LEE-VAC, LTD. was a very profitable company during the days of the oil boom. its most profitable division was Domar Ocean Transportation, mainly due to a service Domar performed called Lightering. This service was provided to operators of Very Large Tankers (Vas) carrying cargoes of imported crude oil. These tankers entered the Gulf of Mexico with the destination to go up the Mississippi River just below New Orleans where the river emptied into the Gulf of Mexico. However, there was one major problem which prevented these VLTs from entering the mouth of the river, and that was all the sediment and silt and trash which the river carried along its winding path from Minnesota to the Gulf. All this stuff was deposited at the mouth of the river as it emptied into the Gulf. The U. S. Corps of Engineers operated dredges 24/7/365 but could not keep the mouth of the river clean. Solution? Oil Tanker operators contract with Domar to provide Lightering Services. Lightering Services consisted of Domar pushing barges to the Vas in the Gulf off the coast of Grand Isle, Louisiana, and pumping oil from the tankers into the barges so the tankers become "lighter" and do not set as deeply into the water (or draw as deep a draft). Not drawing as deep a draft, the tankers can now navigate the mouth of the river to discharge their cargoes of oil at refineries and petro-chemical plants from N.O. to Baton Rouge. Domar would follow with the barges of oil to do the same. This extremely profitable operation went on for several years until the U. S. Department of the Interior, and both the U. S. Department of Environmental Quality and the State of Louisiana Department of Environmental Quality formed a consortium to construct an oil port off the coast of Grand Isle, the purpose of which was to allow VLTs to dock at the port, discharge their cargoes into pipe lines going to storage tanks, turn around and get another load of oil, thus saving much time and money.
- How long do you think it took to construct this Louisiana Offshore Oil Port (called the LOOP Project)?
- What kind of change do we have here, and what are the strategic implications for Domar (LEE-VAC, LTD.)? 3. Put yourselves into the role of top management of LEE-VAC, LTD. and decide a course of action in light of this impending change.
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