Forum 2-2012 by DNV GL (old account)

forum TenneT: Taking power further

Sembawang: HSE excellence

KOGAS: Ambitious plans

A magazine from DNV

WPC President Renato Bertani:

Oil and gas is here to stay

no 02 2012

Content

02 2012

02 Editorial 03 News 08 WPC President Renato Bertani: Oil and gas is here to stay 12 DNV KEMA CEO David Walker: Towards a new world of energy 16 TenneT senior project manager Raymond Berntzen: Taking power further 20 Risk management: Paddling like mad to stay calm 24 The fishing vessel of the future 26 Taking deepwater pipelines to the X-Stream 28 Sembawang Shipyard Managing Director Ong Poh Kwee: FORUM 02.2012 PUBLISHED BY Det Norske Veritas as NO-1322 Høvik, Norway Tel: +47 67 57 99 00 Editor Eva Halvorsen Tel: +47 67 57 97 19 eva.halvorsen@dnv.com

Aiming for HSE excellence

32 Leading the way in bunker quality management 34 DeWind President and Chief Operating Officer Shin Dong Won: DSME going forward with wind

38 KOGAS Vice President Dae-Chun Jun: Ambitious plans for KOGAS 42 Energising the efficiency game 46 DNV supports Sustainia initiative 48 Last word: DNV takes a look at technology uptake towards 2020

Design and layout coormedia.com media@coorno.com

+ Risk management

+ World Petroleum Council

PADDLING LIKE MAD TO STAY CALM “tHere will be more CHanges to risk management during tHe next ten years tHan we Have seen over tHe past 20,” says Hans læssøe of lego system, denmark. “tHe sHareHolders’ value model will not survive for ten more years,” replies antHony Hilton, finanCial editor of london evening standard. TexT: per wiggo riCHardsen PhoTo: nina e. rangøy

I Doha skyline. The 20th World Petroleum Congress was held in Doha, Qatar.

WPC PRESIDENT RENATO BERTANI:

OIl AND GAS IS HERE TO STAy “oil and gas will bE hERE foR a longER timE than most pEoplE thought just tEn yEaRs ago. thE ERa of chEap oil is ovER, but wE aRE still adding to thE REsouRcE basE,” says thE nEwly ElEctEd pREsidEnt of thE woRld pEtRolEum council (wpc), REnato bERtani, to dnv foRum duRing thE woRld pEtRolEum congREss in doha. “nEw tEchnologiEs allow thE ExtRaction of REsouRcEs which wE pREviously REgaRdEd as bEyond REach,” hE says.

TexT: toRE høifødt

enato Bertani was elected President of the World Petroleum Council at the 20th World Petroleum Congress in Doha, Qatar. He is currently President and CEO of Berra Energia, based in Rio de Janeiro. Mr Bertani previously worked for Brazil’s Petrobras for many years, among other things as the President of Petrobras America and Managing Director of Petrobras UK. “The world scene is changing for the oil and gas industry. In 2007, we estimated the remaining oil reserves at 1.10 trillion barrels. In 2011, the industry’s best estimate was some 1.47 trillion barrels,” says Mr Bertani. “Discoveries in new regions and the introduction of new technology have altered the picture on both the supply and demand side. On the supply side, one third of all discoveries during the last five years have been made in Brazil. Offshore Africa is extremely promising, and

8 – no 02 2012

WPC President Renato Bertani: Oil and gas is here to stay

Australia has made huge discoveries. Even very mature areas like the Gulf of Mexico are still yielding huge discoveries as the industry is looking for new finds in deeper waters and reservoirs. This means that OPEC is proportionally less dominant as a source of supply than it was in the recent past. “On the demand side, the US is becoming less of a dominant consumer due to increased oil and gas consumption in Asia and other regions with strong economic growth. China and India will rely heavily on imported energy,” says Mr Bertani. “There’s not so much talk about peak oil anymore. Analysts now prefer to describe a plateau of supply and demand in the world. What has changed is that new resources have become affordable – or profitable for the industry to develop. This new price tag on energy is very important. It makes exploration and production possible in demanding environments, such as

deeper waters and the Arctic. It also makes unconventional energy sources, such as shale gas, oil sand, etc, more relevant.” EnviRonmEntal focus

“Gas is a very interesting energy source for the future. In 2003, we believed that the US would become a major importer of gas. Now gas prices in the US are dropping due to the added resources in the shale gas reservoirs. Globally, we have gas for more than 50 years with the present gas consumption and world reserves, and more than 100 years if you add the unconventional resources from US shale gas alone. The challenge for shale gas development is the environmental concern,” says Mr Bertani. “In the US, the debate on the environmental effects of cracking is fierce. While the industry claims that cracking is safe, environmentalists and some of the public are very concerned. Societal concerns no 02 2012 – 9

DNV

published its Technology Outlook 2020 a year ago. Through those extensive studies, DNV shared predictions of global megatrends and the way in which mainly the energy and transportation industries will develop. A few examples from the Outlook are: “The world’s population continues to grow fast and will pass 7.5 billion people by 2020. Whilst the population in the West, China and Japan are greying, the Middle East is becoming younger. And global energy consumption will increase by 19% over the next decade.” DNV Vice President Elisabeth Harstad was in charge of the Outlook, and she states: “We firmly believe that technology is a vital part of the solution to the challenges facing us today. We also believe that the best way to be prepared for the future is to have a broad view of the technologies in many industry sectors.” But there are topics in addition to technology development and an out-of-balance population that will have an impact on risk management in the years to come. Topics like natural resources, climate change, energy consumption, crime and religion will play major roles everywhere.

So, Mr Læssøe’s comment is well worth listening to. HigH speed will speed up

DNV gathered risk leaders at a central London hotel and used the Technology Outlook 2020 report as a backdrop for evaluating risk in general. Before some 400 risk managers from major parts of Europe arrived to attend the Risk Leaders’ Conference, DNV invited all the conference speakers to share their views. They discussed questions like: what will affect the way we think about risk between now and 2020? How do we have to organise our businesses to be prepared for what is ahead of us? What do we need to think about now to stay ahead of the game in the future? Jonathan Reuvid, an associate publisher at KoganPage, strengthened the scene already set by supporting Hans Læssøe. He said: “Your prediction in the Outlook will not wait until 2020. It will come true earlier.” Hans Læssøe said: “Managers that do not focus enough on risk will not be in their positions by the end of these ten years. I am also convinced – like Mr Reuvid – that the whole world’s development at all levels and in all activities will speed up.

“However, at the same time we will have to face a serious dilemma. If everything is under control at all times, we are moving too slowly. And we will not be allowed to move slowly.” As the Strategic Risk Manager of global toy manufacturer LEGO, Mr Læssøe illustrates his viewpoints elegantly. He said: “Think about a flock of ducks swimming calmly around in a quiet river. When the water flow speeds up, the ducks will still look calm. But they are paddling like mad under the surface to cope with the increased flow and to be prepared for more to come. This is what all managers, not only risk managers, have to do to manage their future risk.” CHina will be led by domestiC demand

When Jonathan Reuvid was asked about his viewpoints related to speed and actual examples, he said: “I’m old enough to remember how wealthy Indian parents sent their young hopefuls from India to England to ensure they would get a good education. Today, you find a lot of Indians living in England, sending their kids back to India to ensure the best education. See? We are facing changes.

I Paddling in a London park.

20 – no 02 2012

Risk management: Paddling like mad to stay calm

no 02 2012 – 21

+ International Safety Rating System (ISRS)

+ Natural gas

AIMING fOR HSE ExCELLENCE

GoinG forward with wind

AMbITIOUS PLANS FOr KOGAS

Sembawang ShIpyaRd In SIngapoRe IS among the woRld’S leadIng ShIp RepaIR and offShoRe yaRdS, SeRvIng many oIl majoRS and InteRnatIonal ShIpowneRS and opeRatoRS. managIng dIRectoR ong poh kwee haS a cleaR ambItIon to Stay ahead of the competItIon. “we now benchmaRk agaInSt the oIl companIeS and not the ShIpyaRdS. thIS bRIngS uS Into a league wIth tougheR RequIRementS and an uncompRomISIng focuS on health, Safety and the envIRonment (hSe). dnv’S InteRnatIonal Safety RatIng SyStem (ISRS) haS helped get uS theRe.”

In 2009, Daewoo ShIpbuIlDIng & MarIne engIneerIng purchaSeD uS turbIne Maker DewInD anD StarteD to Integrate DSMe’S worlD-claSS engIneerIng anD ManufacturIng capabIlItIeS wIth DewInD’S technology anD experIence to becoMe a worlD-leaDIng wInD energy coMpany.

“Our gOal is TO prOvide a sTable supply Of cheap gas TO The KOrean peOple. TO achieve This, we are cOnTinuOusly invesTing in fOreign resOurce develOpmenT prOjecTs TO acquire a sTable energy sOurce,” says dae-chun jun, vice presidenT Of KOgas.

TexT: magne a. røe pHoTos: KOgas TexT: Sun young park PhoTo: DewInD

TExT: toRe høIfødt PHOTOS: maRIanne RamStad

embawang Shipyard, which was established more than 40 years ago, is an established world leader in LNG carriers, passenger ships, chemical tankers, offshore conversions and other work where great skills and high safety standards are applied. With some 2,500 employees and 6,000 contractors at the yard, Sembawang repairs in the range of 220 ships and offshore structures every year. The benefit of being based in Singapore is the strategic location. “To us as a major ship repair and offshore yard, Singapore ensures us critical mass. Many of the most complex conversions in the world are being done in Singapore. And we have chosen excellence in HSE as a differentiator and a means to build a sustainable culture in the shipyard,” says Ong Poh Kwee. “By having companies like BP and ConocoPhillips as customers and partners, we work with organisations that are truly demanding. “Our focus on HSE actually filters out customers we want. Oil majors and leading ship owners and ship managers with stringent HSE requirements feel comfortable

with us. 86% of our customers are repeat customers. In the longer run, this develops into partnerships rather than traditional customer relations,” he says. ISRS a fRamewoRk

“Culture is like air,” says Mr Ong. “We know it’s there, but we can’t see it. Still, we are totally dependent on the company’s culture. That’s why I have spent a considerable amount of my time on people issues. I wanted to find a way to tickle the minds of our workers. They should reflect on safety, how they move around, how they balance. They should look for and talk about improvements. That’s when ISRS came up as a framework to guide us in our improvement process,” he says. “Back in 1993, we set up a project with DNV in which we structured our HSE work according to the ISRS systematics. What fascinated us was that ISRS audits were not the traditional sort of audits. They actually contributed to real improvements as, unlike a typical HSE certification process, ISRS measures performance and improvements. We had already been doing a lot

of what was in ISRS. But there was also a lot that we had not been doing, and that helped us to develop our HSE efforts.” Mr Ong is quite clear: “Our oil company partners also have lots of good practices. They were open to us and eager to show us their ways of working. We brought into Sembawang important learning from the oil companies and from DNV. Actually, we have been like a sponge. We have learnt from those who bring something to the table. ISRS became an important building block for our own HSE system and practice. It represents a framework, but does not tell us how to do the work.” After 19 years of using ISRS, Sembawang last year adopted the ISRS 8th Edition. Over the years, Sembawang has also enriched the ISRS framework by introducing innovative safety practices and programmes while adapting the framework to the shipyard’s processes. In its 2012 assessment, Sembawang achieved Level 7, which is the highest rating awarded to any shipyard in the world and benchmarked to leading oil and gas companies. In addi-

aewoo Shipbuilding & Marine Engineering (dSME) recently introduced the world’s first Voith windrive system. the system allows a clean power supply to be obtained without a converter or inverter. dSME took the technical initiatives to create a success story in the wind market as it did in the maritime industry 40 years ago. dnV met Mr Shin, dong won, the President and Chief operating officer of dewind Co. how do you think DSMe can leverage its experience of the maritime & offshore industries in the wind energy market?

wind energy engineering shares many technologies with maritime engineering. the technology relating to structure load analysis, design, material processing and welding are especially important in wind turbine design and manufacturing. furthermore, the supply chain management skills we have acquired over the years are another strong asset. I “We have chosen excellence in HSE as a differentiator and a means to build a sustainable culture in the shipyard,” says Ong Poh Kwee, Managing Director Sembawang Shipyard.

28 – no 02 2012

Sembawang Shipyard Managing Director Ong Poh Kwee: Aiming for HSE excellence

no 02 2012 – 29

he hostess pours what looks like smoky milk out of a large thermos. At a temperature of minus 162 degrees centigrade, this is actually liquefied natural gas (LNG). We are at the KOGAS Visitor Centre and Gas Science Museum, located west of Seoul. She then demonstrates that LNG is safe even when poured on top of a water-filled bowl with goldfish swimming under the ice crust formed by the LNG. The KOGAS LNG terminal supplies 40% of Korea’s total gas consumption. KOGAS is the world’s largest importer of LNG, which is brought to Korea by ship from suppliers worldwide.

Since the offshore wind business requires more complex and advanced engineering, our offshore experience obtained through various projects in the Gulf of Mexico, the north Sea and other oil fields is one of our greatest strengths in the wind business. this has helped us advance into the wind energy segment, and i believe our worldwide sales network is also a critical factor that helps us in this market.” how do you see the overall market trend for onshore and offshore wind energy in Korea and Asia?

to take Korea first, the renewable Portfolio Standard, which will be implemented this year, will foster the development of wind turbine farms proactively led by Korea Electric Power Corporation (KEPCo) and other national utility companies. Previously, onshore wind farms were developed in areas of high wind speeds but, because of limited space and difficulties in licensing procedures, developments were slow. however, the new standard means we will see more onshore wind farms.

DNV Forum met Dae-Chun Jun, Vice President of KOGAS. After the interview took place, Mr Jun took up the position as President of Korea Gas Safety Corporation.

I Daewoo Shipbuilding & Marine engineering has taken technical initiatives to create a success story in the wind market as it did in the maritime industry 40 years ago.

34 – no 02 2012

DeWind President and Chief Operating Officer Shin Dong Won: DSME going forward with wind

no 02 2012 – 35

importance of LNG in coping with climate change, and 4) the increased demand for LNG in order to expand the flexibility of the natural gas market. The production of unconventional natural gas is rapidly increasing in North America, and is considered to be one of the main factors that will affect the natural gas market. The earthquake in Japan has not had a major effect on the gas market. The energy supply from the nuclear power industry in Japan does not seem to be undergoing a drastic change, and the incident is not expected to have any great long-term effect.

How do you see the current and future LNG industry?

In that solar and renewable energy has not yet been proved to be economical due to its eco-friendly premium, natural gas is expected to play a bridging role in coping with climate change for some time into the future.

Four main issues are currently being discussed in the LNG industry: 1) the increase in the production of unconventional natural gas, 2) the short-term increase in the demand for LNG due to the earthquake in Japan, 3) the increased

Currently, the gas market is quite inflexible in that many of the gas trades are related to pipeline natural gas and LNG is supplied on long-term contracts. However, the market is becoming more flexible so that the share of pipeline natural gas is

expected to decrease while the share of LNG increases. In the overall natural gas trade, the share of LNG was around 27% in 2007, but this figure will increase to 37% by 2020 and to 50% by 2030. The transportation distance is also growing, so that the need for various carriers will increase. What are your views on the future supply and demand in the global LNG industry?

The demand for LNG has been decreasing due to the economic crisis which started in 2008 and the increase in the production of unconventional gas in North America, while the supply has increased due to the production of gas at large project sites such as Qatar. The excess amount of LNG from the Atlantic area is flowing into the Asia Pacific area. Unlike the spot price, the long-term contract price for LNG has not decreased much due to the increased cost of producing LNG. However, because of the earthquake in Japan, it seems that the Tokyo Electric Power Company will use LNG to compensate for the shortage of power. This will decrease the excess supply of LNG, but since Japan uses more oil

38 – no 02 2012

KOGAS Vice President Dae-Chun Jun: Ambitious plans for KOGAS

no 02 2012 – 39

+ Editorial

The world of energy is changing The global energy sector is undergoing significant changes and investments.

he International Energy Agency (IEA) estimates that USD 10 trillion will be spent in the energy industry between 2010 and 2030. Stricter environmental regulations and increased fuel costs will drive a transition towards cleaner fossil fuel, energy efficiency, the use of renewable energy sources and more cost-effective power generation, transmission and distribution. This energy transition will cause major changes in the energy system, from source to end consumer, and will result in new business models throughout the energy value chain. The world of energy is certainly changing. In this changing world of energy, DNV is also in a transition process. Historically, DNV has been strongest in the shipping industry, and this is still true. Our solid base in the maritime industry has allowed us to branch out into the oil and gas sector, where we now have a firmly established presence. From there, we have expanded into cleaner energy, built up our work in certification, and have now expanded further within power generation and transmission, gas distribution and sustainable energy use.

Broad service portfolio

At the end of last year, we were pleased to announce a strategic investment in KEMA – a Dutch company that is a global leader in the fields of energy consulting and testing & certification and has world-class expertise in the gas, energy grid and energy efficiency sectors. We have acquired 74.3% of the shares in KEMA and are in the process of integrating KEMA into the DNV Group. This will truly broaden our service portfolio within the energy field. I’m happy to say that we’ve found a solid, innovative and international partner that shares our strategic vision, purpose and values. Together we are committed to driving the global transition towards a safe, reliable, efficient and clean energy future. I feel confident that with this move we are well positioned to meet the demands of tomorrow’s energy world. We can now offer a broad portfolio of services. And with a staff of more than 10,000 highly competent professionals at offices in more than 100 countries, we will continue to offer the highest quality services wherever this is needed. I look forward to continuing our relationships and to taking this journey into the future together with all of you.

Henrik O. Madsen Chief Executive Officer

2 – no 02 2012

+ News

The Viking Lady is already one of the world’s most environmentally friendly ships. Once the battery pack is in place, the ship will operate using a hybrid system similar to that which has been installed in hybrid cars for a number of years.

“Our joint service offering gives us the opportunity to provide integrated solutions to our customers and meet the growing demand in the market place,” says Kjell Eriksson, Director of the Energy Programme in DNV Research and Innovation.

First true hybrid system to be installed on board an OSV

+ DNV acquires Vattenfall shares in STRI

A true hybrid energy system is being developed for installation on board the offshore supply vessel Viking Lady.

DNV acquires the STRI (Swedish Transmission Research Institute) shares to expand its presence in the power transmission sector.

The three-year-old LNG-fuelled Viking Lady, owned by Eidesvik Offshore, was the very first merchant ship to use a fuel cell as part of its propulsion system. The fuel cell was installed in 2009 and has successfully run for more than 18,500 hours. A battery pack for energy storage is now being installed, giving further emission reductions. DNV is heading the project, due for completion in 2013. The partners are Eidesvik Offshore and Wärtsilä.

“The purchase of 12.5% shares in STRI is a natural step in our drive to support both the electrification of the oil and gas industry, and the integration of renewable energy and the large investments in the power transmission sector,“ says Kjell Eriksson, Director of the Energy Programme in DNV Research and Innovation.

DNV acquires COEX DNV has signed an agreement to acquire COEX AS, a Bergen-based IT company. COEX AS offers IT solutions for smarter ship management through state-of-the-art technology for more efficient management of international merchant fleets. Its ‘Vessel Information Portal’ software has proved that it leads to cost reductions. DNV Navigator™ facilitates compliance with the requirements of charterers and port authorities and is often referred to as the “Captain’s Best Friend”. Currently more than 2,200 ships subscribe to DNV Navigator™. This acquisition will lift DNV Navigator™ onto a web-based platform providing better functionalities. “The fast growing number of ships currently subscribing to DNV Navigator™ will benefit greatly from running it on the COEX web-based platform. And current and future COEX users will benefit from the longer-term commitment and global reach that DNV provides,” says Odd Arne Haueng, Managing Director of DNV Maritime Partner AS. no 02 2012 – 3

+ News Assisting Rio towards a low carbon future

+ Remi Eriksen CEO of DNV Maritime and Oil & Gas

The City of Rio de Janeiro and the World Bank are pioneering an innovative, city-level program for climate change mitigation to put into action the city’s goals for low-carbon development.

Remi Eriksen has taken up the position as Chief Executive Officer of DNV Maritime and Oil & Gas.

DNV KEMA has confirmed the program’s compliance with the requirements of the new Low Carbon City Development Program Assessment Protocol. Top of Form Certified according to the new Low Carbon City Development Program Assessment Protocol, developed by DNV KEMA based on the standards ISO 14064-2, ISO 14001, and the GHG Protocol, the program will help Rio de Janeiro monitor and account for low carbon investments and climate change mitigation actions across different sectors in the city. The Program is a business model that can be applied to other cities around the world. Cities currently account for over two-thirds of the world’s energy consumption and 70% of global greenhouse gas emissions.

DNV is today a world leading ship classification society and a well-established provider of risk management services to the oil and gas industry. These activities will be organised in one company, called DNV Maritime and Oil & Gas, which will have some 5,500 employees and an extensive global reach. The company will be headquartered in Oslo, Norway, and provide services to DNV’s traditional core markets. “Establishing a company dedicated to the maritime and oil & gas industries enables us to focus our efforts,” says CEO Remi Eriksen, who was previously Chief Operating Officer of DNV’s Asia Pacific and Middle East operations, based in Singapore.

+ DNV Business Assurance and Nemko join forces in Presafe The newly formed DNV Nemko Presafe has agreed with DS Certificering A/S to acquire their Danish Medical Devices Certification unit to form a new and focused entity within the medical device certification field.

DNV Nemko Presafe is a newly established joint venture offering testing and certification for medical and EX industries, owned by DNV Business Assurance and Nemko. Through this acquisition, DNV Nemko Presafe is significantly expanding its position in the area of certification for the Medical Device industry.

DNV and WWF to cooperate DNV has entered into a formal cooperation agreement with wildlife conservation organisation WWF Norway. The cooperation agreement means that WWF (World Wide Fund for Nature) will receive funding for its wildlife conservation work. The agreement has a framework of NOK 4.2 million over a three-year period. DNV, on its part, gains a partner that can contribute to sustainable development through constructive dialogue and common projects. The agreement has a strategic and innovative focus, in which four areas that are important to both parties are key: sustainable shipping, a low-carbon society, the Arctic and assurance and sustainability standards. “With this agreement, we are entering a partnership that we strongly believe will interest, challenge and inspire the employees of both organisations,” says DNV Group CEO Henrik O. Madsen and Secretary-general of WWF Norway, Nina Jensen. 4 – no 02 2012

+ News Henrik O. Madsen CEO of the DNV Group From 1 March, DNV’s operations are carried out through three separate companies: DNV Maritime and Oil & Gas, DNV KEMA Energy & Sustainability and DNV Business Assurance. Each company in the DNV Group will have a dedicated leadership team. Henrik O. Madsen is CEO of the DNV Group. DNV now consists of more than 10,000 employees and has offices in 100 countries. The company now has an even stronger foothold in the US, where DNV has 1,700 employees, as well as in China where it has more than 1,200 employees. “Our solid base in the maritime industry has allowed us to branch out into the oil and gas sector, where we now have a firmly established presence. From there, we have expanded into cleaner energy and built up our work in certification. Now we are further expanding into the fields of power generation and transmission, gas distribution and sustainable energy use by joining forces with KEMA,” says Henrik O. Madsen.

+ david walker CEO of DNV KEMA Energy & Sustainability david walker has taken up the position as Chief Executive Officer of DNV KEMA Energy & Sustainability.

“Together with 1,600 dedicated employees globally, we will collaborate to achieve our goals of continuous growth,” says Luca Crisciotti.

+ Luca Crisciotti CEO of DNV Business Assurance Luca Crisciotti has taken up the position as Chief Executive Officer of DNV Business Assurance.

Luca Crisciotti has been with DNV since 2001, most recently as Director of Operations (DOO) in Division Asia and Australia, located in Shanghai. “I am very motivated to take on the role as CEO in DNV Business Assurance. We have a business strategy that I truly believe in, and I am looking forward to the opportunities and challenges ahead. Together with 1,600 dedicated employees globally, we will collaborate to achieve our goals of continuous growth,” says Luca Crisciotti.

With over 2,300 experts in more than 30 countries, DNV KEMA is committed to driving the global transition toward a safe, reliable, efficient, and clean energy future. The company is headquartered in Arnhem, The Netherlands, and is part of the DNV Group. Its services cover the energy value chain from energy source to end user. The company consists of all, more than 1,800 former KEMA employees, complemented by over 500 employees from DNV’s former renewable energy and sustainability activities. “With our independent view, in-depth knowledge, and innovative solutions for all elements of the energy value chain, we are well positioned to support our customers in ensuring a reliable, efficient, and sustainable energy supply, now and in the future,” says David Walker.

Certification of HVDC cables DNV KEMA high-voltage laboratory has received several requests for performing electrical type tests on HVDC cables. The required technical test installation differs from the technical installation used for AC cable testing. HVDC testing requires a greater capacity, challenging the existing lab by encroaching on its limitations. For this reason, KEMA is building new test facilities in Arnhem for the purpose of testing HVDC cables.

no 02 2012 – 5

+ News + Wallem installs DNV Navigator to its fleet Wallem Ship Management in Hong Kong has ordered DNV Navigator for its managed fleet of more than 190 ships. The contract also includes the Work and Rest Hours module allowing for compliance with international legislation on rest hours for seafarers. DNV Navigator is a dedicated decisions support tool for assisting the Master in handling the administrative and regulatory complexity of port operations. The new contract is the largest ever signed for DNV Navigator. DNV Navigator facilitates compliance with requirements from charterers and port authorities and is often referred to as the “Captain’s best friend”.

“Wallem is striving continuously to manage their fleet in safer and more cost-effective ways,” says Captain Deepak Honawar, Wallem’s director of safety and quality, seen here with DNV Senior Customer Service Manager Kaveh Mansoorian (left).

Karen Conover Clean Energy, Education and Empowerment Ambassador Karen Conover, a Vice President at DNV KEMA has been named as one of the inaugural Ambassadors for the U.S. Clean Energy, Education & Empowerment (C3E) program. Ambassadors serve as spokeswomen for the initiative as well as mentors and role models for women in the clean energy industry.

As one of 20 Inaugural Ambassadors, Karen Conover will help support the U.S. C3E plan to broaden the recruitment, retention, and advancement of highly qualified women in the field of clean energy.

The Ambassador program, one of the new components of the C3E action plan, was announced at the Third Clean Energy Ministerial, a global forum of the energy ministers and leaders of 23 governments, joining together to promote clean energy technology. The C3E program, led in the U.S. by the Department of Energy in partnership with the Massachusetts Institute of Technology Energy Initiative, is an effort to advance the careers and leadership of professional women in the field of clean energy.

RSB Certification of biomass and biofuels DNV Business Assurance has recently been recognised as a third party certification body to the Roundtable of Sustainable Biofuels (RSB) certification system for sustainable biofuels. DNV Business Assurance now offers RSB certification worldwide. RSB certification communicates commitment to safe and sustainable production of biomass and bio fuels, and proves that a product, during its complete production chain, contributes to significantly lower greenhouse gas (GHG) emissions than fossil fuels.

6 – no 02 2012

+ The subsea industry gathers to deal with deepwater lifting challenges As oil and gas developments go deeper, the risk related to lifting operations is increasing.

The development of subsea cranes and lifting appliances has been driven by constant demand for increased lifting capacity, operations in greater water depths and motion compensating systems. “Existing standards and regulations don’t sufficiently meet this challenge and this is why DNV now has initiated a joint industry project to ensure a unified safety approach. Fourteen key international offshore players have joined the project,” says Robert A. Oftedal, DNV’s Business Development Leader, Cranes & Lifting.

+ News + Acquiring Norwegian Petro Services (NPS) The Arctic has large oil and gas resources and operations in this sensitive and harsh area will require efficient oil-spill preparedness solutions.

Oil and gas operations in the northern areas introduce several new risk elements; the distances are greater, the climate is cold, it is dark much of the year and there may be no infrastructure. It is important that the safety level here is at least as good as in the conventional areas. Therefore, the Arctic conditions will require improved technology and new knowledge to reduce the likelihood of an accidental oil spill. In addition, efficient oil-spill preparedness solutions that reduce the consequences of a potential accident must also be put in place. “Both the industry and society focus heavily on reducing the environmental effects of operations in the Arctic. DNV wants to contribute to this, and the acquisition of NPS is an important strategic move in that sense. We are now combining DNV’s environmental risk and oil-spill preparedness analyses with NPS’ specialist expertise in planning and organising oil-spill preparedness. This provides a complete service portfolio to our customers,” says Knut Ørbeck-Nilssen, DNV’s COO of the Norway, Russia and Finland division. “The acquisition of Norwegian Petro Services (NPS) in Norway and its recognised expertise will play an important role in our activities in this field,” says Knut Ørbeck-Nilssen, DNV’s COO of the Norway, Russia and Finland division.

“The next ten years will be a major transition period. We need to take the next generation of renewable technology from the drawing board, where it is now, to being fully scaled up,” says DNV Chief Technology and Sustainability Officer Bjørn K. Haugland.

R&I key to drive green energy growth DNV Chief Technology and Sustainability Officer Bjørn K. Haugland emphasised the need for investment in research and innovation at the World Future Energy Summit 2012. Investment in research and innovation and an increased focus on emerging markets will define the renewables industry over the coming years, according to leading industry figures who gathered in Abu Dhabi for a high-level discussion. Speaking at the plenary session “Business Leaders in Renewable Energy – Insights from the Executive Suite”, Mr Haugland, together with eight senior figures from the energy sector, agreed that 2012 was likely to be a challenging year, “but that those challenges could be overcome by a commitment to strategic investment, research and innovation.”

“This JIP is a brilliant example of how industry and regulators can work closely together to accelerate the implementation of new technologies and industry solutions that one single player cannot accelerate alone. It is an important step in developing Singapore’s maritime cluster towards a maritime knowledge hub,” says Bjørn Tore Markussen, Managing Director of DNV Clean Technology Centre.

LNG bunkering in Singapore The Maritime and Port Authority of Singapore has established a Joint Industry Project (JIP) to investigate the operational feasibility of LNG bunkering in Singapore in collaboration with DNV Clean Technology Centre and 21 industry partners. The JIP aims to provide recommendations to the Singapore government authorities on enabling LNG bunkering in Singapore, ensuring operational safety, alignment with industry expectations and best practice, and compliance with relevant international rules, regulations and standards. no 02 2012 – 7

+ World Petroleum Council

WPC President Renato Bertani:

Oil and gas is here to stay “Oil and gas will be here for a longer time than most people thought just ten years ago. The era of cheap oil is over, but we are still adding to the resource base,” says the newly elected President of the World Petroleum Council (WPC), Renato Bertani, to DNV Forum during the World Petroleum Congress in Doha. “New technologies allow the extraction of resources which we previously regarded as beyond reach,” he says.

Text: Tore Høifødt

8 – no 02 2012

I Doha skyline. The 20th World Petroleum Congress was held in Doha, Qatar.

deeper waters and the Arctic. It also makes unconventional energy sources, such as shale gas, oil sand, etc, more relevant.” Environmental focus

+ World Petroleum Council

“I believe the World Petroleum Council can be an arena for developing a better dialogue between the oil and gas industry and society at large.” Renato Bertani, President of the World Petroleum Council (WPC)

I Renato Bertani was elected President of the World Petroleum Council at the 20th World Petroleum Congress in Doha, Qatar.

10 – no 02 2012

need to be addressed in a responsible way. We need to listen carefully to these worries and make sure we communicate better with all stakeholders. This communication is challenging, because the oil and gas industry has an image problem. I believe the World Petroleum Council can be an arena for developing a better dialogue between the oil and gas industry and society at large,” he says. A Good story to tell

“The WPC recently conducted a global survey among graduates, mapping their views on this industry. On topics related to ethics and environmental care, they rate us close to the bottom, ahead only of the tobacco industry. An event like the Deepwater Horizon accident does not improve this perception. In fact, this industry’s track record has improved considerably over the past 20 years. Now we are exposed to activities in harsher and more

demanding environments and have comparatively far fewer incidents than we used to have. It is paramount not to relax on quality and safety standards. Society has a zero tolerance for failure, and the industry should aim to meet such perfect standards while being prepared to cope with and mitigate the impact of any accident. “We need to become better at communicating the importance of the oil and gas sector, which has never failed to deliver a reliable and affordable source of energy for global development. We need to work hard on this, because we have such a good story to tell,” Mr Bertani insists. And he adds: “To develop front-end technologies and open new frontiers, such as ultradeep waters or the frozen Arctic, we must continue to attract talented professionals, particularly young people. “As the President of the WPC, I have two main ambitions. This organisation, with 65 member countries, has access to a

great repository of experience. I want us to act as a catalyst in the industry. We need to share technologies and lessons learnt from environmental incidents, and even exchange business models. In the near future, we will create a database of best practices in order to promote sharing and cooperation. “My second ambition is to ensure that the WPC, on behalf of the industry, reaches out to society. We need to listen more to societal views about us and try to understand what is behind these views. If we manage to improve our communication with stakeholders on future solutions, critical research and best practices, then the oil and gas industry should have a bright future,” says Renato Bertani.

The World Petroleum Congress The World Petroleum Congress in Doha gathered 600 high-level speakers, among them 100 CEOs and 25 government ministers, for four days of strategic discussions and experience exchange and transfer. The agenda focused on the two most pressing issues that need be solved to ensure the petroleum industry’s long-term sustainability: ■■ Cost-effective development and deployment of the most advanced technologies ■■ Meeting society’s increasingly stringent requirements.

no 02 2012 – 11

+ Energy

Towards a new world of energy The global energy sector is undergoing significant changes and investments. Stricter environmental regulations and increased fuel costs are expected to drive a transition towards cleaner fossil fuel, energy efficiency, use of renewable energy sources, and more cost-effective power generation. Text: Eva Halvorsen Photo: nina e. Rangøy

“This energy transition will cause major changes in the energy system, from source to end consumer,” says David Walker, CEO of DNV KEMA Energy & Sustainability, one of three companies in the newly established DNV Group. To broaden its service portfolio within the energy field, DNV recently acquired 74.3% of the shares in the Dutch company KEMA – a world leading company within energy consulting and testing & certification with world class expertise in the electricity, gas, smart grid, and energy efficiency sectors. “This move has extended our service portfolio,” says Mr Walker, explaining how the new company will combine KEMA’s expertise with DNV’s experience in risk management, climate change, carbon capture and storage (CCS) and renewables. “We can now offer a broader portfolio of services, from energy source to end user, and what we are seeing from large clients in the energy sector is they want this kind of one-stop-shop approach. Our combination of business consultancy, technical expert advice and our worldwide reputation in Testing, Inspections and Certification together with DNV’s excellent reputation in areas such as risk management and accredited climate change services will 12 – no 02 2012

strengthen our customer value propositions but also gives excellent development and career opportunities for our staff.” Collaboration

Mr Walker sees major changes in the global energy sector. “The energy transition creates new value chains. New stakeholders are entering the market and traditional parties are being challenged to redefine their role. Existing and new stakeholders will need to collaborate in new ways. “There’s only one option; industry partners and governments working together to make the transition to a secure, reliable, efficient and sustainable energy supply,” he says. For the transition process to be successful, he underlines that a number of conditions must be met. “In the first place: transition is linked to taking risks, so all parties need to be prepared to take them. Secondly, it is important to identify and manage these risks by controlling the process. Furthermore, new strategic business models are needed. And last but not least, innovation is an important condition for the energy transition to be successful. With our services across the energy value chain DNV KEMA can be of

real value to our customers in making the energy transition happen,” says Mr Walker. He is looking forward to exciting times as countries and businesses move quickly to transform their energy infrastructure. “With the current growth in renewables we are going to see gas with CCS become increasingly important as a form of base load power,” he says. “Smart cities are also a good example. We’ve done a lot of work on how smart cities bring together grid upgrades, solar power, energy efficiency, smart appliances in homes, electric vehicles, and so on,” he says. Different stages

However, the pace of the transition towards a new sustainable energy system that is happening globally, will differ per country. But Mr Walker sees that as an advantage. “As a global firm that means that we can learn lessons in some markets and apply the solutions found to other markets.” As an example he mentions numerous smart grid trials around the world that the company is involved in, which are now moving towards full scale deployment, as well as the presence of a 400-strong energy efficiency team in the US working with

I “The movement towards smarter grids is one of the main issues revolutionising the way we see our future,” says David Walker, CEO of DNV KEMA Energy & Sustainability. no 02 2012 – 13

+ Energy

utilities and corporate customers to curb energy use. “What you clearly see with the development of pilots is that a variety of companies have teamed up together. Together, they realised that the innovation of our energy system is necessary and also provides new opportunities. They have actually sat down together to realise this innovation. Subsequently, (local) government has said in number of cases: we will help to facilitate you to get it off the ground. Hopefully this also means that in due course governments will do so by simplifying the regulations, in order to accelerate the transition,” he says. Governments’ role

According to Mr Walker, governments’ facilitating and encouraging role is essential to moving forward with the actual tran14 – no 02 2012

sition. The governments’ task is not only to develop structural grant policies and to have technical and economic feasibility studies carried out. It is also necessary for governments to adjust regulation and licensing systems to the new requirements and to act as catalysts for projects. The latter is especially important, because at the moment, the realisation of sustainable energy projects often takes far more time and money than necessary. Moreover, it is important that the transition policies progress consistently, irrespective of the governments in power. “The success of the energy transition largely depends on the degree to which the existing and new systems can be merged. The call for flexibility and technologies that allow large-scale deployment of renewable sources is entirely justified,” he says. In this context he mentions energy

storage, smart grids and ultra high voltage DC systems. These are all still in their infancy, but in the coming years they will evolve further. Sustainable energy system

“However, there is still a lot to be gained in the field of energy efficiency in buildings and industries,” says Mr Walker. “It would provide huge advantages if we were smarter when using our current systems.” David Walker is convinced that it is only a matter of time before the global population has access to electricity. “Energy, together with water and food, is considered part of a person’s basic needs. Acceleration of the transition to a sustainable energy supply worldwide is therefore of the highest importance,” he says.

Taking advantage of smart grids The new smart grid world will bring together all of the pieces of the larger energy transition.

The increasing use of energy will result in greater dependence on power quality and security of supply. “What we are seeing is a shift to an optimal future where we have a balance between environmental sustainability and economic sustainability, and an increased security of supply. Smart grid plays a major role in this global transition,” David Walker says. I The success of the energy transition largely depends on the degree to which the existing and new systems can be merged, according to David Walker.

Changing policies, deregulation and economic reality are affecting day-to-day business like never before. “The smart grid era is creating more complexity and diversity in the industry. But it will also provide more flexibility in our energy system,” he says. While the energy transition presents some interesting challenges, it also provides new opportunities. Renewable energy sources have been a topic of discussion for years, but how can we use the energy sources in our own backyards to effectively supplement our energy supply? Solar, wind, water – each is abundant and in endless supply. But what is the business case for each source, and how do we integrate intermittent sources like wind and solar? How could adding energy storage in the system support all

of this? What role could the natural gas system play in providing flexibility to our energy system? “After looking at our energy sources, the next step in the transition is how to generate and use this energy more efficiently. We can’t have the smart grid discussion without having the renewables discussion or the energy efficiency discussion. And we need flexibility in the grid if we want to ensure reliability in this new energy world,” says Mr Walker. The smart grid he envisions connects us across borders, neighborhoods, cities, countries, and continents. “Like Web 2.0, which connects people over the internet allowing them to network at any time of the day, all the time, giving and receiving information in the blink of an eye, Energy 2.0 uses IT to move us to a distributed network. The consumer gives and receives energy on demand. He has the power and the flexibility. This new smart grid world will bring together all of the pieces of the larger energy transition, With our Smart Grid knowledge and services we have the tools to accelerate this process,” David Walker concludes. no 02 2012 – 15

+ Energy

Taking power further As the need for more electricity gathers pace in Europe, the services of the Dutch transmission grid operator TenneT are in demand.

Text: Stuart D. Brewer Photo: Alain Baars

he electricity market in Europe has changed dramatically over the past few years. Many new power stations and wind farms have been built and energy companies and project developers have plans to build many more. Arnhem-based TenneT has a crucial part to play in these developments. The company is investing billions in its high voltage grids and building new crossborder interconnections. It is doing this not only to guarantee security of supply now and in the years ahead, but also to further develop the European electricity market and integrate renewable energy, for example from wind farms, into the European grid. One significant step in this direction was in January 2010 when TenneT bought the German extra high voltage grid of transpower. This made TenneT Europe’s first cross-border Transmission System

Operator (TSO), putting it at the heart of the drive towards a single European electricity market. TenneT is currently connected to seven other European countries and has crossborder interconnections in all directions. The NorNed cable linking The Netherlands and Norway is proving a great success in bringing surplus electricity from Scandinavia into northern Europe for 80% of the time and ‘European electricity’ into the Scandinavian grid for the remaining 20%. A new connection with the United Kingdom (through the BritNed cables under the North Sea) became operational last year, and a new interconnection with Germany is in the planning phase. A connection to Denmark, the Cobra cable, and two more to Norway (NorNed2 and Nord.Link) are also under consideration.

Demand for transmission capacity

TenneT is also making major investments in The Netherlands as the demand for electricity is set to increase over the coming years. “Due to the liberalization of the energy market and the rising demand for transmission capacity, energy is also being transmitted over longer distances. As an example, the grid in the north is currently operating at its maximum capacity and we know that several applications have been submitted for the construction of additional power plants. Without a new connection, there will be no transmission capacity available to transport the electricity from these new plants in the future so an expansion of the high-voltage grid is needed,” explains Raymond Berentsen, senior project manager at TenneT. The 380 kV electricity connection will cover a distance of approx. 220km, from

Facts about TenneT TenneT is Europe’s first cross-border grid operator for electricity. With approximately 20,000 kilometres of (extra) high voltage lines and 36 million end users in The Netherlands and Germany, it ranks among the top five grid operators in Europe. Its focus is to develop a Northwest European energy market.

16 – no 02 2012

I TenneT is making major investments in The Netherlands as the demand for electricity is set to increase over the coming years. no 02 2012 â&#x20AC;&#x201C; 17

+ Energy

I “Energy demand has grown significantly in The Netherlands over the years, and there is a clear need for a strong and efficient electricity grid which will increase security of supply, create opportunities for renewable energy and assure competition.” Raymond Berentsen, senior project manager at TenneT. 18 – no 02 2012

Eemshaven to Diemen, via Ens. The project, known as North-West 380 (NW380), started a few years ago and the connection is scheduled for completion by 2016. North-West 380 project

“It’s a challenging project in many respects as it involves work towards land owners, public authorities, energy producers as well as equipment suppliers and sub-contractors,” points out Berentsen who is heavily involved in the design and implementation work. “The engineering work is also challenging so we bring in experts from DNV KEMA to advise us on technical and strategic matters.” “DNV KEMA will assist with the basic design, preparation of specifications, tender evaluation, and support during the construction of the NW380 overhead line,” says Andries van der Wal, senior consultant at DNV KEMA Energy & Sustainability. “We have been involved in this project since 2009 and have conducted a feasibility study for the overhead line and preliminary designs for several challenging sections, including water crossings. More recently, we assisted TenneT TSO with the line routing and tower spotting for the overhead line.” Explaining the rationale for having a strong and efficient electricity grid, Berentsen says: “It lies in having a highly versatile independent grid that will further increase security of supply, create for generating renewable energy and assure sufficient, European, competition in the energy market to bring about great price stability.”

Smart Energy Collective

The application of digital technology to the electric power infrastructure, commonly known as the smart grid, is also considered as a key solution to the security of electricity supply. TenneT, together with twenty six partners, including DNV KEMA, recently signed a cooperation agreement called the Smart Energy Collective, which involves the development of five largescale smart grid demonstration projects in The Netherlands. The projects will be implemented at Schipol airport, ABB and Siemens offices, and in residential districts in Gorinchem, Heerhugowaard and Goes.’ “Smart grids are the key to a sustainable power supply and the most promising answer to the increasing energy demand,” says Andries van der Wal and adds, “The Smart Energy Collective wants to test the smart grids in practice, as well as to provide an important impulse to standardization. The overall objective is to create a common market for energy services that is of a sufficiently large scale to enable consumers to better control their own energy management. “Smart grid technology is already helping to bring information to the utilities so they can plan their investments in their electricity networks and forecast demand with a better insight on how to control the electricity usage,” concludes Andries van der Wal.

Sustainable energy Sustainable energy is growing in importance. Various initiatives are being undertaken, including solar, offshore and onshore wind energy. Local electricity generation by households, for instance, is also increasing. With this kind of electricity generation, the supply is less predictable than before. In addition, the production of electricity, for example in the form of offshore wind energy, will often take place at a greater distance from where it is needed and used. These developments call for new grid investments. There is also a need for new interconnections, especially with other countries bordering the North Sea. The additional interconnections that will be built will contribute to the establishment of an integrated European electricity market.

no 02 2012 – 19

+ Risk management

Paddling like mad to stay calm “There will be more changes to risk management during the next ten years than we have seen over the past 20,” says Hans Læssøe of LEGO System, Denmark. “The shareholders’ value model will not survive for ten more years,” replies Anthony Hilton, Financial Editor of London Evening Standard. Text: Per Wiggo Richardsen Photo: Nina E. Rangøy

DNV

So, Mr Læssøe’s comment is well worth listening to. High speed will speed up

I Paddling in a London park. no 02 2012 – 21

+ Risk management

I Paul Mason, BBC

I Jonathan Reuvid, KoganPage (middle)

“One of the prestigious UK car brands, Range Rover, almost broke the bank and was rescued by Indian money and Indian ownership a very few years back. Over the past months, its main problem has been to employ enough qualified people and to meet the market’s need for its expensive cars – still produced in the UK’s West Midlands. 22 – no 02 2012

I Anthony Hilton, London Evening Standard

I Alex Hindson, Amlin UK

“And what about Rolls-Royce? Today, more Rolls-Royces are sold in China than in any other country. Who would have predicted such changes just a few years ago?” Mr Reuvid has been working in China since the mid-1980s. He has seen the shift from west to east. He has seen how changes within different economies have speeded up, and he predicts we are cur-

rently undergoing major changes that will have a major impact on future risk. “China’s development has been export led. This will not continue. As DNV states in its Outlook, more than every sixth person on this globe is Chinese. As China changes to become domestic-demand led, this will of course have an impact on the global economy, supply and demand,

I Hans Læssøe, LEGO System, Denmark

“If everything is under control at all times, we are moving too slowly. And we will not be allowed to move slowly.” Hans Læssøe, LEGO System, Denmark

our reciprocal trade and investment with China, etc. “Does anyone still believe the risk image will continue to be unchanged?” he asks inquisitorially. Managing risk is about people

“But risk is as much about people as about anything else. Risk management is most likely to fail when the human element has not been taken into sufficient consideration. We all know the saying: what can be measured can be changed, and what gets measured gets thought about. The challenge is to measure all the non-numeric elements, all the elements that have an impact on an individual’s behaviour.” The words above belong to Anthony Hilton, of the London Evening Standard and a highly respected commentator on UK television. “Stop thinking of business as something mechanical,” he warns. “Business is about

people, a complete ecosystem where all things are connected to each other. The human dimension is essential when assessing, communicating, managing and advising upon risk. The real world is about people and politics. “And sometimes about big egos,” he adds, keeping a very straight face. Another editor, Paul Mason, the BBC’s Economics Editor, follows up by adding: “And risk is about the unexpected. It is in its nature. Just look at what happened outside St. Paul’s Cathedral in London last autumn. The protestors simply occupied the church surroundings because it was public, while the Stock Exchange’s surroundings which they were heading for were private. It is hard to accuse the church of not having managed that risk and of not being prepared for all the ethical dilemmas they had to face as an outcome of the camp being established. “What I mean to say is that risk is about

the unpredictable. It is hard for most of us to communicate or accept that fact. I’m sure none of us wants to have a system where everything is predictable and monitored.” His editor colleague, Mr Hilton nods appreciatively and adds: “We cannot be led into a civil service system.” Hans Læssøe, who started the discussions with his clear and thought-provoking viewpoints, is still active and outspoken when the discussion is coming to an end: “As customers and consumers are to be more integrated in product development, risks have to be faced, and new challenges that we are not aware of today must be faced tomorrow.” “We’ll never be able to stop the clock. We will always have to face risk, but we have to ensure we are aware of and able to manage the risk,” is the final comment of Alex Hindson of Amlin.

no 02 2012 – 23

+ Innovation

The fishing vessel of the future DNV has launched a concept for a new generation of fishing vessels that points the way to the fishing industry of the future.

Text: Arnstein Eknes and Eva Halvorsen

one of the oldest industries in the world, fishing is a trade with long traditions. But it is also a business facing mounting challenges. Fishing has never been an easy profession, far out at sea, and in hazardous working conditions. Fisheries are important to the economy and well-being of communities, with about 90 million tonnes of fish currently caught each year, providing some 16% of the world’s total protein. But these resources are limited, and global catches are no longer increasing despite an increase in demand. Human consumption of fish grew from 25 to 85 million tonnes between 1960 and 2008, but global capture has not increased since the turn of the century. Fishing remains one of the world’s most dangerous trades in terms of lives lost each year. It can be a stormy business in economic terms too, with rapid changes in fuel prices, fish prices, fish stocks and quotas. Despite many countries’ considerable efforts in responsible fisheries management, accusations of harming mammals and illegal, unregulated and unreported fishing remain. The issue of climate change complicates the picture further. 24 – no 02 2012

Concept vessel

Against this backdrop, DNV has taken a technological approach to address the key challenges. “Catchy is our concept for the fishing vessel of the future,” says DNV’s project manager Martin Davies. “It answers challenges relating to flexibility of operation, energy efficiency, improved working conditions and safety.” Catchy is designed primarily for fishing with purse seine and pelagic trawling. To take advantage of available time between fishing seasons, it is also secondarily designed for a range of other applications that require a stable and flexible deck area. “Catchy’s primary gear is adaptable to a wide range of other uses, such as ROV (remotely operated vehicle) operations, offshore wind farm support and oil spill recovery,” says Mr Davies. Other tasks that the vessel could perform include marine research, waste collection and disaster support – offering owners the opportunity for flexible operational utilisation and good returns. Cleaner fuel for fishing

In spite of having many advantages,

Liquefied Natural Gas (LNG) is not very widely used in the fishing industry. There is scepticism relating to bunkering opportunities as well as the space required for installation. However, LNG reduces emissions to air and expenditure on fuel, and complies with all known future regulations for NOx and SOx emissions without the need for exhaust gas treatment. It will also contribute to reducing the CO2 footprint from fisheries. “Our concept vessel utilises a prismatic aluminium double barrier tank from Aker Solutions to store the LNG, allowing LNG fuel to be bunkered for two weeks’ operation. The tank is expected to be ready for use by 2015, and by then we expect more advanced LNG bunkering infrastructure to be in place as well,” says Mr Davies. In addition to this, the safety and comfort to those onboard has been one of the most important aspects of the fishing vessel design, according to Mr Davies.

I Multipurpose vessel: Catchyâ&#x20AC;&#x2122;s primary gear is adaptable to a wide range of other uses, such as ROV operations, offshore wind farm support and oil recovery.

I The Catchy concept offers new approaches to operational flexibility, efficiency, working conditions and safety. no 02 2012 â&#x20AC;&#x201C; 25

+ Innovation

Taking deepwater pipelines to the

X-Stream

DNV has developed a new pipeline concept, called X-Stream, that can significantly reduce the cost of a deepwater and ultra-deepwater gas pipeline while still complying with the strictest safety and integrity regime. Text: Per Wiggo Richardsen photos: Damir Cvetojevic

-Stream is based on established and field-proven technologies which have been innovatively arranged. It can reduce both the pipeline wall thickness and time spent on welding and installation compared to deepwater gas pipelines currently in operation. The exact reduction in the wall thickness depends on the water depth, pipe diameter and actual pipeline profile. Typically, for a gas pipeline in water depths of 2,500m, the wall thickness reduction can be 25–30% compared to traditional designs. “It’s essential for DNV that the new concept meets the strict requirements of the existing safety and integrity regime, and I’m pleased to confirm that this concept does,” said DNV Group CEO Henrik O. Madsen at a press briefing in London. “DNV has been instrumental in developing and upgrading the safety and integrity regime and standards for offshore pipelines over the past decades. Today, more than 65% of the world’s offshore pipelines are designed and installed to DNV’s offshore pipeline standard. As the deepwater gas transportation market will experience massive investments and considerable

26 – no 02 2012

growth over the coming years, new safe and cost-efficient solutions are needed,” Mr Madsen said. Thick walls

Current deepwater gas pipelines have thick walls and, due to quality and safety requirements, the number of pipe mills capable of producing the pipe is limited. When installing pipelines, the heavy weights are difficult to handle and the thick walls are challenging to weld. Another aspect is that the number of pipe-laying vessels for deepwater pipelines is limited too. New offshore oil and gas fields are being developed in ever deeper waters, and export solutions for the gas are critical. New exploration activities are also heading for ultra-deep waters. The distance to shore is increasing too. The X-Stream concept can for such fields represent an alternative to e.g. floating LNG plants combined with LNG shuttle tankers. By controlling the pressure differential between the pipeline’s external and internal pressures at all times, the amount of steel and thickness of the pipe wall can be reduced by as much as 25–30% or even more, compared to today’s practice and

depending on the actual project and its parameters. This will of course make it easier and cheaper to manufacture and install the pipeline. “By utilising an inverted High Pressure Protection System – i-HIPPS – and inverted Double Block and Bleed valves – i-DBB – the system immediately and effectively isolates the deepwater pipe if the pressure starts to fall. In this way, the internal pipeline pressure is maintained above a critical level for any length of time,” explains Asle Venås, DNV’s Global Pipeline Director. Simple and reliable

The new concept is simple and reliable. During installation, it is necessary to flood the pipeline fully or partially to control its differential pressure. During operation, the i-HIPPS and i-DBB systems ensure that the pipeline’s internal pressure can never drop below the collapse pressure – plus a safety margin. In sum, a certain minimum pressure will be maintained in the pipeline at all times. “It will also be important to maintain the minimum pressure in the pipeline during pre-commissioning. This can be

I “By controlling the pressure differential between the pipeline’s external and internal pressures at all times, the amount of steel and thickness of the pipe wall can be reduced by as much as 25–30%,” says Asle Venås, DNV’s Global Pipeline Director.

done using produced gas separated from the water in the pipe by a set of separation pigs and gel. This technology is not new to the industry. This method has already been initiated as standard practice by several oil companies,” says Mr Venås.

A team of mainly young highly skilled engineers, headed by DNV in Rio de Janeiro, is behind the X-Stream concept. As with the other DNV concepts launched in 2010 and 2011, the X-Stream team was asked to think outside the box.

The DNV study is a concept study, and a basic and detailed design will need to be carried out before the X-Stream concept can be realised. DNV intends to work further with the industry to refine and test the concept. no 02 2012 – 27

+ International Safety Rating System (ISRS)

Aiming for HSE excellence Sembawang Shipyard in Singapore is among the world’s leading ship repair and offshore yards, serving many oil majors and international shipowners and operators. Managing Director Ong Poh Kwee has a clear ambition to stay ahead of the competition. “We now benchmark against the oil companies and not the shipyards. This brings us into a league with tougher requirements and an uncompromising focus on health, safety and the environment (HSE). DNV’s International Safety Rating System (ISRS) has helped get us there.”

Text: Tore Høifødt photos: Marianne ramstad

28 – no 02 2012

with us. 86% of our customers are repeat customers. In the longer run, this develops into partnerships rather than traditional customer relations,” he says. ISRS a framework

I “We have chosen excellence in HSE as a differentiator and a means to build a sustainable culture in the shipyard,” says Ong Poh Kwee, Managing Director Sembawang Shipyard. no 02 2012 – 29

+ International Safety Rating System (ISRS)

I “ISRS serves as the backbone of our organisation’s HSE system,” says Ong Poh Kwee, Managing Director Sembawang Shipyard.

tion, the shipyard was one of the first in South East Asia to be certified according to OHSAS 18001 on occupational health and ISO 14001 covering the environmental management system. “We are located next to residential areas and on the border between Singapore and Malaysia. That means we have to take environmental measures that go far beyond what our competitors normally face,” says 30 – no 02 2012

Mr Ong. Sembawang Shipyard has also pioneered the “Green Wave Environmental Care Project for Schools” since 2003, a programme that reaches out to schools throughout the country and encourages innovative ideas to save the environment. This national level outreach receives strong participation and support from the primary to tertiary levels. Mr Ong concludes with the following:

“ISRS serves as the backbone of our organisation’s HSE system. However, in order to continue along our journey to build a strong HSE culture, we need to keep on emphasising the need for a strong focus on people issues. Over the years, we have implemented a number of initiatives to ensure our staff pay attention to and are engaged in occupational health, safety and the environment.”

ISRS in brief ISRS is a system to assess, improve and demonstrate the health of an organisation’s business processes. The International Safety Rating System 1st Edition was developed in 1978 by Frank Bird, a safety management pioneer. In recent years, ISRS has changed to address sustainability issues, including environmental, health and quality management and sustainability reporting. ISRS 8th Edition was launched in 2009 and incorporates the best practices in process safety management. The 5th International ISRS Conference will be held in Singapore 4–5 September 2012. For more information, see www.dnv.com/isrs.

no 02 2012 – 31

+ Bunker quality management

Leading the way in bunker quality management When a bottle of bunker sample is shipped to a testing facility, it often hides an interesting story about the fuel it represents. How quickly and accurately the tale unfolds will depend on the skill of the story teller. Text: David wong photos: ren kin (portrait) and Nina E. Rangøy

n the case of DNV Petroleum Services (DNVPS), 30 years of experience in fuel quality analysis have helped the company perfect the art of drawing out anomalies from bunker samples and connecting laboratory findings to operational problems experienced on the ship. A long-standing concern in the shipping industry, fuel quality problems were particularly serious during the 1970s oil crisis when refineries began using ‘deep conversion’ techniques to increase the yield of high-end products from crude oil, leaving the residual components used by commercial vessels in considerably poorer quality. “There was a drastic rise in fuel-related engine damages, and it didn’t take long for the industry to realise the value of having a commercial analytical service to determine the quality of bunkers,” says DNVPS managing director Eirik Andreassen. A collaboration between DNV and INTERTANKO was formed to develop such a fuel testing service, leading eventually to the establishment of DNVPS in 1981. Two-thirds market share

Today, DNVPS has a two-thirds market share in the global bunker testing business and a cumulative test volume of over 1.5 million bunker samples. With a staff 32 – no 02 2012

“What makes DNVPS unique is our ability to translate the massive bunker quality data at our disposal into incisive trends and patterns,” says Mr Andreassen. “We use this knowledge to assist ship operators in becoming better at managing fuel-related challenges, and to develop value-adding services for them.” Since joining DNVPS in June last year Mr Andreassen, formerly DNV’s Director of International Affairs, has been busy planning for the company’s future. He is well aware of the increasingly complex business environment, where economic and regulatory constraints are already forcing many ship operators into a costcutting mode. I During the 2008–2009 global financial crisis, DNVPS’ fuel quality testing and bunker quantity survey businesses actually grew.“This tells us that if we maintain a strong commitment to delivering the best service quality, our clients will stay with us,” says managing director Eirik Andreassen.

strength of 230 employees, it operates five specialist fuel testing laboratories – in Singapore, Fujairah, Rotterdam, Oslo and Houston. DNVPS is also a major provider of bunker quantity surveys, having completed 68,000 jobs around the world since the early 1990s.

Cost control

“Cost control is easily the most important driver in the current shipping market, and this is where DNVPS has a strong advantage. Our clients trust us to make sure they’re getting their money’s worth from their fuel spend.” He feels DNVPS can do more in the challenging times ahead, when ship operators will foreseeably need greater support in procuring the best value-for-money bunkers, using the fuel safely, and in complying with progressively stricter bunker regulations.

I DNVPS has a two-thirds market share in the global bunker testing business and a cumulative test volume of over 1.5 million bunker samples.

In particular, Mr Andreassen predicts that the enforcement of the North American Emission Control Area (ECA) next year will cause major headaches for some ship operators. “While teething problems can be expected with the availability of 1.00% sulphur bunkers to cater for this new ECA, quality will be a longer-term worry because suppliers must increase their blending activities to produce more low-sulphur products.” Mr Andreassen explains that blend stocks for ship bunkers are notorious for their dubious quality and may introduce harmful contaminants into the final fuel products. But even in the toughest conditions, he is convinced ship operators can improve their fuel management decision-making with DNVPS bunker quality insights;

whether in choosing the most reliable bunkering port or supplier, or attempting higher cost savings through more efficient fuel consumption. Fuel Insight

With that in mind, DNVPS recently launched Fuel Insight, a data analytics product that lets users monitor the performance of fuel suppliers based on a number of weighted criteria. It boasts benchmarking functions for measuring the fuel-related performance of the user’s ship or fleet against industry averages. “Fuel Insight is a product that truly encapsulates DNVPS collective knowledge, expertise and innovation in bunker management,” says Mr Andreassen. “It also reflects the talents of our colleagues from DNV Research & Innovation, who helped

us develop a cutting-edge solution for today’s market needs, based on all that we know about heavy fuel and distillates.” But with LNG looking set to give petroleum products a run for the money in ship propulsion, what does the future hold for DNVPS?

“While LNG will no doubt be a part of the fuel mix for the shipping industry, chances are exhaust gas cleaning systems will enable operators to continue burning heavy fuel oil,” says Mr Andreassen. Regardless of the type of fuel in use, he believes there will always be quality issues – and hence a need for testing. “Thirty years from now, I’m quite sure DNVPS will still be in the business of unraveling mysteries hidden in the fuel. “It’s what we do best.” no 02 2012 – 33

+ Wind energy

Going forward with wind In 2009, Daewoo Shipbuilding & Marine Engineering purchased US turbine maker DeWind and started to integrate DSME’s world-class engineering and manufacturing capabilities with DeWind’s technology and experience to become a world-leading wind energy company.

Text: Sun Young Park Photo: Dewind

aewoo Shipbuilding & Marine Engineering (DSME) recently introduced the world’s first VOITH WinDrive system. The system allows a clean power supply to be obtained without a converter or inverter. DSME took the technical initiatives to create a success story in the wind market as it did in the maritime industry 40 years ago. DNV met Mr Shin, Dong Won, the President and Chief Operating Officer of DeWind Co. How do you think DSME can leverage its experience of the maritime & offshore industries in the wind energy market?

Wind energy engineering shares many technologies with maritime engineering. The technology relating to structure load analysis, design, material processing and welding are especially important in wind turbine design and manufacturing. Furthermore, the supply chain management skills we have acquired over the years are another strong asset.

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Since the offshore wind business requires more complex and advanced engineering, our offshore experience obtained through various projects in the Gulf of Mexico, the North Sea and other oil fields is one of our greatest strengths in the wind business. This has helped us advance into the wind energy segment, and I believe our worldwide sales network is also a critical factor that helps us in this market.” How do you see the overall market trend for onshore and offshore wind energy in Korea and Asia?

To take Korea first, the Renewable Portfolio Standard, which will be implemented this year, will foster the development of wind turbine farms proactively led by Korea Electric Power Corporation (KEPCO) and other national utility companies. Previously, onshore wind farms were developed in areas of high wind speeds but, because of limited space and difficulties in licensing procedures, developments were slow. However, the new standard means we will see more onshore wind farms.

I Daewoo Shipbuilding & Marine Engineering has taken technical initiatives to create a success story in the wind market as it did in the maritime industry 40 years ago.

no 02 2012 â&#x20AC;&#x201C; 35

+ Wind energy

I Wind energy engineering shares many technologies with maritime engineering.

As regards the offshore wind industry, the Korean government, together with KEPCO, is developing a 2.5GW offshore wind farm on the south-west coast. The number of offshore wind farms is expected to grow because of this. However, one of the hindrance factors is the competition among as much as eight local wind turbine manufacturers in this limited local market. To effectively respond to this, manufacturers must be cost competitive and actively seek business opportunities in the foreign market. In Asia, China and India are active in wind energy development but the other countries show relatively little interest. In China, many of the foreign players are 36 â&#x20AC;&#x201C; no 02 2012

struggling to increase their share of the business because the government is implementing a rather strict policy that favours Chinese companies. Furthermore, the Chinese wind market is currently facing difficulties because the turbines are priced lower than their cost due to the over-supply in the industry. The Chinese government is likely to promote policies to reduce the number of turbine manufacturers. Other Asian countries, such as the Philippines, Vietnam, and Taiwan, are facing the problem of power shortages and a gradual growth in wind energy is expected. Japan is showing great interest in wind energy, especially after the Fukushima disaster, but needs to solve complicated

issues relating to easing construction and environment regulations for onshore wind farm development since it has limited available space. For offshore developments, fishery rights are the sensitive issue.â&#x20AC;? What is your opinion on the overall global trend?

Slower growth is expected due to the financial turmoil in the US and Europe. Nonetheless, the governmentsâ&#x20AC;&#x2122; stretch targets concerning renewable energy goals will be important drivers in the cleaner energy industry. Within the renewable energy sector, wind energy is comparatively cost competitive and, since it is perceived as a mature market, it will maintain its market size or level of gradual growth.

I Shin Dong Won, President and Chief Operating Officer of DeWind Co.

I Daewoo Shipbuilding & Marine Engineering’s goals are to be in the global top 10 in the onshore wind market by 2015 and in the global top three in the wind power market by 2020.

Since high investment cost is involved in offshore wind farm developments, obtaining adequate financial support will be a success factor. Therefore, offshore wind farm developments run by Europe, the US and China will lead the global wind business ahead.”

the current wind industry, we might need more time to achieve them.

In the long term, the offshore wind market is expected to take an essential part of the industry’s growth. What are DSME’s plans regarding offshore wind development?

DSME’s goals are to be in the global top ten in the onshore wind market by 2015 and in the global top three in the wind power market by 2020. These are stretch targets and, considering the downturn in

We’re developing a 7MW offshore wind turbine and aim to have this type certified by 2014. We’ll test and verify its performance through participating in a southwest coast offshore wind farm development project led by the Ministry of Knowledge and Economics. Collaboration with relevant partners is essential for successfully carrying the business forward. In this respect, DSME’s global network and reputation are a great asset.

wind turbine installation vessel. This was ordered by RWE, a leading German utility company. Our accumulated experience and know-how in offshore engineering and installation will particularly help us gain a competitive edge. DNV has been our close partner since we became established in the maritime industry, and DNV’s outstanding guidelines and services have helped us grow as one of the world’s leading shipbuilders. DNV has great overall understanding and knowledge of the wind energy segment, and we look forward to our future cooperation.

Moreover, we’re trying to pursue a total solution provider model. DSME is the first Korean shipbuilder to construct a no 02 2012 – 37

+ Natural gas

Ambitious plans for KOGAS “Our goal is to provide a stable supply of cheap gas to the Korean people. To achieve this, we are continuously investing in foreign resource development projects to acquire a stable energy source,” says Dae-Chun Jun, Vice President of KOGAS.

Text: Magne A. Røe photos: kogas

How do you see the current and future LNG industry?

38 – no 02 2012

no 02 2012 – 39

+ Natural gas

than gas in its power plants, the effect is not expected to be very great.

Which LNG issues is KOGAS most concerned about?

major effect on our existing long-term contracts.

According to LNG consulting company Wood Mackenzie, Japan’s LNG consumption is expected to increase by five million tons annually in a mid- to short-term perspective, and by ten million tons annually in the long term. Previously, the excess supply of LNG was expected to be used up by 2015 but, due to the effect of the earthquake, this will happen a bit sooner than expected. Increased importance has been put on natural gas to cope with climate change, and the consumption of natural gas is continuously increasing in Japan, China and India. However, the supply and demand will remain balanced since the development of unconventional gas is increasing and production capabilities are improving due to the start of large gas reserve projects.

The issue of most concern regarding our foreign business and the stable supply of gas is the political instability in the Middle East. Other major issues are climate change and our role in promoting and developing natural gas as a cleaner energy.

We are paying close attention to the LNG demand trend following the earthquake in Japan, and to the increased LNG consumption in China due to its economic developments. To prepare for a possible scenario in which the demand for LNG increases, we are actively participating in resource development business in other countries and acquiring stable LNG through long-term contracts.

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KOGAS is more focused on the mid-downstream LNG business. Unlike upstream LNG business, where the political interests are closely linked and most of the exploration and development work is taking place, the mid-downstream business is focused on a return on investment based on the demand for LNG and on stable income generation through technical services. Thus, the political instabilities and issues in Thailand, China, the Middle East and South America do not seem to have a

What are Korea’s key strategies regarding natural gas?

The Korean government expects the national consumption of natural gas to increase by 1.8% annually, reaching up to 34 million tons by 2024 (it was around 26 million tons in 2009). Thus, the govern-

ment is trying to actively prepare for uncertainties in the natural gas supply by acquiring supply infrastructure and setting up efficient facilities. It is attempting to increase the flexibility of its natural gas supply, diversify the acquiring route and invest in foreign gas fields to prepare for the uncertainties in the natural gas market. Korea is expanding its natural gas storage facilities and improving related systems and standards to prepare for the increased demand. It is also trying to use the gas more efficiently by introducing a price rate scheme based on different seasons and consumption management. KOGAS is participating in four projects in Iraq in order to contribute to this country’s reconstruction and acquire its own energy source. We are also actively participating in Canada’s shale gas project and

I “LNG-fuelled vessels are expected to play a critical role in green ship development and, in order to make this possible, an LNG bunkering infrastructure and a stable supply of LNG must be guaranteed. Especially once ECAs are enforced in Europe and North America, around 50% of newbuildings are expected to use LNG as fuel. Thus, the demand for LNG will increase. To cope with this change, KOGAS is creating alliances and partnerships with other global companies, including DNV,” says Dae-Chun Jun, Vice President of KOGAS at the time of this interview. He is now President of Korea Gas Safety Corporation.

Australia’s coal-bed methane development project. In Korea, methane hydrate has been discovered under the East Sea; the process of developing this area is under way. We are also participating in a Mozambique project along with Eni. By cooperating with an IOC company like Eni, we are trying to expand our geographical portfolio and minimise our business risks. The Arctic is considered to be an important future energy source area, and we have acquired equity in the Umiak mine in Canada. We will leverage this experience and seek further opportunities in the Arctic. We are still facing some challenges relating to Russia’s pipeline natural gas business, but we expect positive results if the political relationship improves. We are also conducting a research development

project concerning bio-gas-fuelled and natural-gas-fuelled automobiles to generate new business opportunities. DNV in Korea has signed an MoU to cooperate on EHSQ projects and topside projects. What are your expectations of us?

KOGAS has entered into an MoU with DNV to cooperate on EHSQ and we are currently running projects together. We thank DNV for sharing its expertise with us. To expand the natural gas supply infrastructure, we are currently constructing LNG terminals and pipelines nationwide. However, we are now faced with increased safety risks associated with our subcontractors. We are determined to strengthen our safety management system with our partners, and we expect DNV to be a good partner in helping us come up with efficient solutions. no 02 2012 – 41

+ Energy efficiency

Energising the efficiency game Investing in and implementing industrial energy efficiency has not been a straightforward affair. Environmental Finance and dnv asked a roundtable of experts to discuss the barriers – and how to overcome them.

Text: Excerpt from a roundtable report by Environmental Finance photos: Environmental Finance

mproving energy efficiency in industry should not be the challenge that it is. If manufacturing businesses are being run for profit in a competitive marketplace, then major cost-saving opportunities should be diligently sought out and implemented. Most industrial processes use electricity or heat and, with energy prices rising relentlessly, it should make efficiency an obvious area to pursue. Yet when Bart Adams, DNV KEMA’s Antwerp-based head of energy efficiency and energy management services, is conducting energy efficiency audits at industrial companies, he regularly finds “20, 30, 40 opportunities” to implement energysaving projects at each site, after surveying for just two or three days. “Typically, half of them have internal rates of return of triple digits,” he said. Clearly barriers exist, but Adams argued that, where triple-digit returns are evident, financing cannot be one of them. “You do need to raise the cash to invest in these projects, but I refuse to accept the answer from the site we are visiting that they don’t have the resources to invest in them.” Nor is technology a barrier. “I think all the technology we need to make a differ42 – no 02 2012

ence in energy efficiency exists. It’s proven and it’s available,” he added. “Of course, financing is more than just having the money available. Finding the skills and capacity to undertake a project is becoming harder as available expertise is stretched by massive demand,” said Steven Fawkes, a London-based partner at Matrix Group, a corporate finance house specialising in new energy and clean technology. Positive impacts

“Management boards often favour investing ‘offensively’ in marketing or new product development, over ‘defensive’ investments in energy efficiency,” Fawkes said – although he pointed out that efficiency spending can have positive impacts beyond pure cost-saving, in terms of branding, for example. And there is inherent uncertainty in how much energy can be saved. Anders Nordstrom, group sustainability advisor for ABB – an engineering giant that derives 57% of its revenues from energy efficiency services and products – said customers often ask, “Will we really save this? Can you keep your promises?” And, of course, there are many different solutions, according to Nordstrom.

One approach within ABB is to lend the customer a particular piece of kit, such as a variable-speed drive, to test in a particular application. When it comes to the end of the trial period, “very typically we are not allowed to take it back, because the customer wants it when it’s been proven that it works.” Driven from the top

But perhaps above all, saving energy requires good leadership, reinforced by the corporate culture. Energy efficiency is “often not regarded as a strategic issue by senior management, it’s dumped down the organisation to engineers or an energy manager who actually has very little power,” said Fawkes at Matrix Group. “The really successful energy management programmes ... have all been driven very much from the top.” “We have a long way to go when it comes to energy culture,” said Stein Bjørnar Jensen, global business director for climate change services at DNV KEMA. “But I think the pressure will increase and maybe in ten years, or sooner than we think, it will be shameful to not have a good energy culture.”

I Investing in and implementing industrial energy efficiency has not been a straightforward affair.

Energy management approach

While it is rare to find silver bullets in industrial energy efficiency, Adams said the single best and most widely applicable solution he has seen is an energy management approach. “I very specifically don’t call it an energy management system because that implies the necessity of being certified. I certainly see the value of certification in many cases, but I don’t think it’s an absolute necessity for all organisations.”

Such an approach requires two key components: a commitment from management and a strategy to periodically revisit energy performance. And it need not be too onerous. “One very simple approach that we’ve seen work is to ask people to predict their next energy invoice, and then compare it to their actual invoice at the end of the period,” Adams said. “It is a very powerful yet simple tool to force people to gain essential understanding of their energy consumption.”

Changing priorities

But governments clearly recognise they need to intervene, so what energy efficiency policies can work? Nick Silver, co-founder of the London-based Climate Bonds Initiative, a not-for-profit group, said policy has to be based on the principle that it genuinely changes people’s and companies’ priorities. Mandatory energy reporting, for instance, might work “marginally, but a lot of companies, even after they report, don’t necessarily improve their performance”. no 02 2012 – 43

+ Energy efficiency

I Anders Nordstrom

I Nick Silver

I Steven Fawkes

Challenges and opportunities

I Stein B. Jensen

European officials are busy developing an energy efficiency directive – but the roundtable participants universally criticised it as unwieldy, and predicted it was unlikely to pass into law as it currently stands. “It’s a complete mess, and much of what’s in there has got very little to do with energy efficiency,” said Jeremy Nicholson, director of the Energy Intensive Users Group (EIUG), an industry lobby group. He noted that the directive has attracted 1,400 amendments encompassing many different concerns, such as tightening up the EU Emissions Trading System. “We do need to be looking really at a stripped-down directive,” said Ingrid Holmes, programme leader for low-carbon finance at sustainable development thinktank E3G, who blames the bloated directive on governments’ fear of binding topdown targets, which leaves a bottom-up prescriptive approach as the alternative.

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But setting binding targets and tracking improvements in energy efficiency “is fraught with difficulties”, Nicholson said, mainly because it requires measuring improvement against a theoretical businessas-usual scenario that creates gaming opportunities. The roundtable participants discussed who should face the obligation to improve energy efficiency – deciding generally that it should be the consumer rather than the energy generator, but noting that any market should be made attractive to generators to participate in. However, developers have had difficulties putting energy efficiency projects through the UN’s tradable carbon credit mechanisms, the Joint Implementation (JI) programme and the Clean Development Mechanism (CDM). As a basic level, most of the projects would not qualify as being

I Ingrid Holmes

I Jeremy Nicholson

additional to business-as-usual – a key requirement for receiving carbon finance – because they should be done anyway,” said DNV’s Jensen.

“It takes away the investment uncertainty and, ultimately, the uncertainty around savings.” “Aggregation is another missing part of the puzzle,” said Silver. “If the capital can see relatively low-risk double-digit returns, it should be chasing it and it’s not.” “Aggregating projects is central,” agreed Fawkes. “I don’t think you can get over that barrier – it’s about development of projects. We have developers of renewable energy projects. We don’t really have that many developers of energy efficiency projects at scale … So there’s a bit of capacity building perhaps that needs to happen there. But again, it comes back to the structure, because the money will only flow if the structure is correct.”

Predictable cash flows

“The instrument is becoming the risk to the project, in a way,” said Jan-Willem van de Ven, senior carbon manager at the European Bank for Reconstruction and Development. “You need to have predictable cash flows. So if you have to wait three to four years for a project [to earn carbon credits], while development takes six months, it’s just too long.” “If you don’t have predictability on cash flows, it’s like putting a wet blanket on possible investments,” said ABB’s Nordstrom. E3G’s Holmes said a feed-in tariff for energy efficiency – a government-guaranteed price for efficiency improvements – would make it a financeable proposition.

I Jan-Willem van de Ven

I Bart Adams no 02 2012 – 45

+ Sustainability

I “The Sustainia initiative and the awards will recognize innovative people and technologies that can help our campaign to make communities healthier, wealthier, and more sustainable for generations to come,” said former Governor of California, Arnold Schwarzenegger, and Founding Chair of R20 – Regions of Climate Action. 46 – no 02 2012

DNV supports Sustainia initiative International initiative gathers prominent sustainability leaders to build world’s first realistic model of a sustainable future. Text: Stuart D. Brewer photos: Carla O’Donnell, R20

he initiative, known as Sustainia, is an alliance of thought leaders, companies and organisations who have come together to develop a model which will help people to envisage a sustainable future using low-carbon resources. Launched in Geneva in March, the initiative is headed by former Governor of California, Arnold Schwarzenegger, along with European Commissioner for Climate Action Connie Hedegaard, Rajendra Pachauri, the chairman of the UN Intergovernmental Panel on Climate Change, and Gro Harlem Brundtland, special envoy on climate change to the UN. The initiative aims to take new and developing solutions and technologies used in cities, homes, energy stations and transportation systems, and create visual representations that will allow people to imagine what a sustainable, environmentally friendly world would be like. In addition to creating a virtual model, and publishing a book ‘Guide to Sustainia’, the developers, Monday Morning and a consortium of companies and partners, will arrange the Sustainia Award later this year to honor outstanding performance within sustainability. Recognise innovation

“The Sustainia initiative and the awards will recognise innovative people and technologies that can help our campaign to make communities healthier, wealthier, and more sustainable for generations to come,” said Arnold Schwarzenegger, speaking at the conference ‘Road to Rio: Regions building the green economy’. EU Commissioner for Climate Action, Connie Hedegaard, added: “To get things to the speed and scale we need, it is crucial that sustainable living and business models move from the margins to the mainstream. One of our greatest challenges as leaders is to connect with people and communities around the world

I DNV Group CEO Henrik O. Madsen (left) with Laura Storm, Executive Director, Sustainia, and the founder of Sustainia, Erik Rasmussen, CEO of Monday Morning.

and Sustainia is a way of doing this. Sustainia can help people get a clear picture of what their lives could be in a sustainable future – and how it will improve our health, our environment, our economy.” Speaking on the sidelines of the conference, DNV Group CEO Henrik O. Madsen said: “DNV is pleased to be a partner in this important initiative. Sustainia demonstrates that a sustainable future is possible if we implement ready and available solutions and technologies. Based on a solid platform of research, know how, analysis and experience, Sustainia is an inspiring initiative. We firmly believe it will help to motivate people and decision-makers to see the benefits gained from embarking on a sustainable path.” A handful of Scandinavian companies, DNV, DONG Energy, Realdania, Novo Nordisk among them, other partners, the UN Global Compact and Schwarzenegger’s R20: Regions of Climate Action initiative will work together to develop new aspects of Sustainia. It will be presented to world leaders in June this year, at the Rio+20 Summit in Brazil.

no 02 2012 – 47

+ Last word

DNV takes a look at technology uptake towards 2020 DNV has developed a simulation model using global shipping data and technology specific information to predict the deployment of emission reduction and energy efficiency technologies up to 2020. The results show that high fuel costs will result in a drive towards more energy efficient ships ahead of the Energy Efficiency Design Index (EEDI) regulatory timeframe. Fuel choices up to 2020 will be driven by the time spent in an Emissions Control Area (ECA), but distillate is a more likely option than scrubbers for most ships towards 2020.

2020, it is expected that new tankers, bulkers and container vessels will be up to 30% more energy efficient than today’s newbuildings. DNV predicts that one-third of the reductions will be cost effective for shipowners. The Energy Efficiency Design Index (EEDI) will be the driver for the remaining two-thirds of the efficiency gains.

These results have been obtained by examining the technology choices available to ensure regulatory compliance and how these technology options will be adopted based on simulated investment decisions for individual ships.

Tor Svensen DNV´s President

The model can support owners and managers in their business-critical decisions by providing a shipspecific scenario analysis as well as market predictions for specific ship segments or the entire world fleet. The model is not restricted to the newbuilding market alone, and offers insights on fuel choice, exhaust gas treatment and ballast water treatment for existing ships as well. Over 20 technology options have been included in the modelling process. The results of a survey conducted in March 2012, involving a number of the world’s leading shipping companies, have been used as the basis for the investment decisions. The model also includes fuel availability, regulatory timelines and the net growth in the world fleet, amongst other things. This is not an optimisation study trying to predict the optimal choices for the world fleet, but rather a simulation of the most likely outcomes amongst a multitude of technology options and preferences in a highly uncertain world. An analysis of fuel choices reveals that 10–15% of the newbuildings delivered up to 2020 will have

48 – no 02 2012

the capacity for burning LNG as fuel. This equates to about a thousand ships. Larger vessels will benefit more from using LNG than smaller vessels. Furthermore, a gas-fuelled engine can be justified if a ship spends about 30% of its sailing time in ECAs. In 2020, the number of ships using LNG will increase significantly with the introduction of a global sulphur limit. Incorrect investment decisions could be devastating for individual shipowners and collectively they could impact negatively on the environment as well. DNV believes the industry must work together to avoid a legacy of sub-optimal ships entering the global fleet in the lead up to 2020. This model gives shipowners a clear technology and market context to work in, with the opportunity for targeted analysis of individual ship profiles. Current annual demand for distillate fuels is around 30 million tonnes. This will rise to 45 million tonnes when the 0.1% limit comes into force in ECAs and could be as high as 200–250 million tonnes from 2020. Conversely, the demand for heavy fuel oil will plummet from around 290 million tonnes in 2019 to 100 million tonnes once expected global emissions regulations enter into force in 2020. Shipowners’ costs will increase sharply in 2020 when even more stringent air emissions regulations take effect. It will be unfamiliar territory for us all as the fuel market adjusts. The investment decisions made over the next few years will be critical preparation for this time, and DNV is dedicated to ensuring that the industry as a whole is ready and able to make the correct decisions to ensure responsible environmental stewardship that also makes good business sense.

17,000/08-2012 1203-030

Global presence DNV is a global provider of services for managing risk, helping customers safely and responsibly improve their business performance. DNV is an independent foundation with a presence in more than 100 countries.