April 2014 Port Bureau News by Greater Houston Port Bureau

Port Bureau April 2014

Greater Houston Port Bureau USS Texas Turns 100 A look back at the dreadnought victor ship’s sterling record of service and the men who sailed her

Danner’s Inc.

The Ins and Outs of Exporting Domestic Crude Oil Does the infrastructure exist to profitably export domestic crude oil?

News Port Chairman Emeritus Ned Holmes How he helped shape the Port of Houston for success in the 21st century

Houston’s fourth-generation security company

www.txgulf.org

Greater Houston Port Bureau | 1

Port Bureau 6

News

3 Captain’s Corner

14 Battleship Texas

4 Port Watch

18 Commerce Club

We won’t let you fail A Nadir’s Nadir

6 Is the Leg Bone Connected?

The infrastructure anatomy needed to export crude oil Publisher/President CAPT Bill Diehl, USCG (Ret.), P.E. Editor Christine Schlenker Copy Editor Judith Schultz Art Director Christine Schlenker For information about the Port Bureau:

Phone: (713) 678-4300 Email: info@txgulf.org 2 | April 2014

Celebrating its centennial March 2014: Joe Bob Perkins, CEO Targa

20 Danner’s Inc. Houston’s fourth generation security company

Writers Dave Cooley Matt Logan Christine Schlenker Judith Schultz Patrick Seeba Cover Photo Capt. Lou Vest Photographer Patrick Seeba

Port Bureau Staff Jeannie Angeli Cristina Gomez Janette Molina Al Cusick Printing Company DiPuma Printing and Promotional Products www.dipuma.com

For information about the Port Bureau News stories or advertising:

Email: editor@txgulf.org www.txgulf.org

28 Ned Holmes

Distinguished by Local Author 30 P3 Update

31 Brother James

(Anthony) Ornelas, S.S.S. Eulogy

A Publication of the Greater Houston Port Bureau The Port Bureau News magazine is a monthly publication of the Greater Houston Port Bureau, a member-driven nonprofit dedicated to promoting the maritime community, providing vessel movement information and offering members premier networking and advertising opportunities to drive business. The magazine is distributed to over 6,500 professionals in the Houston maritime community via U.S. mail and email. Advertising is available for members.

Captain's Corner We Won’t Let You Fail

hen I assumed command of the Coast Guard Sector Houston-Galveston in 2006, Jim Overman from Dow Chemical congratulated me at the reception and said: “Don’t worry, we won’t let you fail.” I understood by the term we that he was implying industry and the response community as a whole, but thought it an odd thing to say upon first meeting someone … what had he heard about me? Actually, new COs typically hear something similar to this from their chiefs, the senior enlisted guys--you know, the ones that actually do the work. Anyway, Jim’s comment stuck with me. Every time I saw him, I would bring up in a joking tone that there was no way I could fail. I share this story because as I’m typing this, vessel traffic from the Texas City Y Oil Spill is starting to unwind. This was our first significant oil spill in quite some time, and it shows how industry and the public rallies to assist our emergency responders. The Texas City Y is one of the worst locations for us to have an oil spill because it directly affects all three Houston Ship Channel ports and access to the Intracoastal Waterway. Kudos to CAPT Brian Penoyer and his Unified Command for quickly and effectively integrating a wide range of agencies and industries to mitigate the consequences of this incident. One way industry is rallying around responders is by helping prioritize the cargo that needs to move into and out of the ports, thereby mitigating the economic impact of the spill. This is mostly done through the Port Coordination Team (PCT). The PCT is comprised of approximately two dozen industry members from the ports of Houston, Galveston, Texas City, and Freeport. By serving as an information conduit, the PCT permits the Captain of the Port to establish traffic priorities and better manage the flow of vessels. It is essentially a conference call that feeds a larger phone/email tree that allows information to flow into the Coast Guard and back out to industry. I’ve learned that in the supply chain model, industry loves predictability. When that is not available, they thirst for information. If you are interested in knowing more about the PCT, feel free to give me a call. When I first learned of the spill, I wanted to wade deep into my closet, pull out that one work uniform I

L to R: CAPT Brian Penoyer, CAPT Jim Whitehead USCG (Ret.), CAPT Marcus Woodring USCG (Ret.), CAPT Bill Diehl

kept as a career memento, put it on, and report for duty. Those days are gone so I called Patrick Seeba, Port Bureau staffer and program manager of our Houston Ship Channel Security District, and we pinpointed how our team could help — by getting timely and accurate information out to the larger port industry that is not normally connected to the cargo-prioritizing PCT calls. It is not the front lines of the response by any stretch, but it does feel good to be supporting the responders. In a small way, I understand Jim Overman’s sentiments better: no one wants the responders to fail. Shifting gears, RADM Kevin Cook (previous Captain of the Port) and CAPT Penoyer held a dedication ceremony for the new Sector Building at Ellington Field just a few weeks ago on March 10. It is impressive. As you can see from the photo, it gave us old timers an opportunity to reminisce of our time “growing up” at the cramped facilities in Galena Park. When I reminisce at home, my kids call it dad’s “tuna fish days” when he and mom barely survived and didn’t have cell phones—a dark time in their imaginations— which were to us, the best of times. Looking at the new capabilities of the state-of-the-art Sector building, you know that this building is the best of times for our port community. Bringing the Coast Guard forward into a 21st century facility will definitely enhance their ability to coordinate responses to incidents. Most of the 200-plus attendees at the dedication ceremony are now involved in the Texas City Y response. As much as I would like to call them all out by name, I’ll leave it at this: industry and the other response agencies are fully engaged with the Coast Guard and are ensuring that failure in any response is not an option.ò Greater Houston Port Bureau | 3

PORT WATCH

A Nadir’s Nadir - Perhaps Things Will Pick Up Later! Tom Marian, Buffalo Marine Service

ebruary always gets a bad rap when the final date arrival number by 41%. Hopefully, Freeport can vessel arrival tallies are made known. Invarisustain these trade numbers and emerge from its trade ably, the numbers will pale in comparison to its big doldrums of the past few years. The Port of Brownsbrother – the month of January – and to make matters ville’s vessel arrival tally matched that of January but worse, the first month of the year grabs all the attention was still off by more than 12% against 2013. Finally, when economic prognosticators dissect January’s trade Port Lavaca/Point Comfort, the smallest of the coastal numbers in an attempt to divine how the New Year will ports, broke even with respect to the monthly count. trend. So, it is again this January; only things were a bit Yet, there were several Texas ports that posted more erratic than usual as Texas’ total blue water arrival month-over-month declines and still managed to numbers fell by more than remain ahead of 2013’s pace. Texas Ports Deepdraft Vessel Arrivals Perhaps the most notable of the 14%. Overall, three ports in Texas survived the month without a loss. Perhaps the most notable of the lot was the Port of Freeport which finished the month over 13% higher than the previous month. This result was so impressive that it beat 2013’s year-to4 | April 2014

Feb. 2014 Year-to-Date Percent Change lot was the Port of Galveston.

BROWNSVILLE, -12.5%

HOUSTON, -8.6% PORT LAVACA, -24.4%

TEXAS CITY, -6.3% GRAND TOTAL, -2.0%

Despite being off by 8% in terms of vessel arrivals, CORPUS CHRISTI, 4.1% Galveston outperformed FREEPORT, 41.0% last years’ first two months GALVESTON, 21.3% by a robust 21%. Corpus Christi is also ahead of last year’s pace albeit to the tune of only 4%. Granted, this is somewhat of a feat when one considers the port SABINE, 2.8% experienced a 24% monthly vessel-arrival drop. On the other side of the state, the numbers were a bit more subdued in the Port of Sabine which registered a 1%

www.txgulf.org

drop from January but managed to hold on to an annualized adjusted gain of nearly 3%. The Port of Texas City witnessed the second worst month-over-month change – percentage wise – at just shy 24%. Unlike Corpus Christi, it could not hang onto a year-over-year gain as its first two months of the year are off by 5.5% against 2013.

Port of Houston Deepdraft Vessel Arrivals

Feb. 2014 vs. Feb. 2013 500

The Port of Houston suffered the same fate as Texas City with a vessel-arrival loss in 0 both columns. That is, 18% fewer vessel arrivals for the month and 8.6% less for the first-sixth of the year. There was not a single category of vessel that did not post a gain. Liquid commodities took the brunt of the losses with LPG and chemicals at the head of the pack. LPG vessel movements nearly “flat-lined” as over 41% fewer liquid gas vessels transited the ship channel pulling down the year-to-date number by 14%. Chemical tankers plunged below the century mark for the first time in two years as only 73 parcel tankers called upon Houston – a 31% fall from January and 32% annualized decline. Tankers fared much better with only 5% fewer on a year-to-date basis – a rather heartening number given the 11.5% monthly negative change. On the modular side of the trade equation, car carrier arrivals fell 11% for the month and 5.5% against 2013. Container ships were also down by 15% for the month but managed to remain in positive territory for the year (i.e., 4%). General cargo movements also fell nearly 20% for the month which was roughly twice the 11% loss posted by bulk carriers. However, unlike its general cargo vessel counterpart which is down 6% year-todate, bulkers are up 34%. More to the point, the majority of these declines are offset by either higher tonnage vessels or loaded with greater volumes of cargo. Thus, more throughput on fewer hulls which corresponds with continued strong construction and manufacturing demand in the region.

Feb. 2014 YTD (Total: 1,190) Feb. 2013 YTD (Total: 1,302)

the fact that vessels steaming on the high seas possess much more room to maneuver until they arrive at the sea buoy. Accordingly, Houston Ship Channel tow movements fell well below the 10,000 mark due to a monthly 12% decline that was compounded by several days of fogs throughout the Texas coast.

As in year’s past, a positive first quarter will generally offset a tepid February that produces a flat to single digit wane. Put another way, the shortest month of the year racks up the lowest numbers. Thus, setting the stage for a relatively strong March. Unfortunately, the polar waves of ’13 - ‘14 have caused the fogs of February to linger well into March. Indeed, the nadir of the trade year may produce a much deeper hole for March to climb out of given its precipitous fall from January’s arrivals; however, in the wake of this month’s collision and oil spill at a critical ship channel juncture, that may prove somewhat more difficult this quarter. ò

Optically, much of the less-than-heartening picture must be placed in its proper context due to the reality that on a day-for-day basis, a non-presidentialelection-year February possesses a 10% disadvantage vis-a-vis January. When one adds fog to the mix, the arrival numbers are further depressed due to channel closures. Fog can also have a disproportionate impact on tows plying the Gulf Intracoastal waterway given

Greater Houston Port Bureau | 5

Is the Leg Bone Connected to the Hip Bone?

Does the Necessary Infrastructure Exist to Export Domestically Produced Crude Oil? Dave Cooley, GHPB

rowing up I recall that one of our learning experiences regarding human anatomy was through a childhood song about bones and how they are connected. The lyrics were something like:

“The foot bone is connected to the leg bone and the leg bone is connected to the hip bone, the hip bone is connected to . . .”

and so forth throughout the body. This lesson in connectivity has merit in today’s world as discussions abound regarding the export of domestic crude oil. Irrespective of either the politics or the economics, the other “_ics” – logistics – may be the real driving force.

PREAMBLE

Before embarking on a review of the logistics infrastructure necessary to export domestically produced crude oil, it is incumbent to recognize that generally speaking, it’s illegal. After the energy crisis of 1973 (oil embargo against the United States), Congress passed the Energy Policy and Conservation Act of 1975. One of its provisions was to restrict the export 6 | April 2014

of domestically produced crude oil. In addition, various amendments to the Mineral Leasing Act also impose similar restrictions. However, both statues allow the president to authorize the export of domestically produced crude oil where the president determines that such exports are in the national interest. For example, the president has made such determinations that permitted very limited export of heavy crude oil from California during 1982; allowed the export of crude oil produced from Alaska’s Cook Inlet field in 1985; allowed domestic crude oil to be exchanged in crossborder transactions with Canada in 1985 and again in 1988; and allowed the export of Alaskan North Slope Crude Oil in 1995, which due to commercial considerations, terminated in 2004. To allow the general export of U.S. crude oil in today’s world, either congressional action or a presidential determination is required. Whether either action will occur is problematical.

INTRODUCTION

Rising above the politics, let’s look at the anatomy of the crude oil logistics system. After an oil well is

www.txgulf.org

Greater Houston Port Bureau | 7

2012

2009

2006

2003

2000

1997

1994

1991

1988

1985

1982

1979

1976

1973

1970

1967

1964

1961

1958

1955

1952

1949

completed, a conU.S. Oil Production, Refinery Runs, Net Oil Imports nection is made to a (' 000 Barrels Daily) pipeline system which U.S. Field Production of Crude Oil 20,000 ultimately routes the Crude Oil Refinery and Blender Net Input oil to storage tanks at 15,000 Net Oil Imports either an oil terminal 10,000 or a refinery, where the oil is either aggregated 5,000 for further distribu0 tion (the terminal) or -5,000 processed into refined products for everyday -10,000 use (the refinery). If -15,000 the oil terminal or the refinery is located along the coast, then a possibility for export exists. oil imports to around 60% of the volumetric input to So, the oil well is connected to the pipeline, the pipeline the U.S. refining system. Today, the U.S. remains a very is connected to storage tanks, and if along the coast, significant importer of foreign crude oil. the storage tank is connected to a dock, which can be If U.S.-produced crude oil is to be exported, the two connected to a ship. At first glance, it appears that the most plausible facilities for exporting crude oil are from logistics system exists to export crude oil. refineries and from oil terminals, where each is loUnfortunately, it may not be quite that easy. The cated along the coast; noting that at either location the U.S. crude oil supply-demand position has changed complete infrastructure necessary â&#x20AC;&#x201C; land, storage tanks, over time from self-sufficiency, to simultaneously and piping â&#x20AC;&#x201C; may or may not exist to accommodate the exporting and importing relatively small volumes, to export of domestic crude oil. importing significant quantities of foreign crude oil. REFINERIES The last export activity was during World War II and since 1975, almost 40 years ago, crude oil exports have Since a large number of the U.S. refineries are situessentially been banned. As a result, the infrastructure ated along the coast and are generally connected to the necessary to efficiently handle crude oil exports, which water, theoretically crude oil can be pumped from the was once extant, may no longer be functional or even oil well, through a pipeline system to the refinery storexist. age tanks, and from these storage tanks into ships for export. This alternative is not very plausible based on The current U.S. supply-demand position remains supply deficit. Since World War II, the U.S. has been a net importer of crude oil and significantly so since the early â&#x20AC;&#x2DC;70s when the baby boomers came of age, bought homes in the suburbs along with multiple vehicles and initiated the daily commute. Except for a period from 1979 through 1983, when sequential economic recessions in 1980 and 1981-82 dampened oil demand, imports of crude oil rose each year from 1949 (the date of Energy Information Agency (EIA) records), through 2006 when foreign crude oil supplies to U.S. refineries peaked at just over 10,000 barrels per day or more than 70% of refining input. Since 2006, increased U.S. oil production has reduced foreign crude

the inherent nature and structure of the refining business.

A refinery is designed to process crude oil into various higher-value oil products as efficiently as possible. It is not designed to operate as an oil terminal. The refinery operation is a “conversion” business where the profit margin is the revenue received from selling the refined products less the cost of crude oil and operating

expenses. Refineries operate on a very thin profit margin and are quite cost conscious.

1571_GW_Port_Bureau_half-page_ad.indd 1

Since both the price of refined products (revenue) and the cost of crude oil (major cost element) -- the two key elements in the refinery profit equation-- are both exogenous, the only action a refinery can exert is to control its operating costs. Refinery management is quite reluctant to build an asset, such as additional storage tanks to accommodate the export of crude oil, which does not directly contribute to the profitability of the refinery. Refineries build tankage only to meet the optimum logistics requirements of the refinery supply stream.

At Gulf Winds our business is always about

More than the Move. By partnering with Gulf Winds, your dollar goes towards more than moving freight. Gulf Winds continually partners with ICM (International Cooperating Ministries) to build churches and orphanages all over the world. We believe our company’s mission shouldn’t just be reserved for office walls. Our mission is to glorify God by providing world class logistics services through continual investment in our people, clients, community and the world we live in. Let us not lose heart in doing good!

1/12/2011 1:58:59 PM

411 Brisbane Houston, TX 77061 866-597-4851 toll free | www.gwii.com

8 | April 2014

www.txgulf.org

TERMINALS

Perhaps a more logical scenario is to export crude oil from oil terminals, which are also generally located on or near the coast. There are three general types of oil terminals: those that handle crude oil, those that handle black oil, and those that handle refined products and/or LPGs. The oil terminals that handle refined products and/or LPGs would have neither the size of tank nor the on-site piping capacity necessary to export crude oil.

Terminals that handle crude oil or black oil, on the other hand, offer the most promising opportunities to support the export of domestic crude oil. However, in today’s world, a similar philosophy that applied to oil refineries also applies to oil terminals. The U.S. has exhibited greater demand than supply of crude oil, or a supply deficit, since the end of World War II. To balance this deficit, importing foreign crude oil is necessary to meet the input requirements of the refining industry. As such, today’s oil terminals may be

better geared to facilitate importing crude oil as opposed to exporting.

However, as the industry responds to the current higher level of U.S. crude oil production, some crude oil and/or black oil terminals that may or may not receive and distribute foreign crude oil imports may now be facilitating the distribution of domestic crude oil. This is achieved by building connections to the domestic crude oil supply system that could include either connecting directly to the crude oil pipeline system or indirectly by installing rail or barge unloading capability at the terminal. For this to occur, additional investment necessary to receive and distribute domestic crude oil would include dedicating storage tank capacity and establishing outgoing pipeline connections to the local refineries. Once connected, the terminal then has the capability to parse domestic oil supplies to the local refiners as required. Looking to the future, the infrastructure currently installed at these terminals to distribute domestic crude

oil could minimize any future investment that would be necessary to export domestic crude oil. Consequently, the crude oil and/or black oil terminals with waterfront access and the capability to load the deep draft vessels that have already installed such infrastructure could make the possibility of exporting U.S.-produced crude oil a very quick reality. When evaluating this potential new reality to export domestic crude oil, recognize that the investments that facilitate the receipt and distribution of U.S. crude oil production may be dedicated to an existing business line, encumbered with related contractual obligations, and may not be immediately available, if ever, to export domestic crude oil. Should the export of domestic crude oil be allowed, assessing exactly what existing assets will really be available to support this program will be necessary.

EXPORT AVAILABILITY

To determine the viability of exporting domestic crude oil production requires answers to two very basic

Opportunity.

On a global scale.

WHITNEY MARITIME FINANCIAL SERVICES

From the Gulf Coast to ports across the globe, itâ&#x20AC;&#x2122;s smooth sailing with Whitney Bank. Wherever your business may take you, our experienced maritime bankers can provide the financial tools and expert knowledge you need to successfully navigate todayâ&#x20AC;&#x2122;s complex global shipping environment.

LEE MEDIAMOLLE

SVP, Middle Market Manager 713-951-7107 FORREST TAYLOR

SVP, Maritime Specialist 713-951-7130

FPO

whitneybank.com

Member FDIC

Greater Houston Port Bureau | 9

questions. First, how much oil is available for export, and second, who are the customers and where are they located?

The infrastructure of the U.S. logistics system is currently in a state of flux. Increased domestic oil production over the last seven years has not only arrested the decline in U.S. oil production, but over the last five years domestic oil production has grown from 5.0 million barrels a day (MMBD) in 2008 to about 7.9 MMBD estimated currently. The bulk of this increased oil production has emanated from one formation in North Dakota and two formations in Texas.

Bakken

The Bakken formation in North Dakota (plus increased Canadian oil production being exported to the U.S.) has created a logistical surplus in the Midcontinent as insufficient pipeline capacity exists to move the increased oil supply availability (production plus imports). As a result, the increased oil production from the Bakken is being moved partially through the

existing pipeline system, but more predominantly by rail to refineries located on the East, Gulf, and West Coasts

According to EIA, Bakken crude oil production is currently estimated at just over 1.0 MMBD; a growth of over 800,000 barrels per day (BPD) during the last seven years. Looking forward, new well completions in the Bakken are slowly approaching a balance with the field decline rate. Current oil production is estimated to grow slightly and then maintain a relatively static level until the in-fill drilling is completed. Once completed, oil production will decline somewhat ratably, based on a current assessment of the decline curve.

The current combination of limited pipeline availability and significant rail transport results in moving oil from the Bakken to various markets, albeit at a price discount to cover the increased logistics cost. While crude oil exports may alleviate the surplus, the Bakken production is a long way from the coast â&#x20AC;&#x201C; any coast. As a result, if exports are the panacea, price discounts will

10 | April 2014 www.txgulf.org

still be necessary to accommodate the movement of this oil to an unnatural market.

Eagle Ford and Permian Basin

Currently, EIA is suggesting that oil production in the Texas formations of Eagle Ford and Permian Basin are roughly 1.1 MMBD and 1.2 MMBD, respectively or a respective increase of 1.0 MMBD and 0.4 MMBD. To accommodate this increased supply, the Gulf Coast logistics system is slowly adapting as pipeline projects are being completed to address the situation. Facts known to date include: • The Keystone South Pipeline from the Midcontinent to the upper Texas Gulf Coast is delivering 300,000 BPD of crude oil to Port Arthur, Texas with the capacity rising to 520,000 by year end 2014 and ultimately to 700,000 BPD when Houston is connected. The Houston lateral leg of the Keystone South Pipeline is under development and is expected to be completed late in 2014 or early 2015.

• The Seaway Pipeline has been reversed and is moving 450,000 BPD from the Midcontinent to Freeport, Texas with ongoing deliverability to Texas City and the Houston refining complex. • Various gathering or midstream companies such as Magellan, Kinder Morgan, Plains Petroleum, Enterprise, and Targa have built or otherwise integrated incremental logistics infrastructure with capacity ranging from 400,000 BPD to 600,000 BPD. This capacity is either currently on-line or coming on-line through 2016 to deliver increased domestic crude oil production from both the Eagle Ford formation and the Permian Basin to refineries located along the Texas Gulf Coast.

The Keystone and Seaway projects could also deliver Canadian imports, Bakken, and some incremental West Texas production to the Gulf Coast. These connections have somewhat eased the oil congestion in the Midwest.

Gulf Coast Synopsis

With pipeline infrastructure being built, reversed, and re-routed, low sulphur foreign crude oil imports,

similar in quality to the Eagle Ford shale oil and oil from the tight sand in the Permian Basin and the Bakken, previously destined for the Gulf Coast refining system have predominantly ceased. Today, Gulf Coast refiners are processing Eagle Ford crude oil as well as a portion of the increased production from the Permian Basin and the Bakken instead of importing low sulphur foreign crude oils.

For the future, current expectations are that oil production from both Eagle Ford and the Permian formations will continue to show a slight net increase over the next eight to ten years. If this is realized, a potential surplus of low sulphur crude oil would develop over the near term along the Texas Gulf Coast and export would be an attractive opportunity. A key barometer of future production is the drilling rig count in each area; however, rig counts in both the Eagle Ford and Permian Basin have remained relatively steady over the last four to five years at around 300 rigs and 500 rigs, respectively.

The Future

The EIA forecast for net U.S. crude oil production from tight oil formations (shale, chalk, and tight sand) is to increase at about 150,000 BPD annually from 2014 through the early years of the 2020s. Assuming that the cumulative net increase in domestic oil production from 2006-- the first year U.S. oil production registered a net increase-- through early 2014 is the maximum quantity that can be absorbed by the domestic oil refining industry, then future production increases would be available for export.

At an annual rate of increase of 150,000 BPD, the export program could begin in late 2014 or early 2015. Initial exports could be two ships a week with each ship carrying on average 600,000 barrels, or about 80,000 metric tons of cargo. This rate of increase would continue each year by a like amount until 2022. At this point in time, the EIA forecast suggests crude oil production from these tight oil formations begins to decline and by 2028, returns to the level recorded for 2013, at about 2.3 MMBD. Following the assumption that the domestic refining industry continues to absorb the level of production in 2028 as it did in 2013, then U.S. crude oil exports in 2028 would be either de minimis or zero. Assuming a Caribbean-Latin America trade of 15 days round trip -- with all voyages emanating from and Greater Houston Port Bureau | 11

returning to the Gulf Coast and export availability of 150,000 BPD increasing by a like amount annually for eight years-- shipping requirements would be between four and five ships in round trip service during the first year, and increasing similarly for the next eight years; peaking at approximately 35 ships in 2022 with an annual export capacity of approximately 500 million barrels during the peak year. From this point, according to the EIA forecast, export availability declines to approximately zero in 2028. This scenario is predicated on the key assumptions that the EIA forecast is realized and that U.S. refiners continue to absorb the same quantity of domestic crude oil over time as that currently occurring.

Markets and Customers

Considering markets and customers, where are the potential buyers located and what logistical infrastructure is available? For example, if the customer base is located in Central America, then the vessels required would be of the Panamax size – 50,000-80,000 SDWT. On the other hand, if the market is South America, then the vessels would be of the Aframax size – 80,000 to 120,000 SDWT. In addition, if the customer is located on Aruba or St. Croix, then Suezmax would be the preferred vessel, as deep draft harbors are available. How does the U.S. infrastructure match these needs?

EXPORT INFRASTRUCTURE

Since oil terminals are the most appropriate candidate to manage the export of domestic crude oil, some terminals, particularly those located along the Texas Gulf Coast, have been proactively connecting to the domestic crude oil pipeline system by providing storage capability and either building or orchestrating pipeline connections to local refiners. These terminals generally have access to deep water and have the piping systems and loading arms installed on the docks or piers to handle foreign crude oil imports. As a result, oil terminals along the Texas Gulf Coast would generally require minimum incremental investment to export domestic crude oil. To handle exports, some new terminal investment will still be needed to ensure the capability exists to pump oil from the storage tank to the ship as opposed to the currently installed import system that pumps oil from the ship to the storage tank. Additional terminal tankage may also be necessary to maintain the quality

integrity of the crude oil received from the production field as well as to ensure that a sufficient number of storage tanks of adequate size exist to efficiently manage the flow of exporting crude oil.

The amount of tankage that an oil terminal dedicates to exporting domestic crude oil is a function of the maximum cargo quantity that can be loaded aboard a crude oil tanker and the frequency of tanker arrivals. In the U.S., the limiting factor that determines the maximum crude oil cargo quantity is the depth of water at each port. Most U.S. ports handling crude oil imports have channels that have been dredged to a point where the water depth ranges from 40 feet to 50 feet. This suggests that the maximum cargo size would range between 500,000 barrels and 700,000 barrels which matches reasonably well with the needs of customers located throughout the Americas.

VAPOR RECOVERY

In addition to the various other investments necessary to facilitate the export of domestic crude oil, the Clean Air Act requires that any terminal that loads crude oil from shore side tanks into vessels collect volatile organic compounds (VOCs) vapors displaced from the ship as the oil is loaded. If terminals have never loaded crude oil into tankers before, then the terminal must also install a vapor recovery system.

CONCLUSION

In the U.S., it appears that the leg-bone is somewhat loosely connected to the hip-bone. Generally, the necessary infrastructure exists, but it’s not 100% everywhere. Additional investment will be required perhaps for pipeline connections to the domestic crude oil pipeline system, for additional tankage, for piping and loading arms to export crude oil, for pumps, and for installing vapor recovery systems. However, some terminals, in the ordinary course of business, have made some of these investments to facilitate the flow of increased U.S. oil production to U.S. refiners. These terminals are ahead of the game, and essentially all are located in Houston! The leg-bone is connected to. . . . ò

Ed Note: Unless otherwise noted, all data obtained from the Energy Information Administration, DOE.

12 | April 2014 www.txgulf.org

Greater Houston Port Bureau | 13

Photo courtesy of Andy Smith, Ship Manager, Battleship Texas

Texas’ 100 Years of Service The Battleship Texas Turns 100 Matt Logan, GHPB

ight thousand Texans and many others from across the country came out to San Jacinto State Park to wish the Battleship Texas a happy 100th birthday on March 15. Robert Earl Keen, Reckless Kelly, Charlie Robison, Kelly Willis, and Bruce Robison provided entertainment, and the famous Houston food trucks provided the food for the day-long celebration. The birthday bash was capped off with a spectacular fireworks display. The fact that thousands of patrons braved the rainy conditions is a testament to what the Battleship Texas means to the local community. On March 12, the actual 100 year anniversary of the battleship, a luncheon was held to honor the 31 remaining veterans who served aboard the Battleship Texas. Commissioned on March 12, 1914, the USS Texas (BB-35) was the greatest asset for the greatest generation. She is one of only six remaining ships to serve in both World Wars and is the last remaining dreadnought battleship. The USS Texas is known as the “ship of firsts” as she was the: • First U.S. Navy vessel to permanently house U.S. Marines • First battleship to mount anti-aircraft guns

• First U.S. ship to control gunfire with computers • First U.S. battleship to launch an aircraft from a catapult • First ship to have radar installed

• First battleship to become a permanent museum

• First battleship to be declared a U.S. National Historic Landmark The USS Texas is truly a model of technological advancement. In her earlier days, a kite balloon was launched from her decks to survey the surrounding area. By the end of WWII, the Texas was launching unmanned planes from her deck for reconnaissance.

When she was decommissioned in 1946 there was no doubt she was coming home to Texas. Texas schoolchildren actually organized a drive, setting up “penny” donation boxes in schools, libraries, churches, and local stores, and it wasn’t long before the funds were raised to tow the Texas to the Port of Houston. The only choice for a resting place for the ship that paved the way for U.S. world-wide influence was the location of the battle that led to nearly one-third of the United States’ mainland; San Jacinto. From 1948 to 1956, over 15 million people visited the Battleship Texas, which is remarkable

14 | April 2014 www.txgulf.org

considering that in 1950 only seven million people lived in the entire state of Texas.

are some highlights you may not know:

Veracruz by President Woodrow Wilson in response to the Tampico Incident.

WWI

USS Texas’ service in WWI is often overlooked or forgotten. She was actually one of the few U.S. ships able to serve in WWI because she still ran off coal at the time. Oil-based fuels were not readily available in England, but coal was plentiful. The Texas served The list primarily as a support and convoy ship in many engageof USS Texas’ ments. accomplishWWII ments goes The USS Texas was the only battleship to serve in all on and on theatres of WWII. She received five WWII battle stars. and could Prior to the U.S. entering the war, she was used as an take up this entire maga- escort ship for crossing the Atlantic. zine. Here Invasion of Northern Africa

Battle of Veracruz

The USS Texas saw her first service at Veracruz, Mexico in May of 1914. She was the support vessel for the American troops that had been ordered ashore at

The Texas saw her first action of WWII in Operation Torch and the invasion of Northern Africa. Here she supported the amphibious landing of troops at Port Lyautey in French Morocco. On board the Texas for her Northern African tour was young journalist Walter Cronkite. During the return trip to the U.S. mainland

Greater Houston Port Bureau | 15

after the invasion, Cronkite found himself in a race with another journalist aboard the USS Massachusetts to report the first uncensored accounts of the Invasion of Northern Africa. Because of Texasâ&#x20AC;&#x2122; ability to launch aircraft, Cronkite was able to fly to Norfolk, Virginia off of the Texas as soon as they were within flying distance,

allowing him to be the first to report and launch a storied career in journalism.

D-Day

At the Normandy invasion, the USS Texas was the flagship for both Omaha Beach and Pointe du Hoc. At one point the Texas got as close as 2,700m from the shore to provide gunfire support for troops on the beach. The unexpectedly high injuries from the invasion quickly filled the floating hospital ship, so the Texas served as its back-up, treating as many wounded as it could. The Texas also delivered provisions to and evacuated U.S. Army Rangers from Pointe du Hoc with two landing craft, vehicle, and personnel (LCVP) boats. As allied troops advanced inland and approached the edge of the Texasâ&#x20AC;&#x2122; gun range, she flooded her starboard torpedo blister with water, weighing down one side of the battleship and lifting the opposite guns two degrees, which was enough to provide fire support for one more inland mission.

A chief objective of the Normandy invasion was to capture the Port of Cherbourg in order to secure a spot to land supplies for allied troops. The Texas was vital in securing the port by moving around in the harbor and drawing the heavy gunfire, making it easier for ground forces to advance. She evaded over 60 shots and was hit only twice. One hit was actually a miss that skipped off the water and penetrated the ship without exploding. The

16 | April 2014 www.txgulf.org

War in the Pacific

In 1945 the Texas set sail to take part in the war in the Pacific. She spent three days bombarding the beaches of Iwo Jima in preparation for the landing of U.S. Marines. She was providing on-call gunfire support when the famous raising of the American flag occurred. After Iwo Jima, the USS Texas proceeded to Okinawa and spent a week firing salvos from her main guns into Okinawa to prepare for the amphibious landing. After the U.S. Army and Marines went ashore, the Texas stayed in Okinawa waters providing gunfire support to the troops on the island. At one point during this stint, Texas’ anti-aircraft gunners were at their posts for 50 straight days due to heavy Kamikaze activity. Meals were brought to the gunners, and buckets sat beside them so they could relieve themselves.

Last Mission

At the end of WWII the USS Texas embarked on her final active mission, known as “Magic Carpet,” to get U.S. soldiers home as fast as possible from the Pacific front. In all, the Texas made three trips and safely returned over 4,200 soldiers home. With about 1,400 soldiers added to the 1,800 crew members each trip, space was tight and makeshift bunks were set up all over the ship. On her first return trip home, the Texas carried back approximately a dozen former American POWs. In a gesture that signified her spirit since commission, officers of the Texas gave up their quarters so these former POWs could have an actual bed to sleep on for the first time in years.

Photo courtesy of Andy Smith, Ship Manager, Battleship Texas

other was a hit to the bridge that injured a dozen men and took the life of the helmsman on duty, Christen Christensen.

One of the giants created in 1914 beams with activity and proudly stands as the top of its kind in the U.S. The other sits admirably, gladly willing to educate any who cares to listen, and valiantly fighting for every year of existence. Their proximity of space, and disconnect in fortunes, is poetically sad. The Texas has fought the effects of aging and disrepair from a lack of funding, but her condition reached a critical point in 2012 when she began taking on up to 2,000 gallons of water per minute. “What is tricky about the repairs is that they have to be done from the inside out, with nearly 1,900 pounds per square foot fighting the repairs from the outside,” says Andy Smith, ship manager of the USS Texas.

After delivering all 4,200 soldiers safely to the California coast, Texas made her final voyage, sailing through the Panama Canal to Norfolk, and was de-commissioned in 1946 in Baltimore. Her propellers were removed, and all her guns and engines were disabled, ending her storied 32 years of service.

Texas voters passed a proposition in 2007 that enabled the Texas Parks and Wildlife Department to appropriate $25 million for the repair of the USS Texas and the development of a dry-berth for her at San Jacinto. The Battleship Texas Foundation has contributed $3 million more. These funds have only covered some of the necessary repairs for the Battleship, and approximately another $50 million is needed to develop the dry-berth. Her repairs are being carried out ontime, and on-budget, but a true dry-berth is essential for the long-term survival of the USS Texas. Today over 100,000 people still visit the Battleship Texas each year, and countless schools make annual field trips to the battleship so young Texans can learn from the historic ship.

The Battleship Texas shares her 100th anniversary with another foundation of maritime innovation – the Houston Ship Channel. The two beacons of technological advancement are inextricably linked in time, and rightfully, in location.

The Greater Houston Port Bureau would like to thank Andy Smith, ship manager of the Battleship Texas for his contributions to this article. ò

Upkeep of the Floating Museum

For more information on the dry-berth project visit: dryberthtexas.com. To donate to the Battleship Texas project visit: BattleshipTexas.org.

Greater Houston Port Bureau | 17

March 2014 Commerce Club With Joe Bob Perkins, CEO, Targa Resources Judith Schultz, GHPB

TARGA RESOURCES HAS THE ENERGY TO DELIVER

“I

don’t really give speeches,” declared Joe Bob Perkins, CEO, Targa Resources, as he was introduced to the Greater Houston Port Bureau’s March 13 Commerce Club attendees. “I just like to talk about my company.”

Perkins presented an informative, discussion-style overview of key natural gas industry trends and Targa’s overall market position. He cited the dramatic shift in NGL exports as production has moved from a vertical to a horizontal form as the most continuing significant factors shaping the industry today. Targa’s combination of a strong footprint in the active basins, operations in Louisiana and on the Gulf of Mexico, and their NGL storage and processor facilities at Mt. Belvieu have positioned the organization as a leader in the market. Perkins’ presentation concluded with a brief look at Targa’s Gulf Coast logistics assets and expansion projects.

quipping: “Never underestimate what a good engineer can do with an unlimited budget!”

The Port Bureau’s April Commerce Club will feature RADM James Watson (Ret), President/COO of ABS Americas, on April 10 at Brady’s Landing. Reservations can be made online at www.txgulf.org/commerceclub.php or by calling (713) 678-4300.ò

A lively question and answer session followed the presentation, covering topics that ranged from legislation to Targa’s salt dome storage facilities in Mt. Belvieu to world oil supply. Perkins summed up his optimistic outlook concerning oil supply longevity by

18 | April 2014 www.txgulf.org

Above Left: Houston Pilots Captains Mike Morris, John Vassar and Clint Winegar and Guy Hitt, Frost Bank Above Right: Garry McMahan and Curtis Duncan, Port of Houston Authority

Left: Tyler Brown, AllTrans Port Services, Bernt Netland, Intercontinental Terminals Company and Dennis Hansell, Suderman & Young Towing Company Opposite Page: Michael Taetz, Colliers International; Gary Maybray, Colliers International; Kevin Hickey, Targa Resources; and Mark Vincent, Port of Houston Authority Opposite Page (Lower): Speaker Joe Bob Perkins, Targa Resources

Commerce Club Sponsors:

Greater Houston Port Bureau | 19

Danner’s Inc.

75 Years in the Family Christine Schlenker, GHPB

s a fourth-generation family-owned business, Danner’s Inc. is a rarity simply because it still exists. According to a study by the Institute for Entrepreneurial Excellence at the University of Pittsburg, only 3% of family businesses make it to the fourth generation or beyond. Celebrating its 75 year anniversary in 2014, Danner’s Inc. has grown and evolved with the Houston Ship Channel and Gulf of Mexico region. Third generation President Jim Maxcey and his son, fourth generation Vice President Brad, spent time with the Port Bureau to talk about the history of their company and how it has beat the odds by not only surviving, but thriving. The eponymous D.D. Danner retired as a police officer in 1937, but found retirement was not in his cards. Amongst labor unrest and a growing but unfenced Port of Houston, Danner started receiving requests to use his police experience to continue serving the people of Houston by offering private security services. One of the first contracts he acquired was with Walgreen Drug Stores to provide security at a local Harrisburg store in

November 1938, for which Danner’s billed $8.00 per day.

Danner soon directed his focus on providing marine security, and in doing so created a niche security market in the Houston area. The Houston waterfront before the 1950s would be unrecognizable to the modern port employee. With few fences, little security, no containerization, and most work performed by hand, shipping companies faced a constant threat of looting and stowaways. Danner’s provided gangway watches to monitor who was coming on and off of vessels and to verify they had business on the vessels. On the docked vessels and in the warehouses, Danner’s offered security against cargo theft or damage. During periodic labor strikes, Danner’s hired extra staff to be able to provide security onboard every vessel. Some of the more interesting work involved guarding unruly seamen or stowaways. Crew members on shore leave were not always well-behaved, and Danner’s was often called upon to bail crewmen out of jail and return them to their ship. When stowaways were

20 | April 2014 www.txgulf.org

located on vessels, Danner’s facilitated the stowaway’s return to his or her home country. Depending on the situation, it could include delivering the stowaway to a detention center for a number of days while arrangements were made, escorting the stowaway to a vessel that was headed toward his or her country, or even accompanying the person on a flight back home to make sure the person did not slip away once again. World War II caused another increase in security requirements. Danner’s daughter Johnnie, married to J.W. Maxcey, worked as a secretary for her father while raising their two children as her husband was stationed in Europe. After leaving the Army in 1946, J.W. Maxcey returned to Houston and began working for his father-in-law. Danner’s Inc. was already a 24-hour operation out of a two-story house near Harrisburg and had the same phone number it still uses today. With Maxcey on board, Danner’s was able to open a second office in Galveston and expand to over 75 employees.

Above: D.D. Danner’s agreement with Walgreen Drug Stores in 1938.

www.bladesintl.com LETTER OF CREDIT BROKERAGE ………………………………..…………………………………………………………………………………………………………………………..………...……… Diplomatically reduces export letter of credit and trade finance fees significantly.

Blades International, Inc. is the leader in Letter

Builds relationships with the top strategic International Trade Finance Banks by allowing them to quote on Letter of Credit activity.

transactions”, helping various steel, energy

Reviews export letters of credit and provides expert advice on wording and credit issues.

terms. Clients diplomatically enhance their

CALL: Sherry Mama Direct: 281-224-3228

of Credit brokerage for “Export letter of credit service, equipment, and commodity exporters arrange the most competitive trade finance relationships with the major International Trade Finance Banks and obtain the most competitive export letter of credit terms.

Contact: Sherry Mama | sherrymama@bladesintl.com | 2425 Fountain View, #350

Greater Houston Port Bureau | 21 Houston, TX 77057

713.977.7400

Left: A Houston Post story circa early 1960s describing Danner’s Inc. as the Private Eyes of the Port. reliable security and escort company they knew, Danner’s Inc., which filled in another gap in the security market in Houston.

The late 1950s and ‘60s brought further changes to the industry as more foreign-flagged vessels and their foreign crews began coming to the Houston Ship Channel ports. With limited communication, vessel captains often had to visit the agents’ office in person at the Cotton Exchange Building in Downtown Houston to conduct their business. When a ship’s foreign crew needed assistance – be it an escort to a doctor or to Hobby airport and processing through Customs and Immigration – there was no established way to handle the situation. The agents improvised and called the

Between the 1970s and late 1990s, Danner’s third generation, brothers Jim and Mac Maxcey, expanded across the Gulf Coast to include offices in Corpus Christi, Port Arthur, and Freeport, with Port Arthur extending its service area to Lake Charles. During this time, Danner’s Inc. started facing its first real competition as the need for service companies expanded with the growth of the Gulf ports. Danner’s Inc. kept to its company philosophy of providing the best service possible and through the strong customer relationships forged over decades, the company persevered. Throughout all of the trials and tribulations, Jim and Brad Maxcey consider Johnnie to be the glue that held the company together.

BARGING AHEAD ever so politely.

Buffalo Marine Service, Inc. 22 | April 2014 www.txgulf.org

www.BuffaloMarine.com

Texas Gulf Coast Gateway to the Midwest, Southwest and the Greater Galveston/Houston Region

Port of Galveston

AN EFFICIENT PART OF YOUR SUPPLY CHAIN • Served by Wallenius Wilhelmsen • Roll-On / Roll-Off, Break Bulk and Project Logistics, ARC, "K" Line Ro-Ro, Höegh Cargo Terminals Autoliners, CSAV Ro-Ro & NYK Ro-Ro • Direct Connection to BNSF Railway and • 30 minutes to Open Sea Union Pacific Railroad • Efficient Labor and Competitive Rates • Immediate Access to the Interstate Highway • Foreign Trade Zone No. 36 System and Gulf Intracoastal Waterway

Roll-On / Roll-Off terminal - New vehicle imports

Imported wind turbine towers departing the port by rail

P.O. Box 328 • Galveston, TX 77553 Phone 409-766-6112 • Fax 409-766-6171 Website: www.portofgalveston.com Contact: Capt. John G. Peterlin III Sr. Director of Marketing & Administration Email: jpeterlin@portofgalveston.com

Greater Houston Port Bureau | 23

Jim remembers his mother, Johnnie, sitting with her boys in her lap as she took phone calls and helped run the office on 78th and Harrisburg. Her husband J.W. held her advice in high esteem, and that sentiment continued through the following generations. After following other career paths, both James Maxcey and Doug Maxcey found themselves gravitating toward the family business. James, the son of Mac Maxcey, began his career at Danner’s in 1989 and worked under his father in the freight and spares department where he flourished. He then moved over to the security department where he managed all security operations. Eventually James found his way back to the freight department taking over as manager. In 1996 Doug Maxcey, Jim’s son, came on board as a main dispatcher and, like James, worked his way through all facets of the company. He is now head of transportation operations. Both Doug and James oversee these operations for all of the offices.

In the aftermath of the September 11, 2001 attacks, security requirements across all transportation sectors skyrocketed. With only a handful of companies experienced in maritime security, Danner’s was positioned well to help the Houston Ship Channel adapt to the suddenly stringent requirements. As the U.S. Coast Guard and Department of Homeland Security implemented new safety measures, Danner’s ramped up operations to meet the ports’ demands and was able to offer jobs to highly-trained former police, military, and security professionals who had lost their jobs during the 2001-2003 recession. Brad Maxcey explained that “the difference between guarding a building and a vessel is night and day.” Most warehouses shut down at night, but vessels are always active and have a constant flow of workers, and consequently require more training and more maturity from the guards. 9/11 also brought Brad Maxcey back to the family business. A graduate of the University of Texas, Brad stayed in Austin for work and planned on never

Across the Gulf Coast, we’ve been meeting the needs of our clients for 123 years.

With the Port of Houston expanding, do you have a bank that will grow with your financial needs? With over 9 billion in assets, Trustmark offers expertise in the areas of Trade Finance, Maritime lending as well as a wide range of products and services tailored to meet your financial needs. For more information on how Trustmark can assist you, please contact one of our experienced lenders. Mike Quiray Senior Vice President, Trade Services & Maritime Finance 713.827.3707 MQuiray@trustmark.com

Jeff Deutsch Senior Vice President, Corporate Banking Manager 713.827.3717 JDeutsch@trustmark.com

24 | April 2014 www.txgulf.org

trustmark.com

Member FDIC

returning to Danner’s, but after seeing how suddenly the world could be turned upside-down, he knew he needed to be closer to his family again. Brad was back at Danner’s by early 2002 just as the business was rising to meet the needs of industry. Danner’s business more than doubled during the ramp-up period while companies were still trying to figure out how to meet new regulations and requirements, and USCG and Homeland Security worked on determining what the optimal level of security was required without disrupting commerce.

The 2000s brought another fundamental change to how Danner’s operated – new technology. When Brad joined the office in 2002, there were only three computers: one each for accounting, the office manager, and dispatch. Much of the work was still being done on paper and pencil, and dispatchers communicated with the field team via CB radios fixed inside of the vehicles. Within a few short years, email replaced Telex, cell phones replaced CB radios, and a computer was at

every desk. Danner’s was an early adopter of HarborLights Vessel Tracking System and the real-time vessel scheduling data that helps the team determine when and where to go for crew changes or security shifts.

In 2006, Danner’s started offering surveillance Above: Danner’s installs a camera surveillance system at a construction site. camera services, which proved to be a big boost to the security side of the business. Although cameras cannot replace on-site guards for certain functions, 24-hour site surveillance fills the needs of many customers and is usually more

Sea & Shore

Ship & Store

www.odfjell.com

The Odfjell Group is a leading participant in the global market of seaborne transportation and storage of chemicals and other specialty bulk liquids. The Odfjell Tankers fleet of about 90 ships, trades globally and regionally. The Odfjell tank terminal division of 12 partially owned tank terminals is in a network with 12 other tank terminals partly owned by related parties. The terminals are all strategically located around the world, and with Odfjell Group headquarters in Bergen, Norway, the Company has more than 20 offices world wide.Odfjell has about 3,500 employees and annual gross revenue of about $1.2 billion.

Greater Houston Port Bureau | 25

affordable. With cameras trained to the perimeter of a site, the Danner’s personnel monitoring the cameras can notify authorities as soon as a trespass occurs, increasing the likelihood that assistance will arrive at the site before the perpetrator has left, while at the same time, recording video evidence of the incident. The wealth of technology available now gives Brad a sense of appreciation and respect for the previous generations who started the company with nothing but pencils and determination. “I look at what my grandfather and great-grandfather did in the beginning and how easy it would have been for them to quit.” After 75 years in Houston, Jim and Brad Maxcey know it was not only the hard work of their forefathers that have helped the company reach its success today, but also the support of the maritime community and Danner’s employees. The names Maxcey and Danner ring true to companies that have visited Houston over the last seven decades, and the current generation strives to maintain the relationships of the past while forging new ones. Danner’s prides itself with

having never closed its doors since it opened. Even during Hurricane Rita, when most of Houston and Port Arthur were evacuated, the core staff Mrs. Johnnie Maxcey in the 1960s. sent their families out of town and stayed to keep the office running on generators. The foundation of any strong company is its employees, and Danner’s feels fortunate to have hardworking and loyal staff. Seven employees have 20 or even over 30 years with the company, including three members at the Galveston branch with over 90 years combined service. As the fourth generation of Maxceys - Brad, James, and Doug - take the reins of the family business, the next generation will have the opportunity to learn how to move the company into the future. ò For more information about Danner’s Incorporated, visit www.danners.com or call (713) 714-3732.

26 | April 2014 www.txgulf.org

Donâ&#x20AC;&#x2122;t Navigate Your Finances Alone. With experienced maritime bankers and the capacity to lend, Bank of Texas has the resources you need to help navigate your finances. We offer competitive structures and terms to meet your growing capital needs. As a trusted name in marine financing and a committed partner to the maritime industry, let us chart you a course for success. Give us a call, or better yet, let us come see you.

FORMER PORT CHAIRMAN, NED HOLMES, DISTINGUISHED FOR ROLE IN PORT’S SUCCESS

Judith Schultz, GHPB

he Greater Houston Port Bureau will honor former port chairman, Ned Holmes, as the Maritime Person of Year on August 16, 2014.

Another challenge was establishing a balance between employing new loading and unloading technologies with the needs of labor. Those two concepts typically clash, but Holmes played it straight with union leaders and wound up working to benefit both the interest of profitability and labor needs. One aspect of this was the decision to lease the bulk loading plant to a private concern, turning a $1 million per annum loss into a $2 million per annum return. While labor initially opposed the tactic, leaders quickly realized that the move would preserve jobs.

Honoring Holmes is particularly fitting as he played a crucial part in forwarding the Port of Houston’s objectives for growth and setting into motion a profitable Environmental concerns were a major obstacle business model during Ned Holmes his many years of service. to get the Bayport Terminal up and running. The largest question was centered on the dredging and how to His efforts brought revitalization to the local industry deal with the dredging material—not and helped to bring the Bayport Terjust from the maintenance dredging minal from drawing board to drawing “... Holmes followed but also from the dredging necessary vessels. Local author David Falloure dein the footsteps of to deepen and widen the main stem in the bay and to make the cut to the scribes the significant role played by Tellepsen, Sterling, new terminal. Under Holmes’ watch, Holmes in his new book and counts Holmes among those who shaped the Jones, Ball, and Rice.” the port began engaging opponents from all over the bay area and adPort’s history.: dressing their concerns. Also the “As containerization grew, Barbours Cut quickly port began a program of using the dredge material to became crucial to the port. The vision of a Bayport rebuild reefs and islands in the bay area. These weren’t container terminal with the most up-to-date facilities the only environmental concerns, but Holmes and the seemed to have gone by the wayside, at least until Ned port worked with groups to improve the ports environHolmes took the reins as port Chairman. From 1988 mental record. These efforts and the resulting programs to 2000, Holmes followed in the footsteps of Tellepsen, ultimately earned the Port of Houston environmental Sterling, Jones, Ball, and Rice. His tenure was marked awards. by vision, action, and an aggressive pursuit of more op By the time he left office in 2000, Holmes portunity for the port. Facing Holmes was just about had turned the port’s revenues from losses to earning every sort of controversy that could beset the port—en- $100 million. In addition, the Bayport Terminal was vironmental opposition, water right-of-way disputes, well underway—and when it finally opened in 2007, labor disputes, revenue losses, public apathy, railway it catapulted the port’s container tonnage figures and glitches, and almost anything else defining a nightmare revenues. The facility’s capacity is 7,000 TEUs, strongly for an experienced businessman. And he still took the contributing to the port’s 2013 revenues hovering position. around $200 million per year and its $1.6 billion impact on the region’s economy. 28 | April 2014 www.txgulf.org

Approaching the centennial as a deep-water port, the Port of Houston managed to overcome repeated challenges from geography, nature, economies, war, and politics. Yet the port is at another pivotal juncture in its history—emergent patterns mirror conditions facing Houston in 1914.” Holmes’ recognition as the Maritime Person of the Year will be the featured highlight of the Greater Houston Port Bureau’s 85th Annual Maritime Dinner at the Bayou City Event Center. For more information, call (713) 678-4300 or visit the website at www.txgulf. org/annualdinner.ò Ed. Note: The preceding excerpt comes from David Falloure’s upcoming book “Sheer Will: The Story of the Port of Houston and the Houston Ship Channel” describing the evolution of a small bayou into one of the largest ports in America. “Sheer Will” will be available in April on Amazon.com. You can contact Falloure at falloure@sbcglobal.net.

Port of Houston Authority

Houston: America’s Distribution Center www.portof houston.com/map

SaleS, Service, rental Discover Briggs’ unmatched selection of new and used industrial, heavy and material handling equipment featuring forklifts, railcar movers, scissor lifts, sweepers and more.

8787 Wallisville Rd i Houston, tX 77029 i (713) 672-1100 | briggsequipment.com Greater Houston Port Bureau | 29

P3 Agreement Clears FMC Regulatory Review

he Federal Maritime Commission (FMC) issued a press release on March 20, 2014 announcing that it has concluded an extensive review of the proposed P3 Network Vessel Sharing Agreement, FMC Agreement No. 012230 including the information received from the agreement parties in response to the FMC’s request for additional information. The pending agreement between A. P. Moller-Maersk A/S, CMA CGM S.A., and MSC Mediterranean Shipping Company, S.A. would authorize the parties to share vessels and engage in related cooperative operating activities in the trades between the U.S. and Asia, North Europe, and the Mediterranean. The Commission’s decision, from which Commissioner Lidinsky dissents, allowed the Agreement to become effective as scheduled on Monday, March 24, 2014. The Commission’s decision is based on a determination that the agreement is not likely at this time, by

a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6(g) of the Shipping Act. The Commission notes that there may be circumstances that could permit the P3 Agreement parties at some point in the future, to unreasonably reduce services or unreasonably raise rates that could raise concerns under section 6(g). To address these concerns, the Commission directed staff to issue alternative reporting requirements to the P3 Agreement parties to assist the Commission in its ongoing, close monitoring of the agreement. The Commission’s action on the P3 Agreement takes into account the comprehensive, competitive analysis conducted by the FMC staff and comments received from shippers and other stakeholders. While the agreement is expected to produce operational efficiencies for the benefit of the U.S. consumer, the new reporting requirements specifically tailored to this agreement’s unique authority will ensure we have timely and relevant information to act quickly should it be necessary,” said Chairman Cordero.ò

30 | April 2014 www.txgulf.org

In the Community B

ROTHER JAMES (ANTHONY) ORNELAS, S.S.S., age 58, of the Congregation of the Blessed Sacrament, passed away Thursday, March 20, 2014 in Houston, Texas.

Beloved son of Agapito and Betty (Sisneros) Ornelas of Salt Lake City, Utah; dearest brother of Aaron Ornelas and Rejina Huffman of Salt Lake City. Ornelas served as a U.S. Army Chaplain Assistant and later in the National Guard. He entered the Congregation of the Blessed Sacrament in 1992, making profession on August 15. Following profession, he served as a Certified Pastoral Minister in Cleveland, Ohio, and Menasha, Wisconsin, and at Saint Patrick’s Church in Salt Lake City, Utah (2001-2006). Ornelas was Deputy Director for the Salt Lake City Police Department Chaplains, a Fourth Degree Knight of Columbus and past Grand Knight of Council 1838 in Menasha, Wisconsin. He was a board member of the National Teens Encounter Christ, serving also at the local level. Since 2007, Ornelas served as Port Chaplain at the Houston International Seafarers’ Centers of the Archdiocese of Galveston-Houston, and was the seafarers’ liaison to the U.S. Catholic bishops for the last eight years and a trainer for chaplains and spiritual directors for Princess Cruise Line. He lived at the Blessed Sacrament Community at Corpus Christi Church in Houston, where he

collaborated with the Corpus Christi Council of Catholic Women for the Christmas Shoebox Project for the Seafarers and was also active with the Knights of Columbus Council 12385.

The family received friends at St. Ann’s Church, 450 East 2100 South, James Anthony Ornelas Salt Lake City, Utah on Wednesday, March 26, from 6-8. p.m. Visitation continued Thursday morning, March 27, from 11-12 p.m. at St. Ann’s Church, where the Mass of Christian Burial took place at 12:00 p.m. Rite of Committal was held at Mt. Calvary Cemetery in Salt Lake City, Utah. A Memorial Service was held on Tuesday, April 1, 2014, at 7:00 p.m. at Corpus Christi Church, 9900 Stella Link Road, Houston, Texas.

Contributions in memory of Brother Anthony may be made to the Blessed Sacrament Fathers, 5384 Wilson Mills Road, Highland Heights, OH 44143. ò

Greater Houston Port Bureau | 31

Advertising Directory Bank of Texas................... 27 Blades International............ 21 Blank Rome LLP.................. 16 Briggs Equipment................ 29 Buffalo Marine Service........ 22 Cargoways....................... 13 Clark Freight......................... 5 Gulf Winds International........8 HDR.................................... 15 Houston Pilots....................... 7

Greater Houston Port Bureau www.txgulf.org

McCarthy............................ 26 Odfjell................................. 25 Port of Galveston.............. 23 Port of Houston Authority... 29 Richardson Companies........ 30 Shrader Engineering........... 10 Trustmark National Bank..... 24 Vopak.................................. 31 Whitney Bank........................9 Wortham Insurance............. 31

111 East Loop North Houston, TX 77029 T. +713-678-4300 F. +713-678-4839

The 85th Annual Maritime Dinner Honoring Ned Holmes

Saturday, August 16, 2014 at 5:30 p.m. |Bayou City Event Center | 9401 Knight Road, Houston, Texas For registration and sponsorship information: (713) 678-4300 or ghpbdinner@txgulf.org

Admiral

Queen of the Fleet

Amegy Bank Blades International Ceres Gulf Frost Bank Biehl & Co., LP Briggs & Veselka Co. Cadence Bank Central Healthcare Services/ East Houston Regional Medical Center

Citibank Colliers International

Charles Flournoy

Commodore

Houston Fuel Oil Houston Mooring Manchester Terminal Moran Gulf Shipping

Captain

Cooper/T. Smith Dannerâ&#x20AC;&#x2122;s Incorporated Empire Trucking Equipment Depot ExxonMobil Gulf Stream Marine HDR Engineering Hub International Insurance Services

Shamrock Marine Suderman & Young Towing Vopak Watco Co. Greens Port

JPMorgan Chase Bank Mare Liberum Norton lilly Odfjell USA Ports America Port of Galveston Port of Texas City Rickmers-Linie San Jacinto College

SchrĂśder Marine Services Shrader Engineering Targa Resources Texas Mooring University of Houston West Gulf Maritime Association