T H E I N F O R M AT I O N A U T H O R I T Y F O R T H E WO R K B OAT O F F S H O R E I N L A N D C OA S T A L M A R I N E M A R K E T STugboatsCelebrationsTrials &TribulationsBOMBissosNewTractor TugMarineNewsO C T O B E R 2 0 0 9M A R I N E L I N K . C O M2009Yearbook MN#10 Cover:MN#5 Cover.qxd 10/5/2009 3:00 PM Page 1MN#10 C2 C3 & C4: MN#5 C2 C3 & C4. qx d 9/ 29/ 2009 1: 42 PM Page 1MN#7 ( 1- 17) : MN#5 ( 1- 17) . qxd 6/ 22/ 2009 3: 06 PM Page 78 TechFile IntelliJet Marine Jet10 Insights Jim Moore, COO, Aluminum Chambered Boats14 BOM Bissos 4,000 HP ASD Tractor Tug24 SALVAGE A Brief History of Marine Salvage Contracting By Jim Shirley, Legal Counsel, ASA28 LEGAL Texting Could Create Liability for Vessel Owners By Lawrence R. DeMarcay, III, Partner, Fowler Rodriguez Valdes-Fauli 26 FINANCE Small Business Stimulus Key to Recovery By Richard J. Paine, President, Marine-Finance.comcontentspg824 33 64BriefsDepartments Features Columns 64 Market: Designers66 People & Companies70 Technology Bits72 Directory: Insulation, Pipes, Pumps, Valves58 By the NumbersOctober 2009 Number 10 Volume 18146433 The Yearbook34 Tug, Towboat & Barge40 Offshore44 Boatyards50 Passenger Vessels54 Views from the Helm56 Tug Celebrations & TribulationsDon Sutherland discovers the ups and downs of the tug business at two recent tugfests.2 MN October 2009 50344044MN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 5/ 2009 10: 44 AM Page 2WERE MAKING WAVES BY REDUCING MAINTENANCE TIME AND COSTSFace it. If your vessels are not in service, youre not making money. And thats why with Delo, along with the people, industry expertise and technology behind it, you can count on exceptional protection for your eet. When it comes to maximizing engine life and managing the bottom line, its no wonder eets rely on Chevrons advanced lubricants and coolants. To nd out more, visit chevronlubricants.com. 20072008 Chevron Products Company, San Ramon, CA. All rights reserved. All trademarks are the property of Chevron Intellectual Property LLC.MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 9/ 29/ 2009 1: 28 PM Page 34 MN October 2009POSTMASTER Time Value ExpediteMarineNews is published monthly, 12 times a year by Maritime Activity Reports, Inc.,118 East 25th Street, New York, N.Y. 10160-1062. The publisher assumes no responsibil-ity for any misprints or claims and actions taken by advertisers. The publisher reserves theright to refuse any advertising. Contents of this publication either in whole or in part maynot be reproduced without the express permission of the publisher. POSTMASTER: Send address changes to MarineNews,118 East 25th Street,New York, N.Y. 10160-1062. MarineNews is published monthly by Maritime Activity Reports Inc. PeriodicalsPostage paid at New York, NY and additional mailing offices. ISSN#1087-3864 USPS#013-952Florida: 215 NW 3rd St., Boynton Beach, FL 33435tel: (561) 732-4368; fax: (561) 732-6984New York: 118 E. 25th St., New York, NY 10010tel: (212) 477-6700; fax: (212) 254-6271www.marinelink.comTO SUBSCRIBE:Subscriptions to Marine News (12 issues per year) for one year are available for $33.00; Two years (24 issues) for $51.00. Send your check payable to: MarineNews, 118 E. 25th St., New York, NY 10010. For more information call Rhoda Morgan at: (212) 477-6700; fax: (212) 254-6271; morgan@marinelink.comPUBLISHERJohn C. OMalley jomalley@marinelink.comAssociate Publisher & EditorGreg Trauthwein trauthwein@marinelink.comManaging EditorRaina Clark rainaclark@marinelink.comContributing WritersDon G. Briggs Lawrence R. DeMarcay, III Kevin Gilheany Frederick B. Goldsmith MattGresham Peter A. Mello Randy ONeill Richard Paine Don Sutherland Ken WellsPRODUCTIONProduction Manager Irina Tabakina tabakina@marinelink.comProduction Assistant Amanda OMalley aomalley@marinelink.comSALESVice President, Sales & MarketingRob Howard howard@marinelink.comSales Administration & Office Manager Rhoda Morgan morgan@marinelink.comSales & Event Coordinator Michelle Howard mhoward@marinelink.comClassified Sales Manager Dale Barnett barnett@marinelink.comtel: 212-477-6700Advertising Sales ManagersLucia Annunziata annunziata@marinelink.comTel: 212-477-6700 Fax: 212-254-6271Joseph Colacova joseph@marinelink.com Patrick Haley haley@marinelink.comTel: 561-732-0312 Fax: 561-732-9670 Tel: 561-732-1185 Fax: 561-732-8414Dawn Trauthwein dtrauthwein@marinelink.com Andrea Mowrey mowrey@marinelink.comTel/Fax: 631-868-3575 Tel: 561 732-1659 Fax: 561 732-9670 Managing Director, Intl. SalesTony Stein tony.r.stein@btinternet.com Tel/Fax: +44-1506-822240 Uwe Riemeyer riemeyer@intermediapartners.deTel: +49 202 27169 0 Fax: +49 202 27169 20CORPORATE STAFFManager, Accounting Services Esther Rothenberger rothenberger@marinelink.comManager, Public Relations Mark OMalley momalley@marinelink.comManager, Info Tech Services Vladimir Bibik bibik@marinelink.comCIRCULATION Circulation Manager Kathleen Hickey mncirc@marinelink.comThe October 2009 editionis the presentation of ourAnnual Yearbook edition,with topical marketreports starting on page33. On the CoverMarineNewsComing in Future EditionsNovember 2009The WORKBOAT EditionOffshore InsightsDiesel Engine Technical GuideDecember 2009PASSENGER VESSEL ANNUALU.S. Coast Guard ReportProduct:Welding, Cutting and Machine ToolsJanuary 2010SHORT SEA SHIPPINGMarine Salvage & RecoveryWinches & RopesImage courtesy Canal Barge Company, Inc.)MN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 5/ 2009 10: 45 AM Page 4Power to propel both vessels and business.Since 1902, commercial mariners around the world have reliedon Scania engines to power their fishing boats, patrol boats,tug boats and ferries. No matter the application, Scania marineengines have earned a reputation for their robust performance,legendary durability and outstanding fuel economy.Read more at www.scaniausa.comScania U.S.A., Inc. San Antonio, TX Phone 210.403.0007 Fax 210.403.0211E-mail: contact@scaniausainc.com Web site: www.scaniausa.comNortheast / Great LakesMack Boring & Parts Co.908-964-0700Southeast / Gulf CoastCertified Diesel954-583-4465NorthwestCascade Engine Center206-764-3850SouthwestBoatswains Locker949-642-6800DISTRIBUTORSScania engines - 12 or 16 literwith ratings from 300 to 800 hpScania U.S.A. Inc.Distributed by:MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 9/ 29/ 2009 1: 28 PM Page 56 MN October 2009editorialMore exploring in the Pacific Northwest! In SeptemberI was treated to a day of thrill rides in the waters ofBellingham, Wa., first on Aluminum Chamber Boatsrigid hull inflatable for the U.S. Coast Guards CutterBoat-Large (CB-L) fleet, then in ACBs new sportingyacht vessel. While getting to know my neighbors, I alsovisited All American Marine of Bellingham and NicholsBrothers, of Freeland, Wa. I even stopped by BuffaloBoats, a tiny operation in the Bellingham marina, build-ing two to three vessels a year, mainly for the West Coastfishing fleet. Owner, Roger Allard, builds these vesselswith his own hands and the hands of just a few staff, fromtop to bottom, one at a time. When I asked Allard abouthow the economy was treating him, he said his clientsonly care about how good the fishing is, and right nowfishermen must still want more and better boats to get abigger share of the catch.As I wrap up the October edition Im looking forward toa quick day-trip to the International Propeller Club, U.S.,Convention, which is being held in Seattle this year, aconvenient train ride away. The Womens InternationShipping & Trading Association (WISTA) will be havingan informal get together at the convention on Oct. 8,which reminds me to thank those readers who sent namesof some interesting women in the industry after my lasteditorial While preparing the 2009 Yearbook for this months edi-tion, I was challenged by how to better provide and pres-ent the information that the workboat industry reallyneeds. Markets can be highly regional. Operations, com-modities moved and services offered can be quite differentdepending on what markets you serve and whether youreon the East Coast, Gulf, inland waterways, Great Lakes orWest Coast. After speaking with operators and buildersaround the U.S. for ourYearbook market overviews, Ileft people with a few questionto mull over: What kind of datado you rely on most in your lineof business? Is there somethingmissing? What kind of numbersand information do wish wassystematically collected and at your fingertips? If youre anoperator or builder, Id really like to hear about yourregion and the kind of data youd like to see inMarineNews. Email me with the subject industry data.SUBSCRIBESubscribe to the print or electronic edition of MarineNews at www.marinelink.com/renew-subscr/Renew04/subscribe.html or e-mail Kathleen Hickey at mrcirc@marinelink.comDAILY NEWS via E-MAILTwice every business day we provide breaking news, tailored to your specification, deliv-ered FREE directly to your e-mail. To subscribe visit http://maritimetoday.com/login.aspxPOST & SEARCH JOBSJob listings are updated daily and help match employers with qualified employees. Post aposition or keep abreast of new employment opportunities athttp://www.maritimejobs.comADVERTISEMN offers a number of print and electronic advertising packages. To see our editorial calendar and advertising rates, visit www.marinelink.com/AdvRates/Rates.aspRaina ClarkManaging Editorrainaclark@marinelink.comMN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 5/ 2009 10: 45 AM Page 6MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 10/ 5/ 2009 12: 32 PM Page 7tech fileIntelliJet Marine Jet DesignIntelliJet of Redmond, Wa. offers a marine jet design forfuel economy, safety, reliability and the preservation ofmarine life. The system works with electric, diesel and gasmotors and is applicable to commercial vessels, militaryships, yachts, rigid inflatables and recreational boats. Thecompany is refining the prototype and currently in talkswith potential manufacturing partners.In addition to the safety and reduced draft benefits,IntelliJet uses a computer to control an adjustable intake,an adjustable outlet nozzle and a controllable pitch pro-peller. A velocity sensor senses the water speed into theinlet and adjusts the intake and the outlet to control thevelocity of the water through the pump to achieve higherlow-speed thrust and fuel economy over a wide range ofboat speeds and loads. With the controllable pitch pro-peller pump there is no need for a reversing bucket orother reversing mechanism. Because the system offers ahigh volume of water flow at low speeds it reduces fuelconsumption and reportedly offers excellent low-speedcontrol. IntelliJet claims that the propulsion unit can dothree things better than propellers: 1) it operates themotor more efficiently, so the motor delivers more shaftpower for the fuel it consumes; 2) it controls the flow ofwater through the propeller, so the propeller convertsmore shaft power into hydraulic power; and 3) it mini-mizes the velocity of the discharge jet so that it producesmore thrust force from a given hydraulic power. Reducingthe jet velocity by 50% doubles the thrust for any givenhydraulic power. If the motor and pump efficiencies areconstant, the same amount of fuel is required to producea given amount of hydraulic power, so fuel consumptionis reduced by 50% in the lower jet velocity.IntelliJet and marine architects Art Anderson Associatespresented a technical paper entitled RecentDevelopments in Marine Jet Propulsors at the AdvancedNaval Propulsion Symposium in Arlington, Va. inDecember, 2008. The paper details the propulsion physicsand related reductions in fuel consumption and is avail-able by contacting IntelliJet Marine, Inc. www.iiJet.com8 MN October 2009Rear view. (Photos and images courtesy IntelliJet Marine)MN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 5/ 2009 10: 46 AM Page 8 A blown seal. A simple hydraulic leak. And without warning, you could be at risk for costly fines and environmental damages. Clarion Green helps to reduce those risks. Our full line of environmental lubricants isnon-toxic, inherently biodegradable and passes the stringent U.S. Coast Guard static sheen test. Plus, theyreengineered to provide uncompromised performance and anti-wear protection in even the harshest conditions. 40 years of processing experience. A rock-solid supply chain. Clarion Green delivers the security your eet demands.IKH;"?JFHEJ;9JIJ>;FB7D;J$8KJ?J7BIEFHEJ;9JIOEKH8EJJECB?D;$GreenTo learn how the full line of Clarion Lubricants can provide superior performance and protection, contact info@clarionlubricants.com or visit clarionlubricants.comMN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 9/ 29/ 2009 1: 30 PM Page 9How did you get involved in the industry?After my discharge from the U.S. Army in 1974, I waslooking for an interim summer job prior to resuming col-lege. I wound up working for a distributorship sellingsporting goods including marine equipment. Two linesthey carried were Lund and Grumman. Lund manufac-tures a premium line of recreational fishing boats. Longstory short, I was recruited by Lund as a District SalesManager, became VP of Sales and Marketing and eventu-ally President in 1988, working in the midwest. In 1991, the 20 and 30 below zero winters of Minn.finally got the better of me and I took the opportunity topurchase a retail recreational business in Orofino, Idaho.After selling this business in 1995, I purchased the assetsof Weldcraft Marine in Clarkston, Wa. Weldcraft manu-factures heavy gauge welded aluminum sport fishing boatsin both outboard and inboard jet from 17 to 30 feet. In2000 I merged Weldcraft with Duckworth Boats to formRenaissance Marine Group, Inc. and took the companyfrom less than $1m in sales and substantial losses to over$15m in sales and profitability with an independent deal-er network of nearly 50 dealers throughout the PacificNorthwest. I retired in October of 2007, and was just getting intowalleye fishing when the cell phone rang while I was onmy way to a tournament in S.D. My wife had conspiredwith Larry Wieber of Aluminum Chambered Boats inBellingham, Wa., and they put me back to work in July of2008. In truth however, I saw an opportunity with aground breaking, up-and-coming company that builds asuperior product above and beyond the competition acompany that has barely touched its potential in the mar-ket place. How are you weathering the economic storm? Actually we are having the best year in the history of thecompany in terms of both revenues and profitability. Thecompetition for government contracts has gotten a littlestronger as many recreational builders seek ways to findnew business in the down market, but it is a difficult seg-ment to enter and takes significant time and resources tobe successful. Our investment for the future is mainly inour people, their training and our process improvements. insightsJim Moore COO, Aluminum Chambered Boats10 MN October 2009MarineNews talked with Jim Moore, President and Chief Operating Officer of Aluminum Chambered Boats, Inc., (ACB)about how he started in the industry 35 years ago and how business is going today. ACB, in Bellingham, Wa., builds patent-ed aluminum boats for government, recreational and commercial customers on a global basis. MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 10/ 5/ 2009 12: 44 PM Page 10MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 9/ 29/ 2009 1: 31 PM Page 11What are your top priorities for ACB in the next yearor two?Creating a balanced base of business between the seg-ments we are currently in, improving our processes so wecan be more competitive in the global markets and edu-cating our employees for a more skilled workforce.Do you see any emerging opportunities?There are a number of global opportunities both militaryand commercial. The oil exploration and service industrywill remain strong unless someone presents the miraclealternative next week. Counter-piracy and counter-terror-ism requirements in the littorals also present small boatopportunities.What is the most important legislative issue youface?The cost of government regulation in the U.S. adds morethan 20% to the cost of manufacturing (compared tocompetitors in the rest of the world) over and above ourwage base. Fortunately we have productive workers andcreative management for the most part that help compen-sate for this. Our lawmakers need to carefully consider theshrinking manufacturing base in this country every timethey consider legislation that places additional burdensupon U.S. businesses.Also of concern are workmans compensation and insur-ance issues which have significant impacts on the cost ofdoing business. We provide health insurance, medical, dental and visionfor our employees on a shared cost basis. The increases inthe cost of health insurance have significantly outpacedinflation for many years now. This is not an easy problemto address and there are many strong points on all sides ofthe issue that need to be carefully considered. 12 MN October 2009ACBs 21-ft Law Enforcement Vessel (LEV). Available with an air or foam hybrid collar for fendering and additional flotation, the LEVwas designed by marine patrol officers specifically for maritime law enforcement. (Photos courtesy Aluminum Chamber Boats)MN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 5/ 2009 10: 47 AM Page 12STANDARD OF EXCELLENCEGLOBAL SALES AND SUPPORTEXTENSIVE RANGE OF PRODUCTS AND SERVICESONGOING PRODUCT DEVELOPMENTCLOCKWISE FROM TOP LEFT SCHELDE NAVAL PATROL 9113DAMEN ATD TUG 2412DAMEN ASD TUG 2411DAMEN STAN PATROL 4708DAMEN FAST FERRY 3209DAMEN FAST CREW SUPPLIER 5009DAMEN SHI PYARDS GORI NCHEMIndustrieterrein Avelingen West 204202 MS GorinchemP.O. Box 14200 AA GorinchemThe Netherlands phone +31 (0)183 63 92 67 fax +31 (0)183 63 77 62americas@damen.nl www.damen.nl Member of the DAMEN SHIPYARDS GROUPMN#4 (1-17).qxd 3/31/2009 3:22 PM Page 11boat monthMichael S.Bissos 4,000 HP ASD Tractor Tug of the14 MN October 2009Photos courtesy Bisso Towboat Co., Inc.As Bisso Towboat Co., Inc. approached its 120th year ofcontinuous operation on the Mississippi River, it tookdelivery of the newbuild 4,000 hp ASD tractor tugMichael S. This 100 x 38 x 13.5 ft vessel is powered bytwo Cat 3516B main engines, producing 2000 hp each at1,600 rpm, which drive two Ulstein-Aquamaster US205MK2 Z-drives. The Z-drives feature 90.6 inch diameterby 82.4 inch pitch four blade stainless steel propellers setin stainless steel nozzles. Estimated bollard pull is 60 tons.Electrical service is provided by a pair of 99 kW MarathonMariner generators powered by John Deere 6068TFM76engines. Deck equipment includes a Markey DYSF-42hydraulic bow winch equipped with 500 ft of eight-inchcircumference Plasma line and a Washington Chain andSupply RSRH100 100-ton quick release tow hook.Auxiliary equipment includes USCG-approved engineroom monitoring and fire/smoke alarm systems, completeelectronics package featuring Simrad Autopilot/GPSheading sensor, Furuno radar with chart plotter andFuruno depth meter, Heli-Sep Oily/Water separator,Owens Kleen Tank sewage treatment plant and 500 gpmfire monitor. Other features include sound proof insula-tion throughout crew quarters and engine room, stainlesssteel deck bitts and bow staple, four bunk rooms withseven crew berths and flat screen TVs and DVD players inall bunk rooms.The Michael S. will carry a four-man crew, has an ABSInternational Loadline and has achieved ISM SafetyCertification by ABS. Bisso Towboat has also reached anagreement with Main Iron Works to begin construction ofanother 4,000 hp ASD tractor tug. The new tug will be analmost exact copy of the Michael S. and construction isscheduled to commence in the first quarter of 2010 withdelivery expected in mid-2011.Builder Main Iron WorksOwner Bisso TowboatLength 100 ftBeam 38 ftDepth 13.5 ftMain Engines CaterpillarRadar FurunoZ-Drives Ulstein-AquamasterGenerators Marathon MarinerGen engines John DeereBow Winch Markey Autopilot/GPS SimradDepth Sounder FurunoOWS Heli-SepSewage treatment Owens Kllen TankMN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 10/ 5/ 2009 12: 43 PM Page 14www.marinelink.com MN 15MN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 10/ 2/ 2009 12: 33 PM Page 15Gladding-Hearn Shipbuilding,Duclos Corporation, has completedconstruction of the last of three newsightseeing vessels for Circle LineSightseeing Yachts, Inc., in New YorkCity. Circle Line Sightseeings threenew vessels are the first in more than60 years, according to CostasMarkou, director of marine opera-tions. The companys fleet of eightsteel, 165-ft sightseeing boats consistsof converted LCIs (Landing CraftInfantries) and Coast Guard cutters,built between 1930 and 1943. Like its two sisterships, the new600-passenger all-steel vessel,designed by Dejong and Lebet, N.A.,in Jacksonville, Fla., measures 165 ftin length. The M/V Brooklyn has a34-ft beam and a 22.6-ft air-draft,enabling the boat to pass under thelow bridges on the Harlem River.With a top speed of 15 knots, the ves-sel is powered by twin CumminsKTA38-M1 diesels, delivering a totalof 2,200 hp and connected to ZFW3350 gear boxes, spinning 60-inch,five-bladed bronze Rolls Royce pro-pellers. For dockside maneuvering,the vessel is equipped with a 125 hpWesmar V2-20 bow thruster, pow-ered by an electric motor. Two 137kW Cummins/Newage generatorssupply the ships service power.Additional features include port andstarboard wing stations, in additionto the center console, in the pilot-house. Passenger seating is inside themain cabin and upper cabin. Heatingand air-conditioning is supplied by a210,000 Btu diesel-fired boiler andsix 10-ton water-cooled chillers.briefsAnother Vessel for Circle LineTom Crowley HonoredTom Crowley, Jr., chairman,president and CEO ofCrowley MaritimeCorporation, waspresented withthe NationalTransportationAward from theNational DefenseTransportationAssociation, at thegroup's annual logisticsforum and exposition in Nashville, Tenn. (Photo courtesy Crowley Maritime)Norfolk Harbor Dredging The Navy announced on September 8 itsdecision to deepen approximately fivemiles of the Norfolk Harbor Channel inthe Elizabeth River. This action will allowthe continuous safe and expeditious trav-el of aircraft carriers to and from theNorfolk Naval Shipyard (NNSY) and theLamberts Point Deperming Station.Dredging this heavily-used waterway,which is the federal navigation channelwithin the Elizabeth River in Norfolk,Portsmouth and Chesapeake, would occurfrom the Lamberts Point DepermingStation in the Lamberts Bend Reach, southto NNSY in the Lower Reach. Dredgingwould occur completely within the exist-ing Army Corps of Engineers-maintainedfederal navigation channel. The action isnecessary because currently there is notenough space between the keel of transit-ing aircraft carriers and the bottom of thechannel. This causes mud and other debrisfrom the river bottom to be drawn intothe engine cooling and firefighting sys-tems, creating the potential for enginedamage, costly delays and unsafe condi-tions. Kearney Named CEOThe DeepFlex Board of Directors appoint-ed Michael C. Kearney as its President &Chief Executive Officer. Kearney joinedDeepFlex in 2008 as Executive VicePresident & Chief Financial Officer. Priorto DeepFlex, he served as CFO of TescoCorporation and CFO of Hydril Company.Kearney obtained a Master's degree inAccountancy from the University ofHouston. news16 MN October 2009Length 165 ftBeam 34 ftDepth 12 ftDraft 8 ft (fully loaded)Keel laid March 2007Launched June 2009Delivered July 2009Passenger capacity 600Main engines 2 x Cummins KTA 38-M1 Power 1,100 bhp @ 1,800 rpmGears 2 x ZF W3350 PropellersPropellers Rolls-Royce Bow thruster WesmarEngine controls Kobelt Keel coolers FernstrumSteering system KobeltMN#10 ( 1- 17) : MN#10 ( 1- 17) . qxd 10/ 5/ 2009 12: 43 PM Page 16*Flame job available on requestThink outside the box. Thats what we do.Let Point Eight Power design and manufacture electrical control and distribution systems that meet your unique requirements. Our custom solutions save you time and money .Call us or visit us online and see what we can do for you!C o n t r o l l i n g t h e P o w e r Y o u G e n e r a t ePointEightPower.com 800.284.1522 MN#10 ( 1- 17) : MN#10 ( 1- 17) . qx d 10/ 2/ 2009 11: 18 AM Page 1718 MN October 2009briefsHope Delivers Miss SarahHope Services Inc. delivered the M/V MissSarah to Higman Marine Services, ofHouston, Texas. The 2,000 hp boat meas-ures 72 ft by 30 ft with a draft of 10 ft.This delivery marks the 32nd vessel Hopehas produced for Higman.NG for Brazil OSVs Northrop Grumman Corporation's SperryMarine won contracts to supply bridgenavigation systems for four new offshoresupply vessels to be built in Brazil. Thefour Rolls-Royce-designed boats, will bebuilt at the Estaleiro Alianca shipyardnear Rio de Janeiro for CompanhiaBrasileira de Offshore (CBO). They will beplaced on long-term charter withPetrobras, the Brazilian state oil compa-ny, to provide support services for off-shore oil platforms. VT Halter Marine WinsOSG ATB ContractVT Halter Marine won a second contractfrom OSG Ship Management, Inc. (OSG) toundertake the outfitting and commission-ing of a 350,000 barrel articulated tugbarge unit (ATB). Work for this ATB willcommence in November 2009 and isexpected to complete by mid 2010. VTHalter Marine was contracted in April thisyear by OSG to undertake similar work onanother 350,000 barrel ATB, expected tobe delivered by the end of this year. newsThe Sesok, Crowley's newest triple-screw diesel powered tug joined thecompanys fleet of Alaska river tugs inAugust, when it called on St. Mary'son the Yukon River to pick up its firstbarge. Soon thereafter, the Sesok andher crew made stops along the YukonRiver in Emmonak, Nome, HooperBay and Bethel to meet with Crowleypersonnel and villagers to celebratethe vessel's maiden voyage with com-munity barbeques. Residents gath-ered at the barbeques to learn moreabout the latest vessel to enter theAlaska region and to hear Crowley'scommitment to providing the safestand most environmentally sound fueland freight delivery services inAlaska. The Sesok will continue towork along the coast throughout theseason. Jointly designed by Crowleyand Diversified Marine, the Sesok,which means "beluga whale" in thenative Inupiaq language, boasts 1,362hp and is equipped to safely propelpetroleum/freight barges in river sys-tems throughout Alaska. In April,Crowley took delivery of the Nachik,the Sesok's sister vessel. Crowley'sshallow draft tugs are designed tooperate in Alaska's rivers and coastalregions where operations are chal-lenging due to restricted drafts and alack of docking infrastructure. Thetugs are designed to operate at a draftof just three feet, six inches. Sesok Joins Crowley FleetPhotos courtesy Crowley Maritime Corp.MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 10 AM Page 18PORTABLE TRANSCEIVERFor wireless, hands-free communicationRADIOINTERFACE/INTERCOM CONTROLInterconnects onboard radio systems, crew connection points, and portable transceiversMDH HEADSETFits underneath most helmets including PASGT, MICH and ACH CREW CONNECTION POINTWired access & power to support ANR headwear and charge portable transceivers2456 Brown Avenue Manchester NH 03103 USA TEL: 603.657.1200 FAX: 603.657.1201 www. l vi ssyst em. com/ mn0910GENTEX ELECTRO-ACOUSTIC PRODUCTScomplete, integrated intercom system withwired/wireless functionalitydesigned and tested to meet the mostdemanding marine conditionsnet-centric VoIP platform NMEA 0183 connectivityrobust protection against RFI/EMI L L L LLCrewCommunication SystemALL BOATS AVAILABLEON GSA CONTRACTP.O. BOX 210Monticello, AR 71657Tel: (870) 367-9755 Fax: (870) 367-2120sales@seaark.com www.seaark.comBUILDER OF QUALITY ALUMINUM BOATSMN#10 ( 18- 32) : MN#10 ( 18- 32) . qxd 10/ 2/ 2009 12: 35 PM Page 1920 MN October 2009briefsAAM Completes Alaska Ferry Bay Ship & YachtLaunches Blue ThunderPhoto courtesy of DavidAllenStudio.comBay Ship & Yacht has launched thehigh-performance yacht, BlueThunder, marking the shipyardsentry into the custom-built sport-yachting market. The Blue Thunder has a servicespeed of 32 knots, a flank speed of 42knots and a draft of less than threefeet. The custom interior is crafted withveneered, ultra-light honeycomb-cored panels, with a satin varnish fin-ish. Located on San Francisco Bay,opposite the Golden Gate inAlameda, Bay Ship & Yacht isequipped to build custom-designed,high-performance yachts up to 100 ftin length.Specifications:Length . . . . . . . . . . . . . . . . . . . . . . . . .42 ftBeam . . . . . . . . . . . . . . . . . . . . . . . . . .10 ftConstruction . . . . .light-weight wood/epoxy/ . . . . . . . . . . . . . . . . . .fiberglass compositeDesigner . . . . . . . . . . . . . . . .William GardenEngines . . . . . . . . . . . . .Twin turbo-charged . . . . . . . . . .Volvo D4 300 out-drive enginesnewsAll American Marine, Inc. (AAM)delivered another 83-ft hydrofoil-assisted aluminum catamaran foroperation in Alaska. The recentlylaunched Kachemak Voyager willoperate in Kachemak Bay and pro-vide passenger ferry service betweenthe communities of Seldovia andHomer. Through a competitive bid-ding process, the Seldovia VillageTribe awarded a contract to AllAmerican Marine in September 2008to build a sistership to the CIRIowned, M/V Aialik Voyager andM/V Orca Voyager, AAM previouslybuilt for servicing the KenaiPeninsula. Seldovia was looking for aproven design, but was able to workclosely with AAM to make it theirown. In addition to dedicated wheelchair space, the seats can be quicklyremoved to accommodate wheel-chairs at the tables. The vessel is high-ly accessible and offers wide aisleways, low clearance door sills and anexterior ramp that gradually sweepsup to the fore deck.Specifications:Length, o.a. 82.7 ft Beam 29.2 ft Draught 3.4 ftMain engines2 x Caterpillar C32 ACERTGearbox ZF3000A Propulsion Osborne 5-blade NiBrAL propellers Generators Northern Lights M40C2 40kW Steering system Jastram Maximum speed 29 knots fully loadedCruising speed 25 knots fully loadedElectronics supplied by Radar Marine Radar Furuno FR-1942MKII Radar Depth sounder Furuno Radios 2 x Icom M502 VHF Radio Autopilot ComNav ComPilot Commander Compass Ritchie HB-70 GPS Garmin 172 GPS w/external antenna A.I.S. Simrad OLEX AIS SystemWinches Maxwell VWC 4000 Cranes Morgan Marine 40-3L Paints/coatings AwlgripWindows Diamond SeaGlaze dual pane Seating Eknes tip-up (interior), Beurteaux (exterior) Liferafts 3 x DBC 50 man IBA & 1 DBC 6 man IBAPhoto courtesy All American MarineMN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 10 AM Page 20www.marinelink.com MN 21RAnger 2000 Fireboatfrom Robert AllanIn July, 2009 the new RAnger 2000Class fireboat, City of Portland, wasdelivered to the City of Portland,Maine Fire Department by thebuilder, A.F. Theriault & Son Ltd., ofMeteghan River, Nova Scotia,Canada. The vessel was designed byRobert Allan Ltd. of Vancouver,B.C., who worked closely with theowner's advisor, PK Marine ofCalifornia, to define the owner's var-ious requirements. Derek Noon wasthe Project Manager at Robert AllanLtd. for this new vessel. The City ofPortland is of all-welded aluminiumconstruction, including ice-strength-ening for local conditions. Installed propulsion power is two454 bhp from two CAT C-12 mainengines. Propellers are five-bladed,fixed pitch, driven through a pair ofZF model 305-1A reverse-reduction,down-angle gears with a 1.75:1reduction ratio. With this powerplant, the vessel achieved the full loaddesign speed of 18 knots on trials.The Fire-fighting equipment com-prises a Hale model SPM2500DTrated 3,000 gpm, driven by an inde-pendent Iveco 530 bhp diesel engine.Specifications:Length, o.a. . . . . . . . . . . . . . . . . . . . . .65 ftBeam, molded . . . . . . . . . . . . . . . . . .16.5 ftDepth, molded . . . . . . . . . . . . . . . . . . .6.5 ftMaximum draft, o.a. . . . . . . . . . . . . . .4.1 ftTank capacities:Fuel . . . . . . . . . . . . . . . . . . . . . . . . .490 galFresh water . . . . . . . . . . . . . . . . . . . .66 galSewage . . . . . . . . . . . . . . . . . . . . . . .50 galClass A foam . . . . . . . . . . . . . . . . . .100 galClass B foam . . . . . . . . . . . . . . . . . . .60 galFire monitors:Main elevated monitor1 x 3,000-gpm, remotecontrolledAft monitors . . . . . . .2 x 1,500-gpm, manualForward monitors . . .2 x 1,250-gpm, manualAft platform monitor1 x 500-gpm, remotecontrolledPhoto courtesy Robert Allan Ltd.MN#10 ( 18- 32) : MN#10 ( 18- 32) . qxd 10/ 5/ 2009 12: 52 PM Page 2122 MN October 2009briefsSteiner Z-Drive PushboatBiodiesel Ferry ArrivesBiodiesel fueled USS Arizona MemorialFerry Boat Samuel G. Fuqua carries visi-tors from the Arizona Memorial. (U.S.Navy photo by Mass CommunicationSpecialist 2nd Class Robert Stirrup) USS Arizona Ferry Boat #39-2, Samuel G.Fuqua, welcomed visitors on its maidenrun Aug. 18 as the newest biodiesel boatto operate at Naval Station Pearl Harbor.It's the second of five new biodiesel boatsto debut in Pearl Harbor. The first, #39-1John W. Finn, arrived in April to becomethe first Navy vessel in Hawaii to incorpo-rate off-the-shelf clean fuel technologycomponents. The new boats will eventual-ly replace the existing 20-year-old U.S.Navy-operated tour boats that shuttle vis-itors to and from the USS ArizonaMemorial as part of the National ParkService's (NPS) World War II Valor in thePacific National Monument tours. The clean fuel technology componentsinclude twin diesel engines that fully com-ply with EPA emissions standard, and acomplex fuel system optimized forbiodiesel fuel and designed to furtherreduce emissions. The diesel oxidationsystem is engineered to chemically con-vert hydrocarbons and carbon monoxideinto water and carbon dioxide. The boatis named in honor of Samuel Glenn Fuqua.On Dec. 7, 1941, Lt. Cmdr. Fuqua was onboard USS Arizona as the ship's damagecontrol officer and first lieutenant.Though knocked unconscious by a bombthat hit the ship's stern early in theattack, he continued to direct the fightingof fire and rescue of wounded and injuredpersonnel. After realizing that the shipcould not be saved and that he was thesenior surviving officer aboard, he direct-ed that the ship be abandoned, but con-tinued to remain on the quarterdeck tosave the ship's remaining crewmen. newsThe final, for now, delivery in aseries of four 120-ft by 34-ft 3,200hp Z-drive towboats was completedat Steiner Shipyard in Ala. The vesselswere built for Southern Towing ofMemphis, Tenn. As with the otherthree vessels the Arne Christiansen ispowered by a pair of Tier II compli-ant Cummins QSK50 mains, eachrated for 1,600 hp at 1,800 rpm. Thetwo engines are mounted aft on themain deck level. They turn shortfour-foot shafts to HRP Z-drives car-rying 74.8-inch propellers in steer-able nozzles.The use of steerable nozzles in theEdward Shearer-designed vessels wasa significant departure for Mississippipushboat design.Southerns President William (Bill)Stegbauer said the design has exceed-ed his expectations on fuel economyand pushing power. Down bound,they can push around bends that aconventional boat would have toflank, and lining up for locks andbridges is much easier so contributesto shortened trips. Stegbauer saidSouthern Towing has been operatingthe first of the Z-Drive vessels for ayear now and has had no prop dam-age. Photo courtesy Steiner ShipyardMN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 11 AM Page 22www.marinelink.com MN 23Metal Trades Builds Hullfor Barge ConversionMetal Trades, Inc. of Hollywood,S.C. built and delivered the outer hullfor a double hull fuel barge conver-sion for Cross State TowingCompany of Jacksonville, Fla. Theouter hull was designed by GlowackiEngineering to retrofit on the outsideof the 17,000 bbl cargo tank bay incompliance with USCG and OPA 90requirements. According to RandyBrown, Vice President of BusinessDevelopment for Metal Trades, Thiswas an interesting project thatinvolved building and launching onlythe outer hull, requiring us to takeextra precautions for launchingbecause, without a deck or inner hullin the cargo tank bay, the barge outerhull did not have very much longitu-dinal stiffness. We had Saber Designand Analysis Services perform FiniteElement Analysis (FEA) of the hull toverify transfer car placement andtemporary bracing while ensuringthat peak stresses remained low in thehull during transfer and launch. Charleston Heavy Lift, Inc. wascontracted to perform the final liftingand setting of the 353 ton inner hullcargo bay within calm waters of theintra-coastal waterway close to shore.The lift was completed as plannedwithin a few hours. The final weldingof the inner hull to the outer hull wascompleted by Cross State Towing atits own shipyard in Jacksonville, Fla. Specifications:Length . . . . . . . . . . . . . . . . . . . . . . . . .256 ftBeam . . . . . . . . . . . . . . . . . . . . . . . . . . .56 ftDepth . . . . . . . . . . . . . . . . . . . . . . . . .12.5 ftCapacity . . . . . . . . . . . . . . . . . . . .17,000 bblCargo . . . . . . .Clean fuels, Grade B and lower . . . . . . . . . . . . . . . .(diesel, jet fuel, gasoline)Pumps . . . . . . . . .(2) Byron Jackson DeepwellDeck Winches . . . . . . . . .(2) Nabrico, 60 TonsBow ThrusterOmnithruster HT400 with TwinDisc PTO, Amerillo Right Angle Drive,Caterpillar C13 engineHatches . . . . . . . . . . . . . . . . . . .24" NabricoMN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 11 AM Page 2324 MN October 2009Amongst the maritime activities engaged in bymankind, marine salvage is unique operationally, com-mercially and legally. Operational uniqueness includes therequirement that those engaged in salvage services mustoften steam into weather conditions from which mostmariners are seeking shelter. Also, the master of a salvagevessel must often take his ship into the shallows or otherdangerous areas that he has been trained as a mariner todiligently avoid. Commercially, no ship-owner or ship-master ever wants to be in the position of requiring sal-vage services, but if circumstances make them necessary,the owner or master wants them promptly from those bestsuited to perform. Promptness is also important to thesalvor. In the words of one renowned salvage master,when a vessel is in peril, the salvor has only a givenamount of time to get to the scene and successfully com-plete the salvage, and it is not given to him to know howmuch time that is.That urgency has led to the unique features of marinesalvage contracts, the manner of contracting for salvageservices, and the terms of the contracts used. As withother commercial adventures, the contract terms may belimited in scope, or they may be as expansive as necessaryto address all the concerns of the parties or special consid-erations of the particular situation. As with other mar-itime contracts, they may be agreed orally. Most interest-ing and unique, if salvage services are voluntarily per-formed with no terms having been agreed, the law alreadyprovides the terms for determining the compensation tobe paid to the salvor for his services, and the manner ofsecuring his compensation with a maritime lien againstthe property saved. There is no similar law to provide forcompensating those who rescue property in peril on land.There may, however, be other commercial pursuits inwhich the law operates to provide compensation for serv-ices, but the compensation in those situations will beequitable, based upon the principles of quantum meruit,i.e. reasonable value for the services rendered. In salvage,however, the law provides that the compensation is to bean especially generous reward for success. That is in partbecause the salvor gets paid only if he does succeed, i.e. hisservices are performed on no cure, no pay terms, so hewill be encouraged to press on with even the most diffi-cult cases. The generous award is also meant to encouragethe good conduct of saving property in peril for the con-tinued benefit of its owners, and to discourage bad con-duct by persons who might otherwise be tempted to takeundue advantage of distressed mariners by plunderingtheir ships and cargoes or engaging in other bad conduct.These terms for compensating salvors have evolved overa period of nearly 3,000 years, from a time that precededthe biblical story of Jonah and the whale. In 900 B.C.,Rhodian law required that persons rescuing property fromthe sea be paid one-fifth of what they saved. Over the cen-turies, other codes have been devised in different jurisdic-tions, but all applied similar principles of generosity. Incommon law jurisdictions, such as England and the U.S.,the courts also weighed in, still applying similar princi-ples. Those principles have been reduced to internationalconvention twice, in 1912 and in 1989. It was appropri-ate in the 19th century when salvage contracting beganbeing used in some cases as a substitute for common lawsalvage, amongst other things, the contracts often incor-porated the same or similar principles for determining thesalvors compensation for his services as would have beenprovided by law, and other legal precepts such as the mar-A Brief History of Marine Salvage ContractingcolumnsJim Shirley is a Master Mariner, former salvage mas-ter and maritime lawyer specializing in maritimecasualty and salvage matters, now serving as legalcounsel to the ASA and as Principal Consultant in JTSMarine LLC. He can be reached at jtsmarine@ veri-zon.net or (609) 883-3522.MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 12 AM Page 24www.marinelink.com MN 25itime lien against the property savedto insure the compensation was paid.One of the oldest published con-tract forms, Lloyds Standard Form ofSalvage Agreement, also referred to asLloyds Open Form or LOF, recentlycelebrated its 100th anniversary. TheLOF has gone through a number ofmodifications over the last century,generally to take into accountchanges in the law or in the circum-stances of salvage operations. Overthe past thirty years, these changeshave addressed the increased publicconcern for pollution. LOF 1980, forexample, partially abandoned the age-old no cure, no pay principle of sal-vage in those cases involving laden oiltankers, providing for cost reimburse-ment and some compensation for thesalvor, not limited by salved values,even when the salvage operation itselfwas not successful.The 1989 Salvage Conventionresulted from the need to address pol-lution concerns on an internationalbasis. Its very strong environmentalregime resulted in the U.S. becomingone of the first major maritimenations to ratify that treaty, despiteour nations history of only infre-quently ratifying the maritimetreaties it works very hard to negoti-ate. The 1989 Salvage Conventionled to LOF 1990, incorporating theterms of the treaty as a matter of con-tract. Before the 1989 SalvageConvention went into force, its termswere adopted by statute in England.Because the LOF is subject to Englishlaw, that resulted in LOF 1995. In1997, the English House of Lordshanded down its decision in theNagasaki Spirit case with an interpre-tation of that portion of the 1989Salvage Convention which addressedthe salvors compensation in situa-tions where the salved values wereinsufficient to enable a suitableaward, but the salvors services hadnonetheless been protective of theenvironment, i.e. Article 14. Neitherside was fully satisfied with the inter-pretation given Article 14, so theinterested parties convened anddeveloped the now familiar SCOPICMN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 12 AM Page 2526 MN October 2009(Special Compensation P & I Club) Clause to be incor-porated when desired in what became LOF 2000. That is,the parties did by contract what the diplomats did not doby treaty they devised a system to meet the same objec-tive, but which was more commercially reasonable for theparticipants. This is one situation in which the substantivematerial terms of a standard salvage contract form actual-ly went beyond the law that would have been applied to avolunteer salvor.A discussion of the intricacies of LOF 2000 with SCOP-IC will be saved for another day. In general, though, LOFis the most widely known salvage contract form. Its termspermit immediate response by salvors without need fornegotiating specifics. It incorporates the English law ofmarine salvage and therefore accomplishes those goals thatare built into marine salvage law. Negotiation of thesalvors compensation does not take place until after theemergency has been dealt with and the salvage operationhas been completed. Meanwhile, after appropriate finan-cial security has been posted for the salvors services, i.e.securing his maritime lien, the salved vessel and cargo maybe released to resume their usual commercial pursuits. Ifamicable settlement is not reached, the salvors compensa-tion will be determined in due course in the Lloyds arbi-tration process in London.There are other open form contracts available thatinclude provisions that enable immediate response bysalvors, leaving negotiations and legal wrangling untilafter the work is done and then arbitration if negotiationis unsuccessful. One such form is published by the Societyof Maritime Arbitrators of New York (SMA) under thename MARSALV. This form was developed in the mid-1990s when the SMA invited several members of theSalvage Law Committee of the Maritime Law Associationof the United States (MLA) to participate with the SMAin developing a U.S. Open Form Contract. After consid-erable study and discussion amongst members of thisgroup and other interested parties, this group decided tokeep things simple by using an old Merritt, Chapman &Scott single page form, updated to incorporate the requi-site terms of the 1989 Salvage Convention. TheMARSALV form affords the parties options other thanpure open form terms, such as fixed price or per diemterms, and provides for arbitration in N.Y. applying U.S.law. Smaller cases may be arbitrated locally, outside N.Y.This form has seen considerable use, though mostly onrecreational vessels. Nonetheless, it has attracted a numberof professional arbitrators who have developed experiencein arbitrating the unique claims for salvage compensation.Of course, many professional marine salvage companieshave their own preferred contract forms to be used for sal-vage or wreck removal when they find the LOF orMARSALV forms either inappropriate or not acceptableto the vessel owner. These are often drawn on no cure, nopay terms, usually for a fixed price in such cases. Towingcontracts are also used for the provision of salvage servic-es and these may or may not be specially amended toenable a more favorable basis for compensating the salvor.In addition, BIMCO publishes several forms that areoften used in the provision of salvage services. WRECK-HIRE 99 is a daily hire agreement. WRECKSTAGE 99 isa lump sum agreement with payments to the salvor madeaccording to his completion of the various stages of theoperation. WRECKFIXED 99 is a fixed price, no cure nopay agreement. As the names suggest, these forms may beused for wreck removal operations as well as for the rescueof property that is subject to a marine peril, i.e. marine sal-vage. Their terms, like those of many private companyforms, depart from the law of marine salvage sufficientlyto take into account other considerations unique to mod-ern contracting. They may also incorporate special termsrequired to address specific situations. They may beamended by the parties to address their special concernsover such things as choice of law and venue. That is,despite salvage contracting having its roots in the law ofmarine salvage, freedom of contract is alive and well, per-mitting departure when properly agreed by the parties. Sosays the 1989 Salvage Convention (Article 6). Such a con-tract may not be properly agreed, however, if it wasentered into under undue influence and its terms areinequitable, or the payment due is in an excessive degreetoo large or too small (Article 7), or the services rendereddo not exceed what can be reasonably considered as dueperformance of a contract entered into before the dangerarose (Article 17).MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 13 AM Page 26MN#10 ( 18- 32) : MN#10 ( 18- 32) . qxd 10/ 5/ 2009 1: 30 PM Page 2728 MN October 2009demarcayOver the course of my legal career, I have had the oppor-tunity to witness first-hand the methods various indus-tries employ in the prevention and investigation of acci-dents and the management of claims and litigation.Without a doubt, the maritime industry is the leader ofthe pack. Maritime employers effectively train theiremployees to avoid accidents, quickly and efficientlyinvestigate incidents and claims and, when faced with asuspicious claim, maritime employers do not shy awayfrom defending a lawsuit.If you are reading this article, you undoubtedly under-stand the importance of hiring diligent employees and oftraining those employees to operate your vessels with safe-ty as their primary concern. Even the best employee, how-ever, can make a mistake; and, as we all know, offshoreaccidents are inevitable. The investigation that usually fol-lows an offshore accident sets the maritime industry apartfrom many others. When a non-maritime company expe-riences an incident, it often turns the claim over to itsworkers compensation insurer and forgets about it.Maritime companies, on the other hand, tend to conducta thorough investigation into the circumstances sur-rounding the incident. Thankfully, these investigationslead to the implementation of safer policies and proce-dures and have made our industry much safer than it wasjust a few years ago.In response to this investigation, virtually all companiesprepare a basic accident report that is traditionally pro-duced to the claimant once litigation is filed. Many com-panies also prepare more detailed documents with titlessuch as Root Cause Analysis or Subsequent RemedialMeasure Report. These detailed reports provide all of theinformation that is used to make the operation safer in thefuture. They also provided a double edged sword becausethe conclusions found in these reports are often critical ofthe company and could be used by a claimant to imputeliability if they are ultimately produced through the dis-covery process.Many of the documents prepared during the investiga-tion of an accident do fall within the definition of anaccident report and are required to be produced to theclaimants attorney if requested. Some companies haveworked with their legal teams to develop a protocol toproperly investigate, prepare, route and use the results ofthe investigation in a manner that makes it privileged aswork product prepared in anticipation of litigation.Usually, in these situations, the only discoverable docu-ments produced to the claimant consist of a generic acci-dent report or USCG 2692 and the more detailed analy-sis is withheld as privileged.Advances in technology and communication havenecessitated some changes in the rules of discovery.Examples of new technologies that do not quite fit with-in the carefully managed script of accident investigationand documentation include e-mail messages, cell phonecalls, text messages and other instant messaging tools.For example, if an anchor-handling vessel is performingan anchor handling operation, the crew could accidental-ly hit a pipeline and cause the pipeline to rupture. A cap-tain following the standard reporting/investigation proto-col will not put anything into writing that admits that heis responsible for the accident. Advanced technology,however, now allows the captain, as well as the rest of thecrew, to communicate with a much larger pool of people.The captain may follow the documentation/investigationprotocol to the T while sending his wife, or anotheremployee, text or email messages that discuss what hap-pened, often providing details that may be incorrect andbetter left for the formal process of investigating the inci-dent. A quick text to a co-worker stating We may havebeen out of position and dropped the anchor on aTexting Could Create Liability for Vessel OwnersLawrence R. DeMarcay, III is a partnerat Fowler Rodriguez Valdes-Fauli in thefirms New Orleans, La. office. He canbe reached at ldemarcay@ frvf-law.comor 504-595-5122.MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 13 AM Page 28pipeline, may prove to be incorrectand particularly damaging to thecompany. Even if the subsequentinvestigation determines that thepipeline was out of position or notburied properly, the jury may onlyremember the immediate statementprovided by the captain.As such, it is important for vesseloperators to stay up to date with thetechnology available to its vesselcrews and the rules of discovery.Operators must implement policiesto mitigate the damage that can becaused by these quick messages thatare often exchanged without givingthem any significant thought. The rules of discovery are slowlyadapting to these new technologies.In December 2006, the Federal Rulesof Civil Procedure were changed toaddress electronic discovery issues.The rules provide that emails andother forms of electronically storedinformation are discoverable just likeany other document. Federal Rule 34(A)(1)(a) states thata party can request any designateddocuments or electronically storedinformation- including writings,drawings, graphs, charts, photo-graphs, sound recordings, images andother data or data compilations-stored in any medium from whichinformation can be obtain eitherdirectly or, if necessary, after transla-tion by the responding party into areasonably usable form. Most states are following suit andamending their procedural rules tospecifically address the treatment ofelectronically stored information. Forexample, discovery in La. nowincludes an obligation to preserve alldocuments in ones possession,including documents that exist onlyin electronic form, in the event of ini-tiated or threatened litigation. As e-mails have become prevalent,most operators and their employeesunderstand that e-mails are perma-nent and may be read by others.Most employees have started puttingsome thought into what they say inan email. However, text messagessent between cell phones and pocketPCs are going to provide operatorsthe latest twist in the wave of pro-ducing electronic evidence. Becausecell phone devices are mobile, usersinstinctively feel that their messagesare less permanent. As a result, theyare often less careful about what theysend. While most people now under-stand that desktop emails are not eas-ily erased, many dont realize that textmessages can also live on after usersdelete them, both in the device andon the cell phone providers server. As such, it is imperative that vesseloperators educate their employees inthe use of these alternate methods ofcommunicating and have themunderstand that any message sent viaany of these alternate means of com-munication may be discoverable andmay create significant liability issuesfor the company. Although most claimants attorneyshave not yet standardized discoveryrequests seeking to obtain cell phonelogs, text messages or instant mes-sages to their list of commonlyrequested items, that day is coming. MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 14 AM Page 2930 MN October 2009My marine industry colleagues and I are, for the mostpart, small business owners. As such, we are the historicdrivers for economic recovery and jobs creation. We rep-resent 99% of all companies that employ workers andemploy nearly half of all private sector employees; havegenerated almost 80% of new jobs over the last ten yearsand created more than 50% of non-farm GDP. We arehuge.But huge or not, we are waist deep in the quagmire cur-rently affecting the worlds economy. There is generalmalaise and in some cases, absolute terror on behalf ofbusinesses and consumers alike. Driven by explodingnational debt, financial markets meltdown, nationaliza-tion of businesses, czars, runaway government spending,the specter of across-the-board tax increases and moreburdensome mandates coming down the pike, to say weare concerned is an understatement. By the time thisarrives in print, I can only hope that some of the earlyindicators of a recovery seen when this piece was writtenwill prove prescient and that some sanity has returned toour economy.Recovery and job creation in our industry is almosttotally dependent on the health of the rest of the econo-my. So, if consumer demand is down for grain, millionsfewer tons of wheat ship down the Mississippi. If fewercars and TVs are bought, hundreds fewer containershipsdock. If fewer commuters ride ferries, fewer boats andcrews work, fewer boats wear out, fewer boats get built,fewer yard workers have jobs. The upshot is that millionsmore of us end up filing for unemployment, or thosemore adventurous among us go the self-employmentroute and start their own businesses. At the end of the day,to get the rest of the consuming world back up earningand spending, we small businesses need incentives thatwould help make the economic engine start to rev up. Itsthe jobs, stupid. With increased demand, our boats, crewsand workers go back to work, spend and stimulatedemand and pay taxes. Even some bankers might findgainful employment again.The timing of this recession couldnt have been worse forsmall businesses in the marine industry. Over the courseof the last two or three years there has been a steadydecline of available sources of credit and equity particu-larly for those businesses whose annual revenues are under$25m. Of those lenders remaining active, many have con-centrated their activities in near or investment grade cred-it with revenues north of $100m. Mom and Pop have tolook elsewhere for help. Most Americans know that smallbusiness is the heart and soul of the U.S. economy. It isfrom within this sector that all real economic recoveriesbegin and grow and jobs are created or saved. Yet it isthe least well served and, from the Obama administra-tions lack of initiatives, one of the most neglected.Let no one kid you. Most companies current financialstatements are reflecting the wretchedly reduced revenuesthis recession has brought. Theyre all ugly; its just a ques-tion of how ugly. Balance sheets awash in cash a couple ofyears ago are now hurting for liquidity. Year over yearnumbers paint a dire picture. You may need a temporarycredit facility to cover aging A/R or operating capitalshortages. You may need to refinance a boat or enter asale/leaseback agreement. You are trimming costs to com-pensate for lower income, making hard decisions as yougo, but each boat cold-stacked or each worker laid off onlymakes things worse on your business and your communi-ty. A small business stimulus package would go a long waytowards getting things back on an even keel.Back in the midst of the last presidential campaign,Barack Obama and Joe Biden issued a white paper(http://barackobama.com/pdf/SmallBusinessFINAL.pdf )titled Barack Obama and Joe Bidens Plan for SmallBusiness. The paper was filled with promises, but thus farnearly all have been unfulfilled. However, some of theideas in the treatise were inspired by sound Reagan-esqueprincipals and would, if implemented today, spur growthand recovery at a rate that would make our props spin: The Obama Small Business Health Tax Credit: Arefundable credit of up to 50% on premiums paid bysmall businesses on behalf of their employees. This was tobe coupled with insurance pools, reinsurance for cata-strophic cost and cost reduction methods like electronicinfo systems, chronic care management and increasedinsurance market competition.paineSmall Business Stimulus: Key to RecoveryRichard J. Paine, Sr. is the President ofMarine-Finance.com, a maritime con-sulting firm specializing in the financ-ing and leasing of commercial marinevessels and other equipment. Email:rpaine@ marine-finance.com MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 14 AM Page 30www.marinelink.com MN 31 Zero Capital Gains and OtherTax Relief for Small Business andStart Ups: Encouragement for inno-vation and job creation... a $500 taxcredit to all workers. The creditwas to reduce the burden of self-employment taxes paid as both theemployer and employee. Expanded Loan Programs forSmall Business: Loan and micro-loanprograms for start-ups through theSBA guarantees, expansion of lendernetworks and simplification of loanapproval processes. Innovation and High Tech JobCreation: Make R&D tax creditspermanent. Public-Private BusinessIncubators: Reduce start-up costs byproviding expertise and reducingoverhead expenditure. Women and Minority OwnedSmall Businesses: Increase borrowingchannels, venture capital sources andoffer opportunities for doing busi-ness with the federal government. Rural Small Businesses: 20% Taxcredit on up to $50,000 of invest-ment in small owner-operated busi-nesses.In March of 2009, The AmericanRecovery and Reinvestment Act of2009 signed by the presidentattempted to stimulate small busi-ness by renewing the BushAdministrations 50% bonus depre-ciation and the Section 179 increasein expensing of capital costs. It alsoprovided the MaritimeAdministration with $98m in grantsfor small shipyards and a slightincrease in the amounts the SBA willguarantee under the 7(a) program.The underlying failure of the Act wasits lack of true stimulus for real long-term job growth by addressing theneeds of small businesses and theirinvestors. Considering the resultsthus far, it has been about as stimu-lating as watching barnacles grow.To really get things moving smallbusiness needs real, long term incen-tives to stimulate job growth andmake themselves more financiallyattractive to lenders some of whichwere proposed in the forgotten whitepaper and more. The NationalFederation of Independent Business(NFIB) and other advocacy groupshave defined sound principals forrecovery, job creation and growth: Cut or eliminate capital gainstaxes to access at-risk capital waitingon the sidelines to invest. Cut or offer a hiatus on payrolland self-employment taxes whichnow can range in excess of 16% ofnet income. Offer a tax credit for hiring newworkers. A small incentive will bemore than offset by income taxespaid. Reform SBA loan policy andapplication procedures. Unfortunately, the conundrum weface is that while a few tax cuts andincentives like these could prove tostimulate job growth, we are in anenvironment of huge deficits result-ing not in tax cuts, but of increases tofund runaway government spending.Small business will continue to beleft by the wayside by all but the IRS.Until that changes, I wont hold mybreath waiting for the taxman togoeth. MN#10 ( 18- 32) : MN#10 ( 18- 32) . qx d 10/ 5/ 2009 11: 14 AM Page 3132 MN October 2009MN#10 ( 48- 65) : MN#10 ( 48- 65) . qxd 9/ 29/ 2009 2: 02 PM Page 64www.marinelink.com MN 33MN Yearbook2009In MarineNews 2009 Yearbookedition we take a look at how thepast year has unfolded and what thecoming year holds. While the cur-rent economic storm has wreakedfinancial havoc, there are pockets ofsuccess and belief in some quartersthat the abyss has been hit and thepath is up. With an industry asdiverse and regional as the workboatmarket we sought and receivedinsights from industry leaders acrossthe county, and across the marineindustry spectrum, includinginsights from the offshore, tug andbarge, boatyard and passenger vesselsectors.(Photo courtesy Entertainment Cruises)MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 18 AM Page 33There is no doubt that the tugboat, towboat and bargeindustry is experiencing the effects of the economic down-turn gripping our nation, said Thomas A. Allegretti,President and CEO of the American WaterwaysOperators (AWO). Many AWO members, who wereenjoying full fleet utilization just a year ago, now report asubstantial reduction in economic activity. We see 20 percent fewer ships than we did in previousyears, said Captain Brian McAllister, President of NewYork-based McAllister Towing. As a result, McAllister saidhis ship docking services are down about 20 percent aswell. However, the McAllister tugs that work for oil barg-ing companies have had their business cut in half. OfMcAllisters 10 tugs in that segment, five are tied up. Thecompany has coped by reducing costs wherever possible,including steaming tugs slowly between jobs to save fuel,going to Tier II engines and laying off crew and manage-ment staff. The one bright side that McAllister can pointto is that the company completed its new building priorto the recession. The debt against our fleet has been paiddown quite substantially, McAllister said. We have novessels under construction and no plans to build any-thing. Mark K. Knoy, President of AEP River OperationsLLC, also reported that his company is reducing speeds tosave fuel when possible. In addition, Knoy said, We'rebinging on a group of new towboats that are much morefuel efficient than our current towboats. We're idling ourleast efficient towboats because the fuel burn per ton mileis so much better on the new towboats. We're also invest-ing in new barges. Operating costs are lower on newerequipment, as is the risk of cargo damage.Dominique Smith is Vice President of the one-tug, Fla.-based company, Tradewinds Towing. After serving asGeneral Manager for McAllister Towing, Smith began hisMarineNews YearbookTug, Towboat & Barge by Raina Clark2009Siblings Dominique Smith and Rachel Smith, co-owners of Tradewinds Towing, on Miss Lis. (Photo courtesy Tradewinds Towing)34 MN October 2009MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 21 AM Page 34SENESCO Marine is located on Narragansett Bay in Rhode islandand has a proven record of on time delivery and unsurpassedquality. We can work together with your naval architect or oneof our naval architects in this area. SENESCO has its own N/Cand panel line capabilities as well as covered and outside assem-bly plattens. We take great care with our erection and launchvia our own drydock. Our repair yard offers drydock capabilitiesand a 1200 foot pier for topside work. Excellent project man-agement and detail design support.10 MacNaught North Kingstown, RI 02852-7414401-295-0373Mike Foster - General Managerwww.senescomarine.comNew ConstructionConversionRepairQuality Timely DeliveryDrydock/PierDutch Harbor1558 East Point RoadUnalaska, AK 99692907-581-1498www.pfielectric.comSeattle5351 24th Ave NWSeattle, WA 98107206-783-6800info@pfielectric.comNow at our Dutch Harbor Facility: Year-Round Electricians available 24/7 NightWatch Monitoring and Alarm Panels Aqua-Sonar Flow Measurement Gauges.................Ultrasonic - with No Pipe Penetraons!Maintain Seaworthiness with PFI Marine ElectricThe Sea Has No Back Doorwww.night-watch.com www.cleamarinesystems.comNightWatch Alarms Aqua Sonar Flow GaugesMN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 2/ 2009 11: 21 AM Page 3536 MN October 2009own business and believes it to be the smallest companyon AWOs roster. He described the effect of the economyon his business as more or less the same as for larger com-panies. The tug industry is soft. The oil field is prettymuch flat. I see companies all around me stacking vessels.Smith reported having to actively market his servicesrather than waiting for clients to come to him as he did inthe past. And at the moment he sees a little more workfor us internationally then in the domestic market.Rick Shrewsbury, Vice President of Seattle-basedWestern Towboat, said his business has been sustained byspending through the State of Alaska during the summermonths. When things slow down in Alaska, I think thePacific Northwest will suffer, he said. Weve been mov-ing bulk aggregate since the early 50s and this summer hasbeen the slowest for gravel since the mid-70s. WesternTowboat has 135 employees and covers Alaska and thewest coast and now has taken on work in the Gulf Coastand in Central America. The company has purchasedsome new barges and is currently building one vessel in-house. Rick Calhoun, President of Cargo Carriers and incom-ing Chairman of the Board for the Waterways Council,Inc., had slightly lighter news to report.While we participate in hauling a lot of different com-modities in our barges, our primary focus has been ongrain historically, said Calhoun. The export grain busi-ness has perhaps been one of the less negatively affectedbusinesses in this world economic crisis as people and ani-mals still need to consume food and feed. Trade has con-tinued even though many of our trading partners havegone through difficult times and we have witnessedunprecedented volatility in ocean freight and commodi-ties in general. A drought in the southern hemisphere alsoplaced a greater need on U.S. grains and protein to serveworld markets in the near term.On the marine side, we have moved old barges toSouth America to shore up our supply chain there. Wehave continued to scrap old barges built in the late 70sand early 80s. We have chosen to replace most of thatcapacity by chartering newer equipment with deeperdrafts, versus buying or building new barges.H. Merritt Lane, III, President and CEO of NewOrleans-based Canal Barge Company, thinks the industrymay be better off now than during past dips in the cycle.While unsure of when we will see an upturn, he said, Ibelieve that the industry is in a much stronger conditionthan in prior downturns. Most of the industry's equip-ment is in the hands of larger, well-financed, and better-managed companies in comparison to the past. In addi-tion, the industry fleet has a greater number of olderbarges today than it did in the 1980s, when we overbuilton top of an already-young fleet. I expect that our indus-try leaders will be rational and disciplined, especiallyabout managing their fleet capacity. There will be littlenew construction and likely some accelerated retirementsof older vessels. This will help us avoid the excess supplythat resulted from overbuilding in the 80s. I believe thatwe will see an earlier recovery due to a relatively balancedfleet supply in comparison to expected demand.John A. Witte, Jr., Executive Vice President at DonjonMarine, a N.J. based salvage company, believes that in anyeconomy, diversity is key to his companys health.Donjon is always looking to related markets for contin-Captain Brian A.McAllister, Presidentof McAllister TowingMark K. Knoy,President of AEPRiver OperationsRick CalhounPresident, CargoCarriersH. Merritt Lane, III,President and CEO ofCanal Barge Co. Gary Faber,President and COO,Foss Maritime MarineNews YearbookTug, Towboat & Barge2009MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 33 AM Page 36www.marinelink.com MN 37McAllisters two latest builds, the Andrew and RosemaryMcAllister in N.Y. Harbor (Photo courtesy McAllister Towing)ued growth, he said, one of the most importantrecent decisions we made was to diversify into thedredging industry, where we have had significant suc-cess.Lane however reported no emerging markets thatCanal Barge is excited about for 2010. There aresome newer opportunities in ethanol and biofuelsdriven by government mandates and the green move-ment, but we see them as complementary to our corebusiness lines. Canal Barge will support our existingcustomer base and respond to inquiries instead of tar-geting renewable fuels. Because many refineries haveinstalled, or plan to install cokers, petroleum cokeshipments will likely increase in the future.Some companies continue to pursue green tech-nology even in the current economy. Gary Faber,President and Chief Operating Officer at FossMaritime Company, said that rather than becomingmore conservative during the recession, his companyMarineNews YearbookTug, Towboat & Barge2009MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 22 AM Page 3738 MN October 2009has become more innovative. He cited Fosss Green Assisthybrid tug as one example, and the launching of a pilotboat in San Francisco, the first time the company haslaunched anything other than a tug, as another.Were also testing new emissions-reducing technologiesand looking to other industries for solutions that mightwork in a maritime setting, Faber said. Lane offered a recap of the industry from Canal Bargesperspective. As additional marine equipment cameonline for the industry in 2009, especially in the liquidbarging area, customers who had been chartering-incapacity as a hedge against scarcity started to optimizetheir fleets and released some equipment, he said. Manycustomers are under mandates to cut costs, and we are notyet sure how much demand has fallen. Although activityis down across most markets, the supply side of the equa-tion seems to be the biggest issue in the liquid market. Aseconomic activity stabilizes and hopefully grows, I expectthat we will likely move similar although somewhat small-er volumes, but at flat or slightly reduced rates in the shortrun. In this environment, we expect to see a flight toquality from most liquids customers, securing their busi-ness with the most reliable carriers with the strongestfocus on safety, reliability, flexibility and service.In general, the hopper fleet has not experienced thegrowth in capacity that the liquid fleet has in recent years.Demand may be the bigger issue in the dry cargo businesssince coal stock piles are high and the world economic sit-uation has, at least in the short-term, greatly reducedimport/export activity for open-top hopper cargos. On the cost side, we see supplier costs falling, marinelabor availability improving and wage pressure easing.Our crew turnover is down. We also see increased avail-ability and lower pricing in shipyards. Lower steel price isreducing the cost of both repairs and new construction.Fuel price is down dramatically since last year and isreflected in lower contract of affreightment rates to ourcustomers and in subcontractor pricing to us. We are see-ing much greater horsepower availability from smallertowers and a greater number of idle towboats than wehave seen in several years. Fortunately, Canal Barge hasenjoyed full utilization of our towing fleet through 2009,in large part because we have been able to re-deploy boatsfrom one business line to another and schedule ourplanned outages at the most opportune times.Calhoun pointed to increased costs to operators due tonew regulations on the waterways as another trend thatimpacts his market. Moreover, he said, we continue tosee our lock and dam infrastructure age and as a countrywe are struggling to find the proper balance of funding.MarineNews YearbookTug, Towboat & Barge2009Canal Barge towboats M/V Merrick Jones and M/V Susan L. Stallmove an offshore drilling rig to the Gulf of Mexico (Photo courtesy Canal Barge Company, Inc.)The export grain business has perhapsbeen one of the less negatively affectedbusinesses in this world economic crisis aspeople and animals still need to consumefood and feed.Rick Calhoun, President of Cargo Carriersand incoming Chairman of the Board for theWaterways Council, Inc.MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 23 AM Page 38www.marinelink.com MN 39The Inland Waterways Users Board,the industry in general and the U.S.Army Corp of Engineers are workingtowards a better project delivery systemcombined with a multi-year approachto prioritizing projects and fixing infra-structure. It is very important work.In the salvage market, Witte reportedover the last year we have seen adecrease in marine salvage activities dueto the added responsibility and liabilityplaced upon an owner in the event hisor her vessel is involved in a casualty.Witte also pointed to a decrease in thenumber of federal and state fundedmarine demolition and dredging acti-vates due to the tight fiscal environ-ment. This being said, Witte added, withsalvors being eternal optimists, we haveseen a small increase in marine relatedprojects and have great hopes for thefuture.Allegretti outlined the priorities forthe industry, as seen by the AWO. Ourindustry has a very substantial agendaof consequential issues that need leg-islative and regulatory attention overthe course of the next year. We anx-iously await the publication of theCoast Guards NPRM on towing vesselinspection so that we can move thisrulemaking forward to a regulation thatcovers all towing vessels in the U.S. Weneed Congress to eliminate the secondtrip to the TWIC enrollment centersfor mariners working on tugboats andtowboats. We need Congressionalattention to the impractical EPA regu-lations now governing vessel discharges,which allow individual states to estab-lish standards different from oneanother, creating a substantial impedi-ment to interstate commerce. And, wemust ensure that the newAdministration and the leadership inCongress continue to protect theintegrity of the Jones Act.MN#10 ( 33- 47) : MN#10 ( 33- 47) . qxd 10/ 5/ 2009 2: 04 PM Page 3940 MN October 2009From the bustling docks of Port Fourchon in La., off-shore supply vessels come and go servicing more than aquarter of the nations oil and gas production. Some of theindustrys largest vessels built specifically for servicing thedeep-water industry call the port home and work for pro-duction platforms called Mars, Thunderhorse andBullwinkle.Port Fourchon is very active, the deep-water Gulf ofMexico remains fairly active, said Ted Falgout, PortFourchons long-time director. Now it depends on whatsegment of the industry youre in.Falgout and others point to smaller vessels and inde-pendent operators that service coastal or continental shelfprojects as the ones feeling the financial strain in the Gulfof Mexico.The in-shore and the shelf have died out, Falgout said.If your vessels are in those segments of the industry, youfeel the pinch right away. The deep-water projects, which cost more than $1 bil-lion and produce upwards of 100,000 barrels of oil perday, dont react to short-term market trends and are gen-erally based on five-to-seven-year forecasts. But the overallconsensus for the Gulf of Mexico is considered weak forthe foreseeable future.The area hasnt been good for a while, said JoeBennett, Tidewater Inc.s executive vice president andchief investor relations officer. Theres not a lot of opti-mism out there. The fact is we only have around 10 boatsoperating in the Gulf of Mexico.Tidewater owns 398 vessels, the worlds largest fleet ofoffshore service vessels. Bennett said while deep-waterprojects are holding up in the region, depressed naturalgas prices have driven many producers away from shelfand inland projects. Natural gas prices have dipped belowMarineNews YearbookOffshore by Matt Gresham2009An Edison Chouest OSV.Port Fourchon is very active, thedeep-water Gulf of Mexico remainsfairly active, said Ted Falgout, PortFourchons long-time director. MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 25 AM Page 40www.marinelink.com MN 41$3 per thousand cubic feet due tomild temperatures and near recordstockpiles causing the number of rigsdrilling for natural gas to fall by morethan half in the last year. Bennett saidthe current Gulf market could becompared to the downturns of thelate 1980s.Its as bad as Ive seen it, he said.The oil crunch of that period sawoffshore rig counts dip to a low-pointof the mid-30s in 1992. In mid-September 2009, the rig count for theGulf stood at 27 after an average of53 in 2008.M.J. Cheramie, president ofGalliano, La.-based L&M BotrucRental Inc., is caught in the pinchand recently had to stack one of his14 vessels.The rates are terrible down topre-1980 numbers, he said. It ainteasy. Thats why we stacked and wemay have to stack more.Day rates for OSVs under 200-feetfell to about $4,800 in June from$7,375 a year ago. OSVs 200 feet ormore fell to about $12,500 frommore than $19,000 a year ago.Operators may be operating atbreak-even or at a loss, but they areoperating, Falgout said.Gene Shiels, assistant director ofinvestor relations for Baker Hughes,said a slow exodus of jack-up rigsfrom the Gulf and the move to drilland produce natural gas on land hasled to the downturn in the Gulf ofMexico. It has become clear that a lot of thenatural gas activity will be centeredon land, where it is less expensive toproduce and there is virtually no riskat all, Shiels said. That has put a lotof pressure on shelf activity. I believethe deep-water market will continueto slowly strengthen, but the shelfwill remain a challenging area.But the Gulf of Mexico does have away of surprising people.A lot of people have written off theGulf several times and its bouncedMarineNews YearbookOffshore 2009MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 25 AM Page 41back for reasons that at the time were unforeseen,Bennett said. The Gulf is widely considered a spot market,along with the North Sea, which Bennett said is strugglingmightily, as well.When things go bad [in a spot market] they get badquickly, Bennett said. And when they get good, they getgood very quickly. Its the challenge of operating there.Boat operators hope a turnaround comes soon, as theystruggle just two years after record activity levels.When things are good, you always keep money for acushion, Cheramie said. Once you run through thatcushion thats when you start sending people to thehouse.Analysts and industry leaders alike are apprehensiveabout the coming year and the future, especially withoutclear signals from the White House concerning energypolicies.Our industry certainly set the bar low enough in 2009that 2010 better be better, said Ken Wells, president ofNew Orleans-based Offshore Marine Service Association. Bennett said the industry has failed to hear encouragingnews from Capitol Hill and talk of raising taxes, doingaway with existing energy incentives and cap and tradedont help.We continue to work in the U.S. and pay higher taxesthan virtually anywhere else in the world, Bennett said.Cheramie echoed Bennetts concerns.Everyone is hanging out waiting to see what [PresidentObama] is going to do next, he said. Hes unpredictable.Theres talk of raising taxes on the oil companies theydont have to drill in the Gulf they have a whole worldto drill in.If higher taxes are imposed on the industry, Cheramiefears current conditions would worsen. Until [Pres. Obama] makes a positive move for the oilcompanies, itll be more of the same, Cheramie said.Falgout said uncertainty about federal policy stymiesinvestment.Who wants to invest billions of dollars when every signout of the Administration is discouraging, Falgout said.Shiels pointed to years of neglect when it comes to anational energy policy.All things equal, there really hasnt been anAdministration that understands all of the challenges ofthe energy industry, he said. For years weve lacked acomprehensive energy policy.Shiels called the focus on alternative energy the rightdirection for the world, but said the technology for suchenergy is far away.For the foreseeable future its hydrocarbons, he said,citing a balanced approach, instead of contradictions ofenergy independence, while solely pushing alternativeMarineNews YearbookOffshore 2009Tidewaters Damon B BankstonTidewaters Pat Tillman, currently working in the deepwater Gulfof Mexico.42 MN October 2009MN#10 ( 33- 47) : MN#10 ( 33- 47) . qx d 10/ 5/ 2009 11: 26 AM Page 42www.marinelink.com MN 43E]/+).)-'(((&;Vm/+).)-'((():/^c[d5iZ`c^XgV[i#Xdblll#iZ`c^XgV[i#XdbB;7:?D=97J7C7H7DJ;9>DEBE=Oenergy. As for now, industry leaders hope for a brighterfuture in the Gulf market.With the hurricane season nearing an end, we antici-pate that several programs will be approved, including off-shore development and programs that were put on hold,said Robert Socha, vice president of marketing forLockport, La.-based Bollinger Shipyards. However, ini-tial indications are that 2010 will be similar to 2009,unless the economy turns and the financial aspects of themarine industry improve.Wells said deferred investments this year could createenergy shortages in years to come.The oil and gas supply side is cyclical, he said.Unfortunate