When Heel IS Cargo as Opposed to When it is Not

Court ruling begs for clarification and examples of when “heel” certainly is cargo; MarEx Managing Editor gladly obliges. I read with great interest this week about a case where the US Court of Appeals ruled that cargo left on board a particular vessel was “not cargo for purposes of supporting a maritime tort allegation against a third party that inflicted damage on the ship.” It was all over the maritime news circuit. You probably read the same account and maybe it made perfect sense to you, but from my perspective, I had to read it several times before fully understanding why. In the world of LNG, “heel” is often used to insulate the tanks and is also made available as fuel for the vessel. On the other hand, and in the domain of spot-chartered oil tankers, neither variable is ever present. Let an old tanker hand and cargo superintendent tell you why. I first heard the word “heel” in reference to cargo a short time after I had come ashore after being unceremoniously laid off from my chemical tanker in the mid-1980’s. I had, at that time, joined a consulting firm as a cargo superintendent. Standing on the deck of a stone-age (or so it seemed) tank barge in St. Rose, LA, my opposite number queried the cargo inspector, “What’s the heel?” I had never heard the word before. It turned out he was referring to the innage (and associated volume) of the cargo remaining on board (or ROB), as we usually called it. You learn something new every day as cargo surveyor and although I’ve heard the term “heel” used a few times since, it was never a common phraseology in the tanker world and this week, for the first time in a long while, I ran into it again. But, I’m here to tell you that ROB – or heel, if you like – most certainly is cargo; at least that’s what all my clients insisted. And I’m also quite certain that the judge(s) who said it wasn’t, however correct they might be in the instance of that LNG ship, have never swatted mosquitoes at 0230 hours on a muggy summer night in a greasy tank farm abutting the Sabine River. My favorite ROB story involving “cargo” occurred in Houston in the early 1990’s. I was coordinating multiple liftings of low sulfur vacuum gas oil from a client’s refinery. We probably supervised the loading and discharge of more than 40 cargoes during that refinery “turnaround.” Normally, the facility would consume most of what it made for other purposes, but during this four week period, all of it had to be sold to others. And, delays simply could not be tolerated as they had no room for the cargo. With only two shore tanks, they’d fill one from the cracker, let it settle out, gauge it and then send directly onto the water while the second shore tank was taking the feed stream. But, I’m getting off-message here. In the middle of the turnaround, we simply ran out of surveyors, so I grabbed a hardhat and a NOMEX jumpsuit and went out to cover the next lifting myself. Although most of the cargo had so far been loaded onto strings of 20,000 barrel barges, in this instance, they’d found an old Jones Act tanker operated by a now defunct, but famous American flag carrier. The WWII era tanker had, for at least six months prior to this charter, been used as a floating storage vessel by one of the oil majors. Since they had also been in the vacuum gas oil trade, no tank cleaning had been deemed necessary. We were to load about 180,000 barrels of low sulfur vacuum gas oil onto the old girl and then follow it to the Sabine River area and discharge it there. As soon as she came alongside, and since she had been in domestic service only, the survey party immediately boarded her and commenced the OBQ survey. It was about 3 AM when we hunched over the first ullage cap (for your guidance, all cargo surveys take place between midnight and 5 AM) and the inspector unraveled his gauge tape into the tank. He announced a gauge height of 45’-00” and rapidly withdrew the tape from the tank. He then inspected the brass bob, announced “nil” (or no cargo innage) and prepared to go to the next tank. At which time, I announced, “Wrong. The gauge height is 46’-06”; you hit the eighteen inch stringer – go down and do it again.” He began to argue with me and at about that time, the Chief Mate wandered over to see what the fuss was all about. After listening for a second, he said matter-of-factly, “No, you hit the bottom. We have 18 inches of ROB in these tanks.” At this point, I started to get a bit worried. “What do you mean, EIGHTEEN inches?” He then explained nonchalantly – as if this were a normal event, “The coils are 18 inches off the bottom and we’re single-skinned. It’s cold in February, so we don’t often strip out very well and nobody seems to care.” Sure enough, virtually every one of the twenty-odd tanks gauged out at about 18 inches shy of the official gauge height. The brass innage bob never penetrated the mess down below, since it had long since solidified into the consistency of a wax crayon. Finally, and after calculating over 5,000 barrels of measurable ROB – God only knew how much more of the stuff was plastered to the internal members and tank bulkheads in the form of “clingage” – I left the ship’s cargo office to call my client. At 0430 hours, and on my trusty Motorola “Brick,” I first tried him at home and not having any joy there, I finally got him on his mobile phone. “Martin, how are you doing?” I greeted him warmly. “Who in the H$#* is this?” he snapped back into the receiver. I then identified myself and explained the situation quickly in my usually efficient manner, winding up with a brief dissertation on my reservations about loading on top of a large volume of cargo of unknown quality that couldn’t be sampled – because – well, because it had probably last seen its pour point sometime during the final days of the second Reagan administration. Always a quick study and a pleasant taskmaster, he barked tersely, “Load the ship!” To which I stammered, “Um, but Martin – what about the OBQ? We don’t know the viscosity, the sulfur content, API Gravity – nothing!” The phone crackled slightly and then he roared (and I am not making this up), “I said: LOAD…THE…SHIP!” With the connection broken for some strange reason, I dutifully logged the call (in a rare moment of C.Y.A.) in my notebook and murmured to myself, “Well, that went well – I think.” Soon thereafter, we commenced loading. The cargo poured on board at 15,000 barrels per hour at a temperature of – and I am not making this part up, either – 200 degrees F. For those of you on the fence about such things: there IS a God. Temporarily relieved of the burden (at least until the next day when my client might deny to his boss that he had ever spoken with me) of cargo quality considerations, I literally licked my chops at the prospect of stripping out the lion’s share of that OBQ quantity as outturn for my client in Port Neches. As the heat from the cargo radiated on deck, you could almost feel the solidified cargo melting off the vessel’s bulkheads like warm chocolate bars turning into a nice fondue. In any event, we finished loading that evening and the vessel departed for its next port, which thankfully was about 24 hours away; dock-to-dock. Back in the office now, I dispatched another surveyor to the Golden Triangle with strict instructions to peel every last drop of that cargo off the vessel under penalty of death if he did not. The single skin vessel arrived at the disport with a weighted, volumetric average temperature of 165 F, despite the exasperating discovery that the Chief Mate had decided to turn off the steam coils because, for the first time in his moronic career, he had also decided to read the charter party agreement. It specified only that the vessel maintain the loaded cargo temperature, or 135 degrees F; whichever was lower. Nevertheless, by convincing him to effect at least 19 feet of stern trim during the stripping operation there, we managed to take with us all but about 800 barrels of the previous cargo. The final outturn showed a Gross Standard Volume (net barrels, for all you desk jockeys) gain of approximately 5,500 barrels over the bill of lading quantity. Even the cargo quality was Okay, despite having mixed the loaded volume with an unknown batch of gunk, equivalent to more than 3 percent of the intended volume. For this victory, we also got yelled at by the client for incurring too much demurrage in doing so. Even so, I would have given a month’s pay to see the look on the face of the Oil Major’s trader when he realized that he’d gotten back his time-chartered ship minus about $120,000 worth of vacuum gas oil. For every victory, however, there is always a resounding defeat. My personal record (as a surveyor) for ROB (okay; heel) came on a brand new OBO vessel in New York harbor in the dead of winter. Discharging a cargo of very heavy number six fuel oil – complete with really crappy viscosity – the vessel was heating the cargo just fine, employing some very good heat exchangers. Unfortunately, once an individual tank reached stripping levels, the heat exchangers – recirculating cargo continually in order to keep it heated – had to be shut off. It was also about minus 7 degrees F outside with a howling wind at Stapleton anchorage. I don’t think that I need to recount the grisly details for you, but you could have skated on the cargo left on board; all 6,076 barrels of it (yes, I remember it right down to the very barrel). We exchanged the usual letters of protest; the Chief Mate claiming that he had stripped “to the maximum extent of the ship’s equipment,” and me responding that, “had the cargo been handled correctly, blah, blah; it all would have been stripped off the ship.” I’m sure that they (the charterer and owner) are still fighting about it, fifteen years later. I later heard that the ship owners promptly took the vessel down to the Bahamas, where the gooey mess melted and was stripped right back – you guessed it – to the ship’s bunker tanks. Here’s a case where the cargo was both cargo and fuel oil. Tell that to the LNG judge. The lesson to be learned here is that “heel” or “ROB” – whatever you want to call it – is most usually still cargo, it is worth fighting over and certainly, people should be paying a lot more attention to it. It has been a long time since I surveyed a liquid cargo in the process of a custody transfer, but when crude oil reached $150 per barrel, I found myself wondering if the services of a loss control surveyor were perceived by oil trading houses as being just a little bit more valuable than say, when I was doing the job, at $25 per barrel. Somehow, I doubt it. It doesn’t surprise me that someone would initiate a lawsuit over ROB quantities. And, I don’t pretend to have read any tanker charter party agreements very recently, but in the old days, the on board quantity (OBQ) on any vessel (usually the heel from the previous cargo) automatically became the property of the charterer. There is, then, a very good reason for that. – MarEx. Read the case brief (Gas Natural SDG v. United States) by clicking HERE. Joseph Keefe is the Managing Editor of THE MARITIME EXECUTIVE. Following a career at sea, primarily on oil tankers (and never having left a single barrel of cargo in any tank), he then spent fifteen years in the marine consulting game as cargo surveyor, port captain and in other technical roles, including ship vetting. He likes this job better. He can also be reached at [email protected] with questions on this or any other article in this e-newsletter.