Oil tankers

There are today more than 3,500 (Check) oil tankers in operation. They include the world’s largest ships, one of which (the Jahre Viking) can carry more than half a million tons of crude oil at a time. Many other tankers are almost as large.

Text Box:  The Jahre Viking is the world's largest ship at 564,763 DWT. She was built in 1979 at Oppama Shipyard, Sumitomo, Japan.

Yet as a ship type tankers are relatively new. As late as the middle of the 19th century the only oil transported in large quantities by sea was fuel for oil lamps. Most of this was fish, whale and vegetable oil, but in 1859 an unemployed railway conductor named Edwin Drake was hired to drill for mineral oil at Titusville, Pennsylvania. He struck oil at a depth of 21 metres on 28 August 1859 – and in a sense the modern age began.

Although mineral oil was first used primarily for lighting, the invention of the Diesel and later, the internal combustion engine soon increased its demand enormously. The world’s first true oil tanker is generally accepted to have been the Gluckauf, built in 1886 to carry oil in bulk oil to Europe. The idea of transporting oil in bulk caught on rapidly. In 1885, 99% of the oil exported from the United States was carried in barrels. By 1906, 99% of it was carried in bulk.

Text Box:  The Gluckauf is generally accepted to have been the world’s first oil tanker. But her career was short lived. In 1893 she ran aground on Fire Island, New York and could not be refloated. The remains of her hull can still be seen, just off what is a popular fishing beach.
 
Demand for oil was encouraged by the invention in 1897 of the Diesel engine, which used oil as a fuel rather than coal. . Within a few years, marine diesel engines were being built-in and by 1911, the first diesel powered ship crossed the Atlantic. By 1927 some 28% of the world merchant fleet used oil for power.

During the next few decades, oil replaced coal as a source of energy and tankers soon formed a major portion of the world fleet. Until 1950, however, most of them were designed to carry petroleum and other refined products. Refineries were generally located close to the fields where crude oil was found. But political and technical developments encouraged the oil industry to move their refineries closer to the markets and this led to an increase in demand for tankers designed to carry crude oil rather than refined products.

In 1950 the standard sized oil tanker was the “T2” tanker, some 620 of which were built in the United States between 1942 and 1946. The tanker equivalent of the famous Liberty ship, many T2 ships were sold after the end of hostilities and formed the backbone of many fleets. They had a deadweight of 16,00 tons and many were still being used in the 1960s. However, by then tanker sizes had begun to grow significantly, a process that was to continue until the end of the 1960s. In 1959 the 114,356 dwt Universe Apollo became the first tanker to pass the 100,000-ton figure: within a decade ships five times that size were being planned.

One reason for this was that tanker owners had discovered how to make use of economies of scale. Unlike petroleum tankers, crude carriers were relatively unsophisticated and fairly simple to build. And, thanks to the square/cube rule, it pays to build them big. If two boxes are built, one with sides 2 meters long and the other with side 4 metres long, the surface area of the first will be 24 square metres and that of the second 96 square metres, or four times as big. But the volume of the first box will be 8 cubic metres and that of the second 64 cubic metres, or eight times as great.

Since it is the amount of steel used that basically determines the cost of constructing the ship it can be seen that using four times as much steel will enable eight times as much cargo to be carried. There are other advantages to be gained from building ships bigger.

Text Box:  The size of oil tankers has grown enormously in the last forty years. This graphic shows, in the bottom left hand corner, a cross-section of a typical 25,000-dwt tanker from the 1950s. By 1963 (second cross-section) tankers of 80,000 dwt were not uncommon, but within ten years many ships of 350,000 dwt had been built or were under construction. The bus in the bottom right hand corner gives an impression of how big these ships are.

One is that crew costs do not rise in proportion to the size of the ship. In fact, from the 1950s onwards crew sizes steadily decreased, as owners took advantage of automation and other technical advances. By the 1980s tankers of 200,000 dwt or more were operating with crews of 24, compared with the 45 required to operate a T2 tanker thirty years before. Other personnel costs, such as shore management, also tended to stay the same, or to fall, since the number of people required to run a fleet depends mainly on the number of ships involved rather than their tonnage.

Fuel costs also tend to fall. A 60,000dwt ship might need about 16,000 horse power to operate at 15 knots. A tanker of 260,000 dwt might require 42,500 hp. In other words, 2.7 times as much energy would enable more than 4.3 times as much cargo to be transported.

In practice, a number of factors helped to prevent tanker sizes from growing indefinitely. In the first place, there was a limit to the number of shipyards capable of building them and the number of ports able to receive them. Secondly, many of the world’s most important shipping routes were unable to cope with very large ships. The Suez Canal, located on what was the most important shipping route in the world in the 1960s, was limited to fully laden ships of 70,000 dwt. The Malacca Strait, separating Malaysia from Indonesia, is too shallow for loaded tankers greater than 260,000 dwt. Larger ships going from the Gulf to Japan, for example, have to go via the Lombok Strait, which adds and extra 1,100 miles to the voyage. Many other straits, such as the Straits of Dover and the Bosporus, present navigational difficulties to large ships.

Developments in the late 1960s however encouraged shipowners to go for big ships. The most important of these was the closure of the Suez Canal in 1967. This meant that ships going from the Gulf to Europe and North America had to go around the Cape of Good Hope instead. At the same time, business and trade were generally booming and, for the first time, the United States had become a major oil importer instead of exporter. Freight rates soared and so did profits. At one time, it was possible for the cost of a new VLCC (Very Large Crude Carrier) of more than 200,000 dwt to be paid off in one year.

It was hardly surprising, therefore that there was a boom in tanker building. Shipyards in Japan did especially well, but the traditional shipyards in Europe also expanded their tanker building capacity. Inevitably, the oil producers also sought to take advantage of the boom. Between 1970 and 1973 the price of oil rose from $1.70 a barrel to $5.19 a barrel. But then in October 1973 war again broke out in the Middle East and freight rates soared. So did orders for tankers. But then major oil producers (member of OPEC, the Organization of Petroleum Exporting Countries) increased the price of oil to $11.65 a barrel early in 1974. Further increases followed, and the result was a collapse in demand for oil and for the tankers needed to transport it. But many shipowners had already contracted to buy new ships and for the rest of the decade VLCCs and the even-larger Ultra Large Crude Carriers (ULCCs) of more than 300,000 dwt were still being delivered. Most of them went straight into lay-up. It has been estimated that by 1975 the tanker market was so depressed that there was a surplus of 100 million dwt, or around 30% of the fleet.[1]

The imbalance between supply and demand lasted until well into the 1990s. Few new ships were ordered and so the world tanker fleet became progressively older (as did the fleet of bulk carriers and other ships). This not only had economic implications, resulting in many shipping companies and shipbuilders going out of business, it also had safety implications. Statistics show quite clearly that older ships are more at risk than new ones. And by the late 1970s the threat of marine pollution from tankers and other ships was causing considerable international concern.