Responding to petroleum tanker inspection observations > Capt. John R. Dudley Koch Shipping Inc....

Responding to petroleum tanker

inspection observations<<*>>

Capt. John R. DudleyKoch Shipping Inc.

Wichita, Kansas---------

Intertanko Vetting SeminarAthens - 8 April 2005

Who am I?

Captain John R. DudleyManager of Marine Operations

Koch Shipping Inc

Koch Shipping Inc:• charters 600 tankers each year to transport 32 million tonnes of liquid cargo in all trades worldwide on behalf of Koch interests.• provides vetting services for all tankers: chartered by KSI, or calling at Koch owned docks, or calling at Koch leased terminals.

This presentation represents only the vetting policies and procedures of KSI, and does not represent in any way the

points of view of other members of the OCIMF or of any other group or

association to which KSI is a member.

DISCLAIMER

Background for vetting - John Dudley:

• honors graduate of the U.S. Merchant Marine Academy,• 6 years as tanker officer for Exxon, up to Chief Officer of crude oil and chemical tankers,• 2 years Master of dynamic deep-ocean drillship,• 2 years assistant professor, Maine Maritime Academy,• 4 years 5 million bbl. petroleum terminal manager,• 4 years seismic/research vessel operations Lamont Labs,• 6 years Canadian offshore oil development and production,• 2 years asphalt tanker upgrade program & management,• 8 years chartered vessel vetting and operations management,• author - GARD handbook of tanker operations.

Why does Koch vett your tankers?

1. To identify tank vessels and owners that represent an acceptable risk to the marine transportation of crude petroleum and its products and use them in our trading ventures.

2. To identify tank vessels and owners that represent unacceptable risk - and exclude them from Koch activities.

The stock in trade of the Koch “Goodship” vettingprogram is an inventory of ACCEPTED TANKERS.

Koch Supply and Trading makes $ 0.00 on every tanker that is not approved for use after review of its vetting credentials.

Koch Supply and Trading, and other Koch affiliatesmake $ millions every year on the tankers whose owners prove to us to be:• well managed, • well manned, and • well maintained,and therefore suitable for our use within our risk profile.

Tanker operations is not and never has been an easy job.Both the ships and the business are stupefyingly complex.Success depends on the water-tight cooperation of a largenumber of disparate players, many with conflicting interests:

• cargo scheduler (operations assistant of the trader)• charterer’s vessel operations coordinator• cargo insurance broker and underwriter• charterer’s P&I Club• independent petroleum inspectors• measurement field agents - cargo auditors• port pilots, agents and line handlers• charterer’s chartering manager• vessel, master, officers and crew• vessel owner and technical managers• vetting manager• vessel class society

When things do not go well, one reason is: therehave been no credential or licensing requirementsfor many of the participants in the marine venture!

Take owners and managers for example: From the launching of the Gluckauf in 1886 …

until 1998 - for more than 100 years, - you did not need a license to be an owner or a manager of an ocean going tanker!

The tanker Gluckauf after grounding in fog at Fire Island New York 1893

What happened in 1998?

Since ISM, you are doing better at your business:

Intertanko graphic

While ISM is certainly not the only contributor to the favorable trend in tanker incidents (SIRE, GPS, Paris MOU, etc. have helped), there can be no doubt that ISM has been a major contributor to better performance of your ships.

After decades of responding to tanker incidents by adding new ship systems, the marine “industry”suddenly realized what an old sea captain toldme 20 years ago: ……...

“Trouble starts at the top.”

Captain L.C. McKay

Or, as recently re-stated:

“The deciding factor in shipping accidents

is the Shipowner!”

Torkel Soma - DNV researcher 2005

Now that we agree on the importanceof a tanker management with a viable

Safety Management System,

How is a vetting manager going to measurea tanker owner or manager’s

safety management culture ?

A. By the wine they select at lunch?

B. By the size of the Christmas basket?

C. By sending an auditor to the Manager’s office to verify that the staff is following the procedures in the owner’s SMS?

D. By finding evidence of an active, living, breathing Safety Management System in the owner’s inspection report observation replies.

“Even today, shipping ventures remainadventures.

An owners ability to respond to a nonconformity

is the best evidence we can use in evaluating their ability to respond to any incident.

It is the best way for us to judge how the owner will respond in time of crises,

to keep an incident from becoming catastrophic.”

Rob BrownPresident - Koch Shipping

February 2005

So, … when the SIRE inspector leaves the

gangway, the vessel inspection is finished;

Then, the vetting of the vessel’s

management begins …… !

What is the vetting manger to look forin the manager’s SIRE report replies

to measure the owner’s SMS?

“The underlying principles of the ISM Code include development of a safety culture not only as a matter of policy, but also systematically in practice, from top management ashore down to the officers and crew at sea.” Intertanko: “ISM Legal Implications” 9/96.

“Non-conformity – means an observed situation where objective evidence indicates the non-fulfillment of a specified requirement.” Ibid.

“Major non-conformity – includes lack of effective and systematic implementation of a requirement of the ISM Code.” Ibid.

Class NKK ISM Code summary:1.4.4 Functional requirements of a SMS include procedures for reporting accidents and non-conformities with the provisions of this Code.9 Reports and Analysis of Non-conformities, accidents and hazardous occurrences:9.1 The SMS should include procedures ensuring that non-conformities, accidents and hazardous situations are reported to the company, investigated and are analyzed with the objective of improving safety and pollution prevention.9.2 The company should establish procedures for the implementation of corrective action.

NKK ISM summary (cont.)

10.2 In meeting its maintenance requirements, the company should ensure that

.2 any non-conformity is reported with its possible cause, if known,

.3 appropriate corrective action is taken, and

.4 records of these activities are maintained.

When review of a SIRE report is necessary, the Koch Goodship vetting process requires that every SIRE/CDI observation is read, scored and recorded.The distribution of scores looks something like this:

number ofreport number % of currently %observations score of ships total approved approved 0 10 60 5% 40 66% 1 to 4 9 230 18% 185 80% 5 to 8 8 335 26% 235 70% 9 to 12 7 190 15% 115 60% 13 to 16 6 110 8% 40 36% 17 to 20 5 100 8% 35 35% 21 to 24 4 140 11% 0 0% 25 to 28 3 80 6% 0 0% 29 to 32 2 40 3% 0 0% 33 to 36 1 20 2% 0 0%

note: percentages are distorted by ships that have been scrapped - so are no longer “approved”.

I frequently review SIRE and CDI inspection reportsthat contain 10, 12, 15, or 17 observations.

I then carefully read the owner/manager’s replies to the dozen or more observations and often find them

to be completely devoid of:• any mention of the owner’s Safety Management System,

• any effort to evaluate the root cause of the problem,• a positive statement that the deficiency is corrected,

• anything remotely resembling an initiative to put in place measures to prevent the event from happening again!

I care less about whether you fixed it for the inspecting companyin July than I do about whether it is still going to be fixed

when my cargo is on the ship in November!

I can only conclude from these sets of replies that:

• the owner’s SMS is not an integrated part of their management processes, or

• the owner purchased his ISM DOC, or

• the person writing the response has been poorly trained and instructed, or

• The owner/manager places a low priority on the importance of the SIRE replies he sends and is unconcerned about he impression they create.

You have invested hundreds of millions of dollars in your ships and their ISM systems,

$ millions in your shore establishment and Safety Management System,

$ millions in crew recruitment, safety management training and pay,

and then you write replies to a SIRE report, replies that will tell me

if I can trust your ship with my cargo,

and you don’t show me the money!

Some replies which are not accepted:

• “Rectified.” ….. (trust me!?) ….


• “Rectified.”• “when convenient”… (spending money is

never convenient!)


• “Rectified.”

• “when convenient”

• “at the earliest opportunity” (but we can’t plan

far enough ahead to give you a date.)




• “at the earliest opportunity”

• “We have reminded the Master/Chief Officer...” (what about the next Master/Chief officer?)




• “at the earliest opportunity”

• “We have reminded the Master/Chief ...”

• “The parts have been delivered on board.” (but are they correct? … installed? …. calibrated?

working? ….. class approved?)



• “when convenient.”

• “at the earliest opportunity.”

• “We have reminded the Master/Chief ...”

• “The parts have been delivered on board.”

• “He has been cautioned and instructed ...”

Consider some examplesof real replies that have

crossed my desk, (honest!):

Bad example #1Observation:

“The vessel does not have a vapor release response plan.”

Owner’s Reply:

“The vessel’s vapor release response plan is included in section 8.3.2 of the vessel’s ISM Manual.”

Example #1Better reply:

Recognizing that the Master was not aware of the location

of the vapor release plan within our SMS manual,

we sent our superintendent on board 11 Oct 02, and he conducted SMS training with all officers so that they are now fully aware of all contents of our SMS procedures

manual.


“The main engine is covered with oil.”

Owner’s Reply:

“The main engine has been cleaned.”


During the shipyard period Nov 2002,

we have arranged for a factory representative

to supervise work to eliminate all fuel

and lube oil leaks from the main engine,

after which the engine will be cleaned and re-painted

so that any future leaks can be immediately

detected and the cause of the leak corrected.


The IGS oxygen sensor bubbler was found without any water in it while the vessel was discharging.

Owner’s Reply:

“The bubbler was filled with water immediately.”


It was noted that the engineer’s pre-transfer checklist

did not include an item to check the O2 bubbler.

The engineers pre-discharge checklist has been amended

to include an item to verify

that the IG sensor bubbler is filled to correct operating level prior to starting the cargo transfer.

SMS section 13.6, revised 11 October 2002.

(copy attached).


A June inspection found a C-of-C issued Feb, due in July: “vessel to submit results of stern tube lube oil analysis”.

Owner’s Reply:

“Condition of class will be attended to in due course.”


“Stern tube lube oil sample test results were submitted to class on 17 March and Condition of Class was deleted on 22 April 2003. Deletion of C of C will appear on 1 July class

quarterly report.

Stern tube oil analysis has been added to the

vessel’s PMS at 6 month interval.”

Bad example #5

Observation:There is no record of which fire detectors

are being tested.

Owner’s reply:“Fire detectors are listed among the critical safety items.

Tests are done in rounds, each round consisting ofone group of sensors for each deck and section of deck.

The complete set of sensors is tested within a two month period.”

Good example #1Observation:

“Steering gear emergency reserve tank was found only 1/3 full of hydraulic fluid.”

Owner’s Reply:

“The low reservoir level was determined to be caused by a leaking steering pump seal (1), which was replaced (2).

Reserve tank was refilled immediately (2).

The engineers weekly checklist has been amended to include an item to “verify steering gear reserve tank is full”. (3)”

(1) - root cause analysis

(2) - corrective action

(3) - preventive measures put in place.

Good Example #2

Observation:Pumproom entry procedure not IAW ISGOTT 2-17-4

and entry records not being maintained.

Owner’s Reply:> “Root Cause: requirements of 2-17-4 were performed

but records of gas detector were not maintained.> Corrective Action: Company SMS checklist for the

enclosed space entry permit was revised to addentries for record keeping; rev. on 29 Nov 04.

> Preventive Action: Revised checklist was distributedto the fleet accordingly.” (Korean owner with 18 obs.)

Good Example #3

(From a Mainland China owner)

>>>>>>>>>>>>>>>>>>>

A world-class response includes:• The observation (SIRE), number and text repeated.

• A convincing statement that the root cause

has been sought and found.

• A statement that managers has “objective evidence” that corrective action has been completed,(or will be

completed by a stated date), to fix close the item.

• A statement of preventive measures taken to avoid a repetition of the condition (SMS change, etc.).

“Objective evidence”A document, report, message, completed

checklist copy, note, or certificate in your files, that you can show me when I come to visit

your offices.

Something that “closes the loop” on the deficiency!

Which brings us the the subject of audits ...

After years of wrestling with the question of “what framework can I use to audit

tanker owners and managers?”

Now we have one …………...

The audit process Koch proposes to follow is:

• Indicate a desire to audit an owner against the TMSA

• Wait until the owner indicates that they are ready.

• Review the owner’s SIRE inspections and history for areas of management weakness,

• Visit the owner’s or manager’s HQ and review their- objective evidence of their self assessment, - their gap analysis of what needs improvement, and- their plan of action for closing the gaps.

SUMMING UP:

Owners need to give really serious thought to who is writing their answers to SIRE reports.

The SIRE responder should be thoroughly trained and conversant with, and have free access to:

The owner’s SMS, The SMS non-conformity process Root cause analyses, Company management structure & approval authorities, Vessel’s maintenance schedule, Manning department.

Finding root cause is not an ability that all are born with. The US Air Force spent $1million on a study to define the techniques that their most effective officers used to find the root causes of problems inhibiting organizational effectiveness.The result is called “Analytic Trouble Shooting” and isa course available from:

http://www.kepner-tregoe.comhttp://www.apollorca.com , and others

This is NOT an endorsement. There are other providers, I just know that the K-T system works because I took the course, and the other has been recommended to me.

The good news:Is that beginning this month, with the introduction of WebSerm IIowner’s vetting mangers will have two chancesto reply to a SIRE report:

First Reply - within 14 days - per vetting company’srequirement for approval, containing corrective intentions, and

Second reply - giving closure by indicating:• verification of the root cause of the observation,• confirmation of corrective action completed, and• indication of preventive measures implemented.

Is there a return for all of this effort?

Judging by the Koch experience - YES!For the last 3 years Koch has been implementing a programof 10,000% compliance - 100% compliance with laws andregulations 100% of the time!

In 2004 Koch companies turned in record performance in areas of compliance and environmental health and safety. There were fewer lost time injuries than ever and fewer environmental releases. Those releases that did occur were smaller than previously. By the end of the year, nine Koch company sites had been certified as Voluntary Protection Program Star Sites, the highest US OSHA designation.

Koch’s 5-year results (1998-2002):

• 1 crew fatality• 3 medical diversions• 7 spills; total < 1 barrel spilled• 2 detentions (lifeboat failures)• 3 general average claims• 4 arbitration cases

For the oil company vetting manager, every marginal vessel he/she approves

can be a career decision.

He/she is not going to bet his/her career on an owner who sends second-rate replies

to what are considered to be serious vessel deficiencies.

As professional mariners,

we are called

to be faithful and successful

custodians of the oceans

and the crews

entrusted to our care.

So:Help me help you

to get your ship accepted …..

Show me you care enough to send your very best response

to every inspection comment or deficiency.

Thank you!

There’s more to tanker shipping than meets the eye.

Responding to petroleum tanker inspection observations > Capt. John R. Dudley Koch Shipping Inc....

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