Paradise painted black: the Oil Spill Scenario: a 15-million gallon slick drifted quickly because of strong tidal currents. Within a few days it reached all the coastal communities of the Puget Sound

The Hypothetical Scenario:

Whether a simple navigational error was to blame or, as was later claimed, the second officer had left the wheelhouse, one fact is clear: The SS Kodiak Star ran aground at 2:26 a.m. PST on January 28th. With 80,000 tons of Alaska crude in its hold, the tanker was en route to a refinery in the Puget Sound.

It had strayed from its intended course by half a mile and was passing through the Rosario Strait in the San Juan Islands, the most hazardous part of its route, when it hit the shoals.

Such accidents were not unanticipated. The northern Puget Sound refineries at Cherry Point and Anacortes import 550,000 barrels of unrefined crude per day. As much as 15 billion gallons of oil and oil-related products move through the waters of the Sound each year. About 40 tankers, large commercial cargo ships and tanker barges pass through the straits each day.

Under normal circumstances, oil tankers are escorted by tugs, but that night the region was in the midst of the worst winter storm in several years, with 90 mph winds over the sea and a 25-foot swell surging through the Sound's Pacific gateway, the Juan de Fuca Strait.

Earlier in the evening, as the storm intensified, a Chinese cargo ship had lost power while passing Port Angeles, and file Kodiak Star's escort tug had been diverted to tow the cargo vessel as it drifted dangerously toward the southern shore.

Immediately after the collision, the Kodiak Star grinds to a halt on the rocks. The tanker's hull begins to take a heavy beating from the storm swell and the rising eight-foot tide. Oil pours out of the ruptured tanks and through the gash in the singe-hull vessel. At first light the next morning, just as the first tugs reach the site, the hull of the 24-year-old vessel breaks in two and the rear two-thirds of the vessel sinks in 120 feet of water. By then, an estimated 30,000 tons of crude has spilled out through the gash under the waterline. With the tanker now split in two, another 15,000 tons of crude spills into the sea. A lull in the winds later that day allows the first attempt to establish a boom around the wreck, but a second storm on January 30th splits the boom in several places. Containing the oil with booms is now hopeless. It is not until Feb. 2nd that calm weather allows an oil barge to be moored next to the sunken tanker in an effort to pump out the 12,000 tons of crude oil remaining in the two intact holds.

The 15-million gallon slick, 20 percent larger than that released from the Exxon Valdez, drifts quickly, carried by strong tidal currents. Within a few days it reaches all the coastal communities of the Puget Sound.

A number of towns and villages try to protect their harbors and inlets with booms. At first, they succeed. But bad weather in the second week of February severs the booms and oil washes ashore in nearly every community.

While the oil is mainly concentrated in an area within 40 miles of the wreck, contamination eventually spreads to more than 2,000 miles of coastline.

Southern and southeastern Vancouver Island is affected, as is the mainland coast up to the Fraser River delta close to Vancouver. Also affected are the beaches and rocky shorelines and inlets of the San Juan Islands and Juan de Fuca Strait. Oil makes its way as far south as Tacoma and as far west as Neah Bay. The harbors of Victoria and Seattle are also contaminated.

Following the disaster, there is no shortage of scapegoats. What if the tanker had been a modern double-hull vessel, built in the wake of the Exxon Valdez disaster? Some experts suggest that had that been the ease, no more than 10,000 tons would have seeped into the sea. Others estimate the whole cargo might have been contained.

Other experts, however, note that in a collision the new, larger double-hull tankers are not immune to damage either and such vessels could leak as much as 37 million gallons, an amount 250 percent greater than that from the Kodiak Star.

The dispute soon moves beyond the bucolic shores of Puget Sound to the political arena as news reports note that after the 1989 Exxon Valdez disaster, Congress had outlawed the use of single-hull tankers in U.S. waters by 2015. Yet, because the Jones Act forbids any but U.S.-built vessels to trade between U.S. ports, only around one-third of the tankers on the Alaska route are operating with double-hull constructions, as compared with more than 50 percent worldwide.

U.S. shipyards are expensive, and the nation's big oil distributors, observing the declining production of Alaska crude, had postponed commissioning the construction of new tankers at $200 million apiece.

Many tanker owners also transferred their older ships to work in U.S. waters, following the European ban on older single-hull tankers after the 2002 sinking of the Prestige off the northwest coast of Spain. That accident released 70,000 tons of heavy fuel oil, equivalent to about 20 million gallons, and damaged hundreds of miles of coastline.

Meanwhile, back in the Puget Sound, the enormous cleanup operation gets underway. Thousands of fishermen are forced to remain ashore. The local fishing industry faces collapse. Thousands of workers are recruited to shovel sand into bags and to begin pressure-cleaning the rocky shoreline. The cleanup continues into the summer, mining the San Juan Islands tourist trade. Spurred by graphic images of thousands of dead sea otters and birds, activists begin demanding the closure of the four giant refineries along the northern coast of the state.

Finally, there is the question of cost, which will take several years to settle. Under the 'polluter pays' principle the responsible party, a large and well-capitalized oil company, faces massive costs. But the polluter's share price had fallen 26 percent in 24 hours.

Reparation payments cover the cost of protecting communities from oil slicks, removing oil throughout the affected sand and rocky coastlines, and rehabilitating wildlife. The federal and state agencies ensure that the cleanup meets the proper standards and that the environment and natural habitats are restored. The price is expected to be around double the $2.8 billion paid to clean up in the wake of the Exxon Valdez spill.

Hotels, restaurants, beach owners, fishermen and ferry owners submit property damage and personal claims. They also submit claims to recoup a portion of lost profits.

Residents living by the water in and around Seattle file medical claims and blame illnesses on the oil spill. In the Exxon Valdez disaster, only $300 million was awarded to third-party claimants, mostly fishermen. But another $5 billion in punitive damages was also assessed against the oil company.

In this ease, with so many people making a living from the sea--in the form of tourism, recreation and fishing--the costs are expected to be far higher. Initial estimates run as high as $3 billion, raising the possibility of astronomical punitive damages.

Federal and state penalties are expected to cost the polluter another $200 million, in the form of new safety improvements and more money to the Marine Spill Response Corp.

A laundry list of other costs are "also added to the final bill: loss of the ship, loss of earnings from the vessel and congressional requirements that all transport in U.S. waters must now be undertaken in double-hull vessels.

The final price of this disaster is expected to go as high as $18 billion, maybe more.

* Losses from a Hypothetical Oil Spill in the Rosario and Juan de Fuca
Straits

             Type of Loss                 Total Loss    Insured Losses

Property and infrastrucfure damage       $1.2 billion    $100 million
Workers' compensation, life and health     minimal         minimal
costs
Direct costs of business interruption    $12 billion      $3 billion
Other costs (e.g. emergency response)    $800 million         0
Liability claims                          $4 billion     $500 million
Total Direct Costs:                      $18 billion     $3.6 billion
Human Loss/Injuries
Total number of people killed:                 5
Total hospitalized with hypothermia            8
or ancillary accidents:
Total treated at outpatient clinics:         270

RELATED ARTICLE: That seeping peeling.

Environmental catastrophes are notable for the way in which the impact of the event is not initially fully recognized, and consequently the wry in which events become increasingly politicized. This politicization often leads to punitive liability payments, as well as forcing changes to industrial practice that can be far more costly than the original incident.

The most significant environmental incidents have had global consequences. Among the first such incidents was that at Minamata Bay, Japan, in 1952 when a chemical company dumped mercury into the sea, contaminating fish eaten by local villagers. A total of 597 people were poisoned, resulting in 68 deaths including 22 unborn children.

In the United States, one of the most notorious episodes of environmental damage occurred close to Niagara Falls, N.Y., in 1978. Hundreds of homes had been built on the abandoned "Love Canal," choked with 20,000 tons of waste including pesticides such as lindane and DDT. After 18 months of campaigning, with evidence of mounting health problems, including birth defects and miscarriages, around 850 families were eventually relocated. The Love Canal incident, some might argue, gave birth to the environmental risk management industry.

Arguably the world's largest environmental catastrophe was the 1986 Chernobyl reactor explosion and fire in the Ukraine, that released a plume of radioactivity contaminating thousands of square miles in the Ukraine and neighboring Belarus. The disaster led to the evacuation and resettlement of more than 325,000 people, and a 10-fold increase in the incidence of thyroid cancer among young children in the Ukraine. The disaster ended the building of nuclear power plants for a generation.

The United States, along with Russia, is no stranger to environmental pollution from nuclear weapons production and testing. At the Hartford, Wash., plutonium manufacturing and reprocessing facility there are 177 underground tanks containing 54 million gallons of radioactive waste. About one-third of those tanks have leaked more than one million gallons into the soil. The Columbia River, source of drinking water for more than 120,000 residents, is located just seven miles away.

The chemicals transported in the largest quantities are crude oil and its refined products. While there are many chemicals more toxic, there is little that combines the toxicity and volume in what can be released from a ruptured supertanker in a confined populated coastal setting. The 1989 Exxon Valdez grounding and oil spill in Prince William Sound, Alaska, was not the first major environmental spill on U.S. territory, and despite the work to reduce the risk of similar future accidents, will not be the last.

The 1 percent probability event here reflects the intersection of one of the principal oil transport routes in U.S. waters with the greatest concentration of hazard--the narrow Rosario Strait in the inner Puget Sound, where tankers pass daily to the oil refineries of northern Washington State.

The environmental impact of such a spill is exacerbated in the narrow channels and inlets of this region, far beyond what would be required to clean up an equivalent spill on the Gulf Coast of Texas, for example.

Much has been done to attempt to reduce the risk of such an accident in the Puget Sound region, in particular by stationing pilot tugs, but all it takes is a chain of interlinked coincidence, as presented here, to break all the precautions. Too often in risk analysis each element is considered independently. Many catastrophes reflect correlations of the kind presented here. The same storm which has forced the tug to help another stranded vessel, obscured visibility, made navigation more difficult and tired the ship's crew, is also responsible for ripping the ship apart in hours, rather than days as would have been more likely under normal weather conditions.

The modeling of the Rosario Strait oil spill is based on a study undertaken for assessing potential scenario oil spills by the British Columbia provincial government. Since the Exxon Valdez disaster, the tanker industry has made changes to hew it operates in coastal U.S. waters: that includes having a tug stationed to escort vessels into the Juan de Fuca Strait. However, the tanker industry has been slow to adopt other practical safety measures such as switching all transport to double-hulled tankers.

ROBERT MUIR-WOOD, PHD, is chief research officer and heads the Research Group at RMS. He has published six books, 40 scientific papers, written more than 100 articles and reviews, lectured at many insurance seminars and run courses on Catastrophe Risk for Lloyd's of London.

COPYRIGHT 2004 Axon Group
COPYRIGHT 2004 Gale Group