Winners and Losers :
Unfortunately in 1893 the Gl?ckauf (Good Luck) grounded in fog on the US East Coast, and spent the remainder of its life on the beach as an elegant tourist attraction. But its basic design was still in use by another tanker which went aground in US waters in March 1989 the Exxon Valdez. This time there were fewer tourists, but lots of journalists to witness the spill. US Congress acted promptly, passing the Oil Pollution Act (1990), which phased out single hull tankers from US waters in 2010.
Sinking of the Single Hull
OPA(90) was followed by a new Annex to IMO`s MARPOL Convention, with a schedule phasing out single hulls and precise design requirements for the new double hulls replacing them. There was much concern about the merits of the double hulls and that single hull VLCCs on order would be phased out at 15 years. So what happened?
Road Less Travelled
Actually it all went surprisingly well. When the last single hull VLCC had been delivered in 1996, there were 376 in service. Today there are only 3. But only 243 were actually scrapped. Sixty were converted into floating oil production and storage facilities (see graph) and some of the older VLCCs proved particularly suitable for FPSO conversion, attracting better prices than obtainable in the secondhand market.
Another 70 obsolete VLCCs were converted into Ore Carriers. In the 2000s the dry bulk market was booming and short of capacity, so with Capesizes changing hands for up to $100m, the extra capacity seemed a bargain. Since these are now prime demolition candidates (5 of the 70 scrapped already), today they are helping to balance the market again!
Still All at Sea
So the show is almost over. There are 52 single hull tankers left over 40,000 dwt. Two are in storage and 22 laid up. The remaining 28 are operating into Brazil (2), China (2), India (7), Indonesia (3), West Africa (8), and the Far East. Until 2009 the scrapping age was around 25 years, but since the recession started it has slipped back down towards 20 years.
Method in the Madness
So there you have it. The market did a slick job of managing the single hull phase. The newer VLCCs provided cost effective platforms for the offshore structures and a well-timed top up for the over-stretched dry market.
Meanwhile the transition to double hull tankers was pretty painless too, illustrating the industry`s adaptability. Anybody fancy a Capesize conversion? Have a nice day.