CONFERENCE SUMMARY CONCLUSIONS
 

1.      Future Energy Demand – There is significant risk that demand might exceed IEA’S conservative expectations with the consequential requirement for greater transportation system capacity.  The ability of the transportation system to accommodate future demand mostly relates to the shoreside interface where issues of security, terminal capacity and port limitations will constrain transportation system capacity (see paragraph 12).   Ship and shipbuilding capacity should be adequate, with even excess capacity in international shipping (see paragraph 7). 

2.      Future Sources of Energy, Particularly Oil – Future sources are likely to be very dependant on all OPEC countries.

·         Idle OPEC capacity may be less than assumed.

·         FSU capability may be less than projected.

·         Possibility of global oil supplies nearing a peak with production plateauing.

·         Quality of oil declining – both gravity and sulphur content.

·         Fiscal uncertainties likely to delay development of new sources of energy.

·         Uncertainties of production sharing agreements (PSA), especially in Russia and some West African nations.

 3.      Oil Shocks Likely – Political, military, terrorist or natural disaster induced short-term shortages are likely to occur.

•  Lower trigger point due to global lower inventory policies.
• SPR and other reserves: logistical constraints not fully appreciated and diminished effect as daily demand increases.
• Better understanding by US and OEDC of minimum energy requirements and methods of sharing should be developed.
• Oil and gas supply very inelastic in short to medium term.
• Impact adds more volatility to tanker market in the short term.
• Spare capacity in refining not there.

 4.      LNG Growth - a very desirable energy source facing challenges of public perception of danger, site permitting, high capital cost.  LNG projects are logistical chains, tending to be more integrated than the oil supply delivery chain. LNG is long-term contract oriented with some spot activity developing.

• LNG capital cost reduction is a key driver of growth in LNG.
• Site permitting process must be simplified and facilitated by USCG/MMS & DOE/FERC and not complicated by the movement of the USCG to a new department.
• LNG Site permitting expanded into Deepwater Port Act by Maritime Transportation Security Act and now includes MARAD as additional permitting authority.
• Government and industry must work together to moderate public opinion to reflect reality of safety concerns.

5.      Coal – Coal Must have a future due to demand versus foreseeable supply. Need technical break-throughs to make coal more energy efficient and environmentally friendly.

• Entrapped methane and coal gasification potential.
• US becoming an importer rather than exporter even though sufficient internal supplies exist (see paragraph 12).

6.      Capital Investment – Due to huge energy demand increase, capital requirements for energy, including transportation, may be much greater than expected. There is competition for capital from new high cost ventures in exploration and production. 

• Traditional ship financing is impacted by fewer “shipping” banks and Basel II.

• Oil exploration is down despite energy prices being up.  A possible cause of this is financial constraints.
• Experiment in energy trading and deregulation has led to uncertainty and volatility.
• Public markets have been an erratic source of shipping capital; private capital and hybrid products may be more applicable.

7.     Shipbuilding Capacity – There is persistent excess world shipbuilding capacity, especially with the substantial expansion in China , that can produce all the ships needed for international trade. In fact,  this surplus capacity continues to apply pressure on shipowners’ ability to earn acceptable ROI. In America , US shipbuilding capacity is capable of supplying the inland and intra coastal towing industry and the offshore oil industry requirements.  However, it is unable to provide economically priced vessels to the Jones Act coastwise trade. Captain Schubert, U.S. Maritime Administrator, indicated it was his high priority to encourage the construction of product tankers for Jones Act and Military support roles.

8.      IMO Plan for Maritime Security – The IMO approach imbeds extensive but basic maritime security requirements in SOLAS, complemented by a new International Code for the Security of Ships and Port Facilities (ISPS Code). The Code has both mandatory and recommendatory parts. Member governments who do not adopt the recommendations of Part B may not achieve the level of improvement in maritime security envisioned in this effort.

• Final outcome of IMO deliberations on SOLAS amendments and ISPS Code must be balanced and represent a broad consensus to avoid generating regional or national unilateral action. 
• “At sea” risk must be addressed.

·       Many vessels may be unable to meet July 2004 deadline for ISPS Code certification and trained Ship Security Officers (60.000 ships, 20.000 ports).

• Environmentally friendly, safe and efficient ships and ports are more secure – not incompatible goals.

9.      New Paradigm: Maritime Security – Considered in the context of its critical importance to the global economy, a sense of urgency and a cultural change in the “normal” way of doing business in the maritime mode is imperative. The LIMBURG terrorist attack off the coast of Yemen points to the obvious vulnerability of marine transportation. The LIMBURG incident points to the importance of US and other governments transmitting restricted information to stakeholders for their alertness and action. A partnership approach by governments and industry must be the paradigm. All maritime governments must pay attention beyond the ship. It is:

• The owners’ responsibility to provide a safe and secure vessel;

• A port and terminal’s responsibility to provide safe and secure facilities along with adequate MARPOL reception facilities for waste;
• All maritime governments’ responsibility to provide a safe and secure waterway;
• Shipper’s (cargo owners) responsibility to provide a safe and secure cargo.
• Costs should be shared as appropriate among all stakeholders including the general public who benefits by the commerce.

10.  Sub-standard Shipping – Despite progress all elements of the chain of responsibility need improvement: class, owner, flag state, port state, charterer, salvage, banks, underwriters, pilots and shipbuilders. Improvement depends upon transparency.

• IMO needs more “teeth” and must be more pro-active. IMO needs to put more emphasis on a holistic, preventive, pro-active approach (with incentives for quality), in order to head off problems and avoid knee-jerk public reaction from accidents.

• IMO needs greater power to promote enforcement of conventions.
• The world community’s responsibility to address the plight of mariners isolated and restricted to their ships.  

11.  The Loss of Bulk Carriers – The loss of these vessels, often with their crews, and consequent pollution indicate that the shipping industry must still make progress in better understanding vessel structure, corrosion, maintenance and operations. Class societies and IACS are working diligently but must accelerate their efforts. Transparency must be practiced to provide both public confidence and sharing of lessons learned. All links in the chain of responsibility, particularly shipyards, must do their part. Charterers can do their part by applying high consistent vetting standards and developing long term relationships with serious quality operators.

12.  Future U.S. Marine Transportation System Demands – In planning for future demands on the US transportation infrastructure, it is extremely important that a formal assessment be produced analysing national, regional and global challenges. The U.S. National Academy of Sciences, Marine Board has proposed a study of the challenges to the U.S. marine transportation infrastructure due to the expected increase in hydrocarbon imports and marine distribution.  The goal is to assess demands, capacities, vulnerabilities and constraints.  Databases and tools will be developed to assist regulators, policy and industrial stakeholders in resolving future issues.   The study will use workshops to involve all stakeholders.  It deserves sponsorship by the appropriate departmental agencies of the US government and industry groups.

• Increasing LNG, crude oil and product imports will require increase and improvement of terminals and greater vessel traffic control.
• Increasing steam coal imports in large bulk carriers may tax America ’s export oriented facilities sized for smaller vessels.
• Increased container traffic is demanding more terminal facilities and greater channel depth and competes for waterway access.
• The Intertanko Port and Terminal safety Study (PTS) points out the need for improvement in aging infrastructure, improvements in navigation channels, increased waste reception facilities, expansion of the PORTS project and increased charting surveys.

13.  Congestion on American highways – Congestion, particularly the I-95 corridor, will get worse in future years. Waterborne coastwise transportation is an environmental solution with potential economic benefits. This solution must be pursued by industry and government as it has been in Europe .

• Support Short-Sea Shipping initiative in U.S. by MARAD
• Support the Marine Board assessment.

14.  Environmental Concerns - In spite of dramatic improvement/reduction in cargo oil spillage and pollution incidents overall, much work yet needs to be done in the areas of ballast water management, emissions of SOX, NOX and greenhouse gasses and improvement of salvage a s a prevention measure and to mitigate potential spill severity.

CONFERENCE COMMITTEE

RADM Robert C. North (Ret.)

President

North Star Maritime, Inc.

Ed Roland

Partner

Elmer Roland Maritime Consultants (ERMC )

Gus Elmer

Partner

Elmer Roland Maritime Consultants (ERMC )

Richard T. du Moulin

Chairman
Intertanko North American Committee  
President 
Intrepid Shipping

 
Matthew R. Simmons
Chairman & President
Simmons & Company International

Jannis Kostoulas

President
Mare Forum 

Organisations Actively Participating 
in Maritime Transportation of Energy 2002

Intertanko North American Committee 


Intrepid Shipping 


Simmons & Company International


Office of Natural Gas and Petroleum Technology, Fossil Energy
U.S. Department of Energy 


British Gas LNG Services, LLC


National Mining Association U.S.A. 


ExxonMobil Refining and Supply Company 


American Marine Advisors 


Ocean Advocates


US COAST GUARD 


IACS Council 


European Commission 


Maritime Safety Committee
International Maritime Organization 


Chamber of Shipping of America


Baltic and International Maritime Council (BIMCO)
 

International Maritime Organisation (IMO)


U.S. Transportation Security Administration


U. S. Maritime Administration


Marine Board USA


Lloyds'List 


Intertanko


Intercargo


American Waterways Operators
 

Shipbuilders Council of America


Port of Houston Authority


Gray Maritime Co


Port of Rotterdam


North Star Maritime, Inc.


Elmer Roland Maritime Consultants (ERMC ) 


MARE FORUM


American Bureau of Shipping


Det Norske Veritas


INTERNATIONAL REGISTRIES INC.

Shell Trading and Shipping Company

ChevronTexaco  


LNG Shipping, Shell International Trading and Shipping Company, Limited

LLOYD'S REGISTER

sponsors

INFORMATION 
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