Coordinating Chemical Tanker Movements on the Houston Ship Channel
Patrick Seeba, GHPB
The busiest port in the western hemisphere is a 52-mile long stretch of waterway running from the Galveston/Bolivar jetties to the Turning Basin of the Port of Houston Authority City Docks where construction is about to begin for the new Houston Maritime Museum. With 25,000 deep-draft movements every year and over 200,000 barge transits, the Houston Ship Channel’s 250-500 wide trench is a complex maritime system whose operations are often nebulously opaque, even to those who work the waterway. While the Port of Houston Authority’s container terminals thrive, and pure car carriers land in Galveston and the Houston City Docks, petrochemicals are by far the largest operational locus of the Port. With eight refineries and dozens of chemical manufacturing facilities, the regional motto is simple: “Not one molecule wasted”.
The intricacies of physical transits are the purview of sailors, pilots, and regulators, but before the ship’s crew swings a Jacob’s ladder down to the sea or begins to winch a gangway into position, agents, schedulers, and dispatchers work in strident harmony to plan a voyage which always begins with a routine cargo transaction. Unfortunately, with without a central managing authority to coordinate traffic, and the structural issues inherent in such a wide variety of competing businesses, the Houston Ship Channel is beset with difficulties for planners and schedulers due to the very complexity on which it thrives.
Terminals visited by vessel loading or discharging chemicals and petrochemical products span the entire breadth of the Houston Ship Channel. The tallow-processor/exporter Jacob Stern & Sons sits at the farthest reach of the Turning Basin and its neighbor Westway Terminal #1 moves caustic soda, specialty chemicals and more, while over a dozen other terminals sit before you get to Galveston Bay, including Port Bureau Members Vopak and ITC, whose Deer Park operations combine to form the busiest intersection on the upper Houston Ship Channel. Passing through Galveston Bay, Odfjell and LBC operate tank terminal facilities at the end of the Bayport land cut, and the entire Port of Texas City is dedicated to oil, petrochemicals, and their byproducts. This tremendous geographic range will come into play later as secondary and tertiary service providers have to weigh time, distance, and manpower into their calculations when quoting prices and diverting resources to ply their trade.
The biggest reason that the Port of Houston - and the greater Galveston Bay port complex - has so many terminals that receive and load these cargoes is simple: the manufacturers are here. The region’s eight refineries distill crude oil into component products, and in addition to producing finished/semi-finished products such as gasoline or diesel, they produce feedstocks like olefins. Then, other facilities, like Ineos in La Porte, take those olefins and manufacture other products such as polyethylene and polypropylene. From the Turning Basin to Bayport, and I-10 to 225, hundreds of plants, centers, and manufacturing sites produce innumerable products that are brought to the port for export around the world. Over 10,000,000 short tons of organic chemicals alone are exported from the Port of Houston every year, mostly on tankers ranging from 10,000 to 50,000 deadweight tons. The Texas Transportation Institute performed a study in 2015 looking at chemical tankers and noted that for the Port of Houston, “parcel sizes are relatively small, ranging from 300 metric tons to 6,000 tons, with some industrial chemicals such as caustic soda and MTBE shipping in parcels of up to 40,000 metric tons.”
Fully 42% of Houston deep draft vessel traffic is dedicated to the movement of chemicals, clean products and other (non-crude) petrochemicals. Even through the economic downturn currently besieging the US economy, chemical plants are still being expanded, like the construction of units such as the Chevron Phillips Cedar Bayou Ethylene plant which will have a nameplate capacity of 1.5 million metric tons per year, or Ineos’ La Porte Gemini Project which will produce 1 billion pounds of high-density polyethylene (HDPE) annually upon completion.
The Arrival Process
While the vetting and chartering process for a vessel is complicated in and of itself, this piece will focus on the arrival process: what happens when a ship arrives to Houston, looking to load or discharge cargo.
Throughout the process, the ship’s master, vessel agent, and terminal schedulers are a multi-faceted team looking to coordinate an optimal port call: from arrival at anchorage to full-away on passage. The agent is a critical part of this process, as they are the owners (or charter’s) local representative. Days before arrival, agents, like those working in-house at Odfjell, at arm’s length in coordination with owners like Inchcape Shipping Services/Stolt, or as a third party service provider like Moran-Gulf Shipping, are ensuring that all the necessary regulatory, port state control, and security filings are made, so that the vessel can come smoothly into the Port (for a more in-depth discussion of these issues, please see the March 2015 edition of the Port Bureau News).
Vessels laden with or loading petrochemical products come from dozens of different providers, from some of the largest, like Stolt, Odfjell, Jo Tankers, and Nordic Tankers, to single-vessel time charters. The terminals that they visit however, are mostly limited to the 14 that can handle direct liquid bulk discharge. However, unlike crude oil tankers, vessels carrying chemicals or products may visit a number of terminals during their period in Houston. As an example, according to pilot records, the Bow line of vessels operated by Odfjell made 88 port calls to Houston in 2014. During those port calls, they made 725 movements to over a dozen terminals. While it’s certainly possible for a chemical tanker to come in, visit the terminals it needs to, and depart in an optimum fashion, the tremendous volume of cargo moving through Houston means that some vessels spend days, even weeks trying to make it through their rotation.
Because of the time involved in loading/discharging a chemical tanker during the course of what may be a multi-week port call, Houston is also a place where vessels resupply. Anyone who has seen Buffalo Marine’s push boats or a JAM lube oil barge knows that vessels are being refueled every day in Houston, but in addition, everything from new crew, personal protective gear, and wall-wash equipment/chemicals to distilled water, provisions, and charts are brought aboard.
When the vessel arrives at anchorage, has cleared Port State Control, and any necessary safety/security boardings have been performed, the vessel agent may be ready to confirm that the vessel – or individual parcels – are ready for load/discharge. Having done so, the agent calls various terminals to determine when the vessel might be able to visit.
Though most vessel agents communicate with terminals often enough to have a decent idea of what slots may be open, the constantly changing schedule of the 20-30 daily tankers in Houston every day means that when a vessel is ready to submit its Notice of Readiness (NOR), or formal notification that it is ready to load/discharge cargo, agents still need to call around to find out where an open position may be. In order to submit a NOR, the vessel has to have clean tanks, the trim and stability must be proper for sailing, and it should meet the physical restrictions of the prospective terminals.
Adding a layer of complexity to the process, though a vessel may need to visit, for example, seven terminals on a port call, physical constraints (draft, air draft), commercial constraints (product not ready yet, tanks to be loaded are full of cargo to be discharged), and other factors mean that some terminals must be visited before others, regardless of berth availability.
As the agent calls around to gauge terminal availability as part of their port rotation planning, they tender NOR based either on commercial requirements of the charter party, or, when not specified, their judgment as to where the vessel should/can go next to attempt an optimal port call. When the NOR is tendered, then the vessel is tentatively scheduled at a terminal for arrival, and the terminal gives advice regarding the probable wait time until complete shore-side readiness.
Unfortunately, because a vessel with multiple parcels aboard may tender to numerous terminals, estimations of wait time for any particular facility may be skewed. As the official notice that a vessel is ready to, for example, load, upon receipt of the vessel’s NOR, a terminal with an open berth will begin preparing for the vessel’s arrival. On the shoreside, this means notification to crews, potential arrangement for crosspiping, pigging existing pipes, flushing lines, etc. If a vessel receives notice from a different terminal and begins its voyage, then this time dockside may be wasted, as a ship loses its place in other terminals’ queues when she moves to a facility. As part of a study performed by the Greater Houston Port Bureau in mid-2015, it was found that at one facility, over a six month period, though 344 vessels arrived, another 129 tendered in, then dropped tender after a cumulative total of 6,281 hours. In the overwhelming majority of cases, vessels dropped tender because they went to a different facility.
Why does this occur? Put simply, the charter parties governing commercial transactions, and agreements to handle local responsibilities mean that each agency has a duty to ensure that their vessel is able to load/discharge cargo and complete their port call in as efficient a manner as possible.
Notices of readiness are extremely important because the timing of NOR tendering and, on the flip side, notice of berth readiness, govern whether or not a vessel is in compliance with its laydays cancelling or laycan. If a vessel misses laycan by not tendering NOR in time, the charterer may be able to void the entire freight contract and renegotiate or allow another commercial entity to purchase the cargo.
In addition, once a vessel arrives at a facility, laytime begins. Laytime is a specific, contractually agreed upon window where the vessel will be at a facility, else financial penalties, known as demurrage, will apply.
Demurrage bills – which in Houston average about $1,000 per hour – are based on the time that NOR is tendered, so keeping a ship moving is in everybody’s best interest. Unfortunately, this means that some facilities end up spending an inordinate amount of time preparing for vessels that may not arrive, so then they too have to reset for the next vessel, and attempt to ascertain from the vessel agent if it too will find another berth before terminal readiness is achieved.
Once at a facility, the job begins. While terminal and vessel personnel begin making ready for cargo operations, the vessel undergoes screening by Customs & Border Protection, and the vessel agent continues coordinating actions. Alongside, a vessel still may need to clean tanks, have the tank cleaning verified by a third party, survey the cargo before/during/after discharge/loading, ensure that all of the third-party services such as chandlering or fresh water resupply occur smoothly, and ensure that departure/shift arrangements are underway. Once cargo operations begin, depending on the commercial terms governing the transaction, surveyors may still be called upon to take samples - the “one foot” sample, as an example, is a measure taken after 25cm/1 foot have been loaded into the tank to ensure that no contamination has taken place. This process repeats itself at every berth, every day, throughout the year with over 8,000 annual chemical vessel movements.
When Port Bureau staff completed a study of channel utilization and movements performed by vessels purely for staging reasons – that is, with no movement to cargo or for practical reasons like tank cleaning – it was discovered that fully 10% of chemical tanker movements on the Houston Ship Channel may be unnecessary. This was backed up in the September 2015 Texas Transportation Institute Study that noted that “With an average of 785 [movements that qualify as movement to layberth or anchorage before returning to a chemical terminal], these transits consume 6,359 hours of additional transit time each year.”
When addressing possible solutions, the Texas Transportation Institute noted that “the deployment of an adequate scheduling and traffic management system has the potential to significantly increase efficiency and reduce unnecessary transits of chemical tankers… By managing chemical tanker traffic, additional capacity will be freed up on the channel and at the terminals.” At the same time, the report noted the same feedback that Port Bureau staff have received at traffic efficiency meetings and sundry other gatherings of the regional maritime community: any move to create a control center where a third-party would establish positive control of regional shipping would meet with sharp feedback from established operators.
To bridge the gap between a free-for-all and a wholly-automated port, the Port Bureau is exploring the development of a Chemical Tanker Optimization Center. In broad terms, this Center will look to serve as a communications hub. Receiving information from terminals, agencies, and third party operators like the harbor pilots, tugs, and line handlers, the group would then take preferred-scheduling information from competing vessel agencies and, using a preestablished and public formula, recommend vessel routes back to agencies. In addition, the Center would send notices to terminals when vessels move, so that no terminal is waiting for a ship that may pass them by on the way to a competitor. The Center would be self-sustaining, operating on a fee-per-vessel basis, and as a non-operating entity, not show any favoritism or preference for any particular operator. Stay tuned for further developments, and we hope to see you at the GHPB Traffic Efficiency Committee meetings, next to be held on October 26, 2016.
Though a seemingly innocuous process, the steps to clean and certify a tank ready for loading is one that can add significant time to a port call. The process involved for cleaning a tank may vary depending on the last product carried. However, almost all of them start with a water-wash (though some heavy fats begin with squeegees and manual tank sweeping). Spraying water gets large particulate matter out of the tank, though operators must be careful to ensure that water continues flowing from pressure head to tank wall to drain, not stopping to allow residue to build at any point. The type and pressure of the water used may vary, as some products such as vinyl acetate or styrene monomers require cold water, and others such as vegetable and animal oils will be removed with water in excess of 800° Celsius. Following this, additional procedures may be undertaken with chemicals, different temperature water, or synthetic soaps. For example, when cleaning vegetable and animal oils, tank crews will add caustic soda to the water after the initial hot prewash, a solution that will remove contamination, but it presents legitimate risks to crewmen so it is a laborious, time intensive process. As a rule of thumb, the heavier the oil, the more difficult and time-intensive the cleaning process. Heavy oils will follow their initial scrub with a hot-wash using emulsifiers which encase whatever product they hit with water on the molecular level, allowing it to then run down the wall and to drains. When multiple steps are necessary for tank cleaning, the crew will usually start with water before moving to a caustic agent, then soaps, emulsifying agents, solvents, and then a final water-wash. When the crew is finished, then in most cases, an independent, third-party surveyor will be called in to ensure that the tank is up to specifications for the next customer. In addition to the vessel’s tanks, surveyors take samples from shore tanks, lines to the vessel, ships’ manifolds, and vessel pump stacks to ensure cleanliness and that products meet exacting specifications.
- Date October 12, 2016
- Tags October 2016