BC Shipping News - July/August 2014

INSIDE: THE GAS CARRIER BY SYD HEAL

BC SHIPPING Commercial Marine News for Canada’s West Coast.

Volume 4 Issue 6

NEWS

www.bcshippingnews.com

July/August 2014

Industry Insight Alan Dawson Co-owner, ABD Boats

Shipyards

Ray Dykes’ annual B.C. shipyards review

Maritime Security Maritime disputes in the South China Sea JUL

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Maritime Clusters: A vision for a dynamic International Maritime Centre

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Design s of e n r i r a a M e n i Y y t i ng 84 ion and Divers i t a r b t Cele Innova

1930-2014

design your future Robert Allan Ltd. is a long-established consulting Naval Architectural and Marine Engineering firm. Known internationally for design excellence in tugs, fireboats, and other working vessels, the employee owned Company continues to experience significant growth and is actively seeking creative and talented individuals for our office in Vancouver, B.C. Positions are available in virtually all aspects of our growing international business, including: Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

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Contents

NEWS

Cover Story

20 7 8 12

18

Editor’s note

By Jane McIvor

20

In brief

Industry traffic and news briefs

Industry insight

Of long life and magic metal Alan Dawson, Co-owner, ABD Boats Given this very special occasion of his “90th” birthday, BC Shipping News was pleased to learn that the often shy, modest Mr. Dawson had agreed to an interview.

30

Spies, gamblers and yachtsmen: The story behind the Wigwam Inn

By Lea Edgar

B.C. shipyards

B.C. shipyards review: Strongest in decades

By Ray Dykes

Asian shipyards A new dawn breaks...

By Jaya Prakash

33 Shipyards

Survival of the fittest: The challenges for today’s modern shipyard

By Heiko Oldendorf

34 Ferries

Spotlight on safety as Interferry heads for Vancouver

By Len Roueche

History lesson

36

July/August 2014 Volume 4 Issue 6

Maritime clusters

Canada’s golden age: A vision for a dynamic International Maritime Centre

By Kaity Arsoniadis-Stein and Georgia Papadimitriou

41

LNG tankers

44

LNG propulsion

46

Legal affairs

The gas carrier

By Syd Heal

LNG as a marine propulsion fuel in North America

By Fred Loomis Fear in a handful of dust: The case of the Aestival

By James Vander Woude

47 Technology

Cavitation: What does it cost you?

By Allan Austin

49 Technology

Monitored confined-space entry protects workers

By Keith Lincoln

51

Maritime security Maritime disputes

By Brett Witthoeft

41

12 On the cover: Aerial view of Victoria Shipyards with the Pacific Princess in dock (photo courtesy of Seaspan ULC); above: Vancouver Drydock (photo credit: BC Shipping News);. bottom right: The LNG tanker Cubal (photo courtesy of Teekay Shipping (Canada) Ltd.); bottom left: Alan Dawson (photo credit: Dave Roels — www.daveroels.com).

July/August 2014 BC Shipping News 5

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July/August 2014 Volume 4/Issue 6

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Contributing Writers Kaity Arsoniadis-Stein Allan Austin Alan Dawson Ray Dykes Lea Edgar Syd Heal Keith Lincoln Fred Loomis Heiko Oldendorf Georgia Papadimitriou Jaya Prakash Len Roueche James Vander Woude Brett Witthoeft Advertising and Subscriptions Jane McIvor Phone: 604-893-8800 / Email: jane@bcshippingnews.com Lesley McIvor (Advertising only) Phone: 604-893-8800 / Email: lesleymcivor@shaw.ca ANNUAL SUBSCRIPTION Canada Three Years $108.95 Cdn*

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6 BC Shipping News July/August 2014

EDITOR’S NOTE

Photos by Dave Roels, www.daveroels.com

Building a better mousetrap

T

he one thing I noticed about the articles in this issue of BC Shipping News was that many alluded — some more subtly than others — to how success was being achieved in those sectors and companies who were coming up with ways to “build a better mousetrap.”

The obvious example of Seaspan’s $200 million modernization program fits in well with Jaya Prakash’ article on Asian shipyards and how yards that are “increasingly latching onto technology and quality design work” are outstripping their competitors when it comes to

winning contracts for new vessels. Heiko Oldendorf’s article on implementing systems that can be used to meet the challenges of more complex designs and an increasing use of outside suppliers demonstrates the availability of tools that can lead to a competitive edge.

Kaity Stein’s article on a vision for a dynamic International Maritime Centre follows the same vein albeit with a much more holistic view of Canada’s shipping industry. Kaity puts forth a clear message that Canada is missing out on opportunities that would benefit all sectors of the industry by not having a

proactive shipping strategy in place — one that attracts ship owners who in turn attract high, value-added services. Using examples of countries like Denmark, the Netherlands and Dubai, Kaity’s message is a strong one: It’s time that industry, government, academia, unions and other players start working together to “build a better mousetrap” — one that will differentiate us from other countries and give us that edge that leads to success.

The stakes are high when you consider how much there is to lose and how much we can gain not only as an industry but as a country.

— Jane McIvor

In the shipyards...with Dave Roels

In keeping with our theme of shipbuilding and repair, Dave spent time this month visiting shipyards in Vancouver and Victoria. Noting the glowing report card from Ray Dykes and the level of activity Dave witnessed, it’s a good time to be in the shipbuilding and ship repair industry in British Columbia.

A full photo essay of Dave’s travels can be found online at www.bcshippingnews.com.

July/August 2014 BC Shipping News 7

INDUSTRY TRAFFIC Canadian Lifeboat Institution dedicates new lifeboat

M

www.greenwoodmaritime.com nsg@greenwoodmaritime.com / 250-507-8445

Full story and photos online at www.bcshippingnews.com.

Photo credit: BC Shipping News

MA, BSc, Master Mariner, FRIN, MNI Rear-Admiral, RCN (Ret’d)

embers of the Canadian Lifeboat Institution were joined by the industry, politicians, Royal Canadian Navy representatives and friends as they dedicated their newest acquisition: the Fraser Lifeboat on May 17, 2014 at the Imperial Landing in Steveston. Master of Ceremonies Cameron Cathcart introduced Capt (N) Jamie Clarke, Chief of Staff Operations, Maritime Forces Pacific, who brought a message of congratulations on behalf of Rear-Admiral Bill Truelove, Commander, Maritime Forces Pacific.

Robert McIlwaine, President, Canadian Lifeboat Institution also spoke and highlighted the important role the CLI plays in pro-actively patrolling the Fraser River and surrounding area.

The Fraser Lifeboat is 14 metres in length with a 4.47 m beam and a draft of 1.27 metres. With two GM V6 diesels, ZF BW 160 Gearboxes driving 30” props, the vessel has a maximum speed of 17.6 knots with a cruising speed of 10.5 knots.

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Working together for a safer world Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Copyright © Lloyd’s Register Group Limited 2014. A member of the Lloyd’s Register group.

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8 BC Shipping News July/August 2014

06/03/2014 19:26:33

NEWS BRIEFS SMIT Marine Canada achieves highest international safety, quality and environmental accreditations.

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loyd’s Register Quality Assurance, a leading international certification body was chosen by SMIT Marine Canada to carry out an assessment of the organization’s Integrated Management System (IMS) against four separate standards: ISO 9001:2008, ISO 14001, OHSAS 18001 and the ISM Code. These four standards are recognized international benchmarks for Safety, Quality and Environmental protection.

After much preparation, which included a variety of education and training sessions, meetings, internal audits, and the creation and implementation of a quality documentation system, SMIT underwent external assessment by LRQA in February of this year and received their certifications in May. Certification encompasses all subsidiary companies.

This recognition marks a milestone in the company’s efforts to improve their operations whilst at the same time preparing them for involvement with any future opportunities arising out of the potential LNG and oil transportation projects currently being planned. The commitment to an externally certified health, safety, environment and quality system also supports the Government of Canada’s stated intent to create a world-class tanker safety system, one that will rely heavily on the availability of world-class tanker escort services.

The integrated management system has been developed and implemented over the last two years. Guided by Bob Beadell of Invicta Marine Ltd. and Hilary Miller, SHEQ Officer at SMIT Marine Canada, employees throughout the organization have worked to implement the system and provide feedback which has been invaluable in helping to identify improvements.

“To achieve all four standards at once is highly unusual,” says Bob Beadell. The effort required to achieve this has been tremendous, as noted by the assessors from LRQA who also commented that the employees have been extremely supportive and helpful.

“Achieving all four of these certifications is a testament to a lot of hard work and dedication of our colleagues,”

said Frans Tjallingii, President of SMIT Marine Canada. “Attaining this certification speaks to our continuous effort to improve internal process disciplines to ensure the utmost in safety, health, the protection of the environment and

quality, and to provide first-class service to our customers.”

SMIT looks forward to continual improvement in its operations and to excellence in the provision of services to its customers.

Mike Calvard of Lloyd’s Register Canada presents SMIT Marine Canada President Frans Tjallingii with the Certificates.

July/August 2014 BC Shipping News 9

INDUSTRY TRAFFIC

Marian Robson joins Global

G

Boating BC announces new ED

B

oating BC has announced lobal Public Affairs is the hiring of a new Executive pleased to announce that Director. “We are very Marian Robson has joined excited to announce that Lisa its Transportation, Infrastructure Geddes has been appointed to lead and Communities practice as Senior Boating BC Association’s business Associate. She was previously the BC affairs moving forward,” said Don Senior Associate with True North Prittie, President of Boating BC. Public Affairs which has merged its Lisa is no stranger to the recreaoperations with Global. tional marine industry having spent Based in Vancouver, Marian brings many years at Mustang Survival a rich, professional background and multi-modal expertise to Global. Amongst her previous senior Corporation where she began in leadership roles over the past 40 years, Marian served as Chair and product development and ended her CEO of the Canadian Transportation Agency, the body respon- time there as Director of Marketing. More recently, Lisa has been sible for economic regulation of all modes of transport under involved in senior positions with the Rick Hansen Foundation federal jurisdiction (1996-2006). Earlier, Marian was Chair of the and Peace Arch Hospital Community Health Foundation. As a Vancouver Port Corporation. She also held senior management founding member of Boat for Hope, a special event created to positions with British Columbia Railway and CN. At the federal share the experience of boating with special needs children, Lisa 1 Posted:and FINAL 2014 people of all walks of #: J22-VAN-293C the passion joy- 6ofJune getting level, she was Industry Assistant to theJob Minister of Transport. Version: understands 1/2 Page Horiz (7.125” x 4.9375”) Lines: Marian continues to be actively Size: involved, contributing to life out on the waters of British Columbia.

Publications: BC Shipping News Working with the Boating BC Board of Directors and other national and regional policy discussions about transportaSign-off: Janet David Proofread: Jim industry partners, Lisa will bring an infectious enthusiasm for tion and trade issues. She currentlyOperator: serves CT as Chair, Pacific recreational boating to all members of Boating BC and the larChapter of the Chartered Institute Adjusted of Logistics and Transport, specifications to fit small set size North America and as Co-Chair, Metro Transportation and ger marine community. The Board takes this opportunity to welcome Lisa aboard!

Infrastructure Committee of the Vancouver Board of Trade.

Assistant Director, Marine Operations Pacific Pilotage Authority

T

All qualified applicants are encouraged to apply with a cover letter and resumé, in WORD format, in confidence, quoting file #14547, to: search@janetdavid.com We thank and acknowledge all applicants and will proactively contact those selected to participate in the assessment and interview process. Qualified Canadians and permanent residents of Canada will be given priority.

he Pacific Pilotage Authority (PPA) is a federal Crown corporation that provides safe and efficient marine pilotage services in the coastal waters of British Columbia, including the Fraser River. The PPA oversees marine pilots, coast-wide, and dispatch and launch operations at stations in Vancouver, Victoria, Steveston and Prince Rupert. Progressive and innovative, the PPA is a self-funded organization that generates revenues through the collection of negotiated tariffs paid by transportation companies whose ships access the coastal waters of British Columbia with the assistance of licensed pilots. The PPA is governed by a Board of Directors who are appointed by the Government of Canada. PPA is seeking an outstanding person to fill the newly created role of Assistant Director, Marine Operations.

A key member of the management team of this nimble organization, the Assistant Director, Marine Operations will report to the Director, Marine Operations and be based at PPA’s main office in downtown Vancouver. The Assistant Director, Marine Operations will be directly responsible for the management of PPA’s pilot launch operations and will also provide proactive support to the Director, Marine Operations in a wide range of functional areas, including: planning; human resource management; contract negotiations; performance management; incident investigation; and overall risk management. The Assistant Director, Marine Operations will work closely with staff, pilots, representatives of government and various stakeholders in the shipping and marine industry.

The ideal candidate has, at a minimum, been certified at the Master Local Voyage (ON-1) level, but preferably, has completed a Master Mariner Certificate of Competency. The preferred candidate has completed a post-secondary degree in a relevant discipline and has had several years of experience in progressively more senior management roles with exposure to all aspects of marine operations, including planning, ISM/ISO certification, scheduling, budgeting and the administration of union and service contracts. Without doubt, the candidate has superb interpersonal and communication skills and the energy and motivation to lead effectively.

The PPA offers a dynamic work environment and competitive compensation. To learn more, please visit www.ppa.gc.ca.

10 BC Shipping News July/August 2014

NEWS BRIEFS ClassNK approves new super-efficient fillet welding consumable

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eading classification society ClassNK (Chairman and President: Noboru Ueda) announced that it has granted type approval for the new MX-200F welding consumable, developed by Kobe Steel Co., Ltd. (KOBELCO) to greatly improve welding efficiency and coating quality in commercial vessels.

Up until now, shipbuilders using conventional fillet welding consumables had to make two welding passes for the required weld leg lengths of around 8mm or above. As the IACS Common Structural Rules (CSR) require the use of 8mm leg lengths in some structural members, this has meant that the relevant welding time for oil tanker and bulk carrier newbuildings has virtually doubled. The IMO Performance Standard for Protective Coatings (PSPC), applicable to vessels over 500 gross tons and double-sided skin spaces

in bulk carriers over 150m in length, also substantively requires welding beads to have a smooth profile in order to ensure the required paint film thickness, further increasing the difficulty of welding work.

In order to help address these challenges and improve welding efficiency, Kobe Steel, Ltd., Shin Kurushima Dockyard Co., Ltd. and ClassNK began a joint R&D project to investigate the relationship between the profile of welding beads and paint film thickness. The research, which was carried out as part of ClassNK’s Joint R&D for Industry program, resulted in the development of KOBELCO’s new MX-200F fillet welding consumable. MX-200F not only allows one pass welding with the leg lengths of around 8mm, but also ensures welding beads have a smooth profile in line with PSPC requirements. The application of this welding consumable

is expected to greatly reduce man-hours required for this kind of welding work compared to existing consumables.

Upon completion of the development process, KOBELCO submitted the new welding consumable to ClassNK for approval for application in vessel construction. After a thorough testing and review process, ClassNK determined that MX-200F met the requirements of the ClassNK Rules and approved its use in ship construction.

The development and approval of MX-200F represents the latest success of ClassNK’s Joint R&D for Industry program which has provided funding and research support for nearly 300 joint maritime R&D projects since its founding in 2009.

For more information on this topic, please contact: ClassNK’s Material & Equipment Department at eqd@classnk. or.jp

July/August 2014 BC Shipping News 11

INDUSTRY INSIGHT Photo credit: Dave Roels (www.daveroels.com)

Of long life and magic metal Alan Dawson Co-owner, ABD Boats

I

t’s not often that you come across someone who is nearing 90 years of age and still active at work… well, technically 90. According to Alan Dawson, co-owner of ABD Boats, he already considers himself to be 90 – that is, working on his 90th year, about to start on his 91st. Given this very special occasion of his “90th ” birthday on July 15, BC Shipping News was pleased to learn that the often shy, modest Mr. Dawson had agreed to an interview.

So this month’s Industry Insight is slightly different from our usual questionand-answer format to review the issues of the day. While Alan certainly has his opinions on these, our focus looks more at the example of how passion for an industry, for its people and for life itself, provides the drive to contribute as much as he can for as long as he can.

So sit back, enjoy the read, and take away what you will from the lesson of Alan Dawson and his 91 years.

Before delving into Alan’s past, it’s useful to provide some context. Alan owns ABD Boats with Burton Drody. Since 1987, Alan and Burton have built a solid reputation as one of the West Coast’s most renown manufacturers of aluminum vessels. Operating out of the former BelAir Shipyards on the North Shore, ABD has built 60 vessels in aluminum including yachts, seiners, workboats, passenger vessels, water taxis, ferries, barges and 12 BC Shipping News July/August 2014

Given this very special occasion of his “90th” birthday on July 15, BC Shipping News was pleased to learn that the often shy, modest Mr. Dawson had agreed to an interview. tugs (two of those in steel) with many over 50 feet in length. Their current project is a 105-foot aluminum packer, the MS Amarissa Joye, for the James Walkus Fishing Company, that will be completed this year. And they have work planned out for the next three or so years with three tugs for SMIT. Alan and Burton are joined by a workforce of 18, three of them (Toshio Honma, Arvind Bhardwha and Robert Dion) with the company since the beginning, even earlier when all five plus Otto Hauswald (who joined ABD a number of years later) worked at Matsumoto Shipyards in the late 1970s.

Aluminum is the metal of choice at ABD Boats. Alan calls it the “magic metal” and with good reason. Among the benefits of aluminum: it is stronger than steel or fibreglass; more flexible (where steel will puncture and fibreglass will rip open, aluminum will bend); lighter than steel so it doesn’t require as much power to reach the same speed and reducing the weight of anything above deck improves vessel stability. Aluminum also requires less hull maintenance.

While both Alan and Burton are competent in vessel design, they collaborate frequently with naval architects — most notably, A.B. McIlwain Ltd. One of their more recent deliveries was the Kootenay for Samson Tug Boats Inc., an ASD ship-docking tug measuring 64’ by 32’7” with a maximum draft of 14’ now operating on the Main Arm of the Fraser River. The MS Amarissa Joye, currently under construction, was also a McIwain design. Given the long-standing relationship between ABD and A.G. McIwaine Ltd. — the first 54’ seiner built by ABD in 1988 was a McIlwain design — the company felt the sting of Al McIlwain’s passing in April. “Al has been much more than just a working colleague with us here at ABD,” said Burton. “He was a very respectful and kind man with a gentle demeanor. He was a true friend and we will miss him.”

Burton goes on to say that “Over the years, Al had taken on more of a roll as PR person. His son Steve and other employees carried out most of the design and stability work, while his daughter, Jan, handled most of the administration duties. Steve

INDUSTRY INSIGHT Photo credit: Dave Roels (www.daveroels.com)

and Jan will continue to operate the company as usual and I have no doubt that they will continue the successful path of Al McIlwain.”

In discussing the relationship between builder and designer, Alan was quick to add in the role of the owner as well. “The design comes after the owner has approved it and it’s the architect that is the go-between for all three parties. There are always changes to specifications once a project gets underway — mostly minor, but for bigger issues, we’ll go to the designer who will then raise them with the owner and come back with agreed-upon solutions.”

And while many companies have become bogged down in contracts that are countless pages long, ABD continues to use their five-page contract that has stood the test of 25 years. “There are remedies for both parties if either wants to cancel or significantly amend specifications,” said Alan. “Sometimes, the contract will start off with five pages and end up being 20 but we always start with the original contract I developed when we started ABD.” Which brings us back to the early days and how Alan’s past led to the present success of ABD. Alan was born on July 15, 1924 at St. Paul’s Hospital in Vancouver. His younger years were spent with the family furniture manufacturing business (Restmore Manufacturing) where he gained skills in purchasing, traffic and receiving. As his father and uncle were both engineers during the First World War, Alan followed suit when the Second World War broke out. In 1941, he joined the 6th Field Company in Vancouver as a sapper in the Reserve Army. When he turned 18 in 1943, he transferred to the active army and took four months of basic training before being sent to NCO (Non-Commissioned Officer) school where, upon completion, was promoted to Corporal and took an Engineering Section through basic and advanced engineer training before being sent overseas. This all happened quickly as Britain was building up for the invasion.

The Engineering Section Alan joined specialized in bridging and watermanship. They built 32 Bailey bridges in Holland and Belgium — mostly at night and mostly on pontoons — each job lasting no more than 10 days. One memorable occasion for Alan was the rescue of paratroopers involved in the failed attempt of Operation Market Garden.

Alan Dawson and Burton Drody, co-owner, ABD Boats (in front of an Osborne propeller on the MS Amarissa Joye).

After three years of service overseas, Alan returned to Vancouver in 1946.

His apprenticeship for the profession of a wood butcher found him on the RCMP’s St.Roch (yes, the one that rests in the Vancouver Maritime Museum) where he renewed the hull planks at Burrard Yarrows Shipyard. He also worked with his brothers, Lorne and Don, to build the Alordon, an all-wood, 17-footer with oak frames, yellow cedar steamed planks, affixed with slot head brass screws and mahogany transom, and powered with a 25hp universal inboard.

From 1947 to 1979, Alan continued to work with wood — from the family business at Restmore until 1962, to Harrigan Industries in Richmond, then to Citation Cabinets and further to ZerO-Loc, Artisan Manufacturing and Dominion Construction. Having joined the Purchasing Management Association in 1947 (and, incidentally, currently the oldest

actual working member), Alan’s roles and responsibilities grew with each move — from purchasing agent and traffic manager at Restmore, to vice president and general

July/August 2014 BC Shipping News 13

INDUSTRY INSIGHT manager at Harrigan and then as materials manager and assistant plant manager of the much larger Citation Cabinets.

It was in 1979, when Alan joined with Matsumoto Shipyards, that he found the magic of aluminum. At Matsumoto, Alan organized and ordered materials for the aluminum shipbuilding operation to complete two fireboats for Pemex in Mexico — the operation took 32 months with a total of 25 employees. Originally, Sam Matsumoto specialized in wood but in early 1964, he changed from wood to steel and eventually into aluminum. Until that time, aluminum boats assembled with rivets could not withstand corrosion.

Sam’s research into the use of aluminum welding and aluminum alloys to come up with a solution led to the first aluminum seiner on the West Coast, the Sally J.Rogers. After building the Sally J.Rogers in 1965, his competitors warned that the bottom was going to fall off in six months.

Fast-forward to 2014 and the vessel, which has never been painted above the waterline, is still operating in this area. Apart from the introduction of new alloys produced over the past 30 years, new welding techniques, and more stringent inspection techniques, aluminum continues to be a very popular choice for many vessels.

Photo credit: Dave Roels (www.daveroels.com)

From the first skiff built in 1987 (above) to their lastest project, the MS Amarissa Joye (below), Al and Burton have enjoyed the partnerships created with employees, customers and suppliers.

14 BC Shipping News July/August 2014

Alan at the beginning of the Second World War.

Following Matsumoto, Alan moved over to Bel-Air Shipyards in North Vancouver (the current ABD location) and West Coast Shipyards in Richmond as materials manager for the construction of two oceanographic research vessels with steel hulls and aluminum superstructure. Alan continued on at Burrard Yarrows and Versatile Shipyards until 1986 as buyer for the completion of three steel-hulled ships (with aluminum components) for the Canadian government.

As previously mentioned, it was in 1987 that Alan and Burton started ABD Enterprises. With Matsumoto closing, Alan and Burton saw an opportunity to start ABD with a solid nucleus of employees adept at working with aluminum.

While most people at the age of 63 are starting to think of retirement, Alan was just getting going.

When asked outright what drives him, Alan says he has to keep occupied.

“Doing something that’s constructive and beneficial, that’s what drives me. If I don’t work, I’m bored.”

And the secret to a healthy life? “I’m a vegetarian. I haven’t smoked for 75 years.

I drink a lot of coffee and I drink the odd glass of wine.” He also canoes, kayaks, swims, fishes, camps, enjoys playing both

Al displays the medals awarded for his efforts during the Second World War. July/August 2014 BC Shipping News 15

INDUSTRY INSIGHT choral and organ piano and is part of the Barbershop Harmony-Dairyland Glee Club. He has been the choirmaster and organist for the Hastings United Church and the Cliff Avenue United Church for 20 years and has had the equivalent of a full career in the Scouts, moving from Scout Master to District Scout Master then Regional Commissioner for Burnaby. He holds the 20-year service medal and was awarded the Silver Acorn Medal in 1968.

In addition to all of that, he has been a key member of the Canadian Institute of Marine Engineering Vancouver Branch since 2002 (and prior to that, part of the Society of Naval Architects and Marine Engineers).

But it’s obvious his passion is for aluminum and ABD Boats. “Our number one priority is our customer,” he says. “While Burton and I may own the company, we have many partners — our staff, our customers and our suppliers.”

One thing is for certain — when Alan says “there aren’t many like me”, we would have to agree.

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HISTORY LESSON

Photo credit: Dave Roels (www.daveroels.com)

Spies, gamblers and yachtsmen: The story behind the Wigwam Inn

By Lea Edgar Librarian/Archivist, Vancouver Maritime Museum

F

or many years, Indian Arm has been a prime location for day cruises. One sight that cannot be missed is the renowned Wigwam Inn. Though privately owned and inaccessible to the public, its distinctive design and historic charm can still be appreciated from the water. The Inn is over 100 years old yet it is still thriving. A strange and intriguing history, this hotel is a must see for any cruise up the fjord.

The Wigwam Inn opened in 1910 as a luxury hotel for the rich and famous.

The hotel was originally owned and operated by Gustav Konstantin Alvo von Alvensleben of an aristocratic German family. The Inn was originally to have a First Nations theme, but it was redesigned into a German Luftkurort (the literal

The Inn is over 100 years old yet it is still thriving. A strange and intriguing history, this hotel is a must see for any cruise up the fjord. translation is “air spa”). The hotel was scheduled to open on Empire Day (May 24, 1910), however, due to delays it was opened three weeks later.

Many steamers made the trip up the fjord to visit the Wigwam Inn, including Skeena, Alluvia, Fruilda, and later Hollyburn, Belcarra and Harbour Princess to name a few. The current Harbour Princess of Harbour Cruises still makes the trip up Indian Arm today. In the early days of the Inn, a day trip cost as little as one dollar and a weekend trip was five dollars.

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18 BC Shipping News July/August 2014

The Wigwam’s first owner from its luxurious heyday is a bit of a local legend. After being cut off from his wealthy family, von Alvensleben came to Vancouver via El Salvador with only four dollars in his pocket. He worked hard and earned enough money to create the Alvensleben Finance and General Investment Company, among others.

It was rumored that Kaiser Wilhelm II, a friend of his father, invested in the Wigwam Inn. Besides the hotel, von Alvensleben had many other local investments and quickly grew rich. In fact, what was his estate is now the home of the Crofton House School. Sadly, his success in Vancouver was short-lived. During the First World War, von Alvensleben was accused of being a German spy and consequently, the Wigwam Inn was seized by the government. From that point forward the hotel was no longer associated with the rich and famous, such as John D. Rockefeller or John Jacob Astor. In fact, John Jacob Astor signed the guest book on April 15, 1911, exactly one year before he perished in the Titanic disaster. In 1915, the Harbour Shipping Company leased the Wigwam Inn and operated the business until 1919. After 1920, many owners came and went. The Harbour Navigation Company leased and restored the hotel from 1925 to 1929 as a holiday spot for its passengers. During the depression period of the 1930s, the Inn scaled back its operations and acted as a day lodge to serve recreational boaters. The hotel was so well known to local day-trippers that a song was even written about it. In 1951, Curly Switzer sang, “In this land of joy

VANCOUVER MARITIME MUSEUM Courtesy of Niall Williams.

Then and Now. The sternwheeler Skeena in front of the Wigwam Inn, circa 1912. Courtesy of the City of Vancouver Archives. AM54-S4-: LGN 546. The Wigwam Inn in 2014. and sorrows and the world’s great strife within, climb aboard my little sailboat, come with me to the Wigwam Inn.” Though Curly’s song was catchy, the late 1950s was a period of decline for the hotel.

In 1962, William (Fats) Robertson and Rockmill (Rocky) Myers came up with a new plan for the hotel. Fats and Rocky wanted to build a casino for millionaires.

However, the casino was short-lived as the police were soon tipped off and arrested 15 people and also confiscated liquor and gambling equipment. In the end, Fats and Rocky were found guilty of attempted

bribery of a police officer and sentenced to six years in prison.

During the late 1960s and into the 1970s, an Albertan man attempted to restore the building and repair the damage caused by lack of maintenance and vandalism. However, he did not complete his project and again, the hotel sat unused until 1980 when it was purchased and the renovations completed. Eventually, in 1985, the Wigwam Inn was purchased by the Royal Vancouver Yacht Club.

Club members spent countless manhours restoring and repairing both the

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building and the grounds to once again recall its lavish past. The Club’s new outstation was officially opened on June 23, 1985. The first cruise for the Club members included a potluck dinner, dancing, games for children and many more celebratory activities. The Yacht Club members continue to maintain and enjoy the wonderful historic hotel and, with any luck, it will survive for another 100 years.

Lea Edgar started her position as Librarian/ Archivist for the Vancouver Maritime Museum in July 2013. She can be contacted at archives@vancouvermaritimemuseum.com.

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July/August 2014 BC Shipping2/7/2013 News1:14:42 19 PM

B.C. SHIPYARDS B.C. shipbuilding and repair industry

Strongest in decades

By Ray Dykes

N

20 BC Shipping News July/August 2014

Smaller yards up and down the coast remain hopeful there will be a trickle down effect and at least one Vancouver Island shipbuilder is calling for the Provincial Government to require that “we build our ferries in B.C.” Here’s a snapshot of how the B.C. shipbuilding and repair industry performed in 2013 and the major projects of 2014.

Victoria Shipyards

If 2013 wasn’t a record year then it was ever so close, says Victoria Shipyards Director of Operations, Steve Baker.

Part of the Seaspan group of shipyards, Victoria, which celebrated its 20th anniversary in April, has enjoyed a “very strong start to 2014” and the work keeps

on rolling in, employing up to 1,200 including contractors on a frenzied pace while modernization continues.

In April 2013, the frigate HMCS Winnipeg was alongside and readying for delivery after its FELEX (Frigate Life Extension Program) modernization when it had, in Canadian Navy parlance, an “allusion” with the departing American fish factory trawler American Dynasty which rammed the tied-up frigate. Victoria Shipyards won the contract

Photo credit: Dave Roels (www.daveroels.com)

ot since the busy new build years of the Second World War has the British Columbia shipbuilding and repair industry been as vibrant as it is now.

That’s the feeling of Brian Carter, President of Seaspan Shipyards, as he looks at the massive preparation almost completed and ready for the start of work under the federal National Shipbuilding Procurement Strategy (NSPS).

Seaspan began pursuing NSPS contract work five years ago and its success in submitting winning bids will lead to up to 30 years of work, says Carter. For him, shipbuilding success is “all about preparation.”

“We have identified 17 vessels in the non-combat package and 12 others behind that,” he adds. “I don’t know of a better shipbuilding industry in the world today than we have in Canada.” The lower Canadian dollar is also attracting more work from the U.S. Smaller yards up and down the coast remain hopeful there will be a trickle down effect and at least one Vancouver Island shipbuilder is calling for the Provincial Government to require that “we build our ferries in B.C.” The prospect of a big sockeye run this year has more fishing boats being prepared for the season than in some past years and one or two yards are even being forced to turn away work in what is termed “a new chapter in growth and prosperity.”

Seaspan has hired 175 new management staff and is ramping up its production workers for a team of 1,000 within three years as it readies for what Carter calls “a long game.”

For others, the respite and “good times” have come too late. The Nanaimo Shipyard and McKenzie Barge & Marineways in North Vancouver are among this year’s casualties.

Steve Baker, Director of Operations, Victoria Shipyards, monitors progress of work on the Pacific Princess, in dock for eight days in May.

Photos courtesy Daigle Welsting & Marine

B.C. SHIPYARDS

Daigle Welding & Marine is enjoying a “pretty healthy” market — photos above show the new patrol boats destined for Port Metro Vancouver at various stages of construction. to repair the frigate’s hull and other structural damage, some of which was repaired at the Fleet Maintenance Facility Cape Breton at the Esquimalt Naval Base late in 2013.

The year rounded out with the 1,300 passenger liner Grand Princess in for the fitting of its first sulphur scrubber mounted on its uptake as the cruise industry does its bit to reduce marine emissions.

The yard continues on its in-service submarine maintenance contract using its new, purpose-built repair facility (a new threestorey Operation Centre will be completed by the end of the year) and after sea trials, HMCS Chicoutimi will be back in service in the third quarter. Now, HMCS Cornerbrook is in for what could be 30 months for an ELMP (Extended Life Maintenance Period).

As well, HMCS Ottawa is in for her FELEX work and will occupy two sections of the Esquimalt Drydock through the Fall.

March saw the Totem Overseas Trailer Express roll-on, roll-off truck carrier Midnight Sun in for regular maintenance and survey work including underwater painting. And in May, the 680-passenger Pacific Princess was in for an eight-day frenzy of work involving up to 800 employees and owner-contractors for an underwater hull paint, steel work, propeller hubs and davit testing.

In a double-docking of two deep-sea trawlers in April, the Aaron Seafoods-owned Northern Jaeger and the Glacier Seafoods Pacific Glacier were in for similar work including rudders, underwater paint, above deck paint, and surveys. And the large Northlands barge Nana Provider was in for 25 days in June to add cell guides to allow it to carry containers as well as mixed loads on the Alaska run.

Point Hope Maritime

It was business as usual as this Victoria Inner Harbour shipyard continued to have what General Manager Hank Bekkering calls an “okay year” in 2013 and more of the same into 2014. A steady diet of Canadian Navy work and a vessel or two now and then from BC Ferries has been the order of the day for the yard which currently employs 30 full-timers, but has been as high as 120.

Work in 2013 included the 1969-built ferry Tachek which left in the early New Year of 2014 after a mid-life refit including all new electrical, propulsion controls, aluminum work, new Mitsubishi engines and even a new bow thruster.

The navy work included the Kingston Class Coastal Defence Vessel HMCS Nanaimo in for its five-year international ABS

surveys including underwater hull work, sea valves, minor steel repair, tank inspection and cleaning, some electrics, and painting the hull, main deck and house works. Three Victoria Shipyard-built Orca patrol training craft — the Orca, Moose and Cougar — were also given a similar five-year ABS survey.

Daigle Welding & Marine

Success with a Nanaimo harbour patrol boat in 2012 for this Campbell River new build and repair yard has helped land two more contracts, this time with Port Metro Vancouver.

Daigle Welding & Marine Ltd. is completing its largest contract ever for the port and President & Owner Steve Daigle says the two patrol boats were due in service by the end of June. He’s really happy with the way the big contract has gone for the small yard.

Daigle is enjoying what the boss describes as a “pretty healthy” market at the moment and as well as the PMV harbour patrol vessels, the yard is about 20 per cent into the construction of two 37-foot pilot boats for Tymac Launch. The twin diesel, John Deere-powered vessels will skip along on Hamilton 322 water jets.

Not far away in the yard, a 36-foot landing craft is under construction for a Prince Rupert company; and they’re also busy building a 12-passenger crew boat (Volvo D9-500-powered, ASDN surface drive) for leasing through Daigle’s subsidiary company, EagleCraft Leasing, bringing that fleet to 12.

A 30-foot aluminum pleasure cruiser is under construction for a Nanoose Bay buyer and the former MV Stikine, now retired from RCMP patrol boat service and built by Westbay, is being transformed into a gooey duck boat with new decks, power, live tanks and a new back canopy.

McTavish Welding

Campbell River and its marine links gave this small yard a record year in 2013 and owner Rick McTavish is shaking his head at how busy the past two years have been. Most of the business is from Vancouver Island and the crew of eight at McTavish has built over 20 boom boats over the past two years.

Most of the work is general fabricating and steel rolling for small boats, but the team has built a dozen 68-inch propeller nozzles, done work for West Coast Tug & Barge and special marine work platforms for Metro Vancouver, and also does marine repairs. Currently, there are three boom boats on the shop floor and three more on order for Gowlland Towing, Western Forest Products and work boat provider Pacific Cachalot.

July/August 2014 BC Shipping News 21

B.C. SHIPYARDS Ocean Pacific Marine

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It was yet another busy year in 2013 Owner & President Bruce Kempling sees much the same in 2014 “as lots of for this small to medium-sized Campbell people are prepping up for what is expected to be a large sockeye salmon run River yard and its team of about 35.

Owner & President Bruce Kempling sees and the prawn fleet is also busy.” much the same in 2014 “as lots of people are prepping up for what is expected to be bilge pumping system and a small amount foreshore, expansion of public walkways and amenities, the building of floating a large sockeye salmon run and the prawn of hull painting. homes (now the major use) and some Through the past winter, the yard has fleet is also busy.” interim shipyard services. been working on repairs to a 70-foot Projects in 2013 included fiberglass and Part of the property parcel of about engine repairs to the Comox-based search U.S. Marlow yacht which hit a rock near & rescue craft CFAV Black Duck after a Cortes Island. The job involved hull and eight acres, including water lot, is leased grounding late in 2012, while the navy keel work and a new drive system plus an from the Nanaimo Port Authority. The uplands part may eventually be transtug Parksville was in from September upgrade of the state room. formed into a seniors’ independent living through to February 2014 for a complete complex. refit including an engine rebuild and Nanaimo Shipyard Valliere is drawing up his lease agreeThere’s a new owner of the Nanaimo sandblast and paint. ment with the port authority and is not Shipyard and he has several different proThe yard is also winning more and sure what he’ll do with the 30, 80 and posals on his mind, almost all of them more work for nearby fish farms including extensive work on a 70-foot steel likely to end the life of the shipbuilding 1,000-tonne marine lifts which were part of the old shipyard, but visiting vessels ex-U.S. Army Vietnam veteran land- and repair side of the business. will be able to use the services for months Most recently owned by Ron Van ing craft, which was given a sand blast yet while extensive site cleanup is done.

Wachem and in operation since the 1930s, and partial replating plus painting. The the business was in financial difficulties. owners, Grieg Seafoods, also had hatches The yard is now the property of construc- Esquimalt Graving Dock added and is scheduling other upgrades.

In a busy 2013-2014 fiscal year, the tion company owner Scott Valliere and MarineBCshipping_2014ad_out.pdf Harvest brought its steel, self1 2014-05-23 14:31:03 propelled barge Geo in for new rubber, his plans include an expanded marina, Esquimalt Graving Dock berthed 64 vesmechanical and electrical work, a new other marine commercial uses on a filled sels for local shipyards and had revenues

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22 BC Shipping News July/August 2014

B.C. SHIPYARDS of $10.2 million, according to Public Works & Government Services Canada.

At the end of May, it was coping well with demand for docking and was 95 per cent booked.

Some $45.2 million was spent under the Federal Contaminated Sites Action Plan and another $2.1 million on minor capital projects at the facility, which has existed in one form or another since 1887.

There are no current expansion plans.

Esquimalt Drydock Company

After a busy 2013, the yard this year has been quieter, says Esquimalt Drydock Superintendent and Dockmaster Norm Wickett. The workload from last year was impressive and was bolstered by a steady diet of the BC Ferries fleet including the 1958-vintage North Island Princess — the oldest working ferry — in for a refit for about six weeks in March and April, including dry docking, shaft work, painting, sea valves and underwater work.

The Queen of Cumberland spent six weeks getting underwater work including painting and sea valves, while the Quinsam called around Christmas and stayed through February this year for steelwork, sandblasting from the top of the masts to the keel, plus sea valves and some minor steel work. Some work was also done at Swartz Bay on the Spirit of British Columbia and the Spirit of Vancouver Island replacing fuel and oil purifiers.

The Skeena Queen was in dock in April 2013 for a new engine and generators, plus new keel coolers, underwater paint, sea valves and topside paint over 15 days.

She was followed by the Mayne Queen for 12 days in May for underwater paint, sea valves and topside paint and the 1965 veteran Powell River Queen was in for a month in September for similar work.

As the year wound down it just got busier, Wickett recalls. In a double-docking in November-December, the Queen of Cowichan and an old timer, the 1964built Queen of New Westminster, were in for five weeks for major shafting work, underwater paint, sea valves, steel work, topside paint and electrical work.

“That was the peak of our manpower at 60,” says Wickett, whose crew was down to “only five on maintenance” at the time of interview as the quieter summer period began and the yard “is bidding on most anything.”

Non-BC Ferries work included the Fraser River Pile and Dredge Ltd. new

workhorse — the trailing suction hopper dredge FRPD 309 — which was given superstructure and side shell repairs at the old De Vito Shipyard in Delta, plus ongoing piping work and other jobs including A60 electrical upgrades.

BC Ferries at Deas

No longer known as Deas Pacific Marine, the BC Ferries shipyard at Deas has been “very busy” overall and “super busy” in mechanical, says Trades Supervisor Andrew Hohert. The days of

trying to be a stand-alone commercial shipyard have seemingly gone and the yard and its team of up to 145 employees are concentrating on servicing one of the largest ferry fleets in the world.

That often means call-outs to Swartz Bay for alongside service (Coastal Celebration) or work done at another shipyard. There was even major work done for the first time in Bella Coola on the 1973-built Nimpkish involving plumbing, welding, ship safety and electrical. The work was completed late in

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July/August 2014 BC Shipping News 23

Photo courtesy Seaspan ULC

B.C. SHIPYARDS

The modernization program is now 85 per cent complete at Seaspan’s Vancouver Shipyards.

May this year and involved all trades except mechanical.

The North Island Princess this year had both main engines out for a rebuild, plus improved top-end generators. In another major job, the 1964-vintage Queen of Nanaimo was in last year for an engine overhaul and work on its three CAT generators.

The job orders read like a fleet list, but current work includes a full refit for the Quadra Queen II involving the two main engines and three generators, plus electrical, plumbing and welding work; while the Skeena Queen has just left the yard after an overhaul of the ferry’s right angle drive unit and main engines.

Vancouver Shipyards

Balancing work and a big share of Seaspan’s $200 million modernization program, which is now 85 per cent complete, has been the challenge for Tony Matergio, Vice President & General Manager of Vancouver Shipyards.

Charged with maintaining the Seaspan tug and barge fleet while pursuing a healthy diet of other contracts and recruiting skilled workers from all over the world, he says the first NSPS build, an Offshore Fisheries Science Vessel will begin in October. Having “Big Blue” — its new 300-tonne gantry crane up and running — and a variety of new workshops also helps.

Looking back on a busy 2013, Seaspan chip barge new builds 9, 10, 11 and 12 were completed along with two gravel barges for the expanding fleet.

This year kicked off with the docking and refits of 16 Seaspan vessels — six tugs and 10 barges — plus a host of other 24 BC Shipping News July/August 2014

contracts including the Alaskan landing craft Nunaniq in for a docking and refit which involved steel repairs and U.S. Coast Guard surveys.

Seaspan owner Denis Washington has his 120-foot superyacht Impromptu in for a high pressure deck wash and paint, plus stabilizer work. One of Translink’s Seabus vessels, Burrard Otter also docked for a week for minor refit and repairs.

The 110-foot research vessel Medeia was in for five weeks on a scheduled docking and refit before heading back out for the Alaska Department of Fish & Game. Dunlap Towing, of La Conner WA, sent in two of its chip barges — Dunlap 216-7 and 216-8 — for standard docking and refit, blast and paint, and Fraser River Pile & Dredge had its derrick barge R.E. McKenzie in for a docking and refit including steel work.

The dump scow Delcat 120 from the Vancouver Pile Driving fleet also called for steel work and a sandblast and paint.

Matergio says over the rest of the year — given that Vancouver Shipyards will do most of the NSPS work — Seaspan is also chasing a couple of BC Ferries refits, U.S. barge operator refits, and “one or two smaller navy jobs.”

Vancouver Drydock

Currently running at about 95 per cent dock occupancy, the two Vancouver drydocks keep Vice President & General Manager Paul Hebson hopping. He’s been with the Seaspan-owned facility for 10 months or so but knows last year was busy.

Contracts in 2013 included the BC Ferry Northern Adventure in for work on

the tail shaft, propeller hubs, bow thrusters and stabilizers, which took 20 days.

The ferry Island Sky needed a full main deck sandblast and paint with a thick Sprayguard coating, which consumed another 20 days.

The 134-metre Russian-owned pleasure yacht Serene called for routine maintenance including a major refurbishment of the vessel’s stabilizers. A Seaspan deck barge was also dispatched to northern B.C. for wreck recovery work.

So far this year, an articulated tug and barge, the Commitment, and barge 650-6 were dry docked together in January for engine work, tail shafts, hull blasting and coating, a cargo system overhaul and a full deck blast and paint.

In March, the Canadian Coast Guard Sir Wilfrid Laurier called for three and a half weeks for an ABS, including tail shafts, rudders, painting and seal renewals. The cable-laying vessel Wave Venture, which is based in Victoria, was in for major double-bottomed steel replacement and the fish factory Ocean Phoenix dry docked for 19 days for a fish plant upgrade and hull and machinery surveys.

In a frenetic nine days in June, the 702-passenger, 30,277-deadweight-tonne cruise ship Regatta was a hive of 900 workers as the vessel received a full accommodation refurbishment, steel renewals, stabilizer and pipe work, hull blast and paint and tail shaft and rudder work.

That was the employment peak of the year — many of the 900 were vesselowner contractors — but with bookings already into 2015 and 2016, the drydock company keeps 150 employees real busy.

Allied Shipbuilders

New owner Chuck Ko looks back on what he calls a “steady 2013 with nothing outstanding and no big new construction.”

But, depending on the project, employees fluctuated from 65 to 85 for regular work and up to 120 for a big BC Ferries major refit.

There’s only one of those to talk about from 2013, the 1975-vintage Kwuna, which was in the yard for three months for a full paint, wheelhouse upgrades including an enlargement to give a better operating station, improvements to the passenger and crew accommodation and installation of a new hot water heating system.

B.C. SHIPYARDS “We have done a lot of bread and butter work, routine maintenance for our commercial customers,” says Ko. However, there haven’t been many projects to bid on in 2014 although Allied is hoping to win work on the Quadra Queen which is now up for bid.

“There’s been no real lull, but we certainly haven’t captured any big jobs,” adds Ko, who bought the yard including the enclosed Dollarton Ship Yard in 2012 from the McLaren family.

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Arrow Marine

With one of the steadiest workloads in the business, Arrow Marine Services on Mitchell Island in Richmond “is always looking for a better year,” according to Administrative Manager Brad Guest. In the fiscal year ending March 30, the yard handled over 200 projects.

A new 330-tonne Marine Travelift has helped and Canada’s diminishing fishing fleet — Guest can name half a dozen boats that have been sold to U.S. buyers for use in Alaska — has shown up again with the prospect of a big sockeye salmon run.

Bread and butter, in and out work such as minor repairs, anodes, and painting keep the yard and its 24 employees busy year round.

Major highlights in 2013 included the tug DD Catherwood in for a revamped engine room, repowering with Cummins, plus new paint and a two-winch rebuild. The crane-equipped contractor’s barge Han Mar Constructor had a major hull painting and other anti-flaring paintwork. The ex-navy 75-foot, self-propelled landing craft Lituya from Petersburg, Alaska, was in the yard January-February for hull plating and a sand blast and paint job, while the Seaspan tug JRW had bow and stern fendering work, an engine cooler flush, port gear repairs and an anode change.

A long list of tugs and fishing boats was in for regular CSI surveys including the Pacific Towing tug Pacific Ranger II with the usual sea valves and shaft, plus repairs to the hull and ballast tank, anchor winch and capstan. Late in 2013, the Canfisco fishing boat Cape Stephen docked after grounding and had frame repairs, new bow and stern plating and repairs to the forward collision bulkhead and beaver tail.

This year saw the aluminum passenger ferry Centurion VII in for a CSI for Western Pacific Marine, which operates the vessel for BC Ferries from French Creek (Vancouver Island) to False Bay (Lasqueti Island). The work included a clear coat added to the hull to stop oxidation, passenger accommodation repairs and upgrades, and engine and gearbox repairs.

Ongoing work includes the Mercury Launch & Towing 50-foot tug Mustang in for a major refit including revamped deck work, new tankage, extra forecastle space for the crew, an engine repower and a new wheelhouse. The SMIT tug Chinook was also in for fendering repairs.

The Vancouver fireboat I was in for work on its Hamilton jet propulsion and paint, while an unusual site in the yard was the 75-foot pleasure boat High Pockets in for an all-grip paint job, minor refit work and repairs, plus a new hot tub.

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Sylte Shipyard

For a yard that seems to have many of them, 2013 was another “good year” says the President and owner of Sylte Shipyard in Maple Ridge, Erling Sylte.

The plucky, 86-year-old, who started his own yard in 1988, has a loyal crew of 14 employees and the team is kept busy on tug and fishing boat repair and a healthy assortment of new builds.

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July/August 2014 BC Shipping News 25

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By June 2013, Sylte and his crew had completed a new build 30-foot tug for Gowlland Towing of Campbell River.

The year also saw the completion and launch of the 49-foot Helen J for Jones Marine and the conversion of a former RCMP patrol boat (built for Expo 86 duties) for use as a 45-foot fishing boat.

Another new build for Tymac Launch Service Ltd. is nearly complete — a twin screw 35-footer — and Sylte is proud of the work from his crew. “It’s a nice job and Tymac is a nice company to work with.”

So far this year, among its usual work load including a variety of propeller nozzles and even a wheelhouse, the yard has been busy repairing the aluminum Orca Spirit which suffered damage when it ran aground. Sylte’s team is putting on a new bottom and hopes to have the work finished in June for owners Orca Spirit Adventures.

Work will also start soon on a new 65-foot tug for Gowlland and that is expected to take about a year.

ABD Enterprises Ltd.

The boss is even older at ABD where 90-year-old Al Dawson is co-owner with Burton Drody and has been in the work force since he finished Grade 10. Six of the 18 employees have been together for 40 years on the North Vancouver site, which does no repairs and specializes in new builds, largely tugs. (See more on Al Dawson on Page 12).

Two tugs were completed in 2013 for Samson and Standard Towing and work was started on a 105-foot fish packer for James Walkus Fishing Co. Ltd. which has beefed up somewhat since the original contract and now is expected to be launched in July.

Al says the market is “quiet generally” but his yard has landed a big, three steel-tug contract with SMIT if all three 71-footers go ahead as planned and that should keep the crew busy for three or more years. The first delivery is planned for October 2015.

Fraser Shipyard Industrial Centre

A smaller, new home has forced Fraser Shipyard to lose access to larger 700ton marine lifting equipment near the Queensborough Bridge and that has cost a couple of jobs so far says Part-Owner Elias Huddard, who is in partnership with the Esquimalt Drydock Company.

26 BC Shipping News July/August 2014

B.C. SHIPYARDS Photo courtesy Sylte Shipyard

Fraser Shipyard is reinventing itself at Shelter Island and has use of a 220-tonne Travelift which Huddard says has helped “a little bit, but not much.” Most tugs and fishing boats are in the 250-tonne range and opportunities are being lost by the lack of a suitable lift.

That’s why the yard and its eight employees are regularly doing off-site work for BC Ferries, often to meet the needs of the Esquimalt Drydock. Huddard is hopeful that there will be a healthy flow down of work for the smaller yards once NSPS gathers momentum at Seaspan.

Tom-Mac Shipyard

This non-union Richmond yard and its Sylte Shipyard and its loyal crew of 14 have been kept busy on tug and fishing boat repair and a healthy assortment 18 employees is as busy as it has ever been of new builds. and is routinely forced to turn away work.

The Gotland, a former fishing boat con“It’s been that way for five or six renewal and the fish boat Cape Beale was years now,” says Office Manager Kevin in the yard for four months until July 2013 verted years ago to a pleasure craft, was in Campbell. “We are still focusing on tug for conversion work including a new alum- the yard for six months through May 2014 boats and Catherwood Towing is still our inum bow deck plus aluminum bulwarks for a major refit including new aluminum and rebuilt forecastle. decking, bow and bulwarks, new steering, major customer.”

The R.N. Hodder, from the log and stainless steel water tanks, a rebuilt anchor The tug Seymour Crown was in the yard in March 2013 for a cabin rebuild, a new barge towing specialists, Hodder Tugboat and a recaulked hull. sponson and rebumpering all around. The Co., had all rubber bumpers replaced plus Tom-Mac is a favourite with tugs and Pacific Shipping May_Layout 1 5/28/14 9:28 AM Page 1 Miller Richmond was in for a double engine stern and bow and sponson repairs.

Campbell says the yard will even put work

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B.C. SHIPYARDS on pleasure craft on hold to keep the tug fleets running. “We treat them like they are the main customer, not just another customer,” he adds.

Marine was given a steering rebuild and new aft deck plating during a CSI survey.

The fish farm packer, the 60-foot Island Joye of the Kitassoo First Nation in Bella Bella had major work replacing the back deck, a new fish hold, a new stun and bleed table and new fuel tanks in 2013. And the 60-foot fishing boat Leslie Ellen owned by the Ahousat First Nation on the west coast of Vancouver Island, was given a complete rebuild including hydraulics, a repaint and a new drum seiner, all completed in November.

The CT Titan was in for new rubber, a sandblast and paint, and some hull plating replacement completed early December, and the yard also launched a new build catamaran named Revolution I for Marine Harvest earlier this year.

Another departure earlier this year was the tug Tymac Ranger after a complete rebuild including repower, new bow thruster, revamped hydraulics and a sandblast and paint. The Maren J tug completed a half-life refit in April this year including a rebuilt tow winch, stripped decks and bulwarks, a rebuilt front end, new rubber, a sandblast and paint and new shaft barrels and struts...“it left here looking like a new boat,” says Bell.

McKenzie Barge & Marineways

It’s over…might be the final words from this North Vancouver barge repair company. The land has been sold and Controller Brian Moffatt says that after a slow 2013 and 2014, the operation is not proving viable and will close in August after 70 years in business.

The land parcel bought by Polygon Developments also includes the Dollarton Shipyard — part of Allied Shipbuilders Ltd. — and that was a surprise to some, but it looks as if residential town homes and apartments are in the future of the marine land parcel as it sailed through a District of North Vancouver meeting late in May. Polygon will be seeking a development permit now that it has rezoning, bylaws and Community Plan approvals. Site cleanup will also be a factor.

Bracewell Marine

Mark 2013 down as an “outstanding year” for Bracewell Marine in Richmond. “We’ve been so busy we have had to put boats in the water to make room for others,” says General Manager Tim Bell.

Usually going head-to-head with the likes of Allied and Arrow, Bracewell Marine has had a good variety of work. The yard completed the cutting in two of the 61-foot pusher tug Miller Mission, later renamed Blake Cooper, and a crew went up with it to Fort Liard NWT for the reassembly. Two brand new 34 12 CAT engines and twin disk gears were also installed in an unusual project in the field.

Bracewell did repairs to the Tidal Towing tug Harken 10 which was damaged in a marine lift collapse, and had the vessel back in the water by September. The tug Lawrence L of Gisbourne

Meridian Marine

In what is being called “a year of transition,” the marine construction and ship repair facility Meridian Marine Industries Inc. moved from being largely a mobile service slightly over a year ago to being one of the largest yards around with 200,000 square feet of covered workshop and 500 feet of dock on the North Fraser in Richmond.

Regular calls have included service work for BC Ferries at Deas shipyard and expanded services — refits, repairs and upgrades — for fleet boat maintenance for companies such as Ledcor, Catalyst Paper and Lehigh Cement, says co-owner Tom Ferns.

Employees range from 27 today to a peak of 64 and the year has started strongly working on the ferry Queen of Surrey on a major refit. “For the rest of the year,” says Fern, “we’ll be working with multiple firms on fleet service and repair work.”

Meridian is keen to bid on new build tugs, fish boats and barges and Ferns says there is enough business pending to give the company a strong year. A drydock suitable for small tug boats and barges has arrived and the yard has a 1,200-tonne marine lift suitable for the shallow draft of the river. Fabrication work is also being done for the Alberta oil sands in the tailing pond environment.

Photo courtesy Bracewell Marine Group

West Bay SonShip

The crew from Bracewell stands on deck of the old Blake Cooper, now known as the Miller Mission.

28 BC Shipping News July/August 2014

With the new build yacht and pleasure boat industry “soft” these days it pays to have a boat to exhibit at the upcoming Seattle Boat Show (September) and the Vancouver Boat Show (February next) and that’s what Wes Vermeulen, President of West Bay SonShip Yacht Builders Ltd., plans to do.

It would also help if the Canadian dollar continued to weaken against its U.S. counterpart to help boost this “boutique B.C. industry” which has been reduced to a small handful of companies. In the meantime, meeting the service needs of existing customers is growing more and more important.

West Bay in Delta will complete a luxury 72-foot yacht for a repeat Calgary buyer this summer with its three staterooms, two heads on the main deck level, a galley dinette and even a sky lounge.

“There are some inquiries for additional boats,” he adds.

“There’s nothing yet, but there are interested buyers.”

Ray Dykes is a journalist who has worked his way around the world as a writer/photographer. Ray can be reached at prplus@ shaw.ca.

ASIAN SHIPYARDS Shipbuilding in Asia:

A new dawn breaks...

By Jaya Prakash

I

In moves clearly amounting to what may be the ‘new normal,’ Asian shipyards — or, at least those behemoths and trendsetters — are increasingly latching onto technology and quality design work as a means to “bring home the bacon.” home the bacon.” Such developments are latently acute in nations where shipbuilding and shipping-related industries have now formed the mainstay of economies.

Korea’s Samsung Heavy Industries had reportedly built four ultra-deep water drill ships for Maersk, the world’s household name in container shipping. The ships are designed to burrow deep into the reaches of the ocean and drill for hydrocarbon resources in just the way Choo had wanted because inland and coastal wells are now conspicuously dry after decades of exploitation, thus forcing oil firms to search farther out to sea.

It is now believed that one of the Samsung-built vessels, the Viking, can operate in 3,000 metres of water before drilling down through another 10,000 to 12,000 metres of earth. The hallmark of the Samsung innovation is the six thruster engines meant to keep the vessel steady when drilling in unimaginably ‘scary’ depths such that it withstands the brutish onslaughts of life-threatening waves.

And Keppel’s DSS series of submersibles is among the world’s most technically advanced deep-water drilling rigs capable of operating at depths of 3,000 metres and is well suited to drill deep and through

Photos courtesy Keppel FELS

n an interview with Singapore’s Channel News Asia some years ago, Choo Chiau Beng, the then boss of Singapore’s Keppel FELS, the world’s largest builder of jack-up rigs, said that only by deep-sea drilling and in virgin fields across the world would the global oil supply increase enough to trigger a fall in oil prices. From a Keynesian point of view, Choo could not have been more accurate. The excessive supply of ships, as has been seen over the last four years, has depressed prices or, as in the case of container vessels, caused a downward spiral in freight rates, resulting in failed shipping companies and fire sale prices.

In moves clearly amounting to what may be the ‘new normal,’ Asian shipyards — or, at least those behemoths and trendsetters — are increasingly latching onto technology and quality design work as a means to “bring

Keppel FELS shipyard — world’s largest builder of jack-up rigs for the marine and offshore industry.

30 BC Shipping News July/August 2014

The KFELS N Class jack-up rig.

ASIAN SHIPYARDS complicated wells. Keppel is also set to launch the CAN DO drillship in 2016, a state-of-the-art, deep-water exploration, development and completion drilling vessel designed specifically to overcome constraints in limited deck space found in most modern-day drill ships. And Keppel’s Blue Ocean Solutions (BOS) Emulsified Fuel System innovation promises ship owners fuel savings of 2.5 per cent over and above reductions in nitrogen oxide emissions to the tune of 10 to 15 per cent.

Technological shakers and movers!

If there is indeed a salutary outcome to what has happened over the last few years, it is the push by Korea’s class societies and naval architects to devise and design ways to make that well-choreographed, institutional shift from box and bulk ships and husband their resources onto the offshore sector; something which has not caught on in China despite its huge number of yards and repair facilities. And if Publication there is an inference to BC Shipping News what is happening in Korea, it just makes that much more sense to switch from the conventional — or rather from the old model — to the new!

Issue Technical skill sets have now become July/August the saviour of Korean yards who only recently were shedding tears when their own box-ship companies were falling like Size nine-pins amidst overcapacity and bearIsland (half page vertical) ish market conditions. It was only a decade ago that many industry watchers were predicting the downfall of Korean shipDeadline building predominance over their heavJune 2014 Chinese rivals. Since then, ily 6, subsidized what the world has seen has been nothing short of a reversal of fortunes!

Features Though China did get more order EDITORIAL FOCUS: book fills in 2013, Korea produced much Shipyards more in dollar value. That, in any conŸ Industry Insight – Al science, amounts to more than a mere Dawson, ABD Aluminum palpable difference. It is the clincher — (TBC) and clinchers are all that matters in the Ÿ Asian world ofshipbuilding shipbuilding prowess just in industry Jaya ways Daewoo(by and Mitsubishi lionized the Prakash) LNG-building business in the world. Ÿ Firefighting: In an interview Confined with the Economist, spaces John at Lewis) Sokje Lee,(by an analyst J.P. Morgan in Seoul, said that shipbuilding nowadays is a “design and quality” business rather than a labour-driven one. And each of the big Korean yards has thousands of in-house designers and engineers. This has made them world leaders in the new generation of fuel-efficient, cheap-to-run “eco ships.”

Yet, it would be presumptuous to say that it was only the South Koreans

who caught the sweet whiff wrought by the wonders of technology. Malaysia, a long-established player in the offshore market, has never concealed its plans to where it wants to be, so long as the likes of Korea and Singapore keep falling in place.

Maritime academic Nazery Khalid told this author that: “The [shipbuilding companies] which are prospering amid the challenging market conditions in shipping are the small-to-medium-size yards building small-to-medium-size vessels such as workboats, OSVs, barges,

etc. Also doing well are fabrication yards building and servicing offshore structures for oil and gas exploration and production such as topsides and jackets of oil rigs.”

Malaysia, it is believed, has unveiled a Shipbuilding and Ship Repair Strategic Plan 2020 aimed at making it a global player in the small-to-medium-size vessel market. That is only because yards involved in servicing the offshore industry are enjoying positive spill over as underlined by their healthy order books and good revenues. The healthy outlook

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ASIAN SHIPYARDS Indonesian yards such as PT Dok and PT PAL Surbaya are reputed to have good container vessel-building capabilities but the lack of institutional support has hardly done the nation any favours... in the industry looks set to promise good times ahead for Malaysia’s fabrication yards, as Petronas, the national oil company, steps up efforts and splurges huge capital expenditures to find more oil and gas in Malaysian waters through strategies such as Enhanced Oil Recovery (EOR) and exploring marginal oil fields.

Though Malaysia’s technological know-how does not quite enjoy the global adulation it should be getting, the nation’s ambitious plans at achieving high-income status by 2020 in attracting high-technology industries and services could just trigger the spitting-image needed to mirror the success the Koreans exhibit these days.

It is therefore no secret that the Koreans and Singaporeans are making money in the highly competitive market because technology and continual demand for offshore services have shown them the way.

Keppel’s order book just for the first few months of 2014 alone, now stands at close to $1.6bn.

China’s failure stems primarily from its inability to break out of the basic bulkcarrier market where ships may cost as little as $30m. Oddly, it is the Chinese yards that are now struggling. The glaring failure to harness technology is sure to cost it dearly, especially when ‘clean’ ships and the likes have now become the world’s newest buzzword. And Chinese technological expertise to build crafts fitting such characterizations is hardly known, or worse still, never known!

If China has failed to stir, little can be said of the world’s latest poster boy, Indonesia. The nation, with a $1.3 trillion GDP has not had a new ship building directive over the last five years, says Budhi Halim, advisor to the Indonesian Ship Owners Association (INSA).

Indonesian yards such as PT Dok and PT PAL Surbaya are reputed to have good container vessel-building capabilities but the lack of institutional support has hardly done the nation any favours, especially when it badly needs to regenerate its old and decrepit vessels.

What has happened in its stead is a policy to extend the sailing life of its aging vessels until they reach 90 years of age — something that cannot be any more hazardous than what it sounds and for what it is recommended.

A new dawn — a phenomenon marked by technological prowess — is indeed streaking across Asia. All China, Vietnam and Indonesia have to show for this is that they have become that much poorer for it.

The future, as they say, belongs to those who constantly invent and innovate. For a clue of where the Asian shipbuilding and repair future lies, head to where it is all happening in Korea and Singapore.

Jaya Prakash is a Singapore-based maritime journalist. He can be reached at prakruby@hotmail.com.

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32 BC Shipping News July/August 2014

SHIPYARDS Survival of the fittest:

The challenges for today’s modern shipyard

By Heiko Oldendorf, President and CEO, free d graphics, The PLM Company

T

he shipbuilding industry in B.C. today faces a highly competitive environment. From low labour costs in Asian countries to local competition that leads to squeezed and diminished profit margins, a shipyard today must excel in all areas of planning, design, engineering and manufacturing to be able to compete. Finding an edge over competitors and continually differentiating themselves through innovative methods requires great efficiency and organization. This article examines the challenges faced by the shipbuilding and repair sector and offers a solution that allows a yard to increase efficiency, avoid costly mistakes and take advantage of a more organized and ordered external supplier network. As an international Product Lifecycle Company and a Dassault Systemes solutions partner with 20 years’ experience, free d graphics, The PLM Company, has been helping its clients identify improvements, bolster competitiveness and resolve identified issues using a consultancy approach.

Identifying challenges

Challenges within the shipbuilding industry affect more than the sector itself — failures in communications or inaccessible or out-of-date information leads to losses in time, profit and reputation — not just for the yard but for all parties involved. Therefore, all parties must be part of a solution that leads to constructive, collaborative working relationships. And noting that 50 to 80 per cent (and growing) of a ship’s value is built and provided by suppliers, developing a well-defined process that serves the needs of all should be a priority.

To follow are examples of challenges shipyards face today and how these challenges can be managed by the Dassault System — a virtual business platform that provides access to tools that incorporate ever-increasing levels of mechanical, electrical, fluidic and hydraulic system integration to be able to immediately and seamlessly share data in real time with shipbuilders.

Improving time to market — shipyards are under enormous pressure to deliver on time and avoid costly penalties.

Ensuring timely delivery requires strict

process and resource planning across an extensive network of stakeholders throughout the life of the project.

To meet this challenge, Dassault Systemes has developed “On Time to Sea” which provides a role-based integrated program management environment to co-ordinate and effectively plan, manage, and monitor activities internally as well as with the project’s supply chain.

All stakeholders can easily access up-todate project information and clear status with real-time dashboards and business metrics. Take, for example, changes to engineering specifications. The shipyard must analyze the impact on schedules, identify potential issues, mitigate risks and make informed decisions to take corrective action in a timely manner to avoid project overruns and delays.

Delivering more advanced products — to be able to differentiate themselves from competitors and offer more advanced products, shipyards must improve project management systems that will allow for greater complexity. Issues like satisfying a customer’s requirements and complying with regulations and certification rules require efficient co-ordination between the builder and all suppliers. To meet this challenge, Dassault Systemes has developed “Designed for Sea” — a platform that can simulate, analyze and validate “what if” design alternatives.

Designed For Sea is a proven solution for innovative basic design. Ship spaces and general arrangement layouts of all major equipment can be efficiently designed along with engineering the basic design of all disciplines — from steel

and composites structures, to fluid and electrical systems, to accommodation.

Engineering teams can create, evaluate and validate design options in real time through advanced 3D simulation and analysis early in the process to ensure better quality.

Additional challenges — such as effectively managing the supply chain and managing quality — are also addressed

by Dassault Systemes.

Managing the supply chain — As noted, the majority of the budget for a new vessel will likely come from outside sources. The platforms allow for early collaboration with suppliers on design requirements, ensuring they meet industry standards and possess the necessary licences, testing and validating products delivered by suppliers and maintaining quality metrics as well as managing delivery schedules.

Conclusion

In a recent survey of its clients, Dassault Systemes found that most recognized the need to improve their project management and had already identified areas where significant improvements could be made. The top four areas cited were: monitoring costs, risk management, collaboration, and multi-site team management.

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July/August 2014 BC Shipping News 33

FERRIES

CARGO LOGISTICS

Spotlight on safety as Interferry heads for Vancouver

By Len Roueche, CEO, Interferry

F

erry safety is back in the headlines after hundreds died in April when the Sewol sank in South Korea.

Interferry has no members there, but it goes without saying that we are always concerned about ferry safety issues anywhere in the developed or developing world.

One of our major roles is representing the industry on regulatory matters, notably through our consultative status at the International Maritime Organization. The association has come a long way from modest origins in the U.S. in 1976. It is the only body acting for the worldwide ferry industry and now has more than 230 members in 35 countries, including all types of ferry operations as well as suppliers.

Our annual conference, which moves around the world, provides another major platform for the industry. Right now, we are busy finalizing the 39th event which this year takes place in Vancouver from October 4 to 8. I’m looking forward to it on a personal level because I live on Vancouver Island and was with host company BC Ferries for 25 years before joining Interferry in 2002. More than that, however, professionally speaking, I am impatient for another chance to exchange ideas on the industry’s latest opportunities and challenges — where safety is a constant priority.

Interferry has been working increasingly hard on safety issues in recent years. Since 2006, we have partnered with the IMO in efforts to prevent serious accidents in developing countries such as Bangladesh, Indonesia and the Philippines that are highly dependent on ferry transport. Our work with developing nations has covered an entire range of technical and operational considerations.

These include vessel design, damage stability, overloading, crew training, weather communications and, crucially, the need for regulatory enforcement.

34 BC Shipping News July/August 2014

Interferry CEO Len Roueche previews the trade association’s imminent annual conference, where passenger ship safety will be high on the agenda.

A huge challenge in this process has been that most ferries in developing countries operate in domestic waters, so they fall outside the IMO’s mandate for international shipping. Now the Sewol tragedy has reminded us that this domestic service situation also applies even in such a highly developed and widely respected maritime nation as South Korea. The question is being asked: how can we enhance global ferry safety on a uniform basis for domestic as well as international operations?

A lead came from IMO Secretary General Koji Sekimizu when he said after the Sewol incident: “I am of the opinion that the time has now come for IMO to step forward to take further action to improve the safety of passenger ships carrying hundreds of the general public regardless of the nature of their voyage, either domestic or international. Only IMO can take such action to improve safety at sea.” Interferry has already held a meeting with Mr. Sekimizu and senior colleagues to offer our assistance in pursuing this initiative.

Predictably, serious accidents often justify calls for new regulations. Interferry advocates a balanced approach that supports improvements in structural rules but also recognizes the importance of the human element. If prevention is better than cure, the prime focus must be on avoiding an accident rather than trying to build an unsinkable ship.

Trying to impose SOLAS on those countries that lack adequate domestic regulations might be rejected by them on grounds of regulatory overkill and cost.

IMO ‘model regulations’ devised in the past for developing countries have met with limited success. Other countries

might have reasonable domestic regulations but lack the enforcement and control tools.

An alternative approach might involve ‘best practices.’ Work was begun on the concept a number of years ago by DNV’s Karl Morten Wiklund, ShipPax founder Klas Brogren and Interferry, and it could be resurrected. It covered a wide range of areas such as buoyancy and stability; structural integrity; machinery and electrical; navigation, steering and communications; accommodation safety; fire safety; life saving; and operational procedures.

This might look like a good starting place but it would be meaningless if enforcement is inadequate — a particular factor in developing nations. There may be a role here for the IMO judging by the Secretary General’s recent

Johan Roos, Executive Director of Regulatory Affairs, based in Interferry’s European office in Brussels

FERRIES statement. It must be stressed that the IMO has no legal standing for enforcement of domestic rules — but come to that, it has no mandate to enforce international rules either. This is the responsibility of individual Member States in their capacities as Flag States and Port States. National sovereignty is a fundamental issue in both the developed and developing world.

While the IMO has no direct enforcement capability, it does have a ‘soft’ mandate to influence Member States on accepting their enforcement responsibilities, so perhaps this moral persuasion is the way forward to ensure adequate domestic rules. From Interferry’s perspective, it seems ironic that IMO delegates from all over the world can engage on safety improvements for international ferry operations — which by and large have an impressive track record — yet are powerless to intervene on domestic standards.

Little wonder, then, that passenger ship safety will feature large on our Vancouver conference agenda, by which time I hope we will be able to report some progress from our discussions with the IMO secretariat.

Among sessions dedicated to the subject, there will be a panel debate on the human side of safety with participants including BC Ferries President and CEO Mike Corrigan who is this year’s Interferry president. Before that, an overview of current IMO issues will be presented by Jeff Lantz of the U.S. Coast Guard, one of several special guest speakers. Another is Kirk Jones of Canada Steamship Line, who will examine the outlook for short sea shipping. This will be echoed in a further panel session in which BC Minister of Transport Todd Stone joins a discussion on subsidies, governance and stateowned ferries.

As ever, the conference program will cover an exhaustive range of topics on anything from LNG fuel case studies to ways of maximizing onboard retail revenue. For all that, I’m sure that safety will prove to be the really hot topic. I believe this is a critical issue for our industry, which has the expertise and experience to offer advice that will help save lives at sea. That’s a matter for all of us, because in doing this we will maintain the industry’s reputation and the confidence of our customers.

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www.aarc-west.com/www.awcoatings.com July/August 2014 BC Shipping News 35

MARITIME CLUSTERS Canada’s golden age:

A vision for a dynamic International Maritime Centre

By Kaity Arsoniadis-Stein LLB, LLM, President & Secretary-General with research by Georgia Papadimitriou, BSc, MBA International Ship-Owners Alliance of Canada

C

anada is rated the best country in the G20 to do business (Forbes, Bloomberg) and has the second highest standard of living in the G20. According to the World Bank, it led all G7 countries regarding economic growth with the most effective and lowest overall tax rate for business investment (about 17 percentage points lower than the U.S.). Canada has the most highly educated work force amongst the OECD and for the sixth consecutive year, the World Economic Forum has declared its banking system to be the soundest in the world. Canada places in top positions on world-ranking scales including the newly developed Social Progress Index, is recognized for its world-class universities, coveted for its universal health-care system, envied for its political stability and admired for its multiculturalism.

Now factor in Canada’s natural beauty and magnificent genes, its spectacular coastlines, clean air (ranked second by the World Health Organization), rich natural resources, abundant fresh water, and just imagine the glorious opportunities available from a nation that is not even 150 years young.

Some may say that Canada, hardly affected by the 2008 global economic downturn, is entering its golden age of growth.

Without a doubt, with a good strategy and a solid policy in place, Canada can excel in any area it chooses. We should focus on capturing markets that offer the highest value-added returns, create highvalue knowledge jobs that are long-term and sustainable while ensuring to grow a highly skilled and educated workforce, yet another valuable asset that we must continuously cultivate to maximize our nation’s incredible potential.

36 BC Shipping News July/August 2014

...the port sector belongs to the downstream industry with the lowest valueadded, while maritime services belong to the upper-stream industry with the highest value-added.

This article will focus on why we should consider the possibilities of attracting international shipping companies to Canada, not to be confused with an initiative to develop an international Canadian registry of ships where Canadian-flagged ships trade internationally. That would be the next chapter.

Time to swim upstream

Shipping moves about 90 per cent of global trade and one in five jobs in Canada depends on trade. It is predicted that the volume of seaborne trade will grow from nine billion tonnes per year to between 19 - 24 bn tonnes per year by 2030, the giant drivers of global trade being China and India (Lloyd’s Global Marine Trends 2030). Furthermore, China’s oil consumption is expected to triple and become the largest oil consumer globally.

It is not surprising that China will see the largest growth in natural gas consumption while China and India will be the world’s largest consumers of coal and steel. Furthermore, trans-arctic shipping cannot be ignored given the potential of an ice-free passage, reducing transits from Europe to Asia by 40 per cent. Canada can take full advantage of these growing markets and emerge as a shipping superpower, given Canada’s positioning on the map, demand for its natural resources and the fact that seaborne trade will

almost triple because of Asian demands for resources.

This is the time for Canada to develop a solid, proactive shipping strategy. The alternative is to continue along like a Banana Republic with our one-dimensional strategy to facilitate the throughput (or exit) of our natural resource wealth one ship load at a time. Other government treasuries will reap the tremendous economic benefits from the corporate activity that is required to move this trade, while in Canada we continue spending billions on the high capital costs of infrastructure investments. Isn’t it time we started to optimize on our investments, some would say “sunk” costs, and realize the corporate benefits that are associated with Canada’s trade?

Canada’s maritime industry revolves around the port, which is only one part of the maritime cluster. As shown in Graph 1, the port sector belongs to the downstream industry with the lowest value-added, while maritime services belong to the upper-stream industry with the highest value-added. It is this upperstream industry that Canada must start to develop as it matures as a nation. It is important to recognize that we can build on the strengths of our existing port business to develop our international maritime services. We only need to look at other well-established maritime centres and cherry-pick the best way forward.

MARITIME CLUSTERS Centuries of maritime experience

Compared to other maritime nations such as Greece, the U.K., Denmark and the Netherlands, Canada is a very young nation which is one reason why its upper-stream, high-value services have not been realized. Shipping is amongst the world’s oldest industries with countries such as Greece having a maritime history of over 3,000 years. Today, the Greek-owned fleet ranks first in the world in total capacity and represents 16 per cent of worldwide cargo capacity (The Boston Consulting Group, 2013).

The U.K. has more than 300 years of maritime history, with local shipping service providers, such as the globally recognized Lloyd’s Register, having a presence of over 250 years in the industry. The U.K. government recognizes the importance of the shipping industry, a growing industry, which is already worth 14 billion GBP per year to the economy. In a recent press release, Minister Hammond stated: Shipping is big business in the UK […] with a very promising future. We are in a global race, and nowhere is that more apparent than the shipping industry. The UK has a proud maritime history and is a sector that remains of key importance today, not only through shipping and ports but also the maritime professional and business services sector on which the industry relies.

Denmark is another example of a traditional maritime nation which developed even before the age of the Vikings and is now a global, best-in-class maritime centre. Similar to the U.K., Denmark is home to some of the oldest shipping companies that have had a presence in the market for more than 200 years.

Like the Danes, the Dutch have navigated the waterways of Europe for many centuries, becoming maritime leaders by the 17th century and the largest shipping nation in the world. It is this early maritime history that has formed a foundation and yields growth of maritime competence that presently exists with these nations.

research and development, education, etc. This creates a “multiplier effect” which forms a maritime cluster. It is important to note that these are the services that belong to the upper-stream industry with the highest value-added.

As can be expected, without ship owners, who constitute the core of a maritime cluster, there will be lack of demand for both the middle-stream and upper-stream services such as, shipbuilding and ship repairs, ship-broking services, insurance, arbitration, ship finance, etc.

The multiplier effect of maritime clusters

In the last century, many countries have focused on industry clusters as a tool for competitiveness in industries such as shipping. As defined by Michael Porter in Clusters and the New Economics of Competition, 1998, clusters are “geographic concentrations of interconnected companies and institutions in a particular field that include linked industries important to competition such as suppliers of specialized inputs, distribution channels, producers of complementary products, companies related in terms of competence, technology or common inputs and related associations and supporting institutions such as universities, think tanks, trade associations research and technical support.” Geographic, cultural and institutional proximity leads to special access, closer relationships, better information, powerful incentives and other advantages in productivity and innovation that are difficult to tap from a distance. The more the world economy becomes complex, knowledge-based and dynamic, the more this is true (Michael Porter 1998).

Successful maritime nations recognize the economic benefits of supporting clusters with ship owners’ businesses at the core of such clusters (see Graph 2). When ship-owners’ offices are concentrated in one geographic area, they attract additional high value-added businesses to service their offices. For example, you will see the emergence of insurance companies, law firms, banking and financial institutions, classification societies, market exchange information, ship management, chartering, brokering, July/August 2014 BC Shipping News 37

MARITIME CLUSTERS

Former Prime Minister of the Netherlands, Jan Peter Balkenende, Kaity Arsoniadis-Stein, and Prime Minister Stephen Harper.

Attracting ship-owning companies to B.C. to move Canada’s energy products will also result in long-term sustainable jobs, adding a further Canadian component to the logistics chain while improving the social licence required.

Attracting ship-owning companies to B.C. to move Canada’s energy products will also result in significant longterm sustainable jobs, adding a further Canadian component to the logistics chain while improving the social licence required. In developing a successful “made in Canada” program, and in the interest of capturing head offices, our government should consider creating some favourable perks to those companies that are willing to move to Canada to move Canadian resources.

By having the headquarters of shipping companies operating locally to move Canada’s resources, further opportunities will emerge such as the need for maritime training institutes, which will bring knowledge to our communities, produce home-grown expertise and eliminate the fear factor associated with the “mysterious” shipping industry. In addition, there will be more support for Canadian companies that are held to the highest environmental standards to move Canadian energy, rather than the optics of offshore unknowns trading and profiting in Canadian waters.

Strong government policy

Denmark and the Netherlands are among the first European countries to introduce cluster strategies in relation to 38 BC Shipping News July/August 2014

their shipping policies. In Denmark, the Danish maritime cluster, known as “The Blue Denmark,” entered the political agenda in the late 1980s while the Dutch maritime cluster became the emphasis in Dutch shipping policy in the mid-1990s.

In 1997, “The Dutch Maritime Network” was established “to promote and reinforce the Dutch Maritime Cluster.” It was not enough that Rotterdam was the gateway to Europe and the largest European port, policy makers quickly realized opportunities to optimize on their port infrastructure investments. Furthermore, the City of Rotterdam and its visionary Mayor, Ahmed Aboutaleb, provided full support.

During Prime Minister Harper’s trade mission to the Netherlands in March 2014, former Prime Minister Jan Peter Balkenende stressed the importance for strong government policy which was the key driver to the development of the Dutch maritime cluster. There was a heavy push in the 1990s and since then, the government has continuously nurtured and grown the policy, which is why it remains a global leader. Shipping is a mobile industry and can be located in any jurisdiction in the world; therefore, nations wanting to attract such an industry must ensure they are keeping up with the developments of this fiercely competitive global industry.

I was fascinated to learn that the Netherlands, the land of tulips and bicycles, is about the size of Vancouver Island with a GDP and population half the size of Canada, is home to Europe’s largest port and is ranked the world’s fourth largest port with a throughput of 400 million metric tonnes, 200 million metric tonnes being petroleum products.

In comparison, Port Metro Vancouver’s throughput for 2013 was 135 million tonnes of cargo with petroleum products accounting for less than six per cent of the total throughput.

The Dutch policy focuses on building maritime services, the upper-stream industry with the highest value-added.

They have created over 11 subsectors, with more than 12,000 shipping-related companies in the region, employing over 185,000 people and generating an annual turnover of 26.3 billion euros.

Furthermore, approximately 70 per cent of the total added value by shipping is created ashore. Dutch shipping policy has been specifically developed to attract and enable ship owners to manage their vessels from the Netherlands in a manner that is globally competitive and profitable.

Vancouver’s International Maritime Centre

The concept of maritime clusters is not new to Vancouver. In the early 1990s, visionaries Graham Clarke, Wilfred Vacheresse and Jonathan Seymour promoted the concept of maritime clustering to the federal and provincial governments through the establishment of the International Maritime Centre, Vancouver (the IMC). The mission of the IMC was to “promote, foster and encourage the development of British Columbia as a location for the ownership, central control and management of international shipping firms.”

The IMC was successful in accomplishing its goal of attracting international shipping head offices. In fact, in the early 1990s more than 20 shipping companies moved their headquarters to Vancouver, including Teekay Shipping.

Both the federal and provincial governments were at the centre of this development. In addition to providing matching funding of $1.4 million for the development of the IMC, both governments supported legislative changes to the Income Tax Act, Canada Shipping Act, Coasting Trade Act, Customs Tariff and

MARITIME CLUSTERS Immigration. The foundation policy was created and is in place today (and 20-plus years later requires upgrading and improvement). The impact of the IMC to the Canadian economy did not go unnoticed. A $1.4 million government investment generated over $23 million in tax receipts within a period of five years, bringing over $1 billion of new personal wealth to Canada (J.R.F. Hodgson & Mary R. Brooks (2003), Recent Developments in International Shipping Policy and their implications for Canada, Dalhousie University).

It is unfortunate that the IMC initiative was only supported for a few years. The IMC plan included a sunset clause winding down its operations in 1998. We have since lost more than half of the companies that came under the 1991 initiative and in fact, since 2005, with the introduction of criminal strict liability for marine pollution, not a single company has come to Canada.

Because of this, Canada is considered an unfriendly jurisdiction to do shipping business. This must change. Compare this to other dynamic global IMCs that aggressively promote, are fully operational and continuously upgrade policies for fear of slipping behind other IMCs, not to mention the emerging IMCs, such as the Dubai International Maritime Centre, that wish to compete for the upstream, high value-added services of this industry.

Cherry-picking from existing IMCs

The Province of British Columbia, working together with ISAC and the Vancouver IMC, has recognized the need to refresh the IMC in Vancouver. The B.C. Ministry of Transport, under its Pacific Gateway Transportation Strategy 2012-2020, has identified the need to attract shipping headquarters and, under the current government’s BC Jobs and Investment Board report, a key recommendation from the Transportation sector is to revive the IMC through Provincial and Federal government engagement and funding. According to Mr. Wilfred Wacheresse: “In order for the IMC to become sustainable and successful it must adopt an approach mentored by the Provincial Government in close association with the Federal Government.”

An analysis of the benefits available by other global IMCs is beyond the scope of this article but it is exactly this type of an analysis that should be conducted by our government, in consultation with industry, in order to understand the global competition and then create an attractive program for Canada. Some examples that we can draw from include the following IMCs: Singapore is a young nation that has evolved through the years to become a globally acclaimed IMC. In addition to many other benefits, Singapore offers tax exemptions on qualified shipping income for five-to-10-year periods, financial support to shipping companies that adopt initiatives that raise productivity, grants to support eligible expenses incurred in the initial development of new maritime companies or existing maritime companies expanding into new lines of maritime business.

Denmark has raised the bar by developing a sophisticated branding strategy for its growth plan to attract international ship owners, known as “The Blue Denmark.” The Blue Denmark has become the trademark of the country’s maritime cluster and is primarily built around the higher levels of the value pyramid, namely Maritime Services while also creating a platform of knowledge-sharing, research and innovation. This is a government growth plan and the goal is to ensure Denmark becomes a maritime growth centre at the core of maritime Europe with green solutions and Danish competence as the key drivers.

Kaity with the Mayor of Rotterdam, Ahmed Aboutaleb.

Dubai, a relatively new player, is creating the policy, “Dubai Maritime Vision 2030”, to establish itself as a leading global maritime hub by creating a “smart maritime sector” focusing on e-Services. The goal is to become an epi-centre for maritime education and training to produce capable and intelligent administrative graduates and technocrats to guide the local sector to a new level of excellence and leadership as they move towards a knowledge-based economy. Initiatives include encouraging Islamic financing and positioning Dubai as a “Green Maritime” jurisdiction that adheres to the highest standards of sustainability.

July/August 2014 BC Shipping News 39

MARITIME CLUSTERS Canada has incredible resource wealth, the highest energy reserves in the world, three of the world’s longest coastlines... yet a limited global market presence regarding the shipping sector.

The Government of Cyprus, following its unprecedented banking crisis, has reinforced its strong government support to the maritime industry, which contributes approximately seven per cent to the country’s GDP (see Graph 3). The government is creating a number of Under-Secretaries for Shipping. At a recent interview, the President noted that: “The shipping sector operates in a continuously evolving, highly competitive global environment, which in turn requires stability: an essential ingredient for long-term planning and investment. For this precise reason, the Government is determined to introduce those mechanisms necessary to protect this important sector, as well as to develop and reinforce it further.”

Like Canada, Australia is a resource rich nation. Unlike Canada, the government of Australia recognized the need to completely reform its limited shipping policy in order to position itself as a major exporter of natural resources. The former Deputy Prime Minister of Australia highlighted: “Australia is a proud shipping nation and should remain one. Australia’s shipping reform including tax incentives, depreciation, the promotion of an international register with competitive policy settings and workforce development were carefully worked through with all stakeholders following a unanimous parliamentary report.”

Delivering an extensive range of innovative maritime support services across an unrivalled worldwide network of 300 offices in 65 countries. Our industry leading ethics programme, dedicated marine professionals and wealth of local knowledge provide a foundation for our customers’ own global success.

A global resource providing: • Port Agency • Drydocking • Husbandry Services • Freight Forwarding Services • Offshore Support Services

• Bunker Coordination • Ship Maintenance • Spares & Supplies • Provisions & Stores • Cash to Master • Marine Surveys • Medical Assistance

• Crew Movements • Accommodation, Air Tickets & Visas • Disbursement Accounting & Financial Management

A world of local expertise For further information: Inchcape Shipping Services 1199 West Hastings Street, Suite 1201 Vancouver BC V6E 3T5 Office: +1 604 684 3750 Email: iss.vancouver@iss-shipping.com

www.iss-shipping.com 40 BC Shipping News July/August 2014

Numerous programs and incentives that are in existence can be reviewed and assessed. We only need to cherry-pick the most favourable components to create our “made in Canada” package, together with a first-class branding strategy and a strong marketing plan.

The opportunity

Ship owners are constantly examining the competitive global options. Furthermore, they are known to relocate their offices if better opportunities arise. Given the backdrop of the European sovereign debt crisis, the uncertainty with Asia and the financial skepticism in the U.S., Canada quickly emerges as a good place to do business because of a sound banking system and political stability. Then factor in the benefits listed at the beginning of this article and it becomes apparent that Canada has a real opportunity to cultivate.

Canada must package this opportunity in a comprehensive, marketable way and deliver the message that it is open for business globally. It should be ready to market to nations that are not keeping up with their competitive edge. Take for example Greece, a leading maritime nation with a vibrant shipping cluster and the maritime centre of choice for some of the most influential ship owners. The statistic is that 50 per cent of global shipping is controlled by Greeks. As reported by Clarksons on May 2, 2014, in terms of gross tonnage, the Greek-owned fleet was in first place.

Last December, the government of the day instantly changed the tax regime by passing a law tripling taxes for ship owners as a result of the Troika’s demand with respect to the austerity measures that the nation must follow. As a result, Greek ship owners, who control more than 23 per cent of the world’s oil tanker fleet and 18.5 per cent of the world’s dry bulk fleet, are conducting economicbenefit analyses to move to other maritime centres, including Vancouver. The sad thing is that Vancouver is not in a position to take advantage of this opportunity or other such opportunities that may arise. There is no comprehensive plan or strategy in place.

Conclusion

As mentioned above, Canada has incredible resource wealth, the highest energy reserves in the world, three of the world’s longest coastlines (the Pacific, the Arctic and the Atlantic), yet a limited global market presence regarding the shipping sector.

As a nation, Canada is maturing and therefore, Canada should start attracting upstream industries with the highest value-added jobs. Of course, such an ambition would require a comprehensive plan that includes a branding and marketing strategy as well as a much-needed review to amend certain pieces of adverse legislation.

Our recommendation would be to refresh the exiting IMC in Vancouver through federal and provincial involvement and funding and use this vehicle to put Canada on the map of dynamic global IMCs. Oh, and did I mention that there is no International Maritime Centre, or hub, on the West Coast of North America...but given that Washington State released their “Washington State Maritime Cluster Economic Impact Study” in November 2013, it won’t be too long.” That report identifies the maritime industry as an engine of economic growth in Washington State with a current contribution effect of nearly $30 billion to its economy and 148,000 jobs. The report explains that maritime firms innovate, export their goods and services to other parts of the U.S. and globally drive economic growth.

Time for us to get on board!

LNG TANKERS

The gas carrier

By Syd Heal

T

he advent of the gas carrier on the B.C. Coast is now a virtual certainty as the Montney and Horn River natural gas fields of North Eastern B.C. will be pumping their product to new terminals in the Prince RupertKitimat regions. To this can be added Albertan LNG looking for export markets.

However, the international oil industry, including gas, has been thrown into a whole new mix with the Russian adventure in the Ukraine, the Russian deal with China, and considerable misgivings from the European Union regarding its gas supplies from the former USSR and Russian inclinations to mix the business of supplying natural gas with power politics.

There are three categories of tankers that fall under the broad definition of

...the international oil industry, including gas, has been thrown into a whole new mix with the Russian adventure in the Ukraine, the Russian deal with China, and considerable misgivings from the European Union regarding its gas supplies from the former USSR ... gas tankers and all three are post-Second World War developments. The first were the petrochemical tankers and are only partially involved in gas transportation.

Norwegian owners and Dutch shipbuilders were particularly prominent in the foundation of this industry and still are a major factor within it. Development came about more or less parallel with the massive growth in the plastics industry.

When the war ended, the standard vessel for moving liquid plastic components was the 45-gallon oil drum and as late as the early 1950s, the marine insurance company that this writer worked for in Liverpool, England was insuring huge shipments in barrels of refinery products from and to the U.K. chemical industries. It was obvious that there was much room for improvement and the first bulk

The SOYO, a Teekay-managed and partially owned member of the Teekay fleet with a capacity of 160,400 cubic metres, displays the massiveness of an LNG tanker.

Photo courtesy Teekay Shipping (Canada) Ltd. July/August 2014 BC Shipping News 41

LNG TANKERS The birth of the LNG carrier goes back to 1959 when British Gas Ltd. converted a U.S. war-built C1MAV1-class freighter to the world’s first gas carrier. chemical tankers were born from this need.

Modern chemical tankers come in many forms and sizes up to about 10,000 dwt, many of them built with stainless steel or specially coated tanks and some able to carry up to 24 different chemicals in liquid form or in pressure vessels when shipped in gaseous form. The usual chemical tanker handling a variety of products in various forms is a very complex vessel distinguished by high pressure tanks carried on deck. Among the pioneer owners were Stolt-Nielsen, ex-Norwegian but now based in Holland; Odfjell of Norway; and Tokyo Tanker of Japan. Stolt and Odfjell have carried chemical traffic to a level not offered by many other owners in that they now operate large storage facilities and terminals located close to refineries in key ports around the world.

The division between vessel types becomes less distinct when it appears that some oil product tankers, usually of greater size than the average chemical tanker, are also capable of carrying petrochemicals as alternative cargo. Despite

42 BC Shipping News July/August 2014

this, the LPG (Liquid Petroleum Gas) tankers were built to carry ‘flare off’ gas which, ever since oil refining started, has been burned off as waste from the refining process. There is little doubt that the oil industry knew what this waste gas was made up of — about 50 per cent each of propane and butane with small quantities of other impurities — but presumably there was no significant market for it until after the Second World War. The alwaysadvanced German chemical industry found that the butane it collected from Romanian oil fields through the war became the basic material to make manmade rubber.

Propane, of course, is well known as ‘rock gas’ and has been in heavy use domestically for many years with a regular trade along our coasts and throughout the countryside. As a refined product, it is mostly prepared in Alberta and shipped in pressurized rail tank cars and highway tankers. The domestic demand is as strong as ever but Canadian sources are still able to export about half of the total output of propane.

The birth of the LNG carrier goes back to 1959 when British Gas Ltd. converted a U.S. war-built C1MAV1-class freighter to the world’s first gas carrier. Carrying liquified natural gas across oceans was a totally new science, and this small vessel of about 5,000 dwt was the test platform on which ideas for an entirely new technology started development. Named Methane Pioneer, it carried a full cargo from Louisiana, U.S. to Canvey Island in the U.K. This first of its type was followed by the purpose-built Methane Princess and Methane Progress, far larger ships of 24,607 dwt with a capacity of 34,550 cubic metres of LNG, built at Belfast and Barrow-in-Furness. The ships were owned by Shell and operated on behalf of British Gas. They were evidently successful ships as they enjoyed full employment for 22 years until scrapped in 1986, possibly because they had become functionally obsolete due to their limited capacity.

The next noteworthy LNG ships were Gastor and Nestor, built at St. Nazaire in 1976/1977 to provide a new service carrying Algerian LNG to West Europe (which fell through) and Indonesia to California to fulfill a 30-year contract. As things turned out, this trade also never materialized due to the development of a new, cheaper source in the U.S. These two ships of 68,200 dwt and with a capacity of 125,000 cubic metres of LNG were the style setters for the big transoceanic LNG tanker, but they never carried a cargo for their first owners — Ned Lloyd of Holland and the Ocean Group (Blue Funnel) of the U.K. — and remained in lay-up in Loch Striven, Scotland for 17 years while the two owners sought employment in a very difficult market. Eventually, they found work through Shell as the natural gas industry developed into new geographical areas and today they are still afloat and actively employed. Now named LNG Lagos and LNG Port Harcourt, they are owned by Bonny Transport, an affiliate of Shell.

Shell has been a prominent player in LNG international production and marketing ever since the industry started and now appears to be a leader in establishing reliable bunkering depots around the world for the supply of LNG as fuel for ships. Effective and economical distribution is the secret in encouraging LNG as a viable alternative to the heavier fossil fuels. However, I have never seen any

LNG TANKERS kites flown as to where a deep-sea LNG bunkering facility might be developed on the West Coast of North America. Can it share space and facilities with an export terminal? If it can, of course the shipping industry might be well served with several export facilities in operation, but I suspect there will be sound reasons why the simplest solution will not fly. Safety will be a huge factor and legal liability, when considered by the insurance markets, may well point to separate and distinct re-fuelling facilities. That immediately begs the question as to where it can go as it will need a lot more space ashore and afloat than the floating gas stations that were such a common sight at one time in places like Coal Harbour! I suspect that if any oil company came along with ideas of building a large bunkering facility in Vancouver Harbour, it would have difficulties finding a site, even if one was possible, and the howl of protest would be deafening.

What can we expect on the B.C. Coast?

Certainly, ongoing development for many years ahead. We will not be faced with an overnight build-up of a massive fleet as it will only expand as export facilities come on stream. Concerns about huge traffic in Howe Sound as LNG carriers load out at Woodfibre are grossly exaggerated. It is starting as a small facility compared to the anticipated giants up around Prince Rupert and Kitimat although no doubt it will increase its capacity in stages which is usually what happens with most natural resource facilities. Ray Dykes’ article on terminals (B.C. Shipping News, June 2014) illustrates this point admirably.

The chemical trades will undoubtedly grow slowly, but steadily, as more byproduct becomes available but it will remain the smaller part of activities. I do not know enough about the LPG market and the demands it creates. I do notice a steady flow-through of chemical and product tankers that come to Westridge, Stanovan and Lynnwood terminals and, collectively, the traffic might represent up to 15 ships per month. It has been a traffic flow that has produced no significant accidents or losses since it started with refined product tankers possibly as long ago as before the First World War. Certainly, the international oil industry in the form of Shell, Exxon, Imperial, Chevron, Apache, CNOOC and other players have given every indication of interest in selecting sites and partners, but our provincial government seems to be

the source of one challenge that is causing delay on the part of several of the projects.

That, of course, is the issue of taxation on exports. The Clark government wants to extract as much advantage as it can for the benefit of B.C. and for that, Christy Clark will find few critics. However, with developments elsewhere in the world opening up with greater urgency than anything we seem to do in Canada, it may mean that we’ll be cut off at the post and left with empty dreams rather than a progressive new oil and gas industry on the West Coast.

Among the international companies whose presence will be very likely in the B.C. export trade, first and foremost will be Teekay Corporation through its Teekay LNG Partners, the owner of 28 LNG tankers plus five on order. Teekay LNG also owns 13 LPG tankers with four additional chartered in for a total fleet of 52 vessels which appears to be the largest fleet in the world of LNG and LPG ships.

Teekay is managed from Vancouver, being about the first to establish here as a foreign offshore corporation as part of the Vancouver Maritime Centre. From its beginning, Teekay has pursued an aggressive policy of expansion through acquisition. Its mode seems to be in joint ventures and throughout its group there have been a number of recent deals which means that its fleet is in constant change with varying percentages of ownership as additional vessels are added to the overall fleet with frequency.

Shell Shipping of the Royal Dutch Shell group with 27 LNG tankers, and the Belgian Exmar group with 32 owned and managed LNG vessels, vie for second place. Exmar is an example of Teekay’s expansionist policy in that a joint venture with Exmar and Teekay’s LNG arm was

recently announced, but the rearrangement of ownerships are not included in the above fleet figures. Golar LNG is directly descended from well-known Norwegian owners Gotaas-Larsen who migrated to the U.S. after the Second World War and became part of a larger U.S. group until purchased by Norwegian-Cypriot owner John Frederiksen. Currently Golar LNG only numbers 13 large LNG tankers, but knowing this owner, I suggest he will surprise the shipping world with a grand flourish as he will probably place a large order for additional LNG ships when he is ready to make his move. As a major oil tanker owner, he recently placed a large order for tankers just ahead of the recovery in that market even though certain elements in his empire were in serious trouble.

These four fleets own or control a large percentage of the world fleet of LNG tankers numbering just over 400 vessels in the water in 2013 plus a substantial new building order book, particularly with South Korean yards. This compares with a world fleet of all commercial types estimated to be about 90,000 vessels. The strongest have a high percentage of long-term charters up to about 20 years in some instances and the vessels they employ operate a continuous shuttle service between terminals at both ends, returning in ballast to go through the cycle again. The number of vessels in the small spot market for voyage charters is likewise quite small, but they fill a need.

Wartsila has developed a dual-fuel engine which uses LNG when the ship is fully laden and diesel fuel for the return ballast voyage which greatly helps the economics and simplifies the operational logistics.

Syd Heal, a veteran of the marine industry and a prolific writer and publisher of marine books, can be contacted at: richbook@shaw.ca.

July/August 2014 BC Shipping News 43

LNG PROPULSION CARGO LOGISTICS Focus on LNG products

LNG as a marine propulsion fuel in North America

By Fred Loomis, Director of Technical Projects, W&O Supply

W

hile the marine industry in Europe has several years of experience powering its vessels with Liquefied Natural Gas (LNG), the cleanest burning of all fossil fuels, the maritime community in North America has been slow to adopt LNG. However, over the past few years, this trend has changed in North America as major players in the industry have taken steps to implement LNG as a fuel source within their fleets. The momentum is only building, and LNG is poised to become a viable and preferred fuel source for ship owners.

W&O, one of the world’s largest suppliers of pipe, valves, fittings as well as actuation and engineered solutions to the maritime and upstream oil & gas industries, places high priority on being at the forefront of the maritime LNG movement in North America. The company continues to focus on building a team of product managers and leading manufacturers of LNG valves, piping and related fuel system equipment so that we may be a resource to customers as LNG continues to become more prevalent.

Regulations

Under the revised MARPOL Annex VI, the IMO introduced Environmental Control Areas (ECAs) which are playing a significant role in the adoption of new ship power technologies. Aggressive reduction of Sulfur Oxides (SOx) and particulate matter emissions must be drastically reduced in ECAs in the coming years. Also, progressive reductions in Nitrogen Oxides (NOx) emissions from marine diesel engines are included, requiring IMO Tier III NOx compliance.

Emissions Control Areas throughout the 44 BC Shipping News July/August 2014

...there are three available and viable options for operators to comply: switch to ultra-low sulfur fuel when operating within the ECA, install ‘scrubbers’ to remove pollutants...or use a “cleaner” alternative fuel, such as LNG. world, including areas such as the Baltic Sea, North Sea, North American coastal zones, the United States Caribbean Sea and more, will force ship owners to comply with these regulations. In general, there are three available and viable options for operators to comply: switch to ultra-low sulfur fuel when operating within the ECA, install ‘scrubbers’ to remove pollutants from the exhaust gas or use a “cleaner” alternative fuel, such as LNG. In the short term, LNG as a fuel source is a good choice for vessel owners because it surpasses environmental regulations upfront and the current cost of LNG is approximately 30 to 40 per cent lower than that of ULSD. This is true for the long term as well as the abundance of natural gas in North America should keep clean-burning LNG costs down for some time to come. As the current and projected cost of LNG is approximately equal to that of HFO, coupled with the inherent emissions reductions, it seems the logical progression for our industry.

There is, however; significant infrastructure development necessary to support this new frontier in North America.

Valves

There are three primary valve options for cryogenic LNG fuel system service: globe valves, ball valves and butterfly valves. Globe valves are recognized as the best option for zero leakage and flow control due to the globe-style design. W&O

provides customers with a globe valve option through an exclusive distributor agreement in North America with Bestobell Marine Valves. Bestobell has 50 years’ experience in cryogenic manufacturing, with a proven product and more than 25,000 valves on 148 ships.

The Bestobell globe valve is an all stainless steel design that withstands temperatures ranging from -196 Celsius to 100 Celsius. It is in line with the interim IGF and IGC code and is cryogenically tested to BS6364, which is the current standard used by Class and the IMO. The globe valve can be used in both low- and highpressure applications and is available in actuated and manual versions. Bestobell valves are currently being specified in fuel system bunker stations, on the fuel tank and in the fuel gas supply space including ESD application. The globe design is suitable for double wall piping and its testing is witnessed by class and approved prior to delivery. The Bestobell valve has been approved by the Lloyds Register, DNV, ABS and the United States Coast Guard.

There are four specific notable designs for the globe valve: independent bonnet and flange, floating disc, true fire safe gland packing and seat. The independent bonnet and flange style gives absolute sealing during thermal expansion and contraction as downward pressure is maintained on the fire safe graphite gasket. The floating disc does not rotate when driven into the seat, maintaining seat integrity and positive shut-off. Bestobell’s gland packing

LNG PROPULSION is a proven combination of fire-safe graphite and carbon rings which provide the seal near the top of the extended stem.

The stem collar design prevents the stem from being forced upwards from the body if the valve experiences high pressure and a machined flat allows LNG to drain out of the bonnet before expansion occurs.

This valve is recommended for LNG fuel systems because its open and close operability is never compromised.

Bestobell valves can last the lifetime of the system and require minimal maintenance and spares.

Piping

The current regulations for LNGpowered ships require that enclosed space bunker and gas lines be double wall for safety purposes, with the outer wall serving as the containment for potential leakage.

LNG bunker lines should be insulated to minimize heat gain and boil-off, and both types of piping should be continuously mechanically ventilated or pressurized with inert gas within the annular space.

For outer-deck applications, piping may not be required to be double walled.

PERMA-PIPE , an original equipment manufacturer distributed by W&O, produces Fuel-Gard systems for LNG/ NG applications, which are fully engineered and pre-fabricated in the company’s ISO 9001-approved factory to the latest regulations mandated by ABS, the USCG and other maritime class societies. Finite element stress calculations are performed taking into account thermal loads, ship loading and interface with supports, in

®

The Seacor family of products.

LNG as an alternate fuel source is a topic nearly all design firms and naval architects are considering as more and more in the industry look to adopt this alternative fuel. addition to thermal heat gain calculations on bunker fuel piping.

Fuel-Gard piping systems are stainlessin-stainless construction with complete testing and traceability on all materials.

The insulation on the LNG piping is an Aerogel, utilizing the latest nano-technology to reduce the insulation thickness and thus the overall size of the system, providing cost savings to the end user.

For outer deck installations, pre-insulated single wall pipe is offered, which typically consists of stainless steel service pipe ‘wrapped’ with polyurethane foam housed in a HDPE jacket. Pre-insulated single wall applications may include outer

deck storage tank designs and ‘cargo’ systems including bunkering vessels.

Conclusion

LNG as an alternate fuel source is a topic nearly all design firms and naval architects are considering as more and more in the industry look to adopt this alternative fuel.

With a push by regulatory demands and the cost savings LNG can provide owner/ operators, there is a need for high-quality, proven products that can be utilized in the marine industry. W&O is committed to partnering with only the top OEM’s to ensure our customers receive the right product, at the right time, every time.

Located at Vancouver Waterfront and Roberts Bank

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www.flyingangel.ca July/August 2014 BC Shipping News 45

LEGAL AFFAIRS Fear in a handful of dust:

The case of the Aestival

By James Vander Woude

A Vancouver Lawyer with Bernard LLP

A

collision between two vessels in which damage occurs is likely to lead to a demand for security with the threat of arrest of one or both of the vessels. Among the categories of claims that support the arrest of a vessel is a claim for “damage caused by a ship.”

The phrase “damage caused by a ship” conjures images of a bulk carrier ramming into a dock, or the 1975 instance of the American aircraft carrier John F. Kennedy colliding with the cruiser Belknap, shearing off the cruiser’s stacks and leaving her superstructure a twisted mass of melted wreckage.

However, what if a vessel is damaged without any physical contact? Can there be “damage caused by a ship” without physical contact between vessels?

A recent Federal Court of Canada case provides an interesting example of “damage caused by a ship” without the vessels in question ever coming into physical contact or even being in motion.

A recent Federal Court of Canada case provides an interesting example of “damage caused by a ship” without the vessels in question ever coming into physical contact or even being in motion.

The case

The case is 0871768 B.C. Ltd. v. The Owners and All Others Interested in the Sailing Vessel “Aestival” et al.. 2013 FC 899, where the Court considered whether the Plaintiff had the right to arrest a ship because of damage it had allegedly caused to the Plaintiff’s vessel even though there had been no collision — in fact, neither vessel was even in the water at the time of the alleged damage.

It is important to note that the issue of whether damage had actually been caused to the Plaintiff’s vessel was not before the Court, although that issue has since been heard by the Court and a decision is pending. The above decision strictly focused on whether, assuming the facts presented

to the Court to be true, the Defendant vessel had been legitimately arrested.

The facts

The Aestival was hauled out at Lynnwood Marina. Sanding and grinding on the Aestival resulted in a cloud of particulate matter which rose into the air and drifted toward a newly cleaned and repaired vessel, the yacht Ain’t Life Grand. This cloud of debris allegedly covered the Ain’t Life Grand resulting in extensive cleaning costs. The dust, paint and metal particles had penetrated the gel coat of the deck.

The Plaintiff successfully applied to arrest the Aestival pending the posting of bail. Almost a year later, the owners of the Aestival applied to have the arrest lifted on the basis that the Plaintiff’s claim did not disclose an in rem cause of action.

Arrest of a vessel: Statutory conditions

The arrest of a vessel is a useful method of obtaining pre-judgement security.

However, it is only available if certain statutory conditions are met. Generally, the party wishing to arrest a vessel must have a maritime lien or it must have a statutory right to an in rem claim.

An in rem right is related to the use or ownership of property. The term in rem stems from Roman law and means roughly “in the thing itself.” An example of an in rem right is the right of homeowners not to be disturbed in their use or enjoyment of their home. This is a general right that applies “against the world” — everybody must respect the owner’s property and privacy rights.

Continued on page 48...

46 BC Shipping News July/August 2014

TECHNOLOGY

Cavitation: What does it cost you?

By Allan Austin, Technical Consultant, Belzona Molecular (B.C.) Ltd.

C

avitation is a problem that has plagued the marine industry for many years. As vessel speed increases, the problem gets worse. The cost of this damage is significant and if left unchecked, increases repair costs at the next refit. Typically, this damage is repaired by welding but this welding can create its own problems with heat-affected zones and bi-metallic corrosion if the correct alloy rod isn’t selected. Each repair cycle has a tendency to increase the size of the area that requires repair.

Back in the early 1990s, Belzona started rebuilding rudders with Belzona 1111 and 1311 and then protecting them with Belzona 1341, a product that was designed to improve efficiency and reduce cavitation problems in pumps. Belzona 1341 has been performing very well since 1989.

Before the first rudders were coated with Belzona, they would typically come in with very little protective coating left on them. They generally exhibited considerable cavitation and bi-metallic erosion damage. (Fig. 1). The structural problems would be welded. The areas would then be rebuilt / resurfaced with Belzona 1311 and then the entire rudder would be protected with Belzona 1341. When the vessels came in for their next refit, most of the Belzona 1341 was still intact as was the anti-fouling (Fig. 2). Although there were still a few areas that had failed, both overall damage and repair costs where

Figure 1. Cavitation and bi-metallic erosion damage.

It has taken a number of years to find a solution that would work effectively on these areas that experience severe cavitation. reduced significantly.

It has taken a number of years to find a solution that would work effectively on these areas that experience severe cavitation. Many solutions have been tried over the years but up until recently none have worked for extended periods of time. The U.S. Navy has been looking for a product that would stand up in their new highspeed vessels. They were looking for a polymeric protective coating that would last at least 20 hours in the tunnel flow test at the Applied Research Lab at Penn State University. The best products at the time that Belzona 2141 was tested would only do 12-15 hours. Belzona 2141 did 20 hours at speeds to 130 knots with no damage in the same test. The U.S. Navy carriers and destroyers would run in excess of 30kts with some of their newer vessels in excess of 50kts, while most of BC Ferries’ fleet would operate in the 22kt range. It was determined in the testing that the best combination for longevity was Belzona 1341 as a base then a Belzona 2941 conditioner with the Belzona 2141 on top. The U.S. Coast Guard was also looking for a solution for the same problem and has subsequently started coating all their rudders with Belzona 2141.

A large number of in-service tests have also been run since the product was developed. One example was on bow thruster tunnels on a high-speed ferry in Sweden. Previous attempts to solve the cavitation problem with glass flake and other epoxy coatings all failed in under 12 months, with almost complete destruction of the coatings. Belzona 2141 was applied and upon inspection after one year, was found to have localized wear in the top of the tunnel where the coating had insufficient thickness. This was repaired and resulted in four years of service with no

Figure 2. Belzona 1341 and anti-fouling still intact.

Figure 4. Rudders fully coated with Belzona 1341.

Figure 3. Severe damage to the rudders before applying Belzona 1341.

July/August 2014 BC Shipping News 47

TECHNOLOGY further maintenance required! Inspection and repair is important to maintain the integrity of the coatings and will result in lower maintenance costs for the owner over the long term.

Locally, Belzona 2141 has been used in combination with Belzona 1341 and 2941. The rudders on the vessel it was applied to in 2008 had damage so severe that they had considered replacing them (Fig. 3). The rudders where fully coated with Belzona 1341 and the high damage areas were further protected with

Belzona 2941/2141 (Fig. 4). The light blue in the picture is Belzona 1341 and the black is Belzona 2141. When the vessel was docked in December 2013 and inspected, there was no damage to the rudders. Some of the Belzona 2141 was missing but that was likely due to the fact that it had insufficient cure time before it was immersed. This points out a critical point in using these products. It is crucial to allow sufficient time to apply the products and have enough cure time before the vessel is returned to the water. All of this

takes planning but is worth the effort to get the best longevity out of the product.

Testing and in-service trials have shown that you get better results by allowing sufficient cure times for the three products involved.

Allan Austin is a technical consultant with Belzona Molecular (B.C.) Ltd. Established in 1952, Belzona is a global leader in the innovation of repair compounds and industrial coatings. Allan can be contacted at allan@belzonabc.com.

LEGAL AFFAIRS CONT’D This is in contrast to an in personam right which applies only against a particular individual or individuals. An example would be a landlord’s rental agreement with a tenant: only the parties to the agreement are bound by it.

An action in rem is only available if the Court has jurisdiction over the property in question. Section 22(2) of the Federal Court Act provides a list of maritime claims over which the Federal Court has jurisdiction. The Plaintiff alleged its claim fell under section 22(2)(d) of the Act which states: Maritime jurisdiction (2) Without limiting the generality of subsection (1), for greater certainty, the Federal Court has jurisdiction with respect to all of the following: (d) any claim for damage or for loss of life or personal injury caused by a ship either in collision or otherwise; [emphasis added]

The decision

The owner of the Aestival argued that the language of Section 22(2)(d) (“damage…caused by a ship either in a collision or otherwise”) required some sort of physical contact between the ships, or some action caused by the navigation of the Aestival. Since there was no physical

48 BC Shipping News July/August 2014

contact between the Aestival and the Ain’t Life Grand, and since the Aestival could hardly be navigated while it was on blocks in a shipyard, the owner of the Aestival argued that there could be no in rem action and thus no vessel arrest.

However, the Court found that the inclusion of the words “or otherwise” in Section 22(2)(d) allowed a broad scope for interpretation of when and how damage was caused under the section, not simply limited to damage caused by a moving vessel. The Court adopted a “functional or operational” test: • If the damage is caused by the actions of the crew acting under the directions of the ship’s master; and • If the actions of the crew are “integrally related to the operation of the ship”; • Then the damage is “damage caused by a ship” for maritime law purposes.

The Court found at paragraph 31 that: [31] The maintenance of a vessel is an integral part of carrying on the activity of shipping. It is irrelevant whether such maintenance is done while the vessel is moored in the water, while the vessel is in drydock, or while the vessel is blocked out of the water.

The broad language of section 22(2)(d) is sufficient to cover damage caused anywhere the vessel is located so long as the damage done is by those in charge of the vessel to

some third party or piece of property.

Applying the “functional or operational” test, the Court concluded that the Plaintiff’s claim fell under section 22(2)(d) of the Act. The Plaintiff therefore had a valid in rem claim which supported the arrest of the Aestival.

The Court may fix the amount of bail for the release of arrested property. The general rule is that the bail must cover the Plaintiff’s “reasonably arguable best case” including interest and legal costs, but limited to no more than the value of the vessel. The Court set the bail at $58,000.

Conclusion

T.S. Elliott said in his poem The Wasteland, “I will show you fear in a handful of dust.” Of course, Elliott was speaking more of the fear of living an ultimately meaningless life than he was the hazards of power grinding too close to another vessel. Still, the unfortunate case of the Aestival illustrates that carelessness in so routine a thing as ship maintenance can have far-reaching consequences, and that a vessel does not have to be afloat to be considered the cause of damage to another vessel, and subject to arrest.

James Vander Woude is a lawyer with Bernard LLP and can be reached at vanderwoude@bernardllp.ca.

TECHNOLOGY Monitored confined-space entry protects workers

By Keith Lincoln, Senior Project Manager, RAE Systems

W

hen the cable-laying vessel SS Global Sentinel was undergoing repair work, workers found a mysteriously high hydrogen sulfide reading in a confined space onboard.

They could not understand why. After investigation and safe entry into the tank, they discovered where the gas was coming from: a sandwich that had long since decayed had been left in the space and was giving off hydrogen sulfide, which could have taken a life had someone been in the space without detecting the gas.

As readers of BC Shipping News learned in the June issue from Captain John Lewis (“Confined spaces — the tripod theory approach”), marine environments are dangerous unless a very cautious and compliant approach is taken to safely access confined spaces. Improper practices may violate laws and regulations established by regulatory authorities.

Proper safety training, combined with proper tools, technology and safe practices, are key to a safe work culture in a marine environment known as a most dangerous environment.

A most dangerous environment

“When you look at incident statistics, they still indicate that confined space incidents are causing lives to be lost and workers to be threatened any time they’re working in and around confined spaces.

The statistics today indicate that over the last five years an average of about 92 workers are losing their lives in confined spaces,” says Guy Colonna, Manager of the U.S. National Fire Protection Association’s Industrial and Chemical Engineering Division.

According to the U.S. Occupational Safety and Health Administration (OSHA), the rate of injury in a shipyard environment is twice that of the general construction industry. Extra care must be taken by workers, safety managers, operation personnel and emergency responders to ensure a confined space is free from substances that can be deadly. The risk of confined-space entry injury or death in marine vessels is very real.

A few years ago, in the Pacific Northwest, an integrated tug and barge had a close call. Initial indications of a

Confined space entry requires several precautionary measures including adequate ventilation.

As readers of BC Shipping News learned in the June issue from Captain John Lewis...marine environments are dangerous unless a very cautious and compliant approach is taken to safely access confined spaces. lower explosive limit did not indicate a hazard. But workers were picking up signals on their photo ionization detectors (PIDs) indicating dangerous substances. As it turned out, diesel fuel from the tug had somehow migrated to a confined space in the barge. They were about to do hot work in the barge and the PID picked it up. Fortunately, they used advanced gas detection technology to identify a potential problem that otherwise would not easily have been suspected. The PID operator’s recognition and alert to the crew prevented a potential major casualty.

Marine chemists or other “competent persons” are usually required by OSHA and the U.S. Coast Guard to certify a space for access and entry in a shipyard or repair facility. However, that alone does not alleviate the prevalent risks. Once the chemist or other competent person certifies the space as safe and leaves, there’s no telling what can be uncovered later.

In addition, a ship’s crew may be doing minor work in a tank or confined space during the ship’s routine time in operation. Without gas detection technology or proper safety training they could fall victim to a deadly accident.

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July/August 2014 BC Shipping News 49

TECHNOLOGY Marine operators as well as repair facilities and shipyards that do not put confined-space-entry safe practices as a paramount goal risk heavy fines...as well as injury or death of personnel.

That’s what happened at a Texas marine repair facility, when employees working an overnight shift moved spray-painting equipment and portable lighting equipment inside a barge to continue a painting operation. An earlier shift had already worked in the space for 10 hours. The previous shift had not adequately set up ventilation equipment and the confined space was not monitored for dangerous gas levels. In addition, the portable lighting equipment they were using was not explosionproof. A spark from an unknown source ignited the flammable paint vapours and both employees were killed.

A designated shipyard competent person should have visually inspected the space and its equipment. He also should have measured its oxygen content and lower explosive limit with a calibrated and reliable gas detector. If he had, he could have discovered the dangerous atmosphere, evacuated the space, and stopped work immediately.

In another incident at a Louisiana shipyard, two workers were cleaning marine vessel tanks with solvents. Workers were directed to ventilate the space and dilute it with an air hose. One worker used an oxygen hose that ran into the space for three hours. The

Marine Fire and Safety Training and Consulting • Safety and risk management • Safety audits • Offering courses in Marina and Small Craft Harbours Fire Fighting; Confined Spaces Entry and Rescue; Waterfront Hazmat; Initial Emergency Response to Incidents for Terminal and Port Operators; Spill Response; and Basic Fire Fighting

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50 BC Shipping News July/August 2014

other worker entered the space, while smoking a cigarette, which he rubbed out with his foot on the deck. This caused a ball flash of fire to be ignited; his pant leg caught fire, and burned the employee badly. As a result of the burns, the employee perished.

The workers should never have used an air hose, nor should they have used oxygen to ventilate a space. No competent person tested the space for air quality and flammability with a calibrated gas detector. And the employee should not have been smoking.

Incidents such as these show the inherent value of safety training, as well as the need to have the right gas detection tools, technology, and trained personnel on hand to monitor conditions and protect against deadly incidents.

Tools and Technology

Shipyard workers want to use the same equipment and devices that marine chemists use when they certify the tank or space.

Gas monitors can detect four gases: carbon monoxide, hydrogen sulfide, combustible mixtures and oxygen levels. A PID can also be used to detect volatile organic compounds (VOCs) that could represent a myriad of potential substances.

A PID detects measurements of VOCs that can be dangerous if ingested or pose a danger as a combustible gas. The device uses a standard of 10.6 electron volts (eV) as the cut line for VOCs. Below this level, the device will indicate only the presence of VOCs and a sample may be sent to a lab for more precise identification.

Shipyards, chemists, and marine operators have commonly used portable gas detectors and analyzers, but should consider new proven, portable, personal and wireless technology that provides 24/7 monitoring and intelligent data collection that can be used to better protect workers, assets and the community.

For example, remote monitoring equipment, such as the MultiRAE wireless multi-gas monitors, allows someone to remotely monitor dangerous levels for a worker carrying the device. In addition, the device has a “man down” alarm, which alerts the remote monitoring personnel or maintenance command station in case someone needs assistance.

In the past, many accidents have happened in cases similar to the following scenario: One worker went into a tank and that worker collapsed and perished from gases in that tank or space.

This happened in 1986 when a worker entered a septic tank and collapsed. Two of his colleague went in to save him and all three ended up dead.

A safe environment

The marine environment is a dangerous one. Ships carry dangerous and sometimes misunderstood cargoes. Substances find their way into confined spaces and tanks that were never meant to be there. Workers and personnel may never realize the hazards that confined spaces pose.

The paramount goal when it comes to confined-space entry is to ensure the safety of personnel. Marine operators as well as repair facilities and shipyards that do not put confined-spaceentry safe practices as a paramount goal risk heavy fines from regulatory bodies, as well as injury or death of personnel.

The use of advanced technology and gas detection tools that are maintained and calibrated, combined with safety training and implementation of safety practices, is a smart strategy to avert the risks inherent in confined-space entry and keeps workers safe.

Keith Lincoln (klincoln@raesystems.com) is a senior product manager at RAE Systems by Honeywell (http://www.raesystems.com).

MARITIME SECURITY

Maritime disputes

By Brett Witthoeft, Senior Research Analyst, Maritime Forces Pacific

A

...exactly what resources lie on or under the seafloor, and who owns them, is quite uncertain, resulting in maritime disputes with both regional and global implications. to selectively interpret it to get the biggest and most advantageous area of the SCS. A good example of this ambiguity is that UNCLOS says that islands are entitled to a 200-nautical mile Exclusive Economic Zone (EEZ), where the controlling country gets exclusive rights to all resources in that area, but the treaty does not exactly

define an “island”. As a result, claimant countries have taken as many of the 200odd land features in the SCS as possible (sometimes by force), are building up submerged islets and reefs, and are demonstrating ownership by economic activity in an effort to win as big an EEZ as possible.

Photo source: Wikipedia Commons

ny way you measure it, the waters of the Asia-Pacific have become much more important in recent years. Ships are the most cost-effective way to move goods, and as Asian economies have transformed into the workshops of the world, the number of ships moving throughout the region and to the rest of the world has increased dramatically. The steady industrialization of these Asian nations means that they are always looking for new sources of energy and raw materials, both to fuel their growth and to satisfy the demands of their expanding middle classes. One of these new sources is the seabed, which holds the promise of rich mineral and energy deposits.

Unfortunately, exactly what resources lie on or under the seafloor, and who owns them, is quite uncertain, resulting in maritime disputes with both regional and global implications.

Perhaps the clearest examples of these maritime disputes come from the South China Sea (SCS). The SCS is one of the busier maritime regions of the globe: onequarter of the world’s shipping (by volume), one-third of its crude oil, and half of its liquefied natural gas moves through the sea annually. The SCS provides 20 per cent of the global fish catch (a vitally important source of protein for the region’s poor), and drugs and cosmetics made from SCS seabed materials are at least a $100 billion industry. Most importantly, the SCS is potentially rich in oil and natural gas: U.S. experts estimate that the sea holds as many as 22 billion barrels of oil and 290 trillion cubic feet of natural gas, while Chinese officials think the sea has 213 billion barrels of oil and 500 trillion cubic feet of gas.

(The massive gap between the American and Chinese estimates is because the disputes have limited exploratory drilling to the edges of the SCS, not in the centre, where most of the hydrocarbons are believed to be.)

Six countries claim some maritime or land territory in the SCS: Brunei, China, Malaysia, Taiwan, the Philippines, and Vietnam. There is an international treaty — the UN Convention on the Law of the Sea (UNCLOS) — that all of these countries have signed, but there is enough wiggle room in UNCLOS for each country

The South China Sea — with one-quarter of the world’s shipping (by volume), one-third of its crude oil, and half of its LNG moving through the region, resolution of disputed territories is a priority.

July/August 2014 BC Shipping News 51

MARITIME SECURITY The sovereignty dispute between China and Vietnam in the northern SCS has exploded in recent weeks. On May 1, China moved its billion-dollar deepwater drilling rig, Haiyang Shiyou 981, a symbol of Chinese sovereignty, to 120 nautical miles off Vietnam’s coast and 17 miles from Triton Island, an islet in the Paracel chain that China controls. Hanoi was extremely upset at Beijing’s move, since the rig was deployed well within Vietnam’s EEZ, and since then, coast guard vessels and warships from both countries have fired their water cannons at each other and allegedly rammed one another, as Vietnam has tried to dislodge the rig and China has worked to keep it in place. The dispute is not limited to the sea: rare anti-China protests erupted in Vietnam, and although they were unofficially sanctioned by the Communist government, they quickly got out of hand, with six people killed, hundreds injured and arrested, and hundreds of factories looted and/or burnt. (The irony is that many of these factories that were destroyed were Taiwanese, with protestors seemingly unable or unwilling to recognize the difference.) The reaction to these riots was swift: Vietnam’s stock market dropped 15 per cent; China,

Taiwan, Singapore and Malaysia (all with ethnic Chinese populations in Vietnam) called on Hanoi to calm the situation and protect people and property; and China evacuated 3,000 of its citizens by sea.

The effects of the China-Vietnam dispute — and the SCS disputes in general — extend beyond Vietnam’s stock market crashing and regional riots. Because of the importance of the SCS to shipping and resource extraction, such instability has implications for the wider world. An example of these wider implications is piracy in the Strait of Malacca. The strait, a narrow but crucially important waterway between the Indian Ocean and SCS, suffered so many pirate attacks and robberies in the early 2000s that insurer Lloyd’s of London added the waterway to its list of high risk areas in June 2005, which raised insurance by one per cent of cargo value for ships transiting the strait. The Somali coast and Gulf of Guinea, both highpiracy areas, are also areas currently considered risky by Lloyd’s and have higher insurance rates as a result. The probability of the SCS — or parts of — being designated high-risk by Lloyd’s is growing with the continued clashes between China and Vietnam. Indeed, Vietnam is privately considering a strategy of targeting Chinese

shipping in the southern SCS so that insurance rates rise and foreign companies panic, thereby costing Beijing dearly, according to University of New South Wales professor emeritus Carl Thayer. In addition to adding to insurance costs, such a scenario would wreak havoc on just-intime shipping schedules within the region, which would reverberate down the line to consumers around the world.

So how can such instability be prevented and such maritime disputes be resolved? UNCLOS provides a way to arbitrate disputes, but the treaty is vague enough that arguments can be made selectively. The Association of Southeast Asian Nations is the strongest forum in the region, but it has so far remained neutral on SCS issues. In the absence of strong official frameworks, knowledge of the issues and personal relationships can help keep incidents from escalating. The Maritime Security Challenges 2014 conference is an ongoing series at which government officials, naval officers, sailors and industry personnel, can build their knowledge and these important relationships. The next iteration in the series is scheduled for October 6 to 9 in Victoria, with panels to discuss maritime disputes and other crucial maritime affairs.

Image by Pte. Leona Chaisson, Base Imaging, CFB Esquimalt, BC, Canada.

Four crew members from HMCS Regina, including Sub-Lieutenant Crystal Myers, MARS Officer (above), and an Imagery Technician from Canadian Forces Base (CFB) Esquimalt, British Columbia, participate in a co-operative passage exercise aboard the Harbin, a 052 class Destroyer from the PLA(N) with the REGINA while she embarks at sea after a four day visit in Qingdao, China. This is the first time a female Canadian Forces member has been on this ship.

52 BC Shipping News July/August 2014

MARITIME SECURITY CHALLENGES 2014

OCTOBER 6-9, 2014

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Presenting topical maritime security issues on the edge of the Pacific.

• The Naval Rebalance to the Pacific

Photo: Master Corporal David Singleton-Browne, Canadian Forces Combat Camera

• Developments in the Indian Ocean • Building the Fleets of Tomorrow • The Expansion of Economic and Commercial Activities at Sea • Navigating Maritime Disputes • Technology and Naval Operations • The Future of Pacific Seapower

Presented by The Navy League

Find out more about conference speakers and the MSC 2014 programme.

www.mscconference.com In co-operation with the Royal Canadian Navy

Asia-Pacific Center for Security Studies

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BC SHIPPING NEWS

Commercial Marine News for Canada’s West Coast.

For advertising information:

T: 604-893-8800 / E: jane@bcshippingnews.com

www.bcshippingnews.com 54 BC Shipping News July/August 2014

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THANK YOU! for making our event a great success!

Raffle prizes sponsored by Samson Tug Boats Inc., ContainerWorld Forwarding Services Inc. and University Golf Club.