Team Introduction

2. Team Introduction • Nuka Research and Planning Group, LLC. • Pearson Consulting, LLC. • Baldwin and Butler • Cape International • Moran Environmental Recovery • Moran Towing • Northern Economics • The Glosten Associates

3. Vessel Traffic Update Recent Vessel Traffic Figures Future Vessel Traffic

4. Recent Vessel Traffic • Year                Westbound           Eastbound • 2007                3581                            890 • 2008                3274                            957 • 2009                2886                            1088 • 2011                3178                            1355

5. Anticipated Vessel Traffic • Two potential sources of additional traffic have emerged since Phase A was completed: • Proposed Canadian natural gas and crude oil pipelines to the Pacific Coast • Alaska OCS and oil shale development

6. Liquefied Natural Gas • Kitimat LNG Venture (Apache, EOG Resources, Encana) • Canada LNG (Shell Canada, Mitsubishi, PetroChina, Korea Gas) (Kitimat) • BG Group and Spectra Energy (Prince Rupert) • ExxonMobil and Imperial Oil • First 3 are 6.9 bcfd; 2.5 ships per day-900 ships per year

7. Crude Oil Pipeline Proposals • Kinder Morgan to expand their pipeline from Alberta to Vancouver • Would result in an additional 240 tankers per year carrying crude oil • Enbridge to build new pipeline to Kitimat • Approximately 180 to 190 tankers carrying crude oil per year

8. Alaska OCS and Oil Shale • Potential to displace Canadian crude, which presently moves by pipeline to Washington State refineries. • These refineries were built to process ANS crude and are more profitable with ANS crude than Canadian crude. • The Canadian crude would then be exported to Asia resulting in about 60 additional tankers per year

9. Task 1 & 2 Work Plan Developing an Integrated Response System for the Aleutians

10. Scope An Integrated Response System/Organization for the Aleutians • Emergency Towing • Salvage/Marine Firefighting • Open Water Response • Nearshore Response • Operating Organization

11. Vision Analyze all available marine response services for the Aleutians. Determine which services will can be most effective and then develop a plan for a response system that will provide an suite of response capabilities optimized for the Aleutians. Our measure of success will be that the plan is adopted and implemented.

12. Goal Prevent/minimize future environmental harm to the people and natural resources of the Aleutians Subarea by developing an integrated response system that will: • Provide an optimum set of response services • Be congruent with State/Federal regulations • Be cost effective • Be feasible and practical • Supported and accepted by marine industry

13. Objectives 1) Provide an Analysis of: • Emergency Towing • Salvage and Marine Firefighting • Oil Spill Response • Open Water Response • Nearshore Response • Management Organizations

14. Objectives 2) Describe an Optimal Response System considering operating environment, logistics, cost, and benefits. Provide a plan that will be a blueprint of an organization that can implement this optimized system.

15. Work Plan • Regulatory Resource Requirements Analysissetting a benchmark to build toward • Response Gap Analysisevaluate how often a service may be delivered • Emergency Towing Analysis • Salvage and Marine Firefighting Analysis • Oil Spill Response Analysis • Management System Analysis

16. Work Plan • Describe Optimal Response System • Conduct a Benefit Cost Analysis on this System • Draft Report • Review • Final Report • Integrate into the Subarea Plan

17. Assumptions • The Non-tank Vessel Regulations will be adopted and provide a driver for those vessel to participate in a response organization • The regulated marine industry will support a reasonable and effect response capability in the Aleutians • The system will have to be phased in over time • The system will serve the Aleutians, but will support and be supported by other areas • The Subarea Committee may embody this plan in the SCP

18. Regulatory Resource Analysis • Compile the applicable State/Federal regulations • Without considering Alternate Compliance, estimate the resources necessary to provide the services necessary to comply with these regulations for: • 600,000 bbl Crude Oil Tanker • 68,000 GT Containership >4,500 TEU • Estimate the capital and operating costs to provide these services • Use these costs as the design benchmark for planning a response system for the Aleutians

19. Response Gap Analysis • Response Gap is the percentage of time that a particular service can be utilized • Hind cast technique to evaluate how often a particular service can be effectively used • Buoy database for winds, sea state, temperature • Airport database for visibility • Determine the limitations for a particular service and see how often these services were exceed in the past

20. Observation Locations

21. Emergency Towing Vessels

22. Emergency Towing Vessels • Results from Phase A • 6 locations and 16 scenarios

23. Emergency Towing Vessels • Results from Phase A • Five Risk Reduction Options • Dedicated towing vessel(s) • Non-dedicated towing vessel(s) • Seasonal towing vessel(s) • Vessels of opportunity • Some combination of the above

24. Emergency Towing Vessels • Tug Operating environment • Candidate ships from transit study • 16 scenarios from Phase A • Weather conditions from environmental study • Number of tugs from location study

25. Emergency Towing Vessels • Propose Tug Mission Requirements • Limited to emergency towing • Bollard pull/HP • Seakeeping abilities • Size, crew, equipment

26. Emergency Towing Vessels • Tug Location Study • Use Phase Ascenarios (6 locations) • Identify potential home ports • Identify required infrastructure improvements • Determine required distances and speeds • Input for number of tugs required

27. Emergency Towing Vessels • Tug options • Vessels of opportunity • Best available technology world wide • Best available technology in the US • Optimal design for the Aleutians (high speed)

28. Emergency Towing Vessels • Vessel(s) of opportunity • Representative available vessels • Enumerate specifications/capabilities • Time/ability to hand off their tows • Location in the Aleutians • Time periods in the Aleutians • Capability gap analysis

29. Emergency Towing Vessels • Best available technology evaluation • Evaluate both world wide and Jones Act vessels • Enumerate specs and capabilities • Speed/range/bollard pull/crew • Number Required • Cost to procure design • Cost to modify design to US standards (foreign design)

30. Emergency Towing Vessels • Best available technology (cont.) • Cost to modify for Aleutian Service • Cost to construct vessel in US • Cost to charter vessel (Jones Act vessel) • Operating costs • Dedicated vessel • Non-dedicated vessel • Seasonal dedicated vessel • Capability Gap Analysis

31. Emergency Towing Vessels • High Speed ETV design • Meet mission requirements with higher speed to reduce number of vessels • Proposed speed • 30-40 knots • Propulsion study • Diesel/gas turbines • Propellers/water jets • High speed AND bollard pull

32. Emergency Towing Vessels • High Speed ETV design (cont.) • Seakeeping Options • Length • Bow design • Roll reduction methods • Proposed Range • 700-950 Nautical miles in 24 hrs • Winch options • Weight vs. capabilities

33. Emergency Towing Vessels • High Speed ETV design evaluation • Number Required (assumed to be one) • Cost/time to design • Cost to construct vessel in US • Operating costs • Dedicated vessel • Non-dedicated vessel • Seasonal dedicated vessel • Capability Gap Analysis ?

34. Salvage Analysis • In coordination with the regulatory resource requirement analysis and as a result of the Phase A recommendations - • Analyze the four USCG approved Salvage Contractors ability to service the Aleutian Islands and to meet increased planning requirements

35. Salvage Analysis • Review the need of any additional equipment / services to be stationed in the Aleutians and if so, the requirements and recommended location of same

36. Oil Spill Response Analysis • Planning Vs. Performance • “Resourcing” to meet full planning standards (current) is not likely feasible • Resource bolstering at some level is needed • Other external factors and “gap analyses” are critical

37. Oil Spill Response Analysis • Planned Approach for Resource Requirements • Regulatory Analysis • Consider offshore vs. near shore environments • Salvage & Firefighting: likely “point of spear” in offshore scenarios • Consider alternative methods & technologies

38. Oil Spill Response Analysis • Evaluate Effectiveness through Response Gap Analysis • Feasibility – is it practical & sustainable? • Logistics, economics

39. Oil Spill Response Analysis • Other Considerations: • Research completed to date vs. new assumptions • Understand trade-offs between supplemental resources vs. cascading (performance vs. planning & regulatory implications)

40. Oil Spill Response Analysis • Other Considerations: • Impact of on-going USCG/BSSE/EPA work groups • Effective Daily Recovery Capacity (EDRC) • Response Resource Inventory (RRI) • Equipment Surge • Subpart J of the National Contingency Plan

41. Management System Analysis • Evaluation of existing OSRO models • Utilize survey with standard questions • business form • membership, subscription etc. for coverage • general rate structures • governance

42. Management System Analysis • Identification of model based on services provided [some / all ] • OSRO services • SMFF services • WSMC / SERVS – 72 hour initial response role • Planning – preparedness over time

43. Management System Analysis • Consideration of cost allocation options based on profile of covered fleet • Vessel type [ NTV, TV, other] • Vessel size • Fuel / cargo type

44. Management System Analysis • Consideration of business form to manage resources • Acquire resources • Contract for resources • Utilize mix based on type of resources required

45. Optimal Response System • Considering the following factors for each service, we will develop a description of what we feel is the optimal mix of response services: • Response Gap - % time the service can be employed • Cost • Effective Risk Reduction

46. Optimal Response System • We will also describe the best form of organization to manage the service • The combined costs of the organization will be no more than the amount determined in the regulatory analysis.

47. Benefit Cost Analysis (BCA) • BCA is a process for comparing the benefits and costs of a proposed action or project over a specified period of time to determine if it is feasible on its own and/or to determine its feasibility relative to other alternatives.

48. Benefit Cost Analysis (BCA) • Numerous federal agencies have defined how information in evaluated under BCA. • We propose to follow the Office of Management and Budget and Environmental Protection Agency guidelines for our BCA.

49. Benefit Cost Analysis • We will conduct BCA on the recommended or optimized package of tactics developed by the team. • Following the initial BCA, we can look at inputs to determine the relative benefits of individual tactics. • This feedback will help to optimize the tactics employed and increase the benefit/cost ratio or net benefit.

50. Cost Effectiveness Analysis (CEA) • CEA is another form of economic analysis that can be applied when benefits are difficult to quantify. • CEA can provide the cost per unit of benefit for different alternatives as a way to determine the most efficient alternative. • CEA could be employed to evaluate the cost per barrel of oil not spilled, for example, for each alternative or group of alternatives.