oil spills and clean-up costs

OIL SPILLS AND CLEAN-UP COSTS Cao Thi Thu Trang Institute of Marine Environment and Resources 246 Da Nang, Hai Phong, Vietnam

Summary With the development of port activities, of the oil and gas industry, of industrialisation and of related activities, the incidents on the sea and along the coastline increase. Oil spills and discharge of waste in the sea rank among the most frequent and serious environmental incidents. Spilled oil causes damage to the environment, the ecosystems and affects the marine economic sectors. In Vietnam, the costs of oil spills are largely unknown. Existing estimates focus on major oil spill incidents. To support managers with the basics to estimate oil spill damage costs, we apply the BOSCEM model of United States to some oil spill cases in Vietnam. It is shown that, each of oil spill damages cost tens of billion of VND including cultural value damage, socio-economic damage and environmental damage. These costs are currently merely externalized. 1. Introduction The port of Hai Phong is the main gateway to the North of Vietnam. It is the historical seagate of Hanoi to Indochina and the rest of the world. The cargo handled through the port increased sharply during recent years from 7.5 million tons (in 2000) to 14.3 million tons (in 2004). The development of the port activities also results in an increasing number of incidents such as ship accidents, oil spills, fires and explosions. This causes serious damage to properties and the environment. Oil spills are the most frequent incidents. Calculation and identification of their cost is complex and often data lack. Consequently, the accuracy of the estimation is limited. However, estimation of these costs is important for environmental managers, port managers and business. It contributes to identify the financial means that are needed when an oil spill occurs in or near the port. This paper describes the oil spill cases in the port of Hai Phong during the period 1989 – 2001 and estimates the cost related to these oil spills. Data in this paper are not only relevant for environmental and port managers but should also raise public awareness on oil spills and help to minimize the impact of these incidents. 2. Factors affecting the estimation of environmental costs and damage caused by oil spills The following factors affect the estimation of the environmental costs and damage caused by oil spills: - Oil type Oils are complex mixtures with a wide variety of properties. When oil is spilled on the surface of the sea, it undergoes physical and chemical changes. These processes include evaporation, dispersion, dissolution and sedimentation. They result in the disappearance of the oil from the 1

sea surface. On the other hand, the formation of an oil-water emulsion and the increase of viscosity promote the persistence of the oil in the ecosystem. The marine environment assimilates oil through the long - term process of biodegradation. In general, light oil and light crude oils do not persist on the surface of the sea for long, as a result of the fast evaporation of the volatile components and the easy dispersion, especially when the sea is rough. Clean - up cost in these cases are low as a rule. But, other types of oil such as heavy crude, emulsified crude and heavy fuel oils are persistent in the environment, because they contain a high ratio of non-volatile components and they have a high viscosity. Clean - up of these oils in the environment is difficult and the cost may be very high. Light oil products attract fire and explosion risks. Their toxicity is higher than this of heavy oils. Heavy oils have the ability to settle and accumulate in the bottom sediment. - Amount of oil The amount of oil has an influence on the clean-up cost. The more oil is spilled, the more it disperses and moves, and the higher the clean- up cost. - Location of the oil spill The location of an oil spill has an important effect on the clean-up cost. The location is decisive for the response a rescue team can provide and for the damage to natural and social resources, the economy and the environment. The location also influences the behaviour of the oil and the way it relates to the hydrometeorological characteristics (wind direction, currents, waves, tides, and water depth) of the area. Also, the type of the coast affects the clean-up cost. Influencing factors include the proximity of a reserve, of biologically sensitive areas, or a World Heritage site. All these will increase the clean-up cost. The clean-up cost for oil spills differs for on shore and offshore incidents. On shore, common, simple methods can be used. As a rule, they are available in the area. Offshore, the clean-up costs increase because it necessitates more sophisticated equipment including airplanes, ships, a skilled response team, etc. However, recovery of oil off shore may be more effective than onshore. - Weather and sea conditions Weather and sea conditions are important to mitigate the effects of an oil spill. Good weather contributes to a faster clean-up. In the case of the My Dinh ship that sank in December, 2004 in the bay of Cat Ba, it took 7 months to harbour the ship. The main cause for this lengthy activity was the weather. - The local response capacity The response capacity of the Rescue Center for oil spills depends on its equipments (buoy, airplane, oil containment, ship, rescue boat, and chemicals), the rescue teams (trained and skilled professionals) and the preparedness to rescue. Worldwide, this capacity varies according to the attitude of the region, the media, and the competent agencies. If an oil spill happens near a tourist area, the pressure to overcome the consequences is likely to be high as the result of the pressure by the sector and the attention of the media. However, on the contrary, areas like salt marshes or mangrove swamps, that are of ecological importance, are often left behind and have to clean themselves in a “natural” way. Analogously, it is often decided not to clean up oil spilled on rocky shores. 2

In general, the on shore oil spills receive more public attention than the off shore ones. 3. Material and methods An estimation model for oil spill cost and damage, developed by Dagmar Schmidt Etkin – Environmental consultants in the Unites States, is used. The EPA BOSCEM (Basic Oil Spill Cost Estimation Model) allows to estimate the cost of an oil spill incident and takes into account the extensive analysis of oil spill responses, socioeconomic and environmental damage cost data, the oil spill trajectory, and the impact analysis during the American history. The application of EPA BOSCEM necessitates the following steps: Input of spill criteria: - the amount of oil spilled (in gallons), - the basic oil type category, - the primary response methodology and its effectiveness, - the type of the oil spill location, - the socioeconomic and cultural values of the spill location, - the freshwater vulnerability category of the spill location, - the habitat and wildlife sensitivity category of the spill location. Calculation of the spill costs The clean-up cost of an oil spill is the sum of the response costs, the value of the socioeconomic damage and the environmental cost. Total response cost = base per-gallon response cost (based on oil type/volume/response method) x medium modifier x spill amount The base per-gallon response cost is the cost to eliminate 1 gallon of oil from the environment. The base per-gallon response cost depends on the response methods such as mechanical cleaning, dispersing, in-situ treatment or manual removal approaches. The effectiveness of the response methodology is shown in table 3. The base per-gallon response cost to remove different amounts of different oil types is shown in annex 1. The medium modifier is a value that differs for an oil spill in open water, wetland, mudflat, soil, or sand. Medium modifier values are listed in annex 3. - Total socioeconomic damage cost = per-gallon socioeconomic cost x socioeconomic cost modifier x spill amount The per-gallon socioeconomic cost corresponds with the impact of 1 gallon of oil to the local and regional tourism, commercial fishing, recreational facilities, national parks, marine resources, seascapes, private property and waterway and port operation impacts. This cost depends on the oil type and the spill size. Unit price estimations are listed in annex 2.

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The socioeconomic cost modifier differs according to the socioeconomic sector that is impacted. A list of values is shown in annex 4. - Total environmental damage cost = per-gallon environment cost x 0.5 (freshwater + wildlife modifier) x spill amount The per-gallon environment cost corresponds with the cost of the damage caused by 1 gallon of oil. Damage costs are estimated by the amount of money that is necessary to repair the environmental damage. This cost is shown in annex 2. 4. Results and discussion 4.1. The main oil spills in Vietnam and in Hai Phong Oil spills often cause serious environmental disasters, occurring suddenly in ports. In Vietnam, major oil spills mainly happen in the port group of Sai Gon - Vung Tau. The most serious case occurred on October 30th 1994 in the Sai Gon Petroleum Harbor. The accident was caused by the Neptune Aries, a ship under Singaporean flag. An estimated amount of 1,865 tons of oil was spilled in the accident. Table 1. Main oil spills in Vietnamese port waters No 1 2

3

4

5

6 7

8

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Case and place Leela ship sink at Quy Nhon Bay Neptune Aries ship (Singapore) crashed into Sai Gon Petro Harbor Gemini oil ship (Singapore) crashed into Sai Gon Petro Harbor. Oil spill at B12 oil port, Halong City Oil spill on Nha Be River. Nhat Thuan oil ship No.01 crashed into Hiep Hoa Barge No.2 Illegal drained oil on the Long Tau river in Can Gio District Oil spill off the coast of the Ba Ria - Vung Tau province after an collision between a Vietnamese tanker (Petrolimex 01) and a Taiwanese ship (Formosa 1) An oil ship (belong to Trong Nghia Co. Ltd – Binh Duong province) sank on the way from Cat Lai port to Vung Tau port An oil ship (namely Kasco) crashed on the quay of the Saigon Petro Company (Ho Chi Minh City)

Time August 8th, 1989 October 30th, 1994

Amount of oil 200 tons of fuel oil 1,865 tons

January 27th, 1996

70 tons of fuel and light oil

December 2nd, 1997

About 1,500m2 of coastal zone is polluted 97 tons of distilled oil

April 16th, 1999 March 2000 September 9th, 2001

900 m3 of DO oil

March 20th, 2003

600 tons of FO oil

14h25’, January 21st, 2005

30,000 tons of DO oil

Damage level Damaged heavily the lagoon ecosystem 300km2 of coastal zone seriously polluted, damage estimate is 40 million US$ 15 km2 of coastal zone polluted

Impacts on the landscape and aquatic ecosystems Negative impacts on river and coastal ecosystems Leaving a 5 km long trail of oil on the river and nearby canals Total financial cost estimated at 250 billion VND

Leaving a 6-7 km long trail of oil on the nearby area; death oysters floating on the surface water Oil was spilled on the Dong Nai river and long 1 km from Saigon Petro port to Cat Lai ferry.

Source: Thao, N.H., 2001; Asean Energy News Service at www.aseanenergy.org; VietnamNet

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The estimated amount of oil spilled in Vietnamese waters in 1992 is 7,380 tons; in 1995 the figure amounts to 10,020 tons as a result of the increase of marine transport and oil and gas exploitation. This figure is 17,650 tons in 2000. The Agency of Environmental Protection of Ho Chi Minh City reports 8 oil spill cases in Ho Chi Minh City between 1993 and 2004 with 2,520 tons of oil spilled. This oil “disappeared” in the Dong Nai – Sai Gon river systems. Technical failure or insufficient care are the main reasons of these incidents (Khoa L.V., 2006). The statistical data of the Hai Phong Port Authority shows that 30 oil spill cases occurred near Hai Phong between 1994 and 1999. Of these, 51.4% was dumping significant amounts of waste oil in the sea; 28.6% was due to technical failure or insufficient care while pumping; the remaining cases are due to collision with submarine rocks or bad weather condition. From 2000 until 2006, an increase of oil spill accidents and incidents in Hai Phong (table 2) is noticed. Among them is the My Dinh ship incident that happened on December 20th, 2004 due to a collision with a submarine rock. It took 7 months to remove this ship. Consequently, the environmental damage was most important. The incident affected seriously the coastal environment, tourism and aquaculture. As a result, the city faced high costs to mitigate the consequences. Table 2. Navigation incidents causing oil pollution in the Northern water area Year

Number of incidents that caused oil pollution

2000 2001 2002 2003 2004

11 10 14 21 13

Number of incidents that caused oil pollution in the Hai Phong Quang Ninh area Number of cases Proportion (%) 09 81 08 80 09 64 14 67 10 77

(Source: Port Authority of Hai Phong, 2006) 4.2. Estimation of oil spill clean - up costs by modeling the oil spill response and the damage costs Clean-up costs of oil spills are influenced by different parameters including the nation, the coastline, the oil type, the size of the incident, the coastline and the response methods. Also cultural values, socio-economic elements and labor costs influence the bill of the clean up. The on shore oil spills are on average 4-5 times more expensive than the off shore spills. Clean-up cost for heavy oils are on average ten times more expensive than those fore light and diesel oils. Clean-up cost for small oil spills is many times more expensive than big oil spills per basic unit. Table 3. Reported effectiveness of clean-up methodologies Method Dispersants In-situ burning Mechanical containment and recovery Natural cleansing Manual removal

Effectiveness (%) 80-90 90-98 10-20 Up to 90 (depends on conditions) Variable

(Source: Etkin, 2000)

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Among the methods listed in table 3, dispersing the oil is the cheapest. The cost is even below this of the manual clean up, as the cost for equipment (airplane) is lower than those for mechanical collection and labor. In-situ burning is another rather cheap option, but infrequently used because of the air pollution it causes. As the use of dispersants, in-situ burning is heavily regulated in most nations because of the real and perceived risks associated with the particulate and polycyclic aromatic hydrocarbon emissions. Over a 23-year period, the estimated total costs for inland navigable waterway oil spills in the United States was $63.2 billion, or, on average, $2.7 billion per year (Etkin, 2005). In Vietnam, the total cost for the oil spills caused by the collision between the Vietnamese Petrolimex 01 ship and the Formosa One (Taiwan) in September 2001 was 250 billion VND, which is equivalent to $16 million. Of this amount, 108 billion VND were for the local fisheries industry, 43.8 billion VND was for local tourism enterprises, 27.8 billion VND was for the local farmers, including the salt production industry, 11.2 billion VND for health problems and 60 billion VND was used to clean up the polluted water. Application of the above formula to selected oil spill cases in Vietnam, provides the following cost estimation: 

The case of illegal dumping of oil in the sea (up to 20m3 of oil; equivalent to 5,284 gallons).

- Total response cost

= 436 USD x 1 x 5,284 gallons

=2,303,824 USD

- Total socioeconomic damage cost = 900 USD x 1 x 5,284 gallons

= 4,755,600 USD

- Total environmental damage cost

= 85 USD x 5,284 gallons x 0.5

= 224,570 USD

Total clean-up cost

= 7,283,994 USD or 116 billion VND



The case of a spill of 900 litters of FO oil as the result of technical failure 900 liters = 238 gallons

- Total response cost

= 100 USD x 1 x 238 gallons

=23,800 USD

- Total socioeconomic damage cost = 65 USD x 1x 238 gallons

= 15,470 USD

- Total environmental damage cost

= 48 USD x 238 gallons x 0.5

= 5,712 USD

Total clean-up cost

= 44,982 USD or 72 million VND

These two cases occurred in the waters near Hai Phong. In both cases the ship owner did not contribute to the cost the incidents caused. Table 4 summarises the calculated costs for the main oil spills in Vietnam during the period 1989 - 2001 Table 4. Clean-up costs for some oil spills in Vietnam No

Case

1

Leela ship sink at Quy Nhon Bay

Amount and type of oil 200 tons of fuel oil = 51,613 gallons

Response cost (USD) 4,490,331

Socioeconomic damage cost (USD) 9,290,340

Environmental damage cost (USD) 1,548,390

Total cleanup cost

15,329,061 USD = 245 billion VND

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2

3

4

5

6

7

Neptune Aries ship (Singapore) crashed into Sai Gon Petro Harbour Gemini oil ship (Singapore) crashed into Sai Gon Petro Harbour Oil spill on the Nha Be River. Nhat Thuan oil ship No.01 crashed into Hiep Hoa Barge No.2 Oil spill off the coast of the Ba Ria - Vung Tau province after a collision between a Vietnamese tanker (Petrolimex 01) and a Taiwanese ship (Formosa 1) An oil ship (property of the Trong Nghia Co. Ltd – Binh Duong province) sank on the way from Cat Lai port to Vung Tau port An oil ship (Kasco) crashed on quay of Saigon Petro Company (Ho Chi Minh City)

1,865 tons of gas oil = 481,290 gallons 70 tons of fuel and light oil = 18,064 97 tons of distilled oil = 25,032 gallons

35,615,460

43,316,100

7,219,350

1,571,568

3,251,520

541,920

900 m3 of DO oil = 232,258 gallons

17,187,092

86,150,910 USD = 1,400 billion VND

5,365,008 USD = 85.8 billion VND 2,177,784

4,505,760

750,960 7,434,504 USD = 119 billion VND

20,903,220

3,483,870

41,574,182 USD = 665 billion VND 600 tons of FO oil = 154,838 gallons

11,458,012

30,000 tons of DO oil = 7,741,935 gallons

239,999,985

27,870,840

2,322,570

41,651,422 USD = 666 billion VND 541,935,450

77,419,350 859,354,785 USD = 13,749 billion VND

The exchange rate is 1 USD = 16,000 VND (in 2006) DO = Diesel Oil FO = Fuel Oil These costs might represent an overestimation as the labour cost is cheaper in Vietnam than in the US. 4. Conclusion Vietnam has more than 3,200 km of coastline, and consequently seaport development is an attractive option. These developments bring more cargo and other traffic handled by ports. Consequently, the number of ship accidents and incidents both in the harbours and off shore increases. These incidents inevitably result in pollution by oil and economic damage. To be prepared for oil spill incidents, the Vietnam Government ratified the National Plan for Oil Spill Rescue in 2001, but costs are not addressed in this policy. The current models allow a first estimation of this cost, but apply only in part to the Vietnamese situation. In the future, it is necessary to develop models that not only estimate and calculate the damage costs but also the balance between the benefits of oil spill prevention and the clean-up cost to minimise the environmental incidents.

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References Asean Energy News Service. www.aseanenergy.org. Tanker collision causes oil spill off coast of Vietnam, dated on Sep. 09, 2001. Assessed 2006. Dieu, L. V., 2002, Oil spill. Proceeding of the Workshop “Port Management in Vietnam” edited by Luc Hens and Tran Dinh Lan. Institute of Marine Environment and Resources, Hai Phong, Vietnam. Etkin, D. S., 1999. Estimating clean up costs for oil spills. Proceeding of the 1999 International Oil Spill Conference. Seattle, the United States. pp. 33-39 Etkin, D. S., 2000. Worldwide analysis of oil spill cleanup cost factors. Proceeding of the 23rd Arctic and Marine Oil spill Program Technical Seminar. Vancouver, BC, Canada pp. 161-174 Etkin, D. S., 2004. Modeling oil spill response and damage costs. Proceeding of the 5th Biennial Freshwater Spills Symposium. New Orleans, the United States. Khoa L.V., 2006. Personal communication. Port Authority of Hai Phong, 2005. Statistics of oil spills in Hai Phong water area. Hai Phong, Vietnam. Thanh, T. D., 2002, Overview of environmental port issues. Proceeding of the Workshop “Port Management in Vietnam” edited by Luc Hens and Tran Dinh Lan. The document is preserved at Institute of Marine Environment and Resources. Thao, N.H., 2001. Protection of marine environment in Vietnam. Overview on Science, Technology and Economy. No.6. Published by MOSTE. Hanoi. pp. 1- 48. Vietnam Net. http://www3.vietnamnet.vn/ US help training on Oil Spill Response, dated on July 26, 2005. Assessed 2006 White I.C., 2002. Factors affecting the cost of oil spills. GAOCMAO Conference, Muscat, Oman, 12-14 May 2002. ITOPF, London, the United Kingdom. White I.C., 2003. Factors that determine the cost of oil spills. International Oil Spill Conference, 6-11 April 2003, Vancouver, Canada.

Key Words: Cleanup cost, damage cost, oil spill, incidents, accidents, environment, Abbreviation BOSCEM

Basic Oil Spill Cost Estimation Model

DO

Diesel Oil

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EPA

Environment Protection Agency

FO

Fuel Oil

USD

United States Dollar

VND

Vietnamese Dong

Acknowledgement This paper was realized in the framework of the Asia Pro Eco Program (project of VN/AsiaProEco/01(91168) and VN/AsiaProEco/009(115176)) and the Flemish Community (project AWZ/OS/0107). I express my special thanks to Prof. Dr. Luc Hens, Dr. Tran Dinh Lan to guide and review this paper.

Annexes: Annex 1: Per-gallon Oil Spill Response Cost Applied in EPA BOSCEM Annex 2: Socioeconomic and Environmental Base Per-Gallon Coast for Use in EPA BOSCEM Annex 3: EPA BOSCEM Response Cost Modifiers for Location Medium Type Categories Annex 4: EPA BOSCEM Socioeconomic and Cultural Value Rankings Annex 5: EPA BOSCEM Freshwater Vulnerability Categories Annex 6: EPA BOSCEM Habitat and Wildlife Sensitivity Categories

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Annex 1: Per-gallon Oil Spill Response Cost as used in EPA BOSCEM (in USD) (Etkin, 2005)

Oil type

Volume (gallons)

Light fuel

1,000,000 1,000,000 1,000,000 1,000,000

Heavy oils

Crude oils

Volatile distillates

0% 100 98 97 87 74 31 440 438 436 410 179 87 220 218 215 195 123 92 -

Mechanical 10% 20% 85 70 83 68 82 67 72 59 62 49 26 17 386 335 385 334 384 333 359 308 154 128 77 67 199 189 197 187 195 185 185 174 118 113 82 76 103 102 100 55 23 7 -

50% 57 55 54 41 26 12 310 309 308 267 103 36 153 151 149 138 92 64 -

Dispersants Low High 36 25 35 24 34 23 26 18 17 10 11 6 140 89 139 88 138 87 103 62 59 54 53 49 85 53 84 52 82 51 74 31 49 29 58 13 -

In-situ Burn 50% 80% 26 13 25 12 24 11 18 9 10 5 7 3 125 64 124 63 123 62 103 51 72 41 56 26 75 48 74 47 72 46 62 31 36 16 22 11 -

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Annex 2: Socioeconomic and Environmental Base Per-Gallon Coast as used in EPA BOSCEM (Etkin, 2005)

Oil type Light fuel

Heavy oils

Crude oils

Volatile distillates

Volume (gallons) 1,000,000 1,000,000 1,000,000 1,000,000

Base Cost (USD/gallon) Socioeconomic Environmental 65 48 256 45 400 35 180 30 90 15 70 10 80 85 330 80 500 70 200 65 100 30 90 25 150 95 600 90 900 85 500 75 200 40 175 35 50 90 200 87 300 80 140 73 70 35 60 30

Annex 3: EPA BOSCEM Response Cost Modifiers for Location Medium Type Categories (Etkin, 2005)

Category Open Water/Shore* Soil/Sand Pavement/Rock Wetland Mudflat Grassland Forest Taiga Tundra

Cost Modifier value 1.0 0.6 0.5 1.6 1.4 0.7 0.8 0.9 1.3

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Annex 4: EPA BOSCEM Socioeconomic and Cultural Value Rankings (Etkin, 2005)

Value Rank

Soil Impact Site(s) Description

Examples

Cost Modifier Value

Extreme

Predominated by areas with high socioeconomic value that may potentially experience a large degree of long-term impact if oiled.

Subsistence/ commercial fishing, aquaculture areas

2.0

Very High

Predominated by areas with high socioeconomic value that may potentially experience some long-term impact if oiled.

National park/reserves for ecotourism/nature viewing; historic areas

1.7

Recreational areas, sport fishing, farm/ranchland

1.0

Residential areas; urban/suburban parks; roadsides

0.7*

Light industrial areas; commercial zones; urban areas

0.3

High

Moderate

Minimal

None

Predominated by areas with medium socioeconomic value that may potentially experience some long-term impact if oiled. Predominated by areas with medium socioeconomic value that may potentially experience short-term impact if oiling occurs. Predominated by areas with a small amount of socioeconomic value that may potentially experience short-term impact if oiled. Predominated by areas already moderately to highly polluted or contaminated or of little socioeconomic or cultural import that would experience little short- or long-term impact if oiled.

Heavy industrial areas; designated dump sites

0.1

Annex 5: EPA BOSCEM Freshwater Vulnerability Categories (Etkin, 2005) Category Wildlife Use Drinking Recreation Industrial Tributaries to drinking/recreation Non-specific

Cost Modifier value 1.7 1.6 1.0 0.4 1.2 0.9

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Annex 6: EPA BOSCEM Habitat and Wildlife Sensitivity Categories (Etkin, 2005) Category Urban/Industrial Roadside/Suburb River/Stream Wetland Agricultural Dry grassland Lake/Pond Estuary Forest Taiga Tundra Other sensitive areas

Cost Modifier value 0.4 0.7 1.5 4.0 2.2 0.5 3.8 1.2 2.9 3.0 2.5 3.2

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