Responding to

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Responding to petroleum tanker inspection
observations Capt. John R. Dudley Koch
Shipping Inc. Wichita, Kansas --------- Intertanko
Vetting Seminar Athens - 8 April 2005
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Who am I? Captain John R. Dudley Manager 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.

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DISCLAIMER
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.
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• 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.

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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.
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• The stock in trade of the Koch Goodship vetting
• program 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
  affiliates
• make 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.

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• 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 large
• number of disparate players, many with
  conflicting interests
• cargo scheduler (operations assistant of the
  trader)
• charterers vessel operations coordinator
• cargo insurance broker and underwriter
• charterers PI Club
• independent petroleum inspectors
• measurement field agents - cargo auditors
• port pilots, agents and line handlers
• charterers chartering manager
• vessel, master, officers and crew
• vessel owner and technical managers
• vetting manager
• vessel class society

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When things do not go well, one reason is
there have been no credential or licensing
requirements for 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!
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The tanker Gluckauf after grounding in fog at
Fire Island New York 1893
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What happened in 1998?
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I S M
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Since ISM, you are doing better at your business
Intertanko graphic
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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 told me 20 years ago ...
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Trouble starts at the top.
Captain L.C. McKay
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Or, as recently re-stated The deciding factor
in shipping accidents is the Shipowner! Torkel
Soma - DNV researcher 2005
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Now that we agree on the importance of a tanker
management with a viable Safety Management
System, How is a vetting manager going to
measure a tanker owner or managers safety
management culture ?
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A. By the wine they select at lunch? B. By the
size of the Christmas basket? C. By sending an
auditor to the Managers office to verify
that the staff is following the procedures
in the owners SMS? D. By finding evidence of
an active, living, breathing Safety
Management System in the owners inspection
report observation replies.
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Even today, shipping ventures remain adventures.
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 Brown President - Koch Shipping February 2005
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So, when the SIRE inspector leaves the gangway,
the vessel inspection is finished Then, the
vetting of the vessels management begins
! What is the vetting manger to look for in the
managers SIRE report replies to measure the
owners SMS?
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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.
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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.
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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.
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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 of report 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.
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• I frequently review SIRE and CDI inspection
  reports
• that contain 10, 12, 15, or 17 observations.
• I then carefully read the owner/managers replies
  
• to the dozen or more observations and often find
  them
• to be completely devoid of
• any mention of the owners 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 company
• in July than I do about whether it is still going
  to be fixed
• when my cargo is on the ship in November!

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• I can only conclude from these sets of replies
  that
• the owners 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.

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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 dont show me the
money!
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• Some replies which are not accepted
• Rectified. .. (trust me!?) .

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• Some replies which are not accepted
• Rectified.
• when convenient (spending money is never
  convenient!)

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• Some replies which are not accepted
• Rectified.
• when convenient
• at the earliest opportunity (but we cant plan
• far enough ahead to give you a date.)

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• Some replies which are not accepted
• Rectified.
• when convenient
• at the earliest opportunity
• We have reminded the Master/Chief Officer...
  (what about the next Master/Chief officer?)

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• Some replies which are not accepted
• Rectified.
• when convenient
• 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?)

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• Some replies which are not accepted
• Rectified.
• 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 ...

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Consider some examples of real replies that
have crossed my desk, (honest!)
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• Bad example 1
• Observation
• The vessel does not have a vapor release
  response plan.
• Owners Reply
• The vessels vapor release response plan is
  included in section 8.3.2 of the vessels ISM
  Manual.

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• Example 1
• Better 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.

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• Bad example 2
• Observation
• The main engine is covered with oil.
• Owners Reply
• The main engine has been cleaned.

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• Example 2
• Better reply
• 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.

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• Bad example 3
• Observation
• The IGS oxygen sensor bubbler was found without
  any water in it while the vessel was discharging.
• Owners Reply
• The bubbler was filled with water immediately.

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• Example 3
• Better reply
• It was noted that the engineers 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).

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• Bad example 4
• Observation
• A June inspection found a C-of-C issued Feb, due
  in July vessel to submit results of stern tube
  lube oil analysis.
• Owners Reply
• Condition of class will be attended to in due
  course.

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• Example 4
• Better reply
• 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
• vessels PMS at 6 month interval.

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Bad example 5 Observation There is no record
of which fire detectors are being
tested. Owners reply Fire detectors are
listed among the critical safety items. Tests are
done in rounds, each round consisting of one
group of sensors for each deck and section of
deck. The complete set of sensors is tested
within a two month period.
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• Good example 1
• Observation
• Steering gear emergency reserve tank was found
  only 1/3 full of hydraulic fluid.
• Owners 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.

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Good Example 2 Observation Pumproom entry
procedure not IAW ISGOTT 2-17-4 and entry
records not being maintained. Owners 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 add entries for record keeping rev.
on 29 Nov 04. Preventive Action Revised
checklist was distributed to the fleet
accordingly. (Korean owner with 18 obs.)
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Good Example 3 (From a Mainland China
owner)
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• 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.).

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• 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 ...

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After years of wrestling with the question of
what framework can I use to audit tanker owners
and managers? Now we have one ...
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• 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 owners SIRE inspections and history
  
• for areas of management weakness,
• Visit the owners or managers 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.

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• 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 owners SMS,
• The SMS non-conformity process
• Root cause analyses,
• Company management structure
• approval authorities,
• Vessels maintenance schedule,
• Manning department.

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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 is a course available
from http//www.kepner-tregoe.com http//www.a
pollorca.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.
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• The good news
• Is that beginning this month,
• with the introduction of WebSerm II
• owners vetting mangers will have two chances
• to reply to a SIRE report
• First Reply - within 14 days - per vetting
  companys
• requirement 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.

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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 program of 10,000 compliance -
100 compliance with laws and regulations 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.
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• Kochs 5-year results (1998-2002)
• 1 crew fatality
• 3 medical diversions
• 7 spills total
• 2 detentions (lifeboat failures)
• 3 general average claims
• 4 arbitration cases

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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.
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As professional mariners, we are called to be
faithful and successful custodians of the oceans
and the crews entrusted to our care.
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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!
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Theres more to tanker shipping than meets the
eye.