The correct answer is B) replace the hose. Replacing the hose is the appropriate action to take when a small leak develops during cargo oil transfer operations. This is because the regulations require that any hose used for cargo transfer must be in good condition and free of defects that could lead to a spill. A small leak indicates the hose has been compromised and is no longer suitable for use. Attempting to simply patch the hose or place a drip pan under the leak would not address the underlying issue and could result in a larger spill. Notifying the terminal superintendent is also important, but should be done in addition to replacing the faulty hose.