Friday, January 11, 2008

Lets Talk About Port Security

Like it or not, our economy - and way of life - is largely based on imported energy products such as crude oil, liquefied natural gas (LNG), and refined products such as gasoline and jet fuel – and those products come into United States ports in tankers – about 8.5 million barrels per day. This supply chain of energy commodities is vulnerable to attack and disruption at many points, both here and abroad, as evidenced by successful attacks overseas against both ships and facilities.

In assessing the vulnerability of the supply chain, the GAO assessed three areas in a review that spanned several foreign and domestic ports. Multiple steps were taken to analyze data and opinions gathered from agencies and stakeholders, and reported to the House Committee on Energy and Commerce.

The three areas reviewed were:

  1. The types of threats to tankers, and the consequences of a successful attack
  2. Measures taken to protect tankers, and the challenges faced by federal agencies in making these actions effective.
  3. Plans in place for responding to a successful attack and potential challenges stakeholders face in responding.
The GAO determined that the supply lines face threats from three different types of attack:
  1. Suicide attack by explosives-laden boats
  2. Stand-off attacks involving rockets fired from a sufficient distance to allow the attackers to evade defensive fire.
  3. Assault by armed commandos.
The volatile and combustible nature of energy commodities mean the contents of tankers carries a potential for combustion, or, in a less likely scenario, explosion. This explosive capacity represents a significant threat to public safety. The chemical nature of the material transported by tanker represents a high risk of negative environmental impact in the event of an attack. Additionally, the disruption of the supply lines could have a severe economic impact.

The GAO determined that while many steps have been taken, both internationally and domestically, to protect tankers and facilities, many significant challenges remain. For example, in spite of international agreements that detail specific protective steps, in reality many disparities exist in their implementation. The United States is limited in the ability to increase compliance abroad, as well as in ensuring safe passage of tankers traversing vulnerable transport routes.

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The global supply chain involves many players, and has three main components, each presenting it's own vulnerabilities. First, the materials are loaded in the country of origin, then it is transported across the open ocean, and ultimately unloaded at a facility in this country. Facilities where tankers are loaded overseas might be owned by private entities, governments, or combinations of the two. Foreign governments are primarily responsible for overseeing the security of energy export operations, and the vessels aboard which energy commodities are loaded are likewise owned by many different companies, some with multi-national ownership interests. Transportation routes involve crossing open, international waters, where there is no government control. Of approximately 3,550 oil tankers and 200 LNG tankers, most are registered in countries other than the United States, which means the United States has minimal oversight authority over these vessels’ crews or condition until they enter U.S. waters. Once an oil or LNG tanker arrives at it's US destination, it is unloaded at terminals that may be on the Atlantic, Pacific or Gulf coasts. LNG is currently limited to five facilities, but demand for natural gas is growing, and the number of terminals for unloading LNG is expected to increase. The Federal Energy Regulatory Commission must approve each new LNG terminal. Eleven new facilities are currently approved and dozens are pending approval.

On the domestic front, the Coast Guard, the federal agency responsible for maritime security, reports that it lacks adequate resources to meet its own self-imposed security protocols. Those protocols involve escorting ships carrying LNG. As LNG facilities are added, the workload of many units are likely to increase. The Coast Guard has not developed plans for shifting resources and spreading workload among units. According to the data obtained by the GAO, and discussions held with field unit officials, resource shortfalls were the primary reasons for not meeting these responsibilities.

Although multiple attack response plans have been established to address an attack, three main challenges are faced by the stakeholders in their implementation. Primarily, the plans for responding to a spill, versus responding to a terrorist threat are disparate processes, and ports have rarely exercised these plans in concert to see if they work effectively together. Second, ports are generally lacking in plans for dealing with economic issues, such as the prioritizing of the movement of vessels after an affected port reopens. Finally, some ports report difficulty in even acquiring response resources to carry out planned actions.

Federal grants allocated for port security have in general been geared toward preventing attacks, rather than responding to them, but a more comprehensive risk-based approach is in the planning stages.

Now comes the inevitable Catch-22. Decisions about the need for enhanced response capabilities are hindered by a lack of performance metrics tying resource needs to response effectiveness.

The supply chain of energy commodities is not only critical, it is vulnerable to disruption by terrorist attack. Ports are inherently vulnerable because they must be accessible by both land and sea, and because they are sprawling installations, frequently in close proximity to population centers. The ships themselves are vulnerable because they travel direct routes that are known in advance, and for much of the journey, they are afloat on waters that do not afford evasive maneuvers to avoid possible attack. Because there are so many links in the chain, terrorists have the luxury of examining the chain for the weakest link.

In spite of the increased security presence since the terrorist attacks of September 11, 2001, terrorists have managed to carry out several attacks on this supply chain. These attacks have included attempts to damage tankers, and to disrupt the loading operations at facilities overseas. In 2004, terrorists managed to coordinate two offshore oil terminals in Iraq where tankers were taking on oil, and in 2002, terrorists succeeded in conducting a suicide attack against the French supertanker Limburg in international waters off the coast of Yemen. (pictured)

The successful attacks overseas illustrate that tankers face several major threats, and if carried out domestically, serious consequences would likely result. Terrorists have demonstrated the ability to carry out three types of attack - suicide, stand-off, and commando raid - but overall, the suicide boat presents the greatest concern. It was a suicide boat that disabled the Limburg in October 2002. That attack killed one, injured 17, and spilled 90,000 barrels of oil.

To date, no such attacks have occurred on tankers in U.S. waters or on loading facilities in U.S. ports, but the successful attacks abroad, coupled with the expressed desire by terrorists to target U.S. economic interests, and the potential outcome of a terrorist attack on a tanker have led to the conclusion that protective efforts are warranted.

A successful attack against an energy commodity tanker, port facility or terminal carries the potential for significant public safety, environmental and economic consequences, which vary by commodity. A highly combustible commodity like LNG has the potential to burn, or (less likely) explode. An explosion at a port facility, near a population center, would pose a threat to public safety. Crude oil and heavy petroleum products remain in the environment after they are spilled, and must be removed. Spills pose the risk of significant environmental damage. The economic consequences of a major attack could be as mild as a temporary price spike, associated with apprehension about future attacks or supply disruptions with delays of shipments. While the loss of one cargo shipment would probably not have a significant price impact by itself, if an attack shut down a port for days - or even weeks - price responses and higher costs could mean losses that, when figured across the entire spectrum of effect, could run into billions of dollars.

Much is being done, both internationally and domestically, to protect the supply lines, but much more remains to be done. GAO recommends that cognizant agencies
  1. plan for meeting a growing security workload for protecting liquefied natural gas shipments,
  2. help ensure that ports plan for dealing with economic consequences of an attack,
  3. integrate terrorism and spill response plans at the national and local level, &
  4. work to develop performance measures for emergency response.
The agencies generally agreed with the GAO recommendations, but the Department of Homeland Security stopped short of endorsing them and "took the final recommendation under advisement."