Forum 1 2013

forum Shipbuilding: FSG GoES hIGh TEch

offshore wind: US DEpT. oF ENErGy

omV: DyNAmIc rISk mANAGEmENT

a magazine from dnv

no 01 2013

+

QUalIty coUNtS

for Nat chief Herbjørn Hansson alSo INSIDE: ■ tHE DyNamIcS oF tHE ÅlESUND oFFSHoRE clUStER ■■ StatoIl taKES StEp by StEp appRoacH toWaRDS tHE NoRtH ■■ INtERNatIoNal FINaNcE coRpoRatIoN maKING aN Impact IN a RapIDly cHaNGING WoRlD

content

01 2013

ForuM 01.2013 publiShed by Det Norske Veritas AS No-1322 høvik, Norway Tel: +47 67 57 99 00 Fax: +47 67 57 91 60 editor Stuart D. Brewer Tel: +47 91522360 Stuart.D.Brewer@dnv.com

04

editorial: Global impact

05

news

08

quality counts: Interview with NAT chairman & cEo herbjørn hansson

12

offshore: The dynamics of the Ålesund offshore cluster

18

Shipbuilding: FSG goes high tech

20 24 26 30

32

oMv aktiengesellschaft: At the forefront of dynamic risk management

34

international Finance corporation: making an impact in a rapidly changing world

38

wonderbag: changing lives

42

customer panel survey: creating value through supply chain management

Statoil: Step by step towards the north

46

Sustainable Fisheries: Third-party certification in demand

arctic Summit: Is the race for the north pole and its resources a myth?

50

Stein b. jensen: The changing carbon landscape

offshore wind: Interview with Greg matzat, U.S. Department of Energy

52

innovation: New Strategic research Unit

are Føllesdal tjønn: which megatrends will shape our software?

deSign and layout coor media coormedia.com media@coorno.com

printing 07 oslo AS: 10,000/ 05-2013 cover photo DNV/Damir cvetojevic © Det Norske Veritas AS, 2013

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Quality counts: INTErVIEw wITh NAT chAIrmAN & cEo hErBJØrN hANSSoN 2 – no 03 2012

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offshore: ÅLESUND oFFShorE cLUSTEr

© DNV/ magnus Dorati

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Arctic Summit: IS ThE rAcE For ThE NorTh poLE AND ITS rESoUrcES A myTh?

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International Finance corporation: mAkING AN ImpAcT

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wonderbag: chANGING LIVES

+ Editorial

Global Impact In 2006, DNV formulated its current vision statement: ‘Global impact for a safe and sustainable future’. This provides both a direction and an ambition. Just before the end of 2012, we announced that DNV is to merge with GL, which will take us a long way forward to fulfilling this vision.

I

n order to have a global impact, you need to have global reach, size and the skills, knowledge and innovation power to set the agenda. By combining two strong, global companies with world-class technical and risk management expertise, I am confident we will be in a position to make the world safer and more sustainable every single day.

For our customers, a combined DNV and GL will offer a wider set of products and services, deeper competence and expertise and a denser global network. The combined workforce of more than 17,000 highly educated and trained employees will have even more opportunities to further develop their skills. And importantly, there is a strong commitment by both DNV and GL for the merged company to continue to invest heavily in research and innovation. Both DNV and GL want the merged company to be the preferred choice for customers that wish to tackle challenges with robust standards, certification and innovative solutions.

The transaction requires the approval of a number of competition authorities, which we hope to receive later this year. Until then, DNV and GL will remain completely independent in their actions, opinions, and services and will continue to compete on normal terms.

Adapting to change The first half of this year has been a positive one for DNV as it continues to win new roles in the industries it serves. These come in addition to our traditional roles as a classification society and certification body and reflect our response to changing market conditions. Indeed, DNV is actively developing both new and existing services, some of which are covered in this issue of DNV Forum.

Our themes, as usual, are varied, from shipping to offshore and the environment; from offshore wind energy in the United States to articles addressing the prime issues affecting global development. At this time of rapid change in the markets which DNV serves, it is appropriate for our pages to reflect the wide diversity of products and services DNV offers.

Certainly we are demonstrating that our adaptability to new and developing situations, coupled with our sound market standing and the DNV GL merger agreement, forms an excellent foundation for the future. I really look forward to lead the new company and show customers, employees and society at large how we create more value, offer more opportunities and contribute to a safer and more sustainable future.

Henrik O. Madsen DNV Group CEO

4 – no 01 2013

+ News + DNV JoINS UN-lED GREEN INDUStRy platFoRm dnv business assurance has joined the green industry platform, a global multi-stakeholder partnership launched by the united nations industrial development organization (unido) and the un environment programme (unep).

The Green Industry platform assists countries and companies in greening the manufacturing process and creating green industries for the production of goods and services for domestic use or export. the DNV Gl Group will be headquartered in Høvik, Norway.

+ DNV aND Gl to mERGE just before the end of 2012, an agreement was signed to merge dnv and gl. the new entity will be called dnv gl group. it will be one of the world’s leading ship classification societies and risk experts in the oil and gas, renewable energy and power sectors, and among the global top three within management system certification.

“The merger rests on a strong strategic rationale, and responds to challenges of increased globalisation, rapid technological change and the need for sustainable development. our customers will benefit from an increased service offering and global competence base as well as one of the densest networks,” says DNV’s Group cEo, henrik o. madsen, who will be the cEo of the combined new company.

By combining the two international organisations, the new company will be one of the world’s leading independent technical service providers with state-of-the-art technological expertise and strong capabilities for innovation. with more than 17,000 employees and an extensive global network of offices, DNV GL Group will be positioned to meet increased international competition and even better serve the needs of the customers.

The DNV Foundation will hold 63.5% of the shares, while GL’s owner mayfair SE will hold 36.5%. The new company, with a combined turnover of some EUr 2.5 billion, will be headquartered and registered in Norway.

STroNGEr FooThoLDS The DNV GL Group will strengthen its foothold in several areas of expertise, including the maritime segment and across the entire oil & gas value chains. The Group will be one of the global leaders in pipeline verification and asset integrity services and in renewable energy certification and advisory services. moreover, it will be a strong player within power transmission and distribution as well as testing and certification services. The DNV GL Group will strengthen its focus on r&D and innovation to enhance its service offering.

The DNV GL Group will operate in the business segments maritime, oil & Gas, Energy and Business Assurance. Its global headquarters will be at høvik outside of oslo. The maritime business unit will be headquartered in hamburg, Germany, while maintaining its commitment to the Norwegian maritime cluster. oil & Gas will be headquartered at høvik, Energy in Arnhem, the Netherlands, and Business Assurance in milan, Italy.

“The transaction requires the approval of a number of competition authorities, which we hope to receive later this year. Until then, DNV and GL will remain completely independent in their actions, opinions, and services and will continue to compete on normal terms,” says DNV Group cEo henrik o. madsen.

Luca crisciotti, cEo of DNV Business Assurance, says: “By joining the Green Industry platform, we hope that our expertise and experience within assurance services can provide valuable input to the platform’s work to ensure more sustainable business practices in manufacturing.”

Says heinz Leuenberger, Director of UNIDo’s Environmental management Branch: “we are glad to welcome a new member of the Green Industry platform, which is designed to help transform manufacturing activities, with a view to increasing resource efficiency while reducing waste and pollution.”

+ NEW StRatEGIc RESEaRcH UNIt dnv has established a new strategic research unit at dnv keMa’s global headquarters in arnhem, the netherlands. the unit will focus exclusively on the further development of smart grids and super grids.

Smart grids and super grids are considered key elements and a prerequisite to integrate large-scale renewable energy in the future energy system. By setting up its new strategic research unit, DNV is preparing the practices and tools needed to meet the growing demand as well as facilitate the integration of large-scale renewable energy to the grids.

“There is a global need for extra capacity and modernisation of electricity infrastructure to meet the growing electricity demand,” says Theo Bosma, who will head the new research unit. “There are 2,300 energy experts in DNV kEmA. with the establishment of the strategic research unit in Arnhem, we will be able to capitalize on all this expertise and experience. we will also invite external parties to work with us to create opportunities together. To my knowledge, this is the only research centre in the world that concentrates on smart grids and super grids exclusively.” no 01 2013 – 5

+ News + DNV ENHaNcES claSS RUlES FoR oFFSHoRE UNItS dnv has restructured its offshore classification rules for mobile offshore units (Mous) to enhance efficiency, reliability and transparency for owners and yards.

International offshore regulations and requirements are constantly adapting to new conditions, technologies and safety issues. class rules prescribe how the regulations are to be met and help the owner and yard in designing and constructing vessels. But achieving an optimal result requires a delicate balance between detailed prescriptive vs. functional and more general requirements.

The first ensure predictable and transparent results, while the latter allow the application of alternative solutions.

From left, back row: chancellor birgeneau, crown princess mette marit, crown prince Haakon, and cEo Derek l. Dean. Front row: professor andrew Isaacs and DNV Group chief technology & Sustainability officer, bjørn K. Haugland signing the cooperation agreement.

+ DNV SIGNS aGREEmENt WItH bERKElEy dnv has signed a cooperation agreement with the university of california berkeley to extend its technology development program for its technical experts.

The agreement runs for four years and allows DNV to use Berkeley’s renowned competence development expertise and extensive network as a platform to develop its own top engineers and technologists.

At the signing ceremony, which was attended by Their royal highnesses crown prince haakon and crown princess mette marit of Norway and other leading dignitaries, DNV Group chief Technology & Sustainability officer, Bjørn k. haugland said, “DNV and Berkeley have cooperated well for several years. The new agreement forges even stronger relations between us and ensures that our best professional scientists and engineers are exposed to state-of-the-art technologies and unique entrepreneurial insight.”

“The most interesting things happen at the interface between technologies and sciences,” says DNV’s vice president Bjørgulf haukelid, who manages the Top Tech program. “we lecture about what is happening in areas that are, or might be, of vital interest to DNV. The idea is to let each participant ‘touch the future’ in these areas, which currently include subjects such as Energy in Transition, risk management and Sustainable Life on Earth, just to name a few.

“The program is crafted in a way which ensures that the topic is illuminated in a variety of ways; through both lectures and field-visits,” added haukelid. “Throughout the three models, our people meet with an unprecedented list of world-class professors, philanthropists and entrepreneurs from academia, private enterprises and NGos. The program clearly reflects the extensive network our Berkeley project partners possess.” “one of the long-term goals is that the program will inspire and stimulate new business ideas,” said Bjørn k. haugland and concluded, “Some of the ideas developed during previous programs have already been presented to DNV management as new business and research & development proposals.”

6 – no 01 2013

“As before, the rules are aligned with the Imo moDU code, International Association of classification Societies (IAcS) Unified requirements and other relevant international standards and codes. however, in addition, they include a comprehensive description of interpretations. This makes the rules’ requirements easily understandable for application throughout the design, construction and operation of the asset,” said Erik henriksen, director for mobile offshore units at DNV. The enhanced and restructured format is now open for comments during an external six-week consultation period. Subsequently, DNV will update the standards based on the input received, followed by formal publication.

+ News + WoRlD’S FIRSt dnv has been awarded the contract to class petronaS’ first floating lng unit, destined for the kanowit field offshore Sarawak, Malaysia. this is expected to be the world’s first Flng unit in operation.

The unit (pFLNG 1) will be 360m long and 60m wide and will be moored 180km from shore. It will produce 1.2 million tonnes a year (mtpa) of LNG. The scope of DNV’s contract includes the floating structure, mooring arrangement and natural gas liquefaction technology.

© pETroNAS

The floating LNG unit negates the need for a costly or technically problematic offshore pipeline to transport the gas back to a land-based liquefaction plant and includes liquefaction technology designed for use on a floating facility.

+ NEW cHaIRmaN

“The ability to process and offload LNG offshore will increase the viability of significant gas reserves in remote and stranded fields and beyond that,” says conn Fagan, Vice president of Floating Gas project Business Development at DNV.

+ SoFtWaRE tEcHNoloGy bREaKtHRoUGH

terry loftis, director of engineering of transocean, has been appointed chairman of dnv’s rig owners’ committee.

A veteran of the industry and the Director of Engineering of Transocean, Terry Loftis has been appointed chairman of DNV’s rig owners’ committee. The members of the rig owners’ committee represent owners and managers of mobile offshore Units (moUs) and Floating production Units.

The objective of the committee is to provide an active forum for the industry to share and discuss current and future developments in technology, practices and support initiatives that will benefit the industry. The functions of the committee also include providing industry’s input to DNV’s current and future activities including its innovation programs, industry initiatives and rulemaking process.

As Director of Engineering for Transocean, mr Loftis oversees the company’s engineering services and supports upgrade and major repair projects and new construction of ultra-modern high specification drilling units. he has been actively engaged with Transocean’s engineering development efforts and newbuild design program for the past decade.

terry loftis, the new chairman of DNV’s Rig owners’ committee

dnv Software and Fedem technology introduce a new software tool package that covers both wind turbine and substructure design analysis.

The new software solution is powered by FEDEm windpower and includes dynamic simulations, advanced fatigue calculation and code check in one package. with the new module, Sesam wind, DNV’s software solution for strength and fatigue analysis of offshore wind turbines and substructures, incorporates state-of-the-art algorithms geared toward structural analysis.

“As offshore wind is moving into deeper waters, engineering of offshore wind installations will take full benefit of Sesam, whether the installation is based on fixed structures, floating structures, shallow waters or deeper waters,” says Are Føllesdal Tjønn, managing director at DNV Software.

DNV Software recently launched a structured and analytical risk management tool that incorporates Easy risk manager with Synergi Life risk and QhSE management. “our risk management software is now complemented with the leading tool for operational, project and enterprise risk management,” says Tjønn. “our customers will be able to use the Synergi Life portfolio to manage all risks aspects of their business, from detailed and technical risk identification and assessment to their overall business risk strategy.” no 01 2013 – 7

+ Maritime

Qualit y counts One of the most notable success stories in the tanker market has been the role played by Herbjørn Hansson, chairman and chief executive officer of Nordic American Tankers. The company is one of the few in the shipping industry to have paid investor dividends throughout a period of escalating costs and low freight rates. With a strong focus on quality and risk management, Hansson firmly believes the company will “continue to sail clear of the rocks in shipping and dock as one of the few winners.”

Text: Stuart D. Brewer photos: Damir Cvetojevic

F

ounded by Norwegian-born Herbjørn Hansson, Nordic American Tankers (NAT) started its activities in 1995 and has since become one of the leading tanker owners in the Suezmax sector.

Hansson explains, “I figured out that there would be certain benefits for investors if we developed a quality-conscious company, so I hand-picked a small, top-qualified staff and purchased quality tonnage from the very beginning. Today, there are twenty vessels in the NAT fleet and we recently announced the purchase of a 2013-built tanker from Almi Tankers.”

Herbjørn Hansson is unlikely to rest on his laurels. “Relatively speaking, we are pleased with the results, but we are not satisfied when we lose money. In spite of the tough market, I’m confident we will continue to be one of the few winners in the industry. Our strategy is to remain a premier owner of tankers and we want to build on what we have already developed. We have established long-term business relationships with blue-chip charterers such as ExxonMobil and we also have some of the world’s best investors, including Morgan Stanley, Wellington Management, BlackRock and Norway’s 8 – no 01 2013

central bank, just to name a few. They are all quality players.”

Market upturn around the corner?

As a Suezmax shipowner with no diversification into other shipping markets, Hansson is well placed to forecast future developments in the tanker trade. “I wonder if we are seeing an upturn coming around the corner. It might take a year or two, but we are seeing the beginning of something.

And, as is widely known, it’s during the bad times that you make the best transactions. So I’m positive about the prospects,” says Hansson.

“I am glad there is a drive for quality and safety at all levels …

It will help separate the winners from the losers” He continues, “I believe that there are many good opportunities in the market right now if you have your capital in order.

Those who have been in the industry for a long time know that you are always in

doubt about what you are doing. I have been doing this for a while and, the way I see it, there are many opportunities although we will always be cautious.”

In spite of his optimism, there is no denying that these are tough times for many shipping companies around the world. The markets are still struggling and day rates for VLCC tankers are at the lowest levels since 1997.

“This industry is certainly struggling and I guess the banks will soon be the biggest ship owners,” says Hansson, whose strategy of caution has been a winning one for NAT. He has managed to avoid having to run to the banks with poor accounts books, and has instead chosen to pay dividends for 62 consecutive quarters.

“We think that’s a good thing, and so do our investors,” he says.

Solid stock in a bad market

While Hansson controls 5.64 per cent of the shares, he is not the only one who believes in the company’s product. The NAT share is considered a “solid stock in a bad market”, as proved recently when Hansson raised USD 100 million capital in the equity markets. “This is a reflection

I “There are many good opportunities in the market right now if you have your capital in order,” says Herbjørn Hansson who has managed to avoid having to run to the banks with poor accounts books, and instead chosen to pay dividends for 62 consecutive quarters. no 01 2013 – 9

+ Maritime

of our standing in the market place, combined with our solid balance sheet and low operating costs,” he points out.

Commenting on market aspects, Hansson believes that over-capacity in the market is continuing to drive low freight rates. “An

and risk management. With an average vessel age of eleven years, it is very important that all our ships are in excellent condition, which is a requirement to survive in this business,” says Hansson, adding, “DNV’s responsive, professional partner-

I Drawing on his skills as an economist and long experience as a top executive, Herbjørn Hansson has founded and managed Nordic American Tankers with remarkable success.

oversupply of ships, the result of a spending spree by owners in the years before economies worldwide hit the rocks, has sent rates tumbling and cut into profitability. However, there is always a need for quality tonnage. Some of the top qualityorientated companies in the world charter our ships on a regular basis – ships of one, two, three or 15 years of age. They tend to charter good ships – irrespective of age.”

The company’s tankers are moving mainly between China and India and Angola, Nigeria and the Middle East. “The potential of the Far East has been under­ estimated,” says Hansson, citing relatively low per capita oil consumption in China versus the United States. “Going forward, we will see more ton-miles to energy-hungry China.”

Focus on Risk management

Hitherto, most of NAT’s fleet has been classed by DNV. “Our relations with DNV go back many years. It is one of the most reputable classification societies in the world, and has a strong focus on quality 10 – no 01 2013

ship complements our need to do more on the quality side than just comply with the requirements. The DNV people have a broader vision of what is happening in the market and we rely on their services to maintain our quality standards and the trust of our stakeholders.”

Straight shooters

Herbjørn Hansson has been in the shipping industry for a long time. There is a glint in his eye when he talks about the company he founded and its growth.

“There have been many highlights over the years, too many to mention here.

However, I would say that I have been very fortunate to have worked with some of the best people and companies in the business. Our relationships are based on mutual trust and we have done remarkably well over the years. Not many companies in the industry are in the position of being able to run their business the way we do.

“I’m confident we will do well in the future. We are ‘straight shooters’ who are determined to maintain the trust of our

stakeholders and our sound reputation in the industry. Quality, integrity, knowledge and professional, risk-based operations all count,” concludes Hansson.

“An oversupply of ships has sent rates tumbling and cut into profitability”

I “I am glad there is a drive for quality and safety at all levels. Improvements are both necessary and beneficial for the reputation of this industry. It will also separate the winners from the losers.”

Nordic American Tankers

I Herbjørn Hansson has raised capital in the private equity markets through “a disciplined, risk-based strategy” and a track record of investor returns. “I learnt early in my career about the importance of turning investments into returns by running a quality-conscious company with an efficiency to be envied.” He prefers to do most of his financial business in the US. “The cluster of financial investors in New York provides a business-focused environment and I’m in the fortunate position of having close ties to some of the world’s best investors there.”

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Operates a fleet of 20 Suezmax crude oil tankers – vessels of approximately 160,000 dwt. Acquired a new vessel recently

■■

Has a low rate necessary to operate the fleet in terms of cash balances because it has modest debts

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Listed on the New York stock exchange.

The company’s market capitalisation is approximately USD 525 million

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Paid a total dividend of USD 63.5 million last year

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Recently increased its share capital by USD 100 million

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Run by shipowner Herbjørn Hansson

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The commercial operations are handled

by Sandefjord-based company Scandic American Shipping

no 01 2013 – 11

+ Offshore

Compete, cooperate and innovate:

The dynamics of the Ålesund offshore cluster

12 – no 01 2013

F

rom shipowners to shipyards, marine services to equipment manufacturers and a deep pool of highly skilled local seafarers, the Møre and Romsdal region produces the industry’s most advanced, sophisticated and innovative OSVs that continually push the boundaries of technology and design. Indeed, many groundbreaking advances in fuel-efficient propulsion, hydrodynamic hull forms and new vessel types have their origins in the region, where innovation is driven as much by cooperation as by competition.

Located on the west coast of Norway, the Møre and Romsdal region is characterised by a jumble of scenic islands and snowcapped mountains divided by steep-sided fjords. Yet for all its natural beauty, the region is also home to one of the most complete offshore and shipping clusters in the world.

Text: Alexander Wardwell

© Robert Ward

Ålesund is built on herring

The origins of the cluster can be traced back centuries, when the local population supplemented their income from farming by fishing – mostly herring and cod that spawned in the rich marine ecosystem off the coast. When the fish disappeared from the calm waters of the fjords, local entrepreneurs built more seaworthy steel-hulled ships that could navigate the rougher waters of the North Sea. In time, fishermen invested in new, larger vessels, leading to the construction of more shipyards and small factories producing specialised equipment. By the 19th century, Ålesund – one of the larger coastal towns in the region – was known as “The Town Built

by Herring – the Silver of the Seas”.

With the introduction of the internal combustion engine, vessels soon grew larger and were equipped with increasingly sophisticated equipment, such as motorised winches and deck cranes to haul in fishing nets. Fishermen and equipment suppliers worked closely together to develop more efficient vessel types and engines, forming an integrated business culture characterised by competition, cooperation and technical innovation. Indeed, the region continues to produce next-generation fishing vessels and is a pioneer in LNG-powered coastal ferries.

Everything began to change in the 1970s, when Norway struck oil and its burgeoning offshore industry required support vessels. Fredrik Hessen, DNV’s District Manager, explains that the vessels brought in from the Gulf of Mexico were not suited no 01 2013 – 13

+ Offshore

shares trade secrets with competitors, but we all recognise the benefits of sharing knowledge.”

© Alexander Wardwell

A fully integrated cluster ­

“We cooperate when we can and compete when we have to. Competition drives players to outdo one another, while cooperation helps strengthen the overall cluster.”

Børge Nakken, Vice President, Technology and Development, Farstad Shipping

to the harsh conditions on the Norwegian Continental Shelf. The shipping industry in Møre soon realised that the OSVs used in other parts of the world were not suitable for the local environment. In time, many fishing vessels were converted into OSVs and simply adjusted to the requirements of the offshore industry.

Local expertise, global reach

Today, the region is internationally recognised for building high-quality OSVs that are active not only in the North Sea, but also off the west coast of Africa, Australia, Brazil and India, in the Gulf of Mexico and in a number of offshore fields throughout Asia. The region is dotted with specialised shipyards, including Kleven, Ulstein and four owned by STX OSV (Langsten, Brattvaag, Søviknes and Aukra), serving global shipping companies like 14 – no 01 2013

Farstad, Island Offshore, Havila, Olympic Shipping and others. These companies are served by a network of suppliers like Rolls-Royce, Kongsberg Maritime, Brunvoll (thrusters), MaK (propulsion), IP Huse (winches and cranes) and DNV, all working together to push technical boundaries.

But how do all these different stakeholders, which often compete for the same contracts, work together to create such a strong, integrated cluster?

According to Børge Nakken, Vice President, Technology and Development at Farstad Shipping, what makes the cluster unique is grounded in history, a sense of local pride and a willingness to work together. “We cooperate when we can and compete when we have to,” he says.

“Competition drives players to outdo one another, while cooperation helps strengthen the overall cluster. Of course, no one

Nakken notes that the shipowner remains the engine of the cluster, which also involves shipyards, equipment manufacturers, marine services suppliers and seafarers. These stakeholders are further linked by a network of technical schools, universities, training centres and related specialised organisations, like the Norwegian Centre of Expertise (NCE-Maritime) in Ålesund. In addition, many stakeholders participate in Joint Industry Projects focused on developing innovative solutions to manage specific challenges which are unique to the industry.

For Farstad, the innovation process is driven by three elements: customer requirements, safety and environmental performance. “A big part of what we do is listen carefully to our customers to understand the specific challenges they face, and develop the solutions, together with our suppliers, to meet those challenges,” says Nakken. “At the same time, we are always pushing to develop new solutions that we are confident will be attractive to the market in the future.”

A standardised approach ­

Nakken adds that, because the company seeks a standardised approach to equipment and systems on all its vessels, it tends to work with the same suppliers over time. “We also benefit from the quality and experience of our seafarers, who we encourage to participate in the innovation process,” he says. “Many of the changes we make on board are inspired by the people who live and work at sea.”

The company’s ambitious newbuilding programme (which saw its first delivery earlier this year) is a good example of how this process works – and how the cluster works together – to get the job done. Two of the more recent additions to Farstad’s fleet, which will have increased by twelve vessels (a mix of PSVs and AHTSs) by the

© Alexander Wardwell

“The strength of the cluster is not confined to the achievements of individual companies, but is also in the way that each organisation shares knowledge to build our collective expertise. In addition to producing truly innovative vessels, this approach helps retain a high level of competence and expertise that you can’t find anywhere else in the world.”

Svein Kleven, Senior Vice President, Innovation & Technology (Offshore) Rolls-Royce

end of 2016, are the Far Scotsman, delivered in July, and the Far Solitaire, on schedule to be delivered in October. Both were constructed by STX OSV and outfitted at its yard in Langsten.

Optimised for fuel efficiency

The Far Scotsman is a 3,000 gt PSV with Rolls-Royce propulsion and DP systems and classed by DNV (@1A1, DYNPOS AUT, DNV Comfort, Clean Design among others). According to Steinar Nerbøvik, Senior Vice President and Yard Director for STX OSV Langsten, the vessel features Rolls-Royce azipull propeller systems, a hull form optimised for stability in rough seas and a triple engine configuration that helps reduce fuel usage significantly.

“We worked closely with Farstad and Rolls-Royce to develop a flexible diesel electric propulsion system that would both exceed compliance rules on safety and the environment and help lower fuel consumption and corresponding emissions,” he says. “The result allows the master to use one engine for steaming, two when approaching the rig, and three in heavy seas when necessary. It is flexible, but provides the redundancy required when operating close to offshore installations or in challenging sea conditions.”

A history of excellence

Nerbøvik says that STX OSV Langsten has produced a number of groundbreaking vessels, including five that have been

awarded “Ship of the Year” honours by Skipsrevyen, a leading maritime journal.

In the yard’s 70-year history, STX OSV has built about 25 vessels for Farstad, including ten at the Langsten yard alone. Its module approach to shipbuilding and ability to build and outfit vessels in different yards has helped the company manage cyclical changes in market demand more effectively.

“By being part of the cluster, we not only have the opportunity to build long-term relationships with shipowners, but we also have access to a very strong local talent pool of engineers, designers and skilled yard workers helping us maintain our competitive edge and share competencies with other STX OSV yards in our global network,” he says. “At the same time, our close cooperation with suppliers allows a more efficient build process – we all know each other and understand our different roles and responsibilities.”

Groundbreaking design

At present, STX OSV Langsten is outfitting a second vessel for Farstad, the Rolls-Royce UT 754 WP PSV Far Solitaire. Nakken explains that, in response to demand from energy companies, the company sought to produce an IBC Chapter 2 compliant PSV for the safe transportation and handling of noxious liquids above the limit of 800 cubic metres, as defined by existing IMO rules. “PSVs are classed as cargo vessels, which limits the amount of noxious liquids allowed on board,” he explains.

“When launched in October this year, the Far Solitaire will be the first PSV complying with rules usually applied to chemical tankers, so that we can safely transport larger amounts of toxic liquids.”

STX OSV won the contract to build the Far Solitaire, but the design of this unique vessel was awarded to Rolls-Royce Marine Ship Technology (Offshore).

While Nerbøvik notes that the two companies sometimes compete to win design contracts, he insists that STX OSV’s relationship with Rolls-Royce remains strong.

“Sometimes we compete, but we also value no 01 2013 – 15

+ Offshore

“By being part of the cluster, we not only have the opportunity to build long-term relationships with shipowners, but we also have access to a very strong local talent pool of engineers, designers and skilled yard workers helping us maintain our competitive advantage.”

© STX

Steinar Nerbøvik, Senior Vice President and Yard Director for STX OSV Langsten

our cooperation with Rolls-Royce and work to strengthen the relationship in order to deliver quality tonnage to our customers,” he says. “In my view, it is this ‘compete/ cooperate’ dynamic that makes the cluster so strong.”

Shared objectives

Svein Kleven, Senior Vice President Innovation & Technology (Offshore) at Rolls-Royce, agrees. “We may compete with STX OSV from time to time – in particular within the ship design market – but we have worked closely with them for decades and view our relationship as strong. STX OSV remains a major customer for RollsRoyce equipment and system solutions,” he says. “After all, we share the same goal – to deliver or exceed customer expectations.”

In addition to a higher noxious liquid capacity, the Far Solitaire has a number of other innovative design features. The vessel features a Rolls-Royce propulsion and DP system and design-protected ‘Wave Piercing’ hull form, which eliminates slamming and allows a smooth ride even in rough weather conditions, reducing fuel consumption and improving crew comfort. The vessel is also the first PSV with a dual draglink crane (manufactured by Rolls-Royce Deck Machinery and IP Huse) on the starboard side cargo rail, covering 16 – no 01 2013

the full length of the cargo deck, which increases the work area and ensures a ­stable horizontal movement.

A Holistic approach to innovation

Kleven says that what makes Rolls-Royce unique is the way in which the company approaches innovation. “High-quality equipment and system engineering remain critical components of the process, but we also take into account supply chain logistics, maintenance, quality assurance and after-sale services that cover the life cycle of whatever product we offer,” he says. “This holistic view provides a better service to our customers and strengthens our long-term relationships with owners, shipyards and our own suppliers.”

As a leading player in the cluster, RollsRoyce is active in a number of JIPs and research and development programmes, working in cooperation with local and international organisations and universities. “The strength of the cluster is not confined to the achievements of individual companies, but is also in the way that each organisation shares knowledge to build our collective expertise,” he says. “In addition to producing truly innovative vessels, this approach helps retain a high level of competence and expertise in the region that you can’t find anywhere else in the world.”

A class apart

As the regional market leader in classification and related services, DNV plays an active role in the cluster. According to Hessen, the organisation works closely with owners, yards and suppliers on a broad range of projects. “While the core of our activities is the classification of newbuildings and ships in operation, we are actively involved in technical support and the verification of new vessel concepts,” he says.

“Our primary role in the cluster is to support innovation by helping stakeholders manage risks related to safety and environmental performance.”

In addition to technical support, DNV is also in a strong position to work with regulators and flag states to approve new systems or types of vessels. For example, DNV worked closely with Farstad, RollsRoyce and the NMA (Norwegian Maritime Authority) to win approval to increase the capacity of the Far Solitaire so that it could carry 1200cm of noxious liquids.

“We supported Farstad in their efforts to ensure the vessel was compliant with the IMO’s IBC Code, which applies to ships that carry dangerous chemicals in bulk,” says Hessen. “Our challenge was to help manage potential risks associated with stability, layout, tank structure and configuration to allow increased capacity for dangerous chemicals.” Hessen says that

“Our primary role in the cluster is to support innovation by helping stakeholders manage risks related to safety and environmental performance.”

© DNV

Fredrik Hessen, District Manager, DNV

the result includes design features not usually found on PSVs, such as gas detection equipment and segregated cargo pumps and piping systems to avoid risks related to mixing different hazardous chemicals.

In addition to providing valuable technical support from its headquarters outside Oslo, DNV opened an Approval Centre in Ålesund in 2007. “This allows us to respond more quickly to local requests, such as for refits and upgrade projects,” says Hessen. “And since many of our customers operate around the world, they have local access to DNV’s expertise through our global network.”

DNV’s CLEAN DESIGN The CLEAN DESIGN notation requirements are intended to reduce and limit the ship’s air emissions and sea pollution. In addition, CLEAN DESIGN stipulates defensive design, accident prevention and consequence limitation requirements, thus providing additional environmental protection. For owners interested in promoting an environmental profile, the notation confirms a higher environmental standard. Features of the notation include the protection of fuel tanks from grounding damage, proper handling of sewage, waste, ballast water and fuel oil, proper use of refrigerants, and control and limitation of operational emissions and discharges, among others.

Regional pride

Scheduled for delivery in October, the Far Solitaire and Far Scotsman are two examples of how the Ålesund cluster works to produce cutting-edge PSVs. And while both vessels are owned and operated

by Farstad, there are many individuals in the region who feel a sense of ownership in these groundbreaking vessels. “We may work for different companies and organisations, but everyone shares a sense of collective pride in the work we do,” says Hessen. “The cluster may be driven by healthy competition between owners and suppliers, but what makes it special is how we cooperate.”

Building the fleet In addition to the Far Scotsman and Far Solitaire, Farstad has awarded STX OSV a contract for the construction of two Multifunctional Deepwater Anchor Handling/Offshore Service vessels. The vessels will be of Rolls-Royce’s UT 731 CD design. Deliveries are scheduled from STX OSV’s Langsten yard in the first quarter of 2014. More recently, Farstad announced another contract with STX OSV to build two additional platform supply vessels. The steel hull of one of the vessels will be built in Romania and the outfitting yard will be STX OSV Langsten. The other vessel will be built at the STX OSV yard in Vung Tau, Vietnam. Delivery of the vessels will take place during the second and third quarters of 2014 respectively. The PSV newbuildings will service the six-year charter contracts recently awarded by Statoil. The vessels will be built according to DNV’s strictest environmental class – CLEAN DESIGN.

no 01 2013 – 17

+ Shipbuilding

Flensburger shipyard goes high tech About a decade ago, for every one designer and developer there were seven men wearing blue boilersuits occupied with welding and outfitting newbuildings at Flensburger Shipyard (FSG). Today, the ratio is approaching 2:1.

Text: Per wiggo richardsen photos: Jürgen Gosslar

“Ships are getting more and more complex,” explains Peter Sierk, CEO of FSG – Flensburger Schiffbau Gesellschaft. The second reason he states is: “Planning is everything. In the past, we could spend one year designing and another year planning. Nowadays, we have to design and plan for 3–4 ships a year.”

FSG has managed the turn from building standard vessels to high technology complex vessels by focusing on technical competence in all parts of its organisation.

The yard, which is located in the northern part of Germany, very close to the border with Denmark, has a reputation as a ro-ro yard. Since 2000, its market share of large roll-on roll-off vessels has been almost 30 per cent. It does not intend to stop building such vessels, but due to market demand for extended expertise in other complex ship types, FSG is diversifying its product portfolio.

Focus on research and development

At the time of writing, a hybrid between a ro-ro and a container ship – a ConRo vessel – is occupying the yard’s slipway. When completed, this will be one of the world’s most modern, innovative and environmentally friendly ConRo ferries. One reason for the Canadian owner ordering the ship from FSG was the shipyard’s extensive focus on research and development and its 18 – no 01 2013

well-known reputation to deliver ships on time. The vessel itself represents the transition from the past to the future – combining the traditional ro-ro segment with new sophisticated solutions.

“Over the past few years, the global financial and economic crisis has brought many shipyards to the brink of ruin and even tipped some of them over that edge.

FSG has ridden out the storm. We are now in a position to move forward into the future with strength and optimism,” says Mr Sierk.

FSG wants to become the leading research and development shipyard in Europe. Its focus will be on tailor-made products based on in-house design.

“We aim to take a holistic approach. All disciplines, from ideas to the completed ship, have to be in-house,” points out Mr Sierk and adds, “Today’s projects are more complicated than yesterday’s, and tomorrow’s projects will be even more sophisticated. That’s why we need one white-collar employee for every two in boilersuits. And all are equally important to achieve the end result – the ship. There is simply one target for the complete workforce of 700 people – to deliver the best ship within time and budget.”

New ship segments

FSG can be used as an example of the challenges most European shipyards are facing.

Asian yards are better positioned to build the long series of vessels. European yards have to focus on how new solutions can be developed. How new technology can be utilised to improve the end product.

FSG’s focus on research and development has made it look at new ship segments. In February, the first steel was cut for a heavy lift vessel, and in April another first steel cut was celebrated for a seismic vessel.

“This seismic vessel is a good example of FSG’s new era,” explains technical director Dr Broder Hinrichsen when walking inside the yard’s workshops. “Our highly skilled workforce has used its collective knowledge and developed a completely new product – a type of vessel that has never before been built in Germany. Hardly anything that floats has such a high level of built-in technology. No guarantees can be given, but I’m convinced that this vessel will be followed by others like it.”

“DNV is a trustworthy partner for FSG,” emphasises Mr Sierk. “Our relationship has lasted for decades. We’ve utilised the strengths of both sides, especially when we started to focus on more complex production processes and a more technical approach. DNV has always been perceived as technically focused, with a strong research and development base, and I expect our relationship to be even stronger in the future now that we have turned our focus in the same direction.”

I “We aim to take a holistic approach. All disciplines, from ideas to the completed ship, have to be in-house. Today’s projects are more complicated than yesterday’s, and tomorrow’s projects will be even more sophisticated,” says Peter Sierk, CEO of FSG (right), seen here with technical director Dr Broder Hinrichsen.

I A new Con-Ro vessel being built at FSG. It represents a new era for the yard, and when completed it will be one of the world’s most modern, innovative and environmentally friendly ferries. no 01 2013 – 19

+ Arctic

StEp by StEp toWaRDS tHE NoRtH Statoil’S head oF arctic activitieS, runi hanSen, iS clear about hiS MiSSion. “we’re approaching the arctic becauSe the world needS energy and will continue to do So. Statoil iS an energy coMpany that SeeS potential in thiS area – but we’re not Moving FaSter than the technological developMent allowS uS to,” he pointS out.

TExT: Svein inge leirgulen phoToS: harald petterSen/Statoil aSa AND hÅkon jacobSen/Statoil aSa

20 – no 01 2013

I Statoil made the Skrugard oil discovery in the Norwegian Barents Sea in 2011. no 01 2013 – 21

+ Arctic

I Runi Hansen, Statoil’s head of Arctic activities.

S

ince last year, Statoil has increased its focus on research and innovation and recognises that, in order to achieve a sound safety level in the Arctic, it needs to enhance its existing knowledge and technology – work that includes tight cooperation with external partners. We have spoken with Runi Hansen to learn more about the Norwegian oil major’s strategy in this promising but controversial area of the world.

will require incremental innovation in the development and production stages. Our exploration plans for the Beaufort Sea fit into this category.

Finally, we have the Extreme Arctic group. These basins need radical innovation before we can drill or develop them.

They include the east coast of Greenland, where we were the operator for the Kanumas group.

What is your definition of the Arctic?

What is Statoil’s strategy for activities in the Arctic?

There are many definitions of the Arctic.

For us, the most important issue is to understand the challenges and recognise that there are many types of “Arctics”. In Statoil, we tend to split the Arctic into three groups. Firstly, it’s the Workable Arctic, which defines those basins we can drill and develop today, with some modifications. Our positions in the Norwegian Barents Sea and the Grand Banks are good examples of this.

Secondly, the Stretch Arctic refers to those basins we can drill today, but which

For Statoil, the Arctic is about long-term positioning and the strengthening of existing positions. We have projects on the go on the Skrugard and Goliat fields in the Norwegian Barents Sea and the Hebron field in Newfoundland. In addition, we have an exciting exploration portfolio for the next year and are maturing prospects in other parts of the world, such as the US, Canada and West Greenland. In addition, we have signed an agreement with Rosneft to jointly explore four exploration blocks in the Russian Arctic.

22 – no 01 2013

Where do you currently have activities in Arctic conditions?

Today, we have drilling operations in the Norwegian Barents Sea and offshore Newfoundland, Canada. Both these areas are mostly ice-free, but we are faced with other Arctic conditions such as marine icing, darkness and cold. Over the next year, we will drill twelve Statoil-operated wells in these two areas. Seismic operations and drilling are carried out in other areas as well, but only during the ice-free season.

What do you define as the greatest challenges in the Arctic?

In the Barents Sea, ensuring operational excellence is our key objective. Here, we have drilled 90 wells since it was opened for exploration and have now obtained extensive experience from this area. In many ways, other parts of the Norwegian Continental Shelf, such as the Norwegian Sea, are more challenging, with deeper waters and harsher storms. When moving further north into areas covered seasonally

“When moving further north into areas covered seasonally by ice, there is a need to ensure safe and sustainable operations in even tougher conditions.”

by ice, there is a need to ensure safe and sustainable operations in even tougher conditions. Understanding the ice and having technology to handle those challenges will be key to success.

The Arctic carries many additional challenges; how are you prepared to deal with them?

Arctic challenges are approached from several angles. Firstly, we have always had, and will continue to have, a stepwise approach and collaboration with industry and research institutions. Our collaboration with DNV on the ACE (Arctic Competence Escalator) programme falls under this remit, for example. The aim is to learn and increase our knowledge and competence for each step we take.

Secondly, using the competence that already exists in the company is very important to us. Thirdly, we acknowledge that, in order to succeed, we have to be highly focused and coordinated both internally and externally. This is why we have established a dedicated Arctic Unit which owns the Arctic strategy and drives

our activities forward. Our Arctic R&D activities have also been stepped up by the tripling of our budget for Arctic-specific technology.

How are you approaching the oil spill challenges?

Preventing oil spills is a major concern for Statoil, regardless of where in the world we operate. When in the future we move into areas with seasonal ice, we need to be prepared for those challenges. Internally, we work with dedicated people on both operational and R&D tasks relating to oil spill response, and we also collaborate with the rest of the industry through initiatives like the Arctic Oil Spill Response Technology Joint Industry Programme. The goal of this programme is to improve Arctic oil spill response strategies and equipment and to increase understanding of the potential impacts of oil on the Arctic marine environment.

There will be an increasing demand for energy as more and more people escape poverty. This increase will be met using all kinds of energy sources, but we also foresee a high demand for oil and gas.

The supply of renewables will increase as well, but not nearly enough to satisfy the demand. Coupled with the fact that the US Geological Survey (USGS) estimates that around 22 percent of the yet-to-find oil and gas resources will be found in the Arctic, it makes business sense for us to explore this region.

What are your comments on climate change issues?

Statoil’s ambition is to remain an industry leader in terms of having a low climate impact in each of the activities in which it is engaged. While producing energy, we remain committed to addressing climate issues. For us, this represents both a challenge and an opportunity for technological innovation and value creation.

Why is it necessary to extract fossil energy from the Arctic? no 01 2013 – 23

+ Arctic Summit

IS tHE RacE FoR tHE NoRtH polE aND ItS RESoURcES a mytH? aS the Main SponSor oF the econoMiSt’S arctic SuMMit recently held in oSlo, dnv wanted to highlight the iMportance oF cooperation and diScuSSionS between all the arctic’S StakeholderS. TExT: the econoMiSt phoToS: jonathan dewe

t

he summit brought together over 200 scientists, policymakers, industry leaders, journalists and environmentalists to debate the big issues concerning the High North: the profound impact of climate change, the chase for natural resources, the emergence of new trading routes and the need for responsible governance. the meeting was intended 24 – no 01 2013

to focus attention on the arctic’s pressing issues and to encourage constructive thinking in the lead-up to the ministerial meeting of the arctic council in may. and stakeholder collaboration was certainly one of the key themes that arose throughout this two-day event.

James astill, political Editor of the Economist, opened the event by saying:

“Forty-six vessels travelled the arctic Sea Route in 2012, where a few years before there were only two. this demonstrates how fast things develop in the region, and changes in the arctic will have global consequences. this summit matters a great deal because we, the stakeholders in the arctic, need to keep speaking to one another.”

The Arctic Summit brought together over 200 scientists, policymakers, industry leaders, journalists and environmentalists to debate the big issues concerning the High North.

Both risk-based regulation and innovative technologies will have to be part of such an approach. In addition, appropriate preparedness systems for minimising the potential consequences of a mishap must be strengthened.”

Trade routes

If the Northern Sea Route is properly developed with investments in infrastructure, it could revolutionise global trade since it cuts the distance between Western Europe and East Asia by a third. The implications of this could be immense, re-drawing the global map of shipping. Huigen Yang of the Polar Research Institute of China commented: “The Northern Sea Route is of special significance to China.

It will mean shorter distances to Chinese ports and lower CO2 emissions.”

If true, that would be welcome news to many environmental experts. However, the route is still throwing up plenty of challenges. Christian Bonfils, Partner and Managing Director of Nordic Bulk Carriers A/S, despite seeing the potential in the region does not believe that it will rival the Suez Canal just yet.

The ice-free Arctic

Risk management

Sergey Frank, Chief Executive Officer of Sovcomflot, said: “Nearly 22 percent of the world’s undiscovered oil and gas reserves are in this area, but drilling for oil comes with hazardous risks, from the technical challenges of producing offshore hydrocarbons to the difficulties of cleaning up any oil spills.”

Henrik O. Madsen, Chief Executive Officer of the DNV Group, stressed the importance of managing risks. He said: “The Arctic is a varied and complex area where there is no such thing as ‘one solution fits all’. Strong emphasis must therefore be put on risk management and on reducing the likelihood of unwanted incidents happening in the first place.

The area of Arctic land covered by snow in early summer has shrunk dramatically in recent decades. James Astill probed our environmental experts on the topic, Stefan Rahmstorf, Professor of Physics of the Oceans at Potsdam University, Ellen Baum, Senior Climate Scientist with the Clean Air Task Force (CATF), and Rear Admiral Jonathan White, Director of the US Navy’s Task Force on Climate Change, for their predictions on the first ice-free summer in the Arctic. Their responses ranged from 2023 to 2040 – sooner than many experts until recently dared predict.

The Arctic, one of the least explored regions on the planet and also one of the coldest, is warming twice as fast as the rest of the planet. The debate about its future has only just begun. no 01 2013 – 25

+ Offshore Wind Energy

Gearing up for offshore wind energy Offshore wind energy is not currently deployed in the United States but represents a large, untapped energy resource. Recently, the department of energy has announced seven offshore wind awards. According to Greg Matzat, Senior Advisor for Offshore Wind Technologies at the U.S. Department of Energy, these innovative projects will help lower costs further, drive greater performance and clear hurdles.

Text: marjolein roggen photos: U.S. Department of Energy and Shutterstock

Early 2011, the Department of Energy released the ‘National Offshore Wind strategy: creating an offshore wind industry in the United States’. What was the urgency of this strategy?

“Clean, domestic, renewable energy resources are vital to meeting the United States’ critical energy, economic, and environmental challenges. The National Offshore Wind Strategy was designed to provide a pathway for offshore wind energy to help address these challenges.

In 2008, an Energy Department study found that the United States could generate 20 percent of its electricity from wind energy by 2030, with offshore wind providing 54 gigawatts (GW) of capacity. To help realize this goal, the National Offshore

Wind Strategy focuses on two key objectives – reducing the cost of offshore wind energy and promoting responsible commercial deployment – which the Department is working to achieve through a combination of activities in three areas: technology development, market barrier removal and advanced technology demonstration.

Offshore wind represents a large, untapped energy resource for the U.S. – offering over 4,000 GW of clean, domestic electricity potential. Offshore wind can help reduce greenhouse gas emissions, increase and diversify the domestic content of our energy supply, provide cost-competitive electricity to key coastal communities and drive economic growth, particularly for manufacturing and port industries.

“The coastal and Great Lakes states use 78 percent of the nation’s electricity” 26 – no 01 2013

The Department’s offshore wind activities are aligned with the objectives detailed in the National Offshore Wind Strategy.

In 2011 and 2012, the Department announced over 30 awards to industry, universities and national laboratories to help drive development of cost-competitive, efficient offshore wind technologies and reduce barriers to offshore project deployment. These investments are helping to advance breakthroughs in areas including numerical modeling of offshore wind systems, advanced component design and sustainable siting, permitting and grid integration.”

Last December, the Department announced seven offshore wind awards for projects in Maine, New Jersey, Ohio, Oregon, Texas and Virginia as part of the $168 million Offshore Wind Advanced Technology Demonstration program. What is the objective of these projects?

Greg Matzat is the Senior Advisor for Offshore Wind Technologies at the U.S. Department of Energy in its Wind and Water Power Technologies Office and is the lead for the Department’s offshore wind demonstration projects.

Greg has a degree Naval Architecture and Marine Engineering from Webb Institute and did graduate studies in Ocean Engineering at Stevens Institute of Technology. He is a licensed Professional Engineer. Before joining the Department of Energy, Greg was President and CEO of the naval architecture and engineering firm Sparkman & Stephens in New York where he worked for 20 years.

“We are focused on reducing the cost of offshore wind energy to a competing level,” says Greg Matzat, Senior Advisor for Offshore Wind Technologies at the U.S. Department of Energy.

“These engineering, design and deployment projects will support innovative offshore installations in state and federal waters for commercial operation by 2017.

These projects will speed the deployment of stronger, more efficient offshore wind power technologies – helping lower costs further, drive greater performance and clear hurdles for future U.S. offshore wind projects.

The project teams will demonstrate both fixed-bottom and floating wind technologies across a range of sites located in the Atlantic Ocean, Gulf of Mexico, Pacific Ocean and Great Lakes. The seven teams

will conduct their design and engineering phases this year, after which up to three projects will be selected to proceed to construction phases with follow-on funding from the Energy Department.”

What are the department ambitions with offshore wind energy? What will be the main challenges to overcome?

“Broadly, the Energy Department is focused on reducing the cost of offshore wind energy to a level at which it can compete against conventional energy sources without subsidies.

The United States has tremendous untapped clean energy resources, including offshore wind power. Additionally, there is significant opportunity across U.S. coastal regions and Great Lakes states, where electricity demand is the highest.

In fact, the 28 coastal and Great Lakes states in the continental United States use 78 percent of the nation’s electricity and typically have higher retail electricity rates than their inland neighbors, where the majority of land-based wind farms are located.

According to the Department of Energy’s report 20 percent Wind Energy by 2030, no 01 2013 – 27

+ Offshore Wind Energy

“We are always looking for input from industry as to where further investments could be considered”

deploying 54 GW of offshore wind capacity would provide four percent of the nation’s total electricity. While offshore wind energy is not currently deployed in the United States, 54 GW of capacity by 2030 is achievable.

History shows that U.S. industry can gear up quickly. For instance, it took just nine years to install 54 GW of land-based wind in the U.S. with 13.1 GW of that installed in 2012 alone. As our offshore wind industry develops, we expect to see further improvements in production and installation, thereby reducing the total cost of offshore wind energy and driving further deployment.

With reducing costs in mind, the Energy Department is investing in innovations in foundation design, turbines, control systems, electricity transmission and grid integration, construction techniques, installation methods, and Operation & Maintenance. Additionally, we’re working with other federal agencies to remove market barriers and lower the cost of financing – making it easier, faster and less expensive to site, permit and construct offshore wind farms in the United States.”

The announcement of new investments in pioneering offshore wind projects included three floating wind projects. Which role does the department want to play in the development of this technology?

“Across our programs, the Energy Department pursues a portfolio approach to technology R&D. As part of this, we’re supporting both floating and fixed-bottom offshore wind technology. The seven demonstration projects announced in December include three floating and 28 – no 01 2013

four fixed-bottom projects. The floating projects include one spar buoy and two semi-submersibles with one constructed of ­reinforced concrete. Beyond the three floating demonstration projects, we’re supporting research and developing various other floating wind turbine platform concepts, developing aeroelastic/hydrodynamic modeling tools for floating wind and creating recommended practices for assessing these technologies.

While this is still an emerging technology, floating wind turbine platforms have the potential to reduce costs in the long term through design site independence, greater opportunities for mass production, reduced offshore operations for installation, less expensive installation vessel requirements, and reduced impact on environmental ecosystems.

Further, over 60 percent of the U.S. offshore wind resource potential is in waters with depths of 60 meters or more. Floating platforms for wind turbines can help access the tremendous wind resources in U.S. deepwater locations.”

Besides funding these demonstration projects, are there any other plans to stimulate off- shore wind energy?

“The Department of Energy will continue to make investments in offshore wind beyond the demonstration projects.

This work includes additional offshore resource measurements and assessments, turbine-to-turbine wake studies, wind farm control optimization, and improvements to offshore design tools including real world validation to enable the design and evaluation of technological improvements.

The Department is also developing fixed-

bottom and floating reference turbine and wind farm models to enable the assessment of technology and operations and maintenance improvements with respect to the cost of energy and other economic impacts.

We are always looking for input from industry and other stakeholders as to where further investments could be considered.”

The oil and gas industry has a lot of experi- ence in offshore energy production. Could the offshore wind industry benefit of their knowledge and vice versa?

“While there are many differences between offshore wind and oil and gas, there are also many similarities, and offshore wind can benefit from the experience of the oil and gas industry. Many of the offshore wind demonstration projects have experienced oil and gas industry members on their teams.

While wind energy could power oil and gas platforms – reducing platform energy costs and emissions – research is needed on balancing wind’s variable energy output with a platform’s power needs.

The U.S. Energy Department will continue to collaborate with industry, academia, states and other Federal agencies to research, develop and demonstrate effective technology solutions to America’s energy challenges. For example, we partnered with the Department of the Interior last year to host a knowledge exchange workshop that brought together experts from the offshore renewable and oil and gas fields, to exchange best practices and lessons learned and to strengthen relationships.”

Floating platforms for wind turbines can help access the tremendous wind resources in U.S. deepwater locations

no 01 2013 – 29

+ Software

Which megatrends will shape our software?

Managing Director Are Føllesdal Tjønn has been at the helm of DNV Software for three very busy years.

With a 134 percent growth in external revenue since 2009, the shift toward a market-driven company has proved successful. What changes does he expect in the industry in the coming years?

And will there ever be a ‘DNV Software App Store’?

Text: Kaia Means photo: DNV

T

he main development of DNV Software in the past three years has been the change in focus to become more commercial, and putting the customer in focus.

“We’re listening to the customer, understanding what the market and our customers’ needs are,” says Mr Tjønn. “Our software roadmaps are dominated by customer needs and the market rather than by technological possibilities. We have turned that focus into revenue. Previously we were dominated by internal revenue providing software for DNV. We wanted to grow our external revenue,” he says.

This we have managed, from NOK 141 million in external revenue in 2009 to a projected NOK 330 million in 2012. The ratio of internal versus external revenue was 50/50 in 2009. Now we have 75 percent external revenue.

“Although we are experiencing significant growth in all markets, the main growth is coming outside our home market. We reached an important milestone this year when we for the first time had more employees outside of Norway than in Norway,” he says.

This growth has brought us even closer to our customers and provides the possibil30 – no 01 2013

ity to serve them well in the entire process: pre-sales, sales, implementation, training, after-sale services and support.

“Our customer surveys demonstrate that customers are reasonably happy with what we deliver. I would like to thank them for their valuable feedback – this is very important for our efforts to continuously improve our performance. Going forward, our ambition is to increase the score on the rating of our products and services,” he says.

In DNV Software’s main markets – oil and gas, offshore, process and petrochemical industries – our solutions for design, engineering, strength assessment, risk and reliability, QHSE and asset integrity management have all been well received and have experienced strong growth.

“The outlook for the coming years is also good. Investments in upstream, midstream and downstream markets remain high in most of our key areas. We will pursue market opportunities and serve our customers with leading software solutions for managing risk. Our value proposition is strong – well-managed risk means wellmanaged business. We are proud of our impact on, and contributions to, a safe and sustainable future,” says Mr Tjønn.

At the forefront of change

The coming years promise as much or even more change in the industry. Mr Tjønn predicts four major areas where technological advances are going to have a big impact on the products and services we deliver, and on our customers. Those four areas are cloud computing, mobile computing, seamless integration and predictive real-time analysis.

“Analytical software running in the cloud will help our users solve increasingly complex and extensive problems,” he says. “It will enable them to explore more design options, analyse more environmental scenarios, get quicker results and have more dynamic resource management.

Analysis software is available when and where you need it, without any deployment.”

Cloud computing will also have a big influence on our management solutions in the Synergi portfolio. These solutions are by nature hosted, so the switch to cloud computing and software as a service (SaaS) is not that much of a leap.

“But we need to go further. By letting our customers buy it as a service instead of installing, deploying and operating inhouse, we’re creating dynamic resource

I Are Føllesdal Tjønn, Managing Director DNV Software

management. And our ability to offer the mass market affordable, standardised, quick and easy-to-get-started solutions depends on an efficient cloud and SaaSenabled solution,” he says.

Software for mobile devices is another area with big changes in store. “In the past two decades, all software solutions have become network enabled – every­thing is on IP. Today, with smartphones and tablet PCs, everyone is online everywhere, all the time – and they expect to be able to do real work. Cloud com­ puting is driving mobility and also vice versa: mobility and mobile computing are driving cloud-enabled solutions. This leads to ubiquitous access to software resources, analysis results and evaluation reports. It also gives easy access to ­integrity ­status. We will see ever easier reporting of inspection findings and integrity status through mobile devices,” says Mr Tjønn.

Seamless integration with other enterprise solutions is another important development. “Combined with mobility and ubiquitous computing, this puts new

demand on our software solutions in supporting wide and rich standards. Also our implementation of security solutions, identity management, authentication and authorisation will meet new and extensive demands in the future,” he says.

App Store?

“Maybe there could even be a ‘DNV Software App Store’. We can be an attractive platform for innovative independent developers and software vendors for small applications and modules offering attractive additions to our products. For example, analytical models that could be linked in as additions to our own analytical models, or small applications used to quickly create models or to evaluate the results of an analysis, create reports or visualisations … the opportunities are many.”

The fourth megatrend predicted is the change in predictive real-time analytics.

Over the past years, DNV Software has established leading solutions for integrity management of pipelines, offshore structures, topsides and plants. “The next step

for these solutions is to integrate with realtime data streams in order to enable predictive real-time analytics,” says Mr Tjønn.

“This will make them even more relevant for safe and sustainable operations of the assets. For example, performance forecasting on a short time horizon or days or weeks, based on real-time production data, will enable our customers to optimise production profiles for an oil field even further. Another possibility is real-time QRA analysis based on real-time production data in a pipeline,” he says. “Already we are in the process of developing a business case for a commercial offering of such solutions.”

Finally, he says that DNV Software should expect as much change in the next three years as we’ve seen these past three years. Since 2009 we have made one acquisition, with Synergi. But it will not end there. Mr Tjønn reveals that there are two software companies that we specifically have in our sights as possible acquisitions.

More growth is in store.

“We’re very pleased with what we’ve achieved. But we’re not done,” he says. no 01 2013 – 31

+ Software

OMV at forefront of dynamic risk management with Synergi Life

OMV, the integrated international oil and gas company, is implementing a dynamic approach to project risk management. Its most important tool is Synergi Life’s Risk Management module from DNV Software – previously known as EasyRisk Manager.

Text: KAIA MEANS photos: OMv

W

hen Dr Huberta Kulmhofer, corporate project risk manager at OMV Aktiengesellschaft, led the process of choosing a software supplier for risk management of major capital projects, it was done according to rigorous corporate guidelines. Several international software suppliers were invited to demon32 – no 01 2013

strate their solutions, and OMV representatives attended software workshops of the shortlisted companies.

“At the end of the process, DNV Software was the top-ranked company,” says Dr Kulmhofer. “The Risk Management module in Synergi Life was ISO-based, and best suited to our dynamic risk management

strategy for capital projects. It had all the arguments going for it, and the demonstration was very convincing,” she says.

“OMV’s decision was additionally influenced by important recommendations from international companies.”

Dr Kulmhofer has been with OMV since 2004, when she started in the company as

The Risk Management module in Synergi Life is very easy to use and has a high level of flexibility.

Dr Huberta Kulmhofer, Corporate Project Risk Manager, Corporate Project Management, OMV Aktiengesellschaft

a controller. Prior to that she was working as a financial analyst with Hewlett Packard.

At OMV she has held several positions; she is currently stationed in Dubai, working for the Exploration & Production Project in OMV Yemen.

HIGH LEVEL OF FLEXIBILITY

“The Risk Management module is very easy to use. For capital projects a risk management tool is used by international project teams on a frequent basis. If it’s too complicated it won’t be accepted,” says Dr Kulmhofer.

OMV started rolling out the implementation of the Risk Management module for major capital expenditure projects in June 2012, starting with its operations in Yemen, Pakistan and Romania.

Now, project managers, risk coordinators and the project teams use the Risk Management module on a regular basis.

“We could more or less take the module as an out-of-the-box product, with some adaptations and adjustments. We rely on the basics of Synergi Life’s Risk Management module – following the ISO approach that is important to us. It brings in a dynamic approach regarding risk management, and is showing a new way forward,” she says.

One of the many advantages is that it’s web-based, so it can be used by all ventures, across all geographical regions.

ENGINEERS ON YOUR SIDE

“Another key positive point has been our experience with the DNV Software engineers. They’re very experienced, very crea-

tive and helpful when it comes to adapting the tool to our needs,” says Dr Kulmhofer.

Another reason OMV chose Synergi Life’s Risk Management module was its self-explanatory setup, where there is a good overview, and users are clearly led from one step to the next, from risk identification to risk mitigation and follow-up.

It is possible to upload documents and make statistics, and to compare results over a defined timespan. Reports are created easily, with parameters that are easy to change directly by the user, without the need for extra support from software developers. Automatic alerts can notify risk owners in Outlook according to due dates.

“It has a high level of flexibility,” says Dr Kulmhofer. “You can define and create data fields on your own. The import and export functions are very useful and practical.”

Using different risk matrices within the same project is possible. “That’s useful, especially when an entire project has many sub-projects that use different risk matrices with different thresholds,” she says.

“The Risk Management module is really appreciated by our project teams, because it rids them of all the files going back and forth. We have one database that’s up to date.”

All in all, OMV is extremely satisfied with both the software and the service provided

by DNV Software. “The response time we’ve seen, and the discussions we’ve had, have shown results. We’ve also inspired DNV, I think, with our ideas. We’re on a very good risk management track compared with other companies,” she says.

Dr Huberta Kulmhofer, Corporate Project Risk Manager, Corporate Project Management, OMV Aktiengesellschaft

OMV IN BRIEF With group sales of EUR 34.05 bn and a workforce of 29,800 in 2011, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies. In exploration and production, OMV is active in two core countries, Romania and Austria, and holds a balanced international portfolio.

OMV had proven oil and gas reserves of approximately 1.13 bn boe as of yearend 2011 and a production of around 288,000 boe/d in 2011. In Refining and Marketing, OMV has an annual refining capacity of 22.3 mn t and as of the end of 2011 approximately 4,500 filling stations in 13 countries. In gas and power, OMV sold approximately 24 bcm of gas in 2011.

PROFILE OMV Aktiengesellschaft Web address: www.omv.com Market: Oil and gas Employees: 29,800

no 01 2013 – 33

+ Global Development

International Finance Corporation:

Making an impact in a rapidly changing world While responsibility to drive climate change solutions that address the needs of the poorest and the most vulnerable rests primarily with governments, it is clear that the private sector will be needed to leverage the work of the government and civil society, and that better coordination and unified action will be required according to Vikram Widge, Head of Climate Finance and Policy at the International Finance Corporation (IFC).

Text: Stuart D. Brewer photo: World bank group

U

ntil ten years ago IFC, a member of the World Bank Group, was an institution focused on project finance, operating mostly out of Washington, D.C. It has since redefined development finance – by designing innovative financial products and advisory services, emphasizing clients, and maximizing its impact. Today, it’s the world’s preeminent development institution focused on the private sector, with offices in nearly 100 countries.

Key to that transformation: a consistent strategy that leverages all its strengths as a leader in private sector development, and focuses its efforts wherever it can do the greatest good. Addressing climate change is one of its urgent priority sectors.

“The private sector is a key component in tackling the issue of climate change.

The challenge requires both government leadership and large-scale private sector 34 – no 01 2013

actions. Climate-friendly policies and practices must be put into high gear, and these should go well beyond business as usual,” says Mr Widge.

IFC has been supporting business solutions to climate change since 1989, just a decade after the term was coined in a report published by the US National Academy of Sciences. Its first project was solar energy investment in China, a precursor to dozens of investments subsequently made across the globe, from Argentina to Uganda.

Early mover

Since that time, it has continued to be an early mover in clean energy investments around the world, providing seed capital to innovative clean technologies, introducing utility-scale renewable energy projects to new markets, providing risk manage-

ment products for the carbon markets, supporting the growth of energy-efficient buildings and industrial processes, and pioneering the analysis of climate risks and adaptation strategies.

“Last year, IFC invested USD1.6 billion in climate-related investments – more than ten percent of our overall commitments for the year, and we see more opportunities ahead, even in the absence of an international agreement to curb greenhouse gases. Where the investment climate is supportive and access to finance exists, the private sector is moving forward and investing in clean energy and energy efficiency,” says Mr Widge.

This is where IFC plays a role by providing financing and advice to its clients in key areas of climate business including renewable energy, energy efficiency, and climate-friendly finance through domes-

I Affordable, high-efficiency lighting products and electricity from renewable energy mini-grids bring clean electrical power to low-income households. IFC’s Lighting India program will help meet the off-grid population’s needs with renewable energy-based solutions. It draws on lessons of its Lighting Africa initiative with the World Bank and others that has enabled more than 500,000 solar lamps and lanterns to be sold. no 01 2013 – 35

+ Global Development

the challenges – it will need to provide an estimated 80 percent of the investment required to stabilize climate change.”

Public-private partnerships

I Vikram Widge, Head of Climate Finance and Policy Climate Business Group at IFC, emphasises the importance of private sector solutions to a traditionally public sector issue.

tic financial institutions. It is also a role consistent with the World Bank Group President, Jim Yong Kim’s recent call for a global response equal to the scale of the climate problem, and the need to do more on carbon pricing.

Untapped opportunities

Despite the challenges of political risks, regulatory interference and technology take-up in some countries, Mr Widge remains optimistic. “Looking forward, we see untapped opportunities for investors 36 – no 01 2013

seeking to address resource constraints in emerging markets. Based on this potential, IFC is looking to grow its own climate business to 20 percent of its long-term financing by 2015, up from about eleven percent last year.”

In developing nations, basic resources such as food, water, and land are increasingly pressed by urbanization and population growth. “Climate change intensifies those strains, especially for the poorest of the poor,” says Mr Widge and adds, “The private sector is essential in addressing

Over the past few years, the IFC has established a strong record of projects involving climate-related public-private partnerships.

“About 70 percent of our investments in the power sector are now renewable energy. We also implemented a USD 35 million global portfolio of advisory programs to support climate-related investment by the private sector. About 30 percent of our new mandates for public-private partnerships were climate-related,” points out Mr Widge.

Making offices, homes, and other buildings more energy efficient can have a big impact. “Building-related greenhouse emissions could double by 2030, with most of the increase in developing countries.

IFC is helping builders all over the world put a new emphasis on sustainability and energy efficiency – by ramping up investments and by developing codes that lower operating costs, cut carbon emissions, and reduce vulnerability to severe weather events. We have ongoing projects in Colombia, Bangladesh, Indonesia, Mexico, the Philippines, and Vietnam,” says Mr Widge.

Ramping up investments

Mr Widge believes local financial institutions also have a pivotal role in climate finance. “As an example, by providing guidance and resources to Chinese policy­ makers and banks, we’re supporting a transformation of the Chinese financial

“In a time of rapid economic and technological change, it is important to work closely with our clients and expand our development impact.”

sector. The ground-breaking Green Credit Policy encourages Chinese banks to invest more in energy-efficient and sustainable companies. This project is vital in a country that emits more greenhouse gases than any other – it will set a powerful example for the rest of the world.”

The IFC recently issued a USD1billion green bond that will be used to support climate-friendly projects in developing countries. The bond sets a precedent as the largest green bond issue to date and was principally allocated to socially responsible investment portfolios. The bond, which was heavily oversubscribed, was sized to address the demand from an increasing number of investors interested in climaterelated opportunities.

Critical impact

Commenting on the work of the IFC, Miguel Rescalvo, head of emerging mar-

kets Latin America for DNV KEMA, says IFC’s work is having a critical impact.

“Put simply, it is spurring growth, creating jobs, and solving problems in poor and middle-income countries. It’s making a difference, and we applaud the work it is doing.”

DNV KEMA is involved in projects that support the private sector and various international financial institutions in emerging markets. “For example, the private sector plays a critical role in advancing energy efficiency in Mexico’s household sector. Close collaboration between the private sector, the World Bank and the Mexican government has allowed Mexico to present a unique proposal for developing new carbon markets as part of the Partnership for Market Readiness (PMR).

DNV helped the World Bank coordinate Mexico’s proposal to the PMR and the private sector to develop the specific energy-

efficiency program part of that proposal,” adds Mr Rescalvo.

Concludes Mr Widge, “Working together with our clients, governments, and partners, we are creating new models for tackling climate change. But there is still much more to be done. Given the scale of investment required, it is clear that the private sector will need to leverage the work of the government and civil society, and that better coordination and unified action will be required.

“IFC is working to provide the leadership to strengthen the bridge between the private and public sectors and help forge the low-carbon economy of tomorrow.”

About IFC IFC, a member of the World Bank Group, is the largest global development institution focusing exclusively on the private sector.

The corporation helps developing countries achieve sustainable growth by financing private sector investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. It plays a catalytic role by demonstrating the profitability of investments in emerging markets.

Established in 1956, IFC is owned by 184 member countries, a group that collectively determines its policies. Its work in more than 100 countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives.

no 01 2013 – 37

+ Combating Poverty

Wonderbag changing lives Carbon-credit generating slow-cooking device cuts energy consumption, saves money and is transforming women’s lives in South Africa.

Text: Stuart D. Brewer photo: Wonderbag

T

he Wonderbag is an energy-efficient approach to cooking. Its clever insulating properties allow food brought to the boil to finish cooking while in the bag, without the use of additional energy.

So, families can cook appetising hot meals, while saving energy and money. It also means less time tending to cooking food – time that can be better spent looking after children, earning an income or doing essential chores.

“Our primary goal is to significantly alleviate poverty in Africa on a large scale,” says Sarah Collins, founder and CEO of Natural Balance, the South African company behind this innovative idea. “But we’re not stopping there. We’d like to see a Wonderbag in every house around the world. We have ambitious ethical and environmental goals to achieve – we want to positively impact people’s lives, the planet’s ecology and everybody’s perception on a global scale.”

Supplying a simple slow-cooking device that will “change behaviour in a way that will change the world” may seem improbable to some. Sarah Collins, however, is fully committed to achieving her goal.

“We’re not about Wonderbags being sold, we’re about Wonderbags being used to 38 – no 01 2013

help ease the social, economic and environment impacts on disadvantaged communities.”

As of April this year, 600,000 Wonderbags have been distributed throughout South Africa, set to improve the lives of over 2.5 million people. With key partnerships in place, including Unilever and Microsoft, Collins hopes to see that figure rise to at least five million in the next few years.

Combating poverty

In 2008 Collins, who has a background in community-based eco-tourism and environmental conservation, was inspired to develop a product that would combat poverty in Africa on a large scale. Growing up on the east coast of South Africa, she knew the need was great, the opportunities were vast and the time was now.

“It’s taken years of passion, heart, energy, trial and error and stick-to-it-ness to get the brand where it is today – over 600,000 bags distributed in South Africa, first round of carbon credits registered and issued, production started in Rwanda and Turkey, pilots poised to launch in Kenya, Nigeria and Somaliland, and … bags sold in the UK, with a buy-one-give-one

I A Wonderbag being used in a kitchen in Soweto, South Africa. Photo: Mark Lanning no 01 2013 – 39

+ Combating Poverty

In the developed world a Wonderbag will save you money – elsewhere it helps save lives

I The global population is seven billion and growing.

50 per cent of whom are living on less than USD2.50 a day, with no real access to basic healthcare, education or indeed nutrition.

model to support getting Wonderbags into humanitarian relief efforts,” says Collins.

Based in Durban, South Africa, the Wonderbag team has since expanded to include like-minded people to construct a business model that can scale up for replication across Africa, Asia, India, South America, Europe and USA. More than a nice stew …

Collins says the Wonderbag is making the most “incredible shifts” in the economic status of women who have embraced it.

“We see phenomenal change in both developing and developed countries. It’s not just a poverty alleviation project (it can save the average South African family up half of their annual income ordinarily spent on fuel), nor is it just a development exercise (our factories have created over 2,000 jobs in South Africa and Rwanda), nor indeed is it just a carbon trading model (each unit has the capacity to save 40 – no 01 2013

half a ton of carbon a year, which is harvested and sold on the carbon markets).

Brought to scale, the Wonderbag has the power to do much more than that; it can be the catalyst for a lot more than a nice stew and CSR initiatives. Our partners understand this, and that’s why the likes of Unilever, Microsoft and JP Morgan have got behind the cause of getting 100 million into homes by 2015.”

Collins points out that the Wonderbag is a commercially run business, not a charity. Bags are not given out for free. Each bag retails at around GBP30, but they are offered at a subsidized price to those unable to pay that amount, thanks in part to the deal with Unilever and to the carbon credits earned from the reduction in greenhouse gases resulting from use of the bag.

One of only a few businesses accredited with the United Nations Framework Convention on Climate Change, it is going through the process of being validated for the UN’s Clean Development Mechanism (CDM) as well as the Voluntary Gold Standard which allow companies to purchase carbon credits generated by the bags to offset their own emissions.

“This carbon funding allows Natural Balance to sell the bags at cost price,” explains Collins, adding, “This means we can bring Wonderbags in at the lowest possible costs … to people who need them.”

“In South Africa, the Wonderbag project falls into a VCS grouped project, and in Rwanda DNV is validating Wonderbag’s Programme of Activity (PoA) format of carbon emission reduction projects,” explains Grant. “We’ve recently seen the registration of a number of PoAs across Africa. The PoA mechanism was designed in order to allow participants to combine CDM funding with government subsidies, in order to develop national initiatives that governments in developing countries could struggle to sustain over time in the absence of the mechanism. Other countries are also embracing the new mechanism in order to leverage carbon finance for projects that may otherwise not have been implemented.”

He continues, “The premise behind the Wonderbag heat retention cooker is that, of all the energy transferred to food during conventional cooking, most of it is lost to the atmosphere through inefficient insulation and exposure to air through convection and radiation. Food that has been sufficiently heated on a stove can be transferred into a Wonderbag, where the heat is retained and allowed to continue cooking the food without the application of more energy from a stove. This allows the heat source of the stove (e.g. wood, fossil fuels, gas or electricity) to be turned off – thereby saving any additional emissions to the atmosphere.”

Leveraging carbon finance

“The Wonderbag is such a brilliant idea as it benefits both the consumer and the African families each sale will help,” says Grant Little, business development manager, DNV Accredited Climate Change Services South Europe, Africa and Middle East. “I use the Wonderbag myself and I’m impressed. It’s a revolutionary new way of cooking which is making a positive impact on people’s lives.

Unlocking time, money and workforce

“Ultimately the Wonderbag is about efficiency in cooking, which is a fundamental activity in a family. It ignites the connection between families in developing and developed communities: a basic need to provide nutritious meals and the unlocking of time, money and workforce,” says Collins.

I One of the issues that encouraged Sarah Collins to begin the Wonderbag business is that in Africa, girls are sent to get firewood and 68 percent of rapes occur when they are collecting wood – so there are multiple benefits.

Natural Balance ventured what happens when not just one family, but an entire community, gets a Wonderbag; using statistics compiled and audited by the UN, which projected Wonderbags on developing communities across the world. Firewood or charcoal can last 5–7 longer, allowing for reforestation. Water lasts longer, as there is no evaporation from the Wonderbag. Time is given back to women, for a job or caring for the family.

Girls are back in school, rarely needing to collect firewood, and not straying too far from home.

Multiplier effect

“We realised that the impact of the Wonderbag has a multiplier effect: money for charcoal lasts the whole month, ­families have more disposable income, the girls are back at school, the school needs more classrooms, builders are

employed to expand the school, more teachers are employed, and more school uniforms and books are sold,” says Sarah Collins. She e­ mphasizes that in just one year, the impact of having 100 million Wonderbags in use across the world would save 170 million trees and 15.6 billion litres of water, as well as create some 100,000 new jobs and USD3.6 billion in disposable income.

Natural Balance was one of the few social enterprises able to attend this year’s World Economic Forum, where it announced the launch of its initiative to distribute 100 million Wonderbags with the support of its partners. His Excellency Nasser Sami Judeh, the Jordanian Minister of Foreign Affairs, along with the Dutch Prime Minister Mark Rutte and Unilever CEO Paul Polman, acknowledged the importance of collaboration between world leaders, NGOs and corporate organi-

sations to instigate social change. And the 100 million bag initiative was recognized as a viable model to deliver social empowerment and mobility to some of the world’s poorest communities.

Call for real action

“We have the potential to save and improve the quality of millions of lives by providing a simple cooking device, yet we are still struggling to raise the corporate investments we need to help us change the world,” says Sarah Collins.

She concludes, “We have business models that work, pilot projects and Wonderbags in homes. Captains of industry make commitments, governments and UN agencies sign documents, speeches are made: but we need real action … we need more privatepublic partnerships, and other corporate partners to join us to make a lasting impact.” no 01 2013 – 41

+ Customer Panel Survey

Creating value through supply chain management A recent survey of customers in the food and beverage industry conducted by DNV Business Assurance shows there is no magic bullet when it comes to managing your supply chain. Managing every link in the best way possible for the company and consumers requires multiple actions, involves dealing with a number of risk areas and demands both commitment and investment.

Nevertheless, quality and safety is still top of mind.

Text: Cecilie Løne photo: DNV illustration: M&CM

T

he recent horsemeat incident in Europe once again highlighted the importance and possible impact of supply chain management – this time, the negative impact. Players in the food and beverage industry are acutely aware of the consequences of any incident. Their supply chains are growing more and more global and complex. At the same time, manufacturers and retailers are increasingly being held responsible both upstream and downstream, forcing them to be in control of every link. So how is the industry approaching such a daunting task? A recent survey conducted by GFK Eurisko*, an international research institute, and DNV Business Assurance shed some light on how 500 companies in Europe, North America, South America and Asia view the risk picture, and on the mitigating actions they apply.

Food safety and quality first

Of the respondents, 75 percent came from manufacturing companies that were mainly directly involved in the processing of 42 – no 01 2013

the final product, meaning that they sit on top of long and geographically widespread supply chains. Approximately 70 percent of the respondents were directly involved in quality and safety management, while around ten percent were senior decision makers (e.g. CEOs, COOs or Managing Directors). Not surprisingly, quality and safety were top of mind for several reasons.

“Of the total number of respondents, 63 percent picked food safety as a main risk area, and food quality received 54 percent of the total votes. This is as expected, considering the possible impact of any failure,” says Stefano Crea, Global Director Food & Beverage in DNV Business Assurance.

In addition, food safety legislation – like the European Food Act in Europe that has been in place for a while, and now the Food Safety Modernization Act in the US – has shifted the responsibility for food safety towards food manufacturers. This forces them to manage every link in their supply chains, both upstream and downstream. “Thus, most of our customers are

working to continually improve in this area and have done so for some time. This is a topic that is core to the industry and is in some cases seen as a collective threat or risk. The food and beverage industry strongly agrees that food safety should not be a competitive issue and should instead be a collaborative effort for the benefit for everyone – industry and consumers,” says Mr Crea.

Perhaps more surprising was the fact that financial risks only received 38 percent of the total votes. It is somewhat unexpected that the current financial situation does not have an even clearer effect.

Looking at the respondents’ views on risk areas in the years to come, financial risk climbs to second place (50 percent), above quality. So there seems to be some apprehension about the future, especially in North America.

The environment did not rate that high on the companies’ agendas either.

Environmental challenges (29 percent) were viewed as being considerably less threatening. “Again, we see a trend

is one of the world’s leading research * GFK enterprises. With more than 12,000 experts, it helps companies discover new insights into the way people live, think and shop in over 100 countries.

towards environmental aspects growing in importance in the years to come. We should also emphasise that this does not mean the industry is not tackling environmental challenges at all, but it is a little bit ‘basics first’,” says Stefano Crea. “But our indications are that, as both consumers’ demands rise and the world’s resources are increasingly under pressure and diminishing, the environment will continue to rise on the agenda. The water footprint, for instance, is one issue we see growing both in consumers’ eyes and on the business agenda.”

Customers – key influencers

The survey indicates that customers are the biggest driver for companies to manage their supply chain, and this is especially true when it comes to food safety. Other key reasons for committing to risk prevention and mitigation actions are internal company policy and differentiation from the competition. Internal policy combined with consumer opinion is the strongest influencer on environmental action.

“While the reasons for implementing mitigating actions vary depending on the issue, an overall perception seems to be that companies benefit from their actions in terms of customer relations and sales,” says Mr Crea. “They see improvements in quality, competitive advantage and brand reputation, for example. So even though 62 percent of the respondents named cost

I Stefano Crea, Global Director Food & Beverage in Europe for DNV Business Assurance

no 01 2013 – 43

+ customer panel Survey

THE WO

In our global economy food can travel great distances before ending up on your plate. Food safety and sustainability can only be ensured through a systematic approach and well-ma supply chain. With a global presence, we help assure every part of your food eco-system around the world through our certificat verification, assessment and training services.

as a disadvantage, one out of two respondents claims that the benefit from the actions outweighs the costs.” there iS no Such thing aS a Single Solution

While food safety and quality continue to be perceived as a primary challenge within the industry, the food and beverage supply chain is a very complex and diverse world; there is no single solution to reduce all risks. most respondents indicated that their company uses more than 15 ingredients in its products. “that may not sound like a lot but, if you translate, it means that these companies could have in the range of a hundred suppliers and upwards. large companies with a large product line that, combined, could require in the vicinity of 250 ingredients, for example, could rely on thousands of suppliers,” says mr crea. “It’s therefore clear that not only the effectiveness, but also the efficiency, of the supply chain management are fundamental contributions to sustainable development.” companies participating in the survey indicated there is not a single recipe for mitigating risks, and that they rely on an orchestration of different actions. the actions used range from the exclusion of suppliers based in sensitive areas, to supplier diversification and development as well as assessment (audits and evaluations), certification to regulatory standards, crisis management plans and risk transfer. over 44 – no 01 2013

80 percent of the survey respondents indicated that they use all the mitigating actions.

While there is no silver bullet, smaller companies seem to be keener on supplier diversification to avoid sourcing from risky areas. larger companies, on the other hand, seem to be opting for supplier and risk assessment activities, co-makership, certification and emergency preparedness. the reason for this could be related to company size and availability of resources.

the larger companies seem to find a systematic and proactive approach to supply chain management to be the most stable and sustainable approach in the long term. mr crea concludes, “the survey does indicate that prevention-oriented actions, such as assessment and certification, and emergency preparedness, are thought to be the most effective. this seems to be particularly true when it comes to managing issues associated with quality and food safety.”

ORLD OF SUPPLY CHAIN MANAGEMENT

anaged

tion,

The DNV Business Assurance customer panel The ‘creating value through supply chain management’ survey was conducted among the DNV Business Assurance customer panel. This is a community of customers who, on a regular and voluntary basis, provide their insight on hot topics related to sustainable business performance. “we have 80,000 customers around the world; their combined experience and knowledge represent something unique. Through the DNV Business Assurance customer panel, we tap into this reservoir with the aim of creating value for others,” says Luca crisciotti, cEo of DNV Business Assurance. “creating value while balancing the world’s economic, environmental and social needs is what will make for tomorrow’s successful companies. we are truly dedicated to supporting this through sharing knowledge as well as through our services.”

no 01 2013 – 45

+ Sustainable Fisheries

The health of our oceans depends on responsible fishing The world’s fish stocks are under pressure. Some fish stocks risk depletion within a few years.

Third-party certification of sustainably sourced fish is increasingly being demanded by retailers and other parts of the supply chain.

Text: Brit Ingvild Holmem photo: GETTY IMAGES

A

round one billion people rely on fish as their primary protein source. Ensuring responsibly managed fisheries and reversing the decline of fish stocks requires a market that demands sustainably sourced fish.

In 2009, DNV Business Assurance was accredited to certify fisheries against the Marine Stewardship Council (MSC) Standard for sustainable fisheries. The MSC eco-label is increasingly becoming a consumer requirement. People want to be assured that the seafood they eat has been sustainably harvested.

“Since 2009, we have certified a number of fisheries according to the MSC standard for sustainable fisheries in several countries in the North East Atlantic. As an accredited 3rd party certification body for the MSC standards, we want to contribute to a fishing industry that maintains healthy oceans,” says Guro Meldre Pedersen, global seafood coordinator in DNV Business Assurance.

46 – no 01 2013

Proven impact of responsible fisheries management

Norway is often mentioned as a best practice country, in that nearly 75 percent of its total national catch value is covered by the MSC programme. DNV Business Assurance is currently responsible for all MSC certification in Norway.

Sandhya Chaudhury, who is responsible for global service and a lead MSC certification auditor in DNV Business Assurance, says: “Norway is already internationally acknowledged for its sustainable fisheries management. It’s good for the ocean, good for business and good for future fish supply. We must let other fisheries see that responsible management pays off in both the long and short term in order to increase the global attention to this issue as well.”

An MSC study shows that certified fisheries are continuing to improve and are performing better on key performance indicators. During the past few years since

the MSC was established, a positive global environmental impact has also been seen.

The management of fish stocks worldwide has improved, and fishermen have more knowledge about fishing’s impact on the ecosystem, something which the MSC has contributed to.

MSC eco-label creates trust

The Marine Stewardship Council (MSC) is a non-profit organisation with a mission to contribute to the health of oceans. Through a multi-stakeholder ­process, it has developed certifiable ­standards for sustainable fisheries and ­seafood traceability. The MSC’s eco-label can be applied to consumer products, ­providing assurance to the consumer that this is sustainable seafood from a wellmanaged fishery. Only seafood sourced from MSC-certified fisheries can use the MSC eco-label. Consumers are increasingly looking for this label at the supermarket.

“By managing your fishery responsibly, and having it certified, you are not only documenting that you ensure the sustainable harvest of fish stocks. We see that the MSC eco-label also opens up new market opportunities for our customers,” says Chaudhury.

“MSC-certified fisheries often see an increase in demand. Many leading supermarket chains, such as Wal-Mart, aim to buy and sell only MSC-labelled wild fish.

This development is very welcome. The markets must change in this direction to ensure that only sustainably sourced seafood is accepted worldwide.”

national and international agreements and having a management system in place in order to adapt to changing circumstances.

“The certification process is quite complex and completely transparent, requiring stakeholder consultancies at various stages.

Once certified, yearly audits are required in order to maintain the certification.

Fisheries have to prove continuous compliance during the five-year certification period. If inconsistencies are found, the certificate can be suspended or even withdrawn,” Chaudhury explains.

Expanding to markets globally

Principles and criteria for sustainable fishing

Fisheries must comply with a set of principles and criteria for sustainable fishing in order to achieve certification. The fishery must operate responsibly to ensure that the fish stock and marine ecosystem can be maintained, as well as complying with

DNV Business Assurance has, until now, provided MSC certification mainly in the North East Atlantic, but is working to expand MSC certification services to other markets.

“Sustainably managed fisheries are a global concern. Most of the wild captured fish is consumed in the developing world,

and we would like to use our expertise to promote sustainable sourcing and healthy oceans in the international market too,” says Sandhya Chaudhury.

For future generations

One quarter of the world’s fish stocks are over-exploited, depleted or recovering from depletion, while 50 percent are fully exploited and cannot produce more, according to the Food and Agriculture Organisation of the United Nations (FAO).

“Next to climate change, overfishing is one of our major environmental challenges. If fisheries are not responsibly managed, there will not be enough wild fish left for future generations. In this context, eco-labelling and third-party certification to standards such as the MSC can be an incentive to ensure more responsible management of the ocean’s resources,” concludes Guro Meldre Pedersen. no 01 2013 – 47

+ Carbon Market Mechanisms

A shifting landscape DNV’s Stein Bjørnar Jensen talks about the changing carbon landscape and the importance of regulation, rigour and trust in meeting the world’s sustainability challenges.

Text: Excerpt from Environmental Finance article photo: Damir Cvetojevic

Is this the end of the road for the Clean Development Mechanism (CDM)?

It might be tempting to agree with the sceptics that see the end of the CDM as a successful carbon crediting mechanism.

However, it is important to remind ourselves why it was created in the first place.

With CO2 concentrations in the atmosphere about to pass 400 parts per million, it is evident that the world needs all the policy instruments available to help push development in a more sustainable direction. Through its ten years of life, the CDM has effectively identified least-cost mitigating opportunities, helping industrialised countries achieve their emission caps without stressing their domestic finances too hard, and at the same time supporting sustainable development in poor and developing countries. According to the UNEP Risoe centre, the CDM has delivered more than $350 billion of investments.

So, in my opinion, the world needs ­flexible carbon mechanisms in the future to success­fully develop into a lowcarbon economy. These trading mechanisms should allow for offset projects to 48 – no 01 2013

help poorer parts of the world develop ­sustainably. Thus I believe that what we see now is a ‘teaching lesson’ on how markets are functioning, but we will learn and come out stronger when the crises have passed.

Where are the opportunities within CDM as it currently exists for your clients?

This question is best answered by the project owners, and I believe you will get different answers in different parts of the CDM world. However, remember that more than 6,000 CDM projects were registered by the end of 2012. Only 2,200 of these have ever requested issuance of credits. There is obviously a potential to produce credits in the future – credits that might be eligible for other emission trading schemes than the EU ETS. Perhaps some CDM projects could enter the voluntary market – especially where a good sustainability story could be attached to the credits.

Where are the opportunities within the CDM as it currently exists for DNV?

We will try to maintain our position in both the validation and verification markets to

serve our customers around the world.

We assume that there will be sufficient verification business for us to maintain the competencies needed to continue to serve the CDM market. There are obviously limits to how low activity can fall for us to continue as a Designated Operational Entity.

The CDM accreditation scheme in itself is fairly costly to maintain, and DNV will always aim to deliver quality, which means we need to remain ‘sharpened’ through a minimum of projects.

Regardless of the fate of the CDM and the EU ETS, carbon markets are becoming more fragmented. How do you see your clients responding?

We believe the EU ETS will continue regardless of the current difficulties in creating a carbon price level as originally intended. The most dominant crediting mechanism, the CDM, will also continue.

However, we see numerous initiatives to establish national carbon market mechanisms, each of these with specific purposes.

All these new initiatives present new opportunities, not only for low-carbon solution investors, but also for verifiers.

They are all built around requirements for

I Stein Bjørnar Jensen, Global Business Line Director, DNV Accredited Climate Change Services

MRV (measuring, reporting and verifying).

As a verifier/certifier, it is my hope that their verification requirements are built on a few international standards. That will make our working life easier, but also it will help the future linking of these local markets if we all agree what signifies a tonne of CO2 avoided.

I assume that most of the carbon market specialist firms among our clients are eagerly following these new developments. The real issue is the time it will take to have these new systems up and running.

How does DNV see clients’ concerns developing around wider sustainability themes?

We believe tomorrow’s successful companies will create value by meeting the world’s economic, social and environmental needs.

Our customers increasingly recognise the value in understanding how they will continue to access the affordable energy, clean water and the raw materials they need, while minimising pollution, protecting workers and enhancing the lives of their communities. Increasingly, they see their responsibilities extending beyond the factory gate to encompass sustainable supply chains and product use.

What roles are there for a certification company in helping meet these sustainability challenges?

Sustainability is central to everything we do. We help our customers build sustainable business performance through our global certification, assessment and training services. When determining focal areas for our audits, we encourage our customers to consider stakeholder expectations around sustainability impacts. We also

deliver a wide range of formal and informal assessment services that are directly aligned with specific aspects of sustainable business performance.

In response to these sustainability challenges, many economists and policymakers advocate a shift towards increased efficiency in material/resource and energy throughput. In such an emissions-, resource-, and materials-constrained world, there is a need for agreement and regulation.

We see that trust between stakeholders is essential for success in ‘sharing the burden’, and such trust can and will be supported by the work of certifying companies. Just imagine a future climate agreement without a strong element of MRV? This is where a certification company can play an important role in the sustainability challenges that extend beyond carbon trading mechanisms. no 01 2013 – 49

+ Innovation

Strategic Research Unit for smart grids and super grids DNV has established a new strategic research unit at DNV KEMA’s global headquarters in Arnhem, the Netherlands. The unit will focus exclusively on the further development of smart grids and super grids.

Text: Marjolein Roggen photo: DNV KEMA Illustration: Arjan Zoomers

S

mart grids and super grids are considered key elements and a prerequisite to integrate large-scale renewable energy in the future energy system. By setting up its new strategic research unit, DNV is preparing the practices and tools needed to meet the growing demand and facilitate the integration of large-scale renewable energy to the grids.

“There is a global need for extra capacity and modernization of electricity infrastructure to meet the growing electricity demand,” says Theo Bosma, who will head the new research unit. “The success of the transition towards a sustainable energy system depends to a large extent on how the existing and new energy systems fit together.”

with ultra high-voltage lines is evident, as they enable the energy transition.”

Significant investments needed

Bosma says the facilitation of the different energy sources to the grid requires significant investments in knowledge

development, testing, and in setting up trial projects. The strategic research unit in Arnhem is set up to translate research knowledge into practical solutions and provide results to make the right decisions.

As one of the few companies in the world, DNV covers the entire energy chain both in breadth and depth.

“There are 2,300 energy experts in DNV KEMA. With the establishment of the strategic research unit in Arnhem, we will be able to capitalize on all this expertise and experience. We will also invite external parties to work with us so that we together can create opportunities. To my knowledge, this is the only research centre in the world that concentrates on smart grids and super grids exclusively,” says Theo Bosma.

Call from stakeholders

He continues, “Generating power from renewable sources differs substantially from that of conventional sources. Dominant forms of renewables such as wind and solar power are highly intermittent, so the need for more sophisticated power infrastructure and control systems is apparent. The call from stakeholders in the global energy sector for grid flexibility and enabling power transport and distribution technologies, such as energy storage, smart grids and the expansion of the infrastructure 50 – no 01 2013

Research and Innovation

I Theo Bosma, Head of DNV Research & Innovation in Arnhem, will lead the new strategic research unit.

He is also manager of DNV KEMA’s New Energy Technology Group and a member of DNV KEMA’s Innovation Board.

Research and innovation is a cornerstone in DNV, and a key competitive factor to be on the forefront of new technological developments and provide high-quality services to customers.

DNV invests six percent of its revenue in research and development activities. A key aspect of the strategic research is to identify main technology and risk management trends, as well as to develop new competences and services for the future.

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Global pRESENcE DNV IS a Global pRoVIDER oF SERVIcES FoR maNaGING RISK, HElpING cUStomERS to SaFEly aND RESpoNSIbly ImpRoVE tHEIR bUSINESS pERFoRmaNcE. DNV IS aN INDEpENDENt FoUNDatIoN WItH pRESENcE IN moRE tHaN 100 coUNtRIES.