and character of present and estimated future shipping traffic in the region,” and will examine ways to reduce risk such as traffic separation schemes, escort tugs and increased spill response equipment.

The Cook Inlet study committee must consult with groups including local government agencies, Alaska Natives, fishermen, conservationists, merchant shippers and the oil transportation industry.

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