Exxon Valdez ghost lives on as company hires spill-prone ships

Alaskan fisherman J.R. Janneck's boat is 38 feet. The SeaRiver Long Beach, the sister ship of the Exxon Valdez, which caused the worst oil spill in U.S. history, is 987 feet and carries 1.5 million barrels of oil.

There is another difference.

"My boat is double-hulled," Janneck, 63, said as he worked on his silver salmon fishing boat in Valdez Harbor last month. Twenty years after the March 24, 1989, disaster, Janneck still remembers the "tiger-stripe sheen" of oil in the water and the absence of birds around him.

Even after 79 percent of the world supertanker fleet has been replaced by craft with two hulls, Exxon Mobil Corp. remains the biggest Western user of the older designs. It hired more of the tankers last year than the rest of the 10 biggest companies by market value combined, according to data compiled by Bloomberg.

Exxon, the world's largest oil company, keeps using tankers with one hull even after 151 countries have decided two are better than one for preventing oil spills and pledged to ban single-hull vessels by 2015. The European Union called the design "more accident-prone" in 2003, when it started a prohibition that takes full effect next year. London-based BP Plc says it won't hire them because of the risk of leaking.

Hull design is only one of "hundreds of variables" Exxon uses in monitoring safety, and cost isn't one of them, said Rob Young, a company spokesman. He declined to comment on the savings question because it would be an "incorrect characterization" to say its motivation in hiring the vessels was financial. He also declined to comment on whether double- hulls are intrinsically safer than singles.

Exxon had no oil spills in 2008 and "less than one teaspoon per million barrels carried" in 2007, Young said by e- mail. The company's shipping units "often exceed regulatory standards to enhance the safety, security and reliability of marine transportation," he said.

Exxon's U.S. refining rivals, including Sunoco Inc., Chevron Corp., ConocoPhillips and Koch Industries Inc., and Paris-based Total SA didn't hire one single-hull vessel last year, the data show. Exxon's use of single-hull ships compared with its nine biggest competitors is based on more than 12,500 ship-rental deals. The data were provided by shipbrokers, including Simpson, Spence & Young Ltd. in London, and shipping- information provider Lloyd's Register-Fairplay in Redhill, England.

The Valdez dumped 11 million gallons of oil into Prince William Sound, damaging at least 700 miles of coastline and killing more than 36,000 birds, according to the U.S. Environmental Protection Agency. It took three years and $3.86 billion to clean up the spill and compensate fishermen and other business owners. The U.S. Supreme Court last year cut the punitive damages against Exxon to $507.5 million from $2.5 billion.

Had the supertanker been fitted with a double hull, the scale of any spill would have been reduced, said Apostolos Papanikolaou, a ship-design professor at the National Technical University of Athens. The accident was predominantly because of navigational error, he said.

"I am very surprised they are still using these tankers because they are still suffering brand damage from the Exxon Valdez," said Tracey Rembert, a senior corporate governance analyst at the Service Employees International Union in Washington, whose largest stockholding is 126,000 shares of Exxon. "There are people who still don't buy gas at Exxon, and that was 20 years ago."

Double-hull tankers have an outer layer of steel, normally about an inch thick and 6.5 feet from the inner one, that acts as a buffer in an accident. When tankers with one shell are ruptured, the only place for the oil to go is into the sea.

It costs about 20 percent less to hire a single-hull ship. Exxon's estimated savings amounted to less than a cent a share last year, according to Bloomberg calculations. The Irving, Texas-based company made a profit of $45.2 billion, or $8.69 a share, in 2008, the largest in U.S. corporate history.

In the aftermath of the Valdez disaster, the U.S. government led a global push to outlaw single-hull vessels. Later accidents involving the Erika off France in 1999, which had been hired by Total, and the Prestige off the Spanish coast in 2002, leased by Crown Resources AG of Switzerland, increased pressure.

The U.S., under the Oil Pollution Act of 1990, will allow single-hull tankers to sail in its waters either to unload at the Louisiana Offshore Oil Port or at dedicated unloading areas out at sea until 2015. The International Maritime Organization, the shipping division of the United Nations, will ban single- hull tankers starting next year. Member nations can avoid the prohibition for five more years by outlining their intentions in a letter to the IMO. Lee Adamson, a spokesman for the IMO, was unable to say how many have sought such exemptions.

In deciding to restrict single hulls, the U.S. Congress considered design studies provided to the IMO that found spills from double-hull tankers would be "zero in most accidents," said Robert Gauvin, Washington-based technical adviser at the U.S. Coast Guard.

"We in the market don't understand why Exxon continues to do this," said Per Mansson, a shipbroker at Nor Ocean Stockholm AB, who's been involved in the tanker industry for 30 years.

Exxon's single-hull SeaRiver Long Beach regularly calls on San Francisco and Los Angeles as well as Valdez. The 21-year-old carrier had a leak from a hairline fracture in 2000 and had to return to Valdez to unload its cargo. About 10 gallons of crude spilled into the sea, all of which was cleaned up, said Raymond Botto, a spokesman for SeaRiver Maritime, an Exxon subsidiary.

Like Janneck, the fisherman in Valdez, Leroy Cabana from Homer 200 miles away remains angry about Exxon two decades later. That the Exxon Valdez's single-hull sister ship continues to call on Alaska fits a pattern, said Cabana, 53, who was part of the army of workers hired to clean up the spill.

For him, the accident wasn't just caused by a single-hull tanker. "It was caused by a reckless company," he said.