T H E C O R P O R AT E M A G A Z I N E O F D E T N O R S K E V E R I TA S No . 2 / 2 0 0 0
FOCUS ON
deepwater developments in Brazil and the Gulf of Mexico
Also inside: VLCC contracts highlight China's drive for the west Asset management at BHP Australia meeting the Kyoto targets New inspection technology saves money for Koch Industries
ONTENTS
3 4
8
EDITORIAL Adapting to change
THE PROCESS INDUSTRY 34
PLASTICS PRODUCTION
36
CHEMICAL INDUSTRY
38
NEWS
42
LAST WORD
43
DNV WORLDWIDE
VIEWPOINT Ricardo Beltráo of Petrobras: On deepwater technology…and partnerships
How BHP manages change in Liverpool Bay
10 KOCH INDUSTRIES
profits from new inspection procedures at Pine Bend
24
26 27
2
New appointments; Chernobyl project; Frame agreement with Ericsson; DNV acquires Principia, and other matters
Bruce Rees questions the benefit of the latest ISO 9000 quality standard
NEW LNG TECHNOLOGY DNV class for the world’s largest membrane-tank LNG carrier
16 SAFETY-CRITICAL SOFTWARE DNV develops software product certification
DNV Forum is the corporate magazine of Det Norske eritas.V It is published for Det Norske eritas V by DNV Corporate Communications N-1322 Høvik, Norway. Tel:+47 67 57 99 00. Fax:+47 67 57 91 60. HEAD OF CORPORA TE COMMUNICATIONS
Tore Høifødt
19
EDITOR-IN-CHIEF
THE ENVIRONMENT Australia meets Kyoto targets
Stuart Brewer EDITORIAL CONSUL TANT
R.Keith Evans
THE OFFSHORE INDUSTRY 22
Ensuring plants meet the new Safety Directive
ASSET MANAGEMENT
TECHNOLOGY
14
Huntsman Polyurethanes reaches for Quality Award
U.S. AUTHORITIES
PICTURE EDITOR
June Myklatun ADMINISTRATION
Gro Huseby
plan ahead for FPSOsin the Gulf of Mexico
RISK MANAGEMENT Safety first at R&B Falcon Drilling
DESIGN
DRD DM, Reklame & Design as. PRINT
Stens rTykkeri, Nor way COVER PHOTO
TANKER OPERATION
Knut Vadseth
NITC halves its costs
DRY-CARGO SHIPPING Culture matters in Iran
28 THE SAFETY CASE
in the aftermath of Longford
30
NEWBUILDINGS IN CHINA VLCC contracts highlight China ’s drive for the west
32 THE SHIP SAFETY AUDIT
OOCL benefits from DNV ’s safety rating system
DNV FORUM NO. 2/2000
No responsibility is accepted by the publishers for statements made by authors, nor for attributable comment. Reproduction per mitted with acknowledgement ofce. sour Copyright Det Norske eritas V 2000 Det Norskeeritas V is an autonomous, independent foundation with the objective of safeguar ding life, property and the envir onment. The DNV organisation comprises 300fices of in 100 countries, with a total of 5,500 employees.
VISIT OUR WEBSITE www.dnv.com
EDITORIAL
Adapting to change Henrik O. Madsen
Henrik O. Madsen admits that ‘we must never be content’, because the world is constantly changing. The recently appointed Chief Operating Officer of DNV’s Business Area Oil, Gas and Process Industries maintains that technology and markets are developing at such a rate that ‘our biggest enemy at the moment is resistance to change.’ Madsen appreciates that DNV is rapidly winning new roles in the oil and gas industry. These come in addition to our traditional roles as a classification society for mobile offshore units, as a provider of certification or verification for fixed offshore installations and pipelines, and as a provider of marine warranty services. In addition, DNV offers a wide range of risk-management services: from life-cycle risk management and integrity management to safety, environmental and human-factor consultancy. The ability to swiftly respond to change, and a committed approach to further innovation and improvement, will ‘separate the winners from the losers.’ In response to changing market conditions, particularly in the highly promising deepwater sector, DNV is actively developing both new and existing services, some of which are covered in this issue of DNV Forum. In addition to our offshore articles - which include a special focus on activities in the Gulf of Mexico - we have been to Iran to listen to people influential in shipping; we delve into BHP’s management approach, and we present a timely article about our software-certification services, a growth area for DNV. We also feature a ‘viewpoint’ article addressing the prime issues affecting Brazil’s oil and gas industry. Our themes, as usual, are varied, from shipping to asset management and the environment; from personal interviews to a study of risk-based inspection. 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 - and their adaptability to new and developing situations. We hope this issue makes for stimulating and enjoyable reading.
Stuart Brewer , Editor
DNV FORUM NO. 2/2000
3
VIEWPOINT
THE FUTURE LIES IN TECHNOLOGY… AND Most of the significant developments in deepwater exploration and production during the past 25 years have taken place in Brazil. And the pioneer has been state-owned oil company Petrobras. Ricardo Luis Beltráo, Petrobras Installation Technology and Engineering Group manager, here discusses the prime issues affecting the industry, including developing technology and effects of the Government opening up the sector to international companies.
Photo:Geraldo Falc áo
owing demand for oil oducts pr is the ucial cr challenge 'Meeting the gr do Luis Beltr áo. Petrobras faces': Ricar
4
DNV FORUM NO. 2/2000
DEEPWATER IN PARTNERSHIPS
P-36, the world's largest oil rig, arrives in Brazil; it is due to start operating in the Roncador field in March. Photo:Courtesy of Petr obras/Geraldo Falc รกo
DNV FORUM NO. 2/2000
5
VIEWPOINT
B
razil’s oil industr y is a truly international operation,
discovery. In this phase the northern and eastern areas
and its technical expertise the envy of much of the
will be developed, pumping oil through 21 subseawells.
world. Petrobras has for many years invested heavily in
The second-phasedevelopment contract is to be awarded
research and development. Its focus has had to be on
by the end of 2000, for producing in the southwesternregion,
deepwater technology: with huge hydrocarbon reserves
in water depths ranging from 1,500 to 1,850 m. The third
being discovered and produced in deep offshore basins
phase is for development of the deepest region, in the
such as Campos, Santos and Bahia, the industr y has a
southeast.
healthy future. Continues Beltráo, ‘Increasingly, oil production from ultraSays Ricardo Beltráo, ‘Pressed by the need to answer
deepwaters has become the new challenge to be met by
Brazil’s oil-production supply and demand, and to reduce
the industr y. With the depletion of our onshore and shallow
the effect of oil imports on the countr y’s trade balance,
offshore reserves, the industr y’s unavoidable path has
Petrobras decided in the
been to undertake oil exploration in ever-deeper waters.
1970sto concentrate its efforts
The new challengeshaverequired new technological solutions
on the offshore CamposBasin
to be found, either by adapting already existing technologies
- the countr y’s largest beneath
or by developing new alternatives, so as to make it possible to produce oil in extremely adverse conditions.’
In the next decade oil will be produced from wells beneath 2,000 2,500 metres water depth
water depths of as much as 3,500m (11,500 ft) and reservesof 7.2 billion barrels of oil equivalent. First produc-
tion from the basin started in 1977,and since then we have systematically solved all the offshore production challenges that have arisen.’
Pioneering technology Over the years Petrobras has overcome successivedepth barriers, and in the processset a series of world records. In the past two yearsalone, the company has undertaken eight major and innovative development projects in the Campos Basin. As an example, the Roncador field development is presently the deepest oil production systemin the world’s offshore industr y, and is one of Petrobras’ most promising projects. Development plans consist of three phasesbeyond the already producing pilot production system, which involves the deepest dynamically positioned floating production, storage and offshore unit (FPSO) Seillean,producing 20,000 bpd through a drill pipe riser . Roncador is located in ‘ultra-deepwaters’ (between 1,500 and 2,000m) and is Brazil’s most important sedimentary basin. It coversabout 132 km2. The first permanent production systemwill come on stream this year, only 40 months after
6
DNV FORUM NO. 2/2000
Photo:Courtesy of Petr obras/Geraldo Falc áo
'Our relationshipwith DNV goesbackmany yearsand covers bothclassand consultancy-r elatedwork,'saysRicardo Luis Beltráo. DNV has recentlybeenawardeda contractto verify the design, fabricationand installation of two steelcatenary riserson the P-36 platfor m, in water depths in excess of 1,000m.
Company goals for the next few yearsare quite ambitious, as it plans producing at a rate of 1.5 million bpd by the Photo: Geraldo Falc áo
end of 2000 - a 50 per cent hike over just two years.Most of that growth will take place in the Campos Basin, where the production is expected to increase 67 per cent.
Ground-breaking auction
Beltráo explains, ‘The majority of projects today use a
SaysBeltráo, ‘Meeting the growing demand for oil products
mixture of shared technology. Ten or 15 yearsago, a com-
and natural gas is the most crucial challenge Petrobras
pany with new technology wasable to maintain its exclusivity
faces.About 70 per cent of Brazilian oil and gas reserves
for a number of years. Today, however, new technology is
are located in deep and ultra-deep waters.Operating as a
rapidly picked up and applied by other companies, within
monopoly, Petrobras decided to focus on developing off-
a year or two of its introduction.’
shore production technology, and achieved the necessary skill to accomplish its mission. However, as a result of the Government’s recent decision to open up the market, Brazil has become an important and promising market for oil companies from all over the world, so oil and gas exploration is expected to grow significantly.’ Brazil’s first international licensing round was held last summer, ending 46 years of monopoly. The Brazilian National Oil Agency recently announced plans to launch the second round of bids in May. Beltráo comments, ‘Petrobras has demonstrated it is keeping pace with the rapidly changing oil industr y and the pre-
Recent mergers and acquisitions among the oil companies are making big companies even bigger, setting off a new cycle of competition
vailing economic climate by its willingness to develop partnerships. Recent mergers and acquisitions among the oil companies are making big companies even bigger,setting off a new cycle of competition. ‘As a result, the strategies of the past are no longer enough to stay at the forefront of the industr y. Apart from adequate oil reserves,the qualifications for being a winner in the future international oil arena include Seillean will cover the pilot phase on the Roncador field. It is the only FPSO yet to boast a dynamic positioning system.multinational experience, technical leadership, global or regional infrastructure and financial creativity .’ Stuart Brewer
DNV FORUM NO. 2/2000
7
OFFSHORE MANAGEMENT
Managing change in Liverpool Bay Over 1.5 million people, including 22 Members of Parliament, in north-west England and North Wales have a ringside view of the Liverpool Bay oil and gas fields. The asset is operated by Australian multinational BHP Petroleum, in a joint venture partnership with Lasmo and Centrica Resources. With one of the four fields just five miles offshore, activities are very much in the public eye. So far, the Partnership has invested £ 23 million in measures to make the environmental systems even more robust, and to avoid damage to the environment in the future.
T
The Liverpool Bay field is situated justf the of coast of Liverpool and the tourist mecca of Blackpool, and close to the beaches ofthNor Wales, the W ir ral and Lancashire.
he Liverpool Bay fields are situated close to the tourist visi mecca of Blackpool and the beaches of North Wales, the Wirral and Lancashire. The crude oil from this asset is waxy, contains 2 per cent H 2S and has a strong, unmistakable odour. This combines to give BHP Petroleum challenges in both safety and the environment which are different from most operations on the U.K. Continental Shelf. Geology and geography have conspired to demand the highest standards of health, safety and environmental management.
BHP vice president David Walker and his team know that the slightest slip from these standards can result in oil on beaches,attention from the media, questions from politicians and demands from the public. ‘If one drop of oil gets into the sea,it will be headline news in a matter of hours’, he says. Baseline IERS (International Environmental Rating System) and ISRS (International Safety Rating System)audits conducted by DNV in 1998 set a benchmark for further progressand improvement in the field ’s safety, health and environmental performance. The BHP assetteam graspedthis opportunity for positive change, and a challenging improvement programme wasdeveloped and initiated. DNV was actively involved in all aspectsof this programme, and engineers and consultants from the London, Stockport and Aberdeen offices became regular tors to the offshore installations, onshore processing plant and BHP’s London headquarters.
8
DNV FORUM NO. 2/2000
-
Photo: Nina Eirin Rang øy
David Walker, vice president of BHP Petroleum, runs the Liverpool Bay Assetom fr Neathouse Place, in the hear t of London.‘Everything will be cleared from site by 2015, ’ he explains.
OFFSHORE MANAGEMENT
Measurable improvements In December 1999 a repeat of the DNV audits measured the improvements, and both BHP and DNV were delighted with the significant achievements that had been made. Level 5 awards in both the ISRS and IERS were indicators of real progress, and David Walker and his Asset Leadership Team were quick to recognise the efforts of the workforce in accomplishing this successful result. Relativelyminor incidents which havebeen exacerbatedby the field’s location haveresulted in intense scrutiny from the industr y regulators, local authorities and tourist boards. Environmental pressure groups have also exerted pressure on local and central government that has increased the attention paid to BHP Petroleum. ‘We have worked very closely with DNV,’ explains David Walker. ‘This involves behavioural analysesand assessment,change management, training, environmental consultancy, safety engineering and general safety, health, environment and quality support.’ DNV has also played an active role in BHPP’s redesign and restructuring of the field ’s management and operating systems and structures.
Emergency response ‘We have reviewed our accident and incident reports in great depth to be sure that we get to the root causesof the problems,’ statesWalker. ‘We’ve collaborated on joint project teams with DNV to see how to improve our emergency response, and through safety engineering have made sure that we have the correct equipment in place, and that safetycritical elements are fully addressed. By looking at issuesincluding our human factors performance, we are generating procedures that are robust, clear and easyto use. We have also tried to influence the company’s safetyand environmental culture – and we’re achieving results. Through measurementscarried out using DNV’s IERS and ISRStools, we can show politicians, regulators and stakeholders that we’re continuing to improve. DNV has also acted as an independent competent body for the Department of Trade and Industr y to verify the appropriateness of the company’s safety, health and environmental management systems. ’
LIVERPOOL BAY ASSETS • Operated by BHP Petroleum (46.1% interest), in a joint venture partnership with Lasmo (45%) and Centrica Resources (8.9%) • Six offshore platforms, plus one storage/loading facility • One onshore gas processing terminal at Point of Ayr, North Wales • Gas pipeline from Point of Ayr to Connahs Quay Power Station • Waxy crude oil containing 2 per cent H2S • Over 300km of intra-field pipelines
For BHP Petroleum, improved heath, safety and environmental performance is the key performance target for this field, which wasopened in 1996 and is expected to produce hydrocarbons until 2015.
Communication with stakeholders David Walker regards communication with all the company’s stakeholders as one of the basic prerequisites for success.He talks about the three Es – education, employment and the environment. ‘A Visitors’ Centre has been establishedat our Point of Ayr Terminal in North Wales as a part of the education programme. In the employment sector, new oppor tunities are providing work for a number of young people under the government’s New Deal Scheme. In the environmental sector, the company has restored land in North Wales. BHP organisesbirdwatching and community awarenessactivities, and managesa major project which helps restore eroded sand dunes and beachesback to their natural state. BHP provides mini-busesand cars to assistpeople to learn to drive in an area where the majority are dependent upon road transport. It also arranges road-safetyeducation for children in North Wales, and awardsscholarships to young people to study at technical colleges. ‘We feel we’re heavily involved as members of a BHP team,’ statesNick Jackson,the head of DNV’s core team. This consists of five employees from DNV’s offices in Aberdeen, Stockport and London, who have been assisted by some 30 other staff during the past year . Harald Bråthen
DNV FORUM NO. 2/2000
9
TECHNOLOGY
Risk-based inspection ensures major savings at
PINE BEND REFINERY
10
DNV FORUM NO. 2/2000
Equipment inspection and maintenance at Koch Industries’ Pine Bend (Minnesota) refinery has hitherto been based primarily on inspection history, with little consideration for consequences of failure or business interruption. Recently, however, risk-based inspection (RBI) has been recognised as a technology that could offer cost, risk and safety benefits for the refinery. By identifying where the risks were and how to control them, plant operators would save money and reduce risk at the same time.
DNV FORUM NO. 2/2000
11
TECHNOLOGY
K
och Industries contracted DNV, Houston, to undertake a comprehensive RBI programme, including over 3,000
pressure vesselsin 30 processunits at the refiner y. Work began on preparing inspection and maintenance plans in December 1997 and ended February 2000. It comprised a thorough review of the inspection history, process,corrosion, and materials of construction for all piecesof equipment. It also included the initial data collection, data entr y, data analysis,inspection plans and cost-benefit analysisfor each unit. Reports were prepared for each unit, which included the following: • API-RBI software files populated with the required data per unit. • Inspection plan guidelines based on projected risk five yearsafter the next turnaround. This consisted of tables and reports indicating the overall risk, likelihood and consequence factors, the recommended inspection methods and coverage for each equipment item, and each of the damage mechanisms identified. • Three sets of Process Flow Diagrams showing the basic information used in the study. One set included the operating temperatures and pressures. The second set included representative fluids, phases, and isolation devices for inventor y grouping. The third identified damage mechanisms, susceptibility (high, medium or low), corrosion rates, and materials of construction. • Detailed inspection plans for all process equipment. • Active damage mechanisms and process constraints/limits identified for pressurised equipment. • A cost benefit and risk reduction page summary. • Top ten risk items identified per unit. • Prioritised risk ranking of pressurised equipment. • Equipment database for management of equipment risk in
Photo: Knut V adseth
the traditional intrusive inspection techniques. The savingsassociated with non-intrusive inspections were primarily the result of reduced maintenance costs as a result of avoiding vessel entr y.
the future. The data gathering and analysisphase included on-site meetings
In addition to the turnaround cost savingsshown in the diagram,
with inspectors to interpret the RBI results, turnaround planning
the refiner y achieved risk reductions by applying the proper in -
meetings to prepare inspection plans, and training inspectors
spection techniques to the correct damage mechanisms.
on how to interpret RBI results when preparing inspection plans. At the end of the project, the inspection inter valsfor 627 pressure vesselswere extended from five to 10 years.Potential wet H 2S
Cost-effective maintenance
damage was found on 212 pressure vessels,not previously
The total Maintenance and Inspection Turnaround cost of the
identified, and 359 new items were found to be susceptible to
refiner y was reduced by 10%. The projected $11,800,000total
localised corrosion. The refiner y is now planning future work
savings were achieved by removing low-risk equipment from
over severalturnarounds. Equipment not inspected at the next
the turnaround list, or opting for a non-intrusive inspection
turnaround will be checked to seeif its risk profile becomesun-
technique (no vesselentr y) where appropriate. Non-intrusive
acceptablebefore the following one. The refiner y is now moving to
inspections offered higher risk reduction per dollar spent than
inter vals of 10 to 20 years.
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DNV FORUM NO. 2/2000
TECHNOLOGY
DNV hasundertakenwork with KochIndustriesto providerisk-based inspectionat its two facilities, onein Pine Bend,Minnesotaand the otherin CorpusChristi, Texas.Mark Geisenhof f of Koch Industries (left) and DNV client managerfor Koch,Ricardo Valbuenaare seen here at the Pine Bendefiner r y.
Simpler inspection procedures Previous inspection practices were internal visual and ultrasonic thickness (UT) measurementsfor general and localised thinning, and wet fluorescent magnetic particle testing (internal WFMPT) for stress-corrosioncracking (SCC) mechanisms.Now, in place of these practices, the refiner y uses a combination of external manual and automated shear wave UT for SCC detection, a combination of external straight beam manual UT and automated shear wave UT for the detection of hydrogen-induced cracking and stressoriented hydrogen-induced cracking, and UT thickness measurementsfor general thinning. Vesselentry is only considered if the use of an external technique is cost prohibitive or not effective in finding the damage mechanism. Other benefits of the implementation phase included the quantification of the risk of operating parameter changes, reduction in risk of leaks to the atmosphere due to material degradation, identification of opportunities for consequence mitigation, development of universal risk standards for Koch Industries as a whole, and consistent work processesto allow franchising to other Koch processing sites.
An evergreen future After completing the RBI implementation phase,DNV has now begun what is known as the Evergreen Process.This phase of the project will include the preparation of Management of Change Work Processesto ensure that the RBI software files are kept updated at all times, and the training of inspectors in the use of the software for analysisand updating. The refiner y plans to keep the RBI process‘evergreen’ by: • Putting new data into the software, • Re-running the analysis and inspection plans, and • Re-running the cost-benefit analysesto justify their time and efforts. Now the refiner y operators know where the risks are and what they must do to reduce them; and what the savings will be. Stuart Brewer
DNV FORUM NO. 2/2000
13
TECHNOLOGY
DNV class for
WORLD’S LARGEST MEMBRANE-TANK
LNG CARRIER
With her four cavernous membrane cargo tanks, the 69,000dwt SK Summit is one of the largest LNG carriers yet built. A few days after her delivery in August 1999 she commenced loading LNG in Qatar, entering service between Ras Laffan in Qatar and Pyeong Taek in South Korea, on an anticipated 25-year contract.
I
n October 1995 Korean Gas Corporation (KOGAS) and Ras Laffan LNG Co. (RasGas)entered into agreement to deliver 2.4 million tons of LNG to Korea every year for 25 years.Following this agreement, orders for six 138,000 m3 gas carriers were placed in Korean shipyards by Korean shipping companies. SK Summit,built by Daewoo Heavy Industries Ltd (DHI) to DNV class,is the first to be completed. DHI will build three of them.
The membrane principle Unlike the spherical tanks of a Kværner-Mosstype LNG tanker, the prismatic tanks of a membrane LNG carrier are fully integrated into the hull. The boundaries of the prismatic tanks form a continuous inner hull, comprising double bottom, sidesand deck; this achievesa hull structure well suited to absorb global loads as well as local loads from the cargo. The cargo containment systemis fitted inside the tanks, between the inner hull and the liquid cargo. The containment systemis designed by Gaztransport and Technigaz (GTT). It is built up asa cryogenic liner directly supported by the ship’s double hull. The liner includes the primar y (inner) and secondary LNG barriers forming two identical metallic membranes, and the primar y and secondary insulation forming two independent insulation layers.
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DNV FORUM NO. 2/2000
TECHNOLOGY The metallic membranes are 0.7 mm thick and 500 mm wide, of 36% Invar nickel-steel alloy, offering a very low thermal contraction coefficient which makes the material well suited for the low temperature ( –163°C) to which it is exposed. These membranes act as dual barriers protecting the hull structure from exposure to the low-temperature cargo. The insulation boxes, filled with expanded silicone-treated perlite, are internally strengthened to withstand high-impact pressures and to absorb the energy resulting from the liquid motions and pressure head. The boxes are independently and mechanically securedto the double hull by meansof studsand couplers specially designed for their thermal insulation per formance.
A challenge for Daewoo Heavy Industries For DHI this contract meant not only a significant investment
Offshore LNG production LNG production using Floating Production and Storage Facilities has been widely discussedin recent years.The benefits are obvious, with LNG production at the source of the gaswithout the need for expensive pipelines to an onshore plant with liquefaction, storage and export facilities. The FPSOconcept allows for economic utilisation of gasfields in remote locations without the infrastructure or transport facilities needed for onshore liquefaction. This technology also opens up possibilities for development of fields which are too small to justify the traditional solution, as the facilities may be relocated to other areas when the initial field is depleted. The combination of a highly complex processplant on a vessel with storage tanks, offshore loading, and accommodation for a crew of around 50, represents challenges in both construction and operation.
but also a great challenge. DHI, familiar with well-known technologies for traditional ship construction, had to develop new design and construction methods for the building of these more advanced LNG carriers. New welding techniques, procedures and machines had to be developed, and welders for machine and
A number of different types of containment systems(including GTT membrane systems)have been proposed and analysedin recent years.The conclusion seemsclear - that viable technical solutions for such FPSOs are now available.
manual welding trained and qualified. Production facilities for ‘Insulation Box’ fabrication were built inside the yard, housing all
SK Summit
the equipment to produce the complete cargo containment
Propulsion machiner y: LNG temperature: Minimum steel temperature: Area of Invar steel: Invar welding length: Perlite volume: Length overall: Beam: Draft:
system,which required more than 50,000 insulation boxes. Close co-operation with GTT and DHI Quality Control was establishedby Det Norske Veritas at an early stageto agree on common procedures, acceptance criteria and tolerances. The outfitting, carried on in all tanks concurrently over 12 months, required a well-organised team of three surveyors to cover all
40,000 hp steam turbine –163°C –28°C 49,600 m2 120,000 m 10,000 m3 277.0m 43.4m 11.3m
the inspections. DNV had one dedicated surveyor to follow up the installation of all 50,000 boxes and more than 120 kilometres of weld inside the cargo tanks. After successful sea and gas trials, the vessel was named SK Summit by Mrs Lee Hee-Ho, wife of Korean President Kim Dae-Jung. Present were some 350 guests including
the
chairmen
of
Daewoo and the Sun Kyung Group. Later she was selected as ‘Ship of the Year’, by three maritime magazines, proving DHI
to be a competitive
builder and DNV a respected classification society in the area of membrane LNG carriers. Olav Lyngstad
3 SK Summit is the first in a series of thr ee 138,000m gas carriers to be deliver ed by Daewoo Heavy Industries Ltd.
DNV FORUM NO. 2/2000
15
SAFETY-CRITICAL SOFTWARE
For aircraft, SOFTWARE Far from the sounds of shipping or the aromas of the process industry – two of DNV’s traditional areas of activity – its offices in Toulouse, southern France, are home to a dedicated team of aerospace engineers and software specialists. Here, in one of the major centres of Europe’s space industry, DNV is developing certification schemes for the next generation of satellite-based navigation systems, the Eur Agency’s GALILEO.
opean Space
Ariane rockets, launchedom fr ESA ’s base in Kour ou, will be among the launch systems consider ed for positioning the Galileo satellites described in ticle. this ar
16
DNV FORUM NO. 2/2000
Photo:Scanpix
SAFETY-CRITICAL SOFTWARE
rockets, satellites … DNV develops PRODUCT CERTIFICATION D
et Norske Veritas has been actively involved in Europe’s aerospaceindustr y since 1986, when it achieved its first contract with the European Space Agency, ESA – this was to monitor technical and safetyaspectsof the European mannedspaceflight programme. That same year, under the co-operative ‘Eureka’ umbrella, DNV helped initiate the joint-venture Formentor project, to develop a computer-based system to recognise and act on malfunctioning rocket equipment. In 1987 Nor waybecame a full member of ESA; DNV established its independent Space and Communications project unit to support its space activities, and today offers a comprehensive service in information systems,telecommunications, remote sensing and measurement, environmental control, and lifesupport systems. Then and throughout the 1990s, DNV has been involved in numerous projects which have dominated European space activities; some of them are highlighted on p. 18.
The Galileo project Satellite navigation systemsare already indispensable to a wide variety of transport users – civilian and militar y aircraft, worldwide shipping, and a growing segment of land transport. They have also – to wider publicity – helped explorers in the Arctic, the desert and the jungle. But current global navigation and positioning systems,the American GPSand RussianGLONASS, are militarily controlled, and the aim of ESA’s European Satellite Navigation Programme, ESNP, is to build a satnavsystemthat is under civil control, more accurate than existing militar y systems,and with greater integrity and long-term availability. DNV’s competence in software-systemcertification led to its involvement last year in the European Geostationary Navigation Overlay System,EGNOS, a research project to validate the concept of a European equivalent to existing global positioning systems. Prime contractor for this is Alcatel Space Industries. Taking up the story is Sophie Chevillot, DNV’s station manager in Toulouse: ‘This proved an important reference for DNV in our being appointed prime contractor to ESA for the next step in the ESNP work, a study contract for the Galileo systemsoftware certification. The Galileo project aims to place navigational satellites in orbit, as part-payloadsin future European or American rocket launches; DNV’s previous work in telemetry and software for ESA will stand us in good stead in its software certification. ‘Here in Toulouse, with support from DNV experts in Paris and in Høvik, we already have a respected position in advisory and certification services, including all the DNV Rating Systems, TickIt certification, and Project Risk Management – the latter, for example, for Airbus Industrie ’s A3XX series of aircraft.’
Software certification in practice As prime contractor to ESA in the Galileo System Software Certification study, DNV is responsible for three subcontractors: Aerospatiale Matra Airbus (AMA), employing 12,000; Matra Marconi Space (MMS), with 2,000; and software expert Laboratoire d’Analyse et d’Architecture des Systémes (LAAS). In addition, U.S.-basedCertification Services Inc. will act as consultant to DNV in the context of civil aviation require ments. The study will be in two phases,each of about a year. The first will identify software design fault-tolerance mechanisms for Galileo’s main subsystems,identify software-certification require ments for these, and propose a certification development plan. Second phase will parallel the evolving development of the Galileo systemand its architecture, and refine the proposals of Phase 1. Manager of the software methods department in AMA’s Systems and Services Directorate is Gérard Ladier. Explaining the company’s software development in Toulouse last month, he pointed out the growing impor tance of certification of safety-critical software. ‘All equipment suppliers to the aerospace industr y must meet the DO 178B international certification standards for avionics software.In Aerospatiale, we set up a dedicated team to develop software for on-board equipment, and haverecently been assessed to Level 2 of the CMM programme.
Gérard Ladier of AMA: ‘Some of theoblems pr we face may alr eady have been over come in other industries.’
‘There are common requirements in all critical software, whether it is in the aviation industr y, nuclear power generation or telecommunications. This latter is of growing importance, by the way, to all “life-threatening ” applications. Another characteristic today is that less software is developed in-house, and more comes from commercial suppliers in their own equipment; as DO 178B standards specify that the prime manufacturer must have total control over the end product, we have to develop new meansof testing and controlling such commercial off-the-shelf (COTS) equipment. Either we must cooperate with the supplier, to have accessto his systemsdocumentation; or design an architecture which can handle this “outside” software. ‘Among the advantagesthat DNV brings to avionics software certification is its knowledge and experience of other disciplines. Some of the problems we face may already have been met and overcome in other industries. DNV FORUM NO. 2/2000
17
SAFETY-CRITICAL SOFTWARE
Frédéric Voulouzan, MMS:‘High reliability is vital – after all, ther e can be no subse quent access to satellitedwar hare!’
‘Unlike the present GPS, performance of the Galileo system will be largely guaranteed; hence the authorities demand certification of the entire project, including the software. ‘ Looking further ahead, I foresee wide potential for other applications of software certification, such as telemedicine, nuclear power and even bank ATMs.’
A growing role for DNV Growing criticality Also in Toulouse we met Frédéric Voulouzan, deputy manager for products and services coordination in the Data Processing & On-Board Software Division of MMS. ‘Software certification is a new concept,’ he explained, ‘but we already apply a stringent internal quality regime. About 40 per cent of our work is for commercial clients, 60 per cent for ESA and similar organisations. For these latter we must meet, not Code requirements, but aerospace-industry developed standards. These reflect the need for very high reliability – after all, in most casesthere can be no subsequent access to satellite hardware ! ‘As more and more software is installed in aerospaceequipment, its criticality grows. For the past two yearsthe industr y has had a policy of “continuous software processimprovement”. There are two extremes of availability and reliability requirements: a rocket may have a service life of 20 minutes, its payload a life of ten to 15 years. So an essentialcriterion for spacesystemsand their software is fault-tolerance. Such technology may help cut certification costsby reducing the criticality of each individual element.
DNV’s contract manager for the current Galileo work is principal engineer Arne Kjensmo. ‘For many years,’ he says,‘DNV has been increasingly concerned about the quality and reliability of software and systems, particularly those which form part of safety-critical monitoring and control. ‘The growing proportion of software content in systemsand products in areas other than aerospace, such as telecoms, transport, energy, finance and the process industries, calls for increased attention to issuesof software quality. In September 1998 DNV agreed with one of the world’s leading telecommunications companies, L.M. Ericsson, to jointly develop worldwide software-quality services. DNV acquired 50 per cent of the Ericsson-owned company Q-Labs, specialising in software engineering and process improvements. ‘A step further in DNV’s goal of improving the quality of safetycritical software has been to focus on software product quality. An important milestone has been to enter into a strategic alliance with Isoscope SA in Toulouse, a specialist in software product evaluation and improvement services.’ R. Keith Evans
Key DNV aerospace contracts Following its early involvement in ESA programmes, DNV establishedin 1990 a new company, DNV Industrial Development AS, with separate space and defence departments: the former handled European aerospaceprojects such as the Columbus orbiting space station, Hermes shuttle and Ariane rockets, all then seen as vital in the successof an autonomous European space capability.
Other highlights
Priority wasproduct assuranceservices for ESA – looking at quality, safety, reliability and maintainability , and the selection of materials and components. DNV also undertook safety and reliability studies of the European Space Operations Centre in Darmstadt, Germany.
• Establishment of quality standards of optoelectronic components, for ESA.
• Study of reliability, availability, maintainability and safety(RAMS) of the Huygens spaceprobe, for Aerospatiale Espace& Defence. • Review of the French space centre ’ s product-assurance system for the Hermes and Ariane-5 projects, for ESA. • Study of product-assurancedata collection for Daimler-Benz Aerospace Dornier GmbH.
• Principal surveillance authority for the Ariane-5 rocket programme, for ESA. Together with its partners Q-Labsand Isoscope,DNV today offers a wide range of services for managing risk in software products and systems, in both aerospace and land-based industr y.
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DNV FORUM NO. 2/2000
THE ENVIRONMENT
Australia’s Greenhouse Challenge: Meeting the Kyoto targets
Greenhouse Challenge is an Australian co-operative venture between industry and government in which enterprises aim to achieve maximum greenhouse-gas abatement. At the same time they are recording and reporting greenhouse-gas emissions, and enhancing their business advantage.
Photo: Gerrit Fokkema
DNV FORUM NO. 2/2000
19
THE ENVIRONMENT
H
aving been appointed as programme manager for the process of independently verifying Greenhouse Challengereports, DNV’s Simon Daweshas his hands full. The verification of
challengers – enterprises participating in the programme – is well under way. The Australian Government’s Greenhouse Challengeis a voluntar y programme. It is basedon cooperative agreementsbetween Government and individual enterprises from all sectorsof the economy, describing baseline and forecast emissions and planned abatement actions. Achievements are reported against the planned actions. ‘The Challenge was launched in 1996, and we are now carrying out independent verification of the reports for the Australian Government,’ says Dawes. The current verification programme aims to have a number of Challengers’ progress reports verified by this summer. DNV’s role is to develop the process and manage the independent verification of the reported baseline inventor y, annual emissionsinventor y, and the abatement actions undertaken by the companies taking part. ‘ DNV managesa process that will see self-reported emission inventories and reported abatement actions of up to 30 Challengers in the first year verified by a team of independent verifiers,’ explains Dawes.Selectedfrom 13 major contenders, DNV’s role is to manage the independent verification process,which includes the identification of verifiers, matching participating enterprises with agreed verifiers, and oversight of the verification process. The results of this first round will be reported by August 2000.
Designed to abate emissions Enterprises join the Greenhouse Challengeto demonstrate their commitment to the abatement of greenhouse-gasemissions.Their early, voluntar y action will ultimately help Australia meet its Kyoto targets. ‘The programme is designed to abate greenhouse-gasemissionsfrom all sectors of Australian industr y, which account for about 55 per cent of the total,’ explains Dawes.The object is for enterprises to achieve maximum greenhouse-gasabatement, while enhancing their competitive business advantage. SaysDawes,‘Hundreds of enterprises have joined, or have made commitments to join, the DNV’s Simon Dawes in Sydney: ‘Climate change has the potential to significantly af fect sea levels, endangering the world ’s coastal facilities. Australia is taking a leading role in the international climate change debate. ’
Challenge, and independent verification ensuresthey present a realistic forecast of emission inventories and abatement actions. Verification also enhancesthe credibility of the programme.’ Successfulverification of the Challenge will demonstrate that co-ordinated voluntar y action to reduce greenhouse emissions is possible. It will also guide future international action to better manage climate change in accordance with the Kyoto Protocol. ‘The Challenge can assist in the development of structures and processesto support national reporting and the Kyoto flexibility mechanisms– sequestration, clean development, joint implementation and emissions trading, ’ says Dawes. As part of the Greenhouse Challengeagreements, all participants agreed that their reports will from time to time be subject to verification. Challengers will be randomly selectedfor future verification. Another key role for DNV is to ensure that the latest international experience in the field is available to both participants and the programme management. DNV has wide practical experience in this field.
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DNV FORUM NO. 2/2000
Keen for success
‘Both the Australian Government and industry are keen for independent verification under the Greenhouse Challenge to be successful,’ says Linda Powell, Executive Manager, Partnerships Group and Director, Greenhouse Challenge.
Photo: Gerrit Fokkema
Westpac Banking joined a piloteenhouse gr ogramme pr in 1998. ‘Verification of our pr ocesses showed how best eamline to str our forts,’ ef agreeWestpac ´s John Morrissey , left, and Larry McNab, right, her e in discussion with DNV ’s Simon Dawes .
Westpac pilot Challenger In 1998 four Challengers participated in a pilot independent verification programme, conducted by the Greenhouse Challenge. One of these was Westpac Banking Corporation, one of Australia’s four leading retail Banks. It has been a Challenger for the past four years.During this time it has reduced its annual greenhouse-gas emissions by some 26,000 tons, from over 190,000 tons C02 equivalant. The main areasof reduction were
Challengers volunteering to be part of the initial group to be verified will benefit by being acknowledged as leaders in verification of emissions inventories in the Greenhouse Challenge, and by having the opportunity to assistin fine-tuning the verification process. The independent verification process is all about increasing credibility of the Greenhouse Challengeprogramme and building the capacity of both industr y and government to report emissions inventories. Enterprises accepting the invitation to participate are from sectors as diverse as electricity, government, mining, manufacturing, oil and gas and commercial services.They represent a good crosssection of business,and a significant proportion of Australia’s greenhouse emissions. Successful verification of the co-operative agreements and progressreports of these enterprises will make a strong statement about the effectiveness of self reports and voluntary programmes. Linda Powell commented, ‘This is the first processof independent verification of a national greenhouse-gasabatement programme in the world, and Government and industr y are both excited.
in large commercial properties: lighting control, high efficiency lighting replacement systems,variable speed drives, paper recycling, and control systemsfor air conditioning. The policy was implemented in more than 200 sites, together with a staff awareness programme. The bank’s facilities management team has two members dedicated to the task, John Morrissey for energy and Larr y McNab for environmental issues.They both agree that participation in
‘Verification will also give us a handle on the accuracyof reporting of greenhouse-gasemissions and abatement actions. This will greatly enhance both the Government’s and industr y’s capacity for accurate emissions reporting in preparation for future policy options. Linda Powell, Director ofGreenhouse Challenge. Photo: Rob Little
an independent verification of their processeswas beneficial. ‘It compelled us to maintain our focus and provided a valuable insight into how best to streamline our efforts towards reduced emissions’, says Morrissey .
DNV greenhouse-gas emissions projects: 1. Verification/certification of the Ilumex high-efficiency lighting
International forum In DNV’s bid it was proposed that the Greenhouse Challenge verification programme should conclude with an international forum, in conjunction with the Australian Greenhouse Office, to review both international developments in the field and the performance of the programme. It will take place later this year. As time goes by one countr y after another is initiating green-
project in Mexico (W orld Bank Pilot Project). 2. Audit and verification of BP Amoco’s worldwide greenhousegas emissions. 3. Validation of energy project in Romania on behalf of Swiss authorities. 4. Validation of energy project in Latvia on behalf of Swedish authorities. 5. Validation of first project under the W orld Bank’s Pilot Carbon Fund in Latvia. 6. Guidelines and verification protocol development for Dutch authorities. 7. Project requirements for Nor wegian authorities.
house-gasreduction projects to meet the Kyoto targets. Thus the Sydney forum is expected to attract worldwide attention. Eva Halvorsen
In addition, DNV personnel have been engaged in various capacities by OECD, UNFCCC Secretariat, and the U.S. Environmental Protection Agency.
DNV FORUM NO. 2/2000
21
OFFSHORE INDUSTRY
Planning for FPSOs in the
GULF OF MEXICO The Minerals Management Service, a US federal agency, has prepared an environmental assessment on operations in the deepwater areas of the Gulf of Mexico Outer Continental Shelf. An integral part of this assessment involves DNV’s risk-analysis work, which forms part of an environmental impact statement on the possible use of floating production, storage and offloading (FPSO) units.
IN SUMMARY • Over the past few years, there has been a surge in deepwater activities in the Gulf of Mexico. • With the move into deepwater comes a new set of challenges for both governmental authorities and the oil and gas industry. • Regulatory and environmental issues associated with FPSO operations in the Gulf of Mexico are high on the agenda for the Minerals Management Service, the U.S. Federal agency which manages more than a billion offshore acres and collected about US$ 4 billion in mineral revenues last year.
A
dvancesin deepwater technology have resulted in a new era of development potential for the U.S. Outer Continental Shelf (OCS), which includes the Gulf of Mexico, one of the world’s principal offshore oil and gas basins. The move into deepwater means new challenges for both the Minerals Management Service (MMS) and the oil and gasindustry. According to Chris Oynes, Regional Director, Gulf of Mexico OCSRegion, the MMS is working to keep up with industry initiatives, technology developments and other factors linked to deepwater activities; FPSO operation in the GoM is one area that needs further evaluation. Over the past few years, there has been a surge in deepwater exploration and drilling activities in the GoM. The sector has evolved rapidly, seeing frequent new projects and developments. SaysOynes, ‘Despite the previously low oil prices, we have had very substantial levels of explorator y drilling over the past couple of years.The reason for that is probably that companies have long-term, pre-committed contracts. There have been some 1,900 explorator y and development wells drilled to date in the deepwater areas of the GoM. That’s a lot of drilling; probably one of the untold stories is that as it has proceeded, the geology has revealed new frontier areas, particularly in ultra deepwaters.’
Planning ahead for FPSOs
The Shell-operated Ursa tension leg platfor m is located in 3,800 feet of water at Missisippi Canyon Block 809, oximately appr 130 miles southeast of New Orleans. This is thethfour tension leg platfor m installed and operated by Shell in the deepwater Gulf of Mexico.
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DNV FORUM NO. 2/2000
The MMS’s experience of FPSO-typevesselsis limited to a single application in the Pacific Outer Continental Shelf Region. According to Oynes, no operator has proposed an FPSO as a development strategy for the GoM to date, although several have indicated that they are close to making a formal submission. SaysOynes, ‘Since we have not had an application for an FPSO formally presented to us, we have not had a concrete opportunity to work through what the specific issuesmight be on an FPSO, nor the issuesfor a particular site. Essentially, what we have today is our anticipation of the fact that we are going to get an application; the question is how do we get our regulatory house in order so that we can deal with that application.
OFFSHORE INDUSTRY ‘From an environmental perspective, there are specific issues and potential impacts related to FPSOs,as well as some broader concerns. Consequently, we decided that the proper path was to conduct an environmental impact statement (EIS). This is particularly important as it helps to address the broader and generic types of questions that will often be raised, since it would involve the first FPSO-baseddevelopment project on the GoM OCS.’
‘With the move into deepwater comes a new set of challenges for both the authorities and the oil and gas industry’ - Chris Oynes DNV is part of the team chosen by the MMS to prepare the EIS. DNV conducted the risk-analysisportion of the EIS. The study assesses the environmental effects of FPSOsby examining a hypothetical 1 million barrel storageFPSO,with tankers periodically offloading produced oil. A high-case scenario with a 2.3 million barrel storage unit has also been studied. The MMS will manage the contract and retain overall responsibility for compliance with the National Environmental Policy Act, which is the U.S. law regulating environmental issues.
The regulatory approach Regarding regulator y issues,the MMS has had to adapt some areasof the regulator y programme and responsibilities to address the different issues and concerns related to FPSOs. Explains Oynes, ‘While we’ve had a lot of discussion in many different forums on the regulator y front, we haven’t seena crystallised focus yet; now we are at a point where that is rapidly taking shape. During the next couple of months, we expect to start talking much more about the important issues that need to come into place. Right now, the regulatory approach continues to evolve, and we are tr ying to get this on some parallel path, so that in several months time we hope that our regulations and the final EIS will emerge together. Then we’ll be ready for business when some operator files an application.’
‘There are specific environmental issues and potential impacts related to FPSOs that call for an environmental impact study’ - Chris Oynes The MMS is attempting to keep up with technological advances and issues seriously affecting safe, pollution-free exploration and development offshore. According to James Regg, Chief Technical and Operations Support Section, FPSO issueshave been discussedwith operators, contractors and others for some years,and investigations are continuing into the international efforts focusing on inter faces between the production and
Activity scalingup: ‘Oil and gasproducersin the Gulf of Mexicoare planning to drill a total of 994 wellsthis year,’ saysChris Oynes,here in discussionwith Kåre Kristoffsersen,headof DNV’s BusinessArea Offshore America.
non-production processes.Deborah Cranswik, environmental scientist at MMS, also points out that another key issue will be the U.S.Coast Guard role in regulating FPSO operations. It should be possible to identify and co-ordinate the jurisdictional overlaps between the MMS and USCG in order to avoid dupli cation. The question of whether the FPSOsshould be doublehulled, and the applicability of OPA regulations to FPSOoperations, are also the subject of discussion.
Projections for 2000 Oil and gasproducers in the GoM are projected to drill a total of 994 wells in the year 2000, based upon an evaluation of producers’ drilling budgets and the relative stability of oil and gas prices. The full application of floating production units is uncertain, but market sourcesbelieve it is only a matter of time before FPSOs are working in the Gulf. Oynes comments, ‘We encourage operators considering the FPSO option for field developments in the GoM to come in and talk with the MMS early. However, we are concerned about the move towards ‘‘fast-track’’ development to reduce cycle time and bring for ward the date of first oil, particularly in relation to the quality and safetyof the systemsdeveloped for production on the OCS. ‘Operators need to understand that there are environmental reviewsand regulatory requirements that cannot be compromised as part of the fast-tracking effort. It will continue to be the operator ’s responsibility to demonstrate to us that the FPSO can operate in the Gulf of Mexico in a safe and pollution-free manner.’ Stuart Brewer
DNV FORUM NO. 2/2000
23
OFFSHORE INDUSTRY
Enhancing safety, reducing costs in
DEEPWATER DRILLING IN SUMMARY • The task of classification societies is changing as the role of safety on offshore installations becomes ever more regulated and competitive • Many societies now offer clients a wide range of services: from life-cycle risk management and integrity management to safety, environmental and human-factor consultancy • DNV is also actively developing new and existing services such as its Failure Mode and Effects Analysis tool, which is being used by, among others, R&B Falcon Drilling as described in this article
Failures do not just happen: there is almost always an identifiable- and so avoidable - cause. Roderick J. Allan, Vice President Engineering and Technical Services, R&B Falcon Drilling, believes a focused analysis of risk could not only improve offshore safety dramatically, but also save considerable sums of money.
T
wo years ago, DNV Houston developed its Failure Mode and Effects Analysis (FMEA) system.The project waslaunched to help offshore and process-plant
operators improve safetyand reliability management, by making it easier to identify why and how failures happen and so prevent them from recurring. The systemis now available and being used by, among others, Houston-based R&B Falcon Drilling, one of the world’s largest offshore drilling contractors serving the oil and gas industry. Says Allan, ‘Consequenceof failure is the major risk we face today, especiallyregarding our deepwater activities. Typically, larger investments in this new generation of advanced vesselsmeans greater consequencesin the event of failure. One does not normally place an emphasison such problems with proven technology units, since these risks havebeen well understood and the consequences can be remedied through experience. ’ One of R&B Falcon’s major goals for the year 2000 is to eliminate equipment failures, which can produce unacceptable results. As drilling moves into ultra-deep waters, the company is acutely aware of the fact that it may only take a small, seemingly inconsequential failure of a piece of equipment to cause a major incident. The company’s intention this year is to expand the use of proven methodologies, such as FMEA, and to apply them to its critical systemsto minimise the possibility of recurrence of such a failure that may causemajor damage or systemfailure, such as that on the Deepwater Pathfinder last year.
Minimising risk The Deepwater Pathfinder, a dynamically positioned drillship, suffered loss of braking capacity to its drawworks causedby contamination of the brakepads. DNV wascalled in to undertake a root cause analysisand FMEA. Allan explains, ‘Through new design and maintenance processes,we have minimised the risk of this happening again. We have made presentations to other operators to show them what the problem wasand how it’s not going to happen again. We intend to use this information to work with other operators and contractors who own or operate similar equipment. It makesa lot of senseto prevent it Roderick J. Allan, Viceesident Pr Engineering and echnical T Ser vices, R&B Falcon Drilling Inc. Houston.
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DNV FORUM NO. 2/2000
happening somewhereelse,becausewe are all under the samemicroscope. We’ve benefited from what we’ve done and learned from this exercise, and are willing to share the infor mation with other interested parties who may benefit.’
Deepwater Pathfinder is designed for operations in water depths up to10,000 ft. It is in its second year of service in the Gulf of Mexico.
Isolating failure sources ‘People look at this as a way to create redundancy in a system, so that if a failure occurs, some of the human element is taken out of the equation. In many cases,one can go back and look at existing systems,even if the systemand equipment are fairly new. Our approach is to identify the operations with the greatest risk of failure and analysethe systems,equipment and personnel to minimise the risk. This is very similar to assessments we have used in the North Sea. The process is nearly identical. ’
‘The consequential costs of seemingly small item failures can easily run into tens of millions of dollars.’ Photo:Courtesy of R&BFalcon Drilling
R&B Falcon is doing this at the moment on one of its DNVclassedrigs, PeregrineIII , on which it has conducted an FMEA of
R&B Falcon Drilling
the power and dynamic positioning systems.This rig has been
R&B Falcon is one of the world’s largest and most diversified
in service for more than 25 years, and was classed at a time
offshore drilling contractors serving the international oil
when the requirements were very different from today’s - so it is
and natural gas industr y. Its fleet consists of 136 marine-
obviously unpractical to replace an old system in its entirety
based drilling rigs, as well as mobile production units, inter -
with complete systemsthat meet the latest rules. However, by
national class land rigs, and marine towing vessels.
identifying the most likely potential failures, designers can minimise the consequences of those failures.
The company conducts drilling operations in three main market segments:deepwater, offshore shallow water and transition-zone
‘For example,’ explains Allan, ‘if there are 20 single-point failures, and 18 of them can be eradicated for just a fraction of the cost of putting in a new system,then this is a wise,cost-effectivedecision. We believe the cost of conducting these analysesis very reasonable compared to the potential cost of the failure itself. The cost consequencesof seemingly small item failures can easily run into tens of millions of dollars. ’
areas.In the deepwater market, R&B Falcon features 12 semisubmersibles, including one under construction, one multiser vice unit and one accommodation unit, and 12 drillships, including one under construction. The units under construction will enhance the company’s leading position in the emerging ultra-deepwater market, providing drilling capability in waters as deep as 10,000 ft.
Allan points out that in many casesthe issueto be remedied is not so much technical as procedural. ‘Proper training and contingency for failures are also extremely important, so riskbasedanalysisleads us to adopt various philosophies within the company: maintenance and training, as well as the procedural
During 2000, the company will field 13 drillships and semisubmersiblescapable of operating in excessof 5000 ft of water, and its semisub fleet will feature five 4th or 5th generation units and two enhanced 3rd generation rigs. In this segment, the company has strong market positions in the North Sea,
aspects of the way we operate our rigs. ’ Stuart Brewer
West Africa, Brazil and the Gulf of Mexico.
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25
IRAN: TANKER SHIPPING
NITC HALVES COST
of tanker operations National Iranian Tanker Company (NITC) has halved the cost of operating its fleet of 25 oil tankers during the past ten years. Chairman and managing director of NITC Mohamad Souri says the savings have come through professional management and uncompromising priority on quality ships, and claims it is better to have a well-run operation than a big fleet.
The Pars field on the border between Iran and Qatar is
B
Turkmenistan, the present small tankers of 4-5,000 dwt
y the end of NITC ’s newbuilding programme in 2003, Souri says,the averageage of the fleet will be
less than four years. NITC has recently placed an order for five 300,000dwt oil tankers at Dalian, the first Chinese yard to build VLCCs. Close to 6 million grt is a strategically sound sizefor NITC, he says.The present fleet consistsof
the world’s largest gas field. NITC is engaged in studies of possible export of LNG from this field to Korea. The project, which includes a joint venture with Korean companies, indicates a need for more than ten LNG tankers. Development of the Parsfield has a time window of 5 years.
How quality pays off Another project that might initiate newbuildings for NITC is the need for larger oil tankers in the CaspianSea. Plans are under way for a pipeline from the Caspian Sea to Teheran. To carry oil from suppliers in Kazakstanand need to be replaced by nine 50,000 dwt tankers. Including necessary upgrading of Caspian yards and the construction of five single-point mooring facilities, this project is presently under way and will need another four years to materialise, says Souri.
15 VLCCs, five Suezmaxesand five Aframaxes which are
Quality speaksfor itself, he continues, ‘Even with a young
under construction. Harmonised specifications of the
fleet, quality of operations is vital. The ISM Code and the
ships have added up to US$ 5 million per ship in new-
new STCW standards have helped, but there is still room
building cost to achieve good quality.
for improvement. A friendly relationship with mutual understanding of classrequirements and customer needs
‘Even with a young fleet, quality of operations is vital. The ISM has helped us, but there is still room for improvement’ - Mohamad Souri, chairman and managing director of National Iranian Tanker Company.
has made DNV an important safety net in NITC ’s operations. We want classto look deep into our ships and our operations and to supervise on quality and safety matters. ’
New tankers in demand Souri thinks there will be no problem introducing the new tankers into the market. Modern tonnage will be in demand, he says. ‘Throughout this year, the tanker market will be low. NITC plans to sell three VLCCs for scrapping, and others will follow. Today the western countries have oil reserves for close to 100 days. OPEC will maintain low oil production until the reserves are reduced to 30 days. Then production will gradually increase, im proving the tanker market. ’ Tore Høifødt
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IRAN: DRY CARGO SHIPPING
Meeting challenges to THE DRY-CARGO FLEET ‘Professional and cost-effective management of our operations is our main challenge,’ says chairman and managing director of Islamic Republic of Iran Shipping Lines (IRISL) Ahad Mohammadi. Potential growth in Iranian exports of non-oil cargoes offers opportunities for IRISL, which today is Iran’s largest drycargo shipping company.
A
had Mohammadi, who is also Advisor to Iran ’s Minister of Commerce, points to the fact that low
oil prices in the late 1990sforced Iran to focus on lines of businessoutside the oil and gassector. The recovery in oil prices, saysMohammadi, has stabilised the economy, and put the countr y in a better position to make and sell products other than crude oil. ‘This represents potential growth for IRISL. Today the total annual import of dr y commodities to Iran is 16 mil lion tons, while exports are about 5 million tons. The planned increase in export of petrochemicals from the present 3.5 million tons to 10 million tons in 2002 represents a transport need that we want to meet,’ saysMohammadi, and cites a joint venture between IRISL and Iranian
‘Take the International SafetyManagement Code (ISM), for example. Its approach has not been of much help to us. We have to addressproblems from the cultural aspects also. In European companies, feedback on required improvements is accepted and often implemented without strong reactions. But in our Iranian culture, we have to tackle these issuesin a different manner and take other considerations into account, in order not to demotivate the staff and also to boost initiatives to work harder.’
‘The ISM approach alone is not suited to the Iranian situation. We have to address problems from the cultural aspects as well’ Ahad Mohammadi, chairman and managing director of Islamic Republic of Iran Shipping Lines
National Petrochemical Company.
Decision support Cultural aspects
The Classification Society is seen as a partner in IRISL’s
IRISL is a state-ownedcompany, but is not subsidised by
efforts to maintain the quality of the fleet. Mohammadi
the government. ‘We have to invest from our own resources
says the company has good relations with both major
and compete on international terms,’ saysMohammadi.
Societiesin Iran, DNV and LR. ‘Classmust not be an out-
‘So we focus on increasing the efficiency of the company.
sider or against us, they should not act as the police. We
Professional management of the company is a prerequisite
expect classto correct us when quality or environmental
for success,since we are facing worldwide competition. I
matters are on the agenda. Input for improvements in
feel we have a lot of professional individuals, but team-
the maintenance of our ships, and casestudies related to
work is a true challenge in the Iranian culture.
our fleet, are valuable contributions from class. What we need is relevant decision support.’ Tore Høifødt
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SAFETY CASE REGIME
DNV leads development of PROCESS INDUSTRY SAFETY DNV is playing a leading role in processindustry safety developments in Victoria, Australia. Following an explosion at Esso’s Longford Gas Plant in 1998, Victorian industry must demonstrate high standards of safe operation through the proposed new Major Hazard Facilities Regulations, which employ the performance-based safety case approach rather than prescription. DNV is helping both the regulator and process operators to meet the new challenge.
I
n September 1998 an exchanger at Esso’s Longford facility in Australia fractured, releasing
hydrocarbon vapours and liquid. Explosions and the fire that followed killed two and injured eight, and terminated gas supply to users in Melbourne and throughout the state of Victoria. This brought many Victorian businessesto a standstill and caused a loss of public services for several weeks.Essois facing legal proceedings and compensation claims of around A$1 billion.
Technical support to Royal Commission A Royal Commission wasset up to investigate the accident, to which DNV was asked to provide technical support. The technical investigation lasted six months and took 10 man-yearsof effort (a third by DNV). The DNV team, which wascomposed of highly qualified risk engineers from Australia, Singapore, U.S.A., the U.K. and Malaysia,worked intensively on every aspect of the accident and its causes.SaysDNV Melbourne ’s Dr Luke Chippindall,
‘The Royal
Commission provided a great opportunity to work with experts from a diverse range of disciplines. We are proud of the results the Commission achieved.’ Sir Daryl Dawson, chairman of the Royal Commission, and commissioner Brian Brooks, agree: ‘The technical team wasinvaluable in bringing the Commission to what we believe to be a successful conclusion. ’
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Photo: Ken Irwin/Reuters/Scanpix
A fractured exchanger at Esso ’s Longfor d facility released vapour that led to explosions andes. fir
SAFETY CASE REGIME
Findings and key lessons The Commission found that knowledge management at the 30-yearold plant wasa key deficiency. Severalelements of the management systemshould haveidentified the possiblecircumstances/precursors, and had these been foreseen, the disaster might have been averted- or, at the least,the consequencesconsiderably reduced. The Commission noted that one feature of the management structure was: ‘its depthof engineeringexper tise and operationalexperience. ’ The most powerful lessonfrom Longford is that a well-run facility, with a world-classsafetymanagement system,can still experience a major accident. How the safetymanagement systemfailed and
‘WorkCover demonstrates the Government’s commitment to safety, and will serve the State well into the next millennium.’ - Dr Gary Kenney, DNV
how risks should be recognised and prevented in the future are key lessonsto be learned. The Commission highlighted: ‘The lack of knowledge on part of bothoperatorsand supervisorswasdirectly attributableto a deficiencyin their initial or subsequent training. Not onlywastheir training inadequate,but therewereno currentoperating procedur es to guide themin dealing with the problemwhich they encounter ed on 25 September 1998. ’
New regulatory regime The Commission reported its findings in June 1999, and
The Royal Commission
recommended that a new regulatory regime should be instituted
A Royal Commission is fully independent. Its objective is to
to ensure that all operators of Major Hazard Facilities in
determine the truth and not to place blame. Witnessesincluded
Victoria are fully in control of potential risks and are able to
site personnel, managers,emergency service personnel and
demonstrate this through a SafetyCaseRegime. DNV is working
independent experts. Evidence included plant manuals, control
with the regulator responsible for the new regime, the
room charts, logbooks and expert reports.
Victorian WorkCover Authority. The Commission’s assessmentof omissions/deficiencies at DNV’s Dr Gary Kenney wasworking with the Royal Commission
Longford included:
asDirector of Technical Investigations,and is now senior advisor to
• Training: programmes not imparting necessary knowledge
the Government. He says:‘WorkCover is developing a goal-oriented
• Operating instructions: no procedures to deal with loss of
regime that demonstrates the Government’s commitment to safety, and will serve the State well into the next millennium. ’ DNV is assisting WorkCover to develop strategies and policy,
lean oil flow • Lack of operator knowledge or understanding of low temperatures
write regulations, and set up the organisation so that it can implement these regulations. A move to a SafetyCaseregulatory
• Management System self-assessment: obser vations of assessment team inconsistent with Commission findings
environment is now underway.
• Risk Assessment: planned hazard and operability (HAZOP) The approach is likely to be adopted by other Australian states, and a review of the existing Offshore Safety Case regime is planned. DNV’s Risk Consultancy group in Melbourne is already
study never took place • Relocation of plant engineers from Longford to Melbourne
working with a number of process operators, including Shell,
• Incident reporting and analysis: prior incident not investigated
Australian Vinyls Corporation, Qenos, PPG and Terminals, to
• Overall assessment of Management System: not effectively
incorporate all lessonslearned into solutions which will meet
implemented.
both the regulator y requirements and the companies’ business needs. Mark Boult and Christine Calver t
DNV FORUM NO. 2/2000
29
NEWBUILDINGS IN CHINA
300,000dwt tankers contract highlights CHINA´S DRIVE FOR THE WEST Established in 1990, Dalian New Shipyard is the major focus for China’s colossal investment in modern newbuilding capacity - 1.25 billion dollars per year - in the nation’s aim to become the world’s leading shipbuilder. One result of that investment is Dalian’s new 80m wide building dock, opened in 1996 and now being used to build five DNV-classed, 300,000dwt VLCCs for Iran.
T
his is the largest newbuilding contract ever signed by a Chinese yard.Five 300,000dwtVLCCs are to be delivered
over the next four years.Sha Jun Gang, the president of Dalian New Shipyard (DNS), is proud that the yard has been chosen by National Iranian Tanker Company. ‘We have a 100-year-old tradition of building ships here in Dalian, and we’ve built tankers for a number of yearsnow. But these are the largest yet, different from anything we ’ve done before.’ At the time of our visit in January, work wasunder wayon several ships – some newly started, while the product tanker Stavanger Solveig , for example, only needs its propulsion machinery to be
Sha Jun Gang, esident pr of Dalian New Shipyar d.
finished. Dalian New Shipyard’s order book contains a total of 15 newbuildings – 14 product or crude tankers and one FPSO. The
Challenging Japanese and Korean dominance
VLCCs for Iran are double the capacity of the largest of the
‘We can see a growing market in the future for the largest
other crude carriers. But they continue Dalian’s successfulentr y
crude tankers,’ explains Sha. ‘There are currently around 240
into the competitive western and European markets, which has
VLCCs operating on the world’s oceans. Most of these were
seen delivery of Aframax and Suezmaxtankers to such owners
built in the 1970sand have single hulls. Many will be scrapped
as Anders Wilhelmsen, Stena and A.P.Møller, as well as four
in the relatively near future, and will have to be replaced. This
bare-deck semisubmersibles for Ocean Rig and other offshore
is the potential market we’re now competing for.’
units for western oil interests.
30
DNV FORUM NO. 2/2000
NEWBUILDINGS IN CHINA
On its own, the contract with the Iranians is not a gilt-edged
Philosophy plus pragmatism
one for DNS. The price is low from the viewpoint of Sha and
‘If you show faith in a Chinese person, you will find that you
the yard, but the contract is a gatewayto a profitable market.
can always trust him, ’ is Sha’s philosophical approach. ‘We
Chinese shipyards have not previously competed in the Middle
have a large force of young, competent workers. Not only the
Eastern tanker market. With an ever-increasing share of the
shipping company we’re building for, but also the yards we’re
shipbuilding taking place in the Far East, the Chinese aim to
competing with, will ensure that the ships will be successful.I
challenge current Japaneseand Korean dominance in tanker
will personally build the NITC tankers as if my life depends on it.’
exports. Their confidence in meeting the S.E.Asianchallenge is underpinned by China’s growing efficiency, and heavyinvestment
Sha Jun Gang has spent his entire working life in the city’s
in Western technology. Current shipbuilding modernisation
extensive maritime environment. He graduated from Dalian
plans call for importing equipment and technology at the rate
Maritime University in 1966 and has personal experience of all
of US$1000million annually, plus $250 million in added infra -
phasesof shipbuilding – from design to the individual production
structure.
units. During the Cultural Revolution, Sha, then a recently graduated academic, worked as a tradesman for five years.
‘We can see a growing market in the future for the largest crude tankers.’ - Sha Jun Gang
‘Useful training and experience which I wouldn ’t be without.’ Per Wiggo Richar dsen
Dalian New Shipyard situated in Dalian in the former southern Manchuria, is China State Shipbuilding Corporation’s largest, most modern newbuilding yard. Together with that of Dalian (Old) Yard, the city’s combined ship production amounts to around 25% of that of China as a whole. It is supported by the Marine Diesel Works, building slow-speed Sulzer and MAN engines under licence; a marine propeller plant; and Dalian Ship Research and Design Institute. Annual production capacity at the New Yard is over 600,000cgt.
DNV FORUM NO. 2/2000
31
THE IMSRS AUDIT
Orient Overseas Container Line PROFITS FROM SAFETY RATING
‘The cost of insuring our ships is now far lower than before we started to focus on quality,’ says Capt. H. E. Liaw, general manager of the Ship Management Department of OOCL. ‘We are now a preferred transporter in a market we previously did not have access to.’
OOCL is so far the only company to rycar out an IMSRS audit on all its ships, and the only company toeach r level 7 in all audits.
32
DNV FORUM NO. 2/2000
THE IMSRS AUDIT
D
NV has worked closely with Hong Kong based global carrier Orient Overseas Container Line for many years,to improve the company’s work on safety, quality
and environmental protection. SaysCaptain Liaw ‘No other shipping company has come so far in the use of DNV’s International Maritime SafetyRating System(IMSRS). All our ships have now been brought up to level seven of its ten levels. ’ OOCL started systematicwork to improve the safety of its fleet and crews in 1993. Prior to that, various methods had been used on different ships. OOCL achieved positive results almost immediately, with a decreaseof 92.5% in days lost in 1993 when compared to 1992. Other factors indicate the same trend. ‘The IMSRS has been a useful tool for improving our safetyand routines on board,’ explains Liaw. ‘The reduced insurance costs- for the hull and machinery, for example – show that we’ve succeeded. They ’ re now only a fraction of what they were in 1993.
‘It has also helped boost our services.
‘The IMSRS has been a useful tool for improving our safety and routines on board… ‘But too much paperwork, too much studying and training and too much reporting.’
The transport of fruit and vegetablesto
Captain H.E. Liaw and OOCL ’s Ship Management Depar tment wer e asked to systemise the company ’s work on safety , quality and envir onmental pr otection. They have pioneer ed the use of IMSRS, with significant impr ovements to the company ’s safetyecor r d.
the U.S.A., for example, is subject to severe restrictions. The United States Department of Agriculture requires very high quality standards. On the other hand, for shippers our service can meet their requirements. This market used to be dominated by another carrier. Our focus on the IMSRS has resulted in improved quality for our services. This is the most important reason for us now be-
The IMSRS shows its advantages
ing able to carry this unique type of cargo.’
The International Maritime Safety Rating System (IMSRS) offers ten levels of certifi-
Assessing the benefits
cation, with level one equivalent to the
OOCL is very awareof the need to evaluatethe cost-effectivenessof using the IMSRS.
International Safety Management (ISM)
When the company first started to use the tool and focus on safety throughout its
Code and level two equivalent to DNV’s
fleet, the immediate results were striking. Now there is a need to think again.
Safety and Environmental Protection (SEP) programme.
‘We are in the processof reviewing the costsand benefits of bringing our ships to the highest level of IMSRS,’ saysCapt. Liaw. ‘There are of course benefits to us, but at the
To satisfy the requirements of each level,
same time we have to be aware of the cost elements. For example, at level ten, we
up to 20 different safety elements must be
have to include off-the-job safety activities, which will bring about a need for addi-
present.
tional manpower. Nevertheless,I know that among our 20 ships, they are competing
reached levels nine or ten so far. OOCL is
internally with each other and that will definitely bring our standards to new
the only company that has IMSRS-audited
heights.’
all its ships and the only company to reach
No
shipping
company
has
level seven in every audit. T wo of its fleet
But even though OOCL has achieved good results, being a pioneer in developing the
reached level eight just a few weeks ago.
IMSRShas been a strain. ‘Too much paperwork, too much studying and training and too much reporting, ’ is Liaw’s complaint. ‘We suffer growing pains. However, I do feel confident that DNV, which has developed the tool, will also improve it. My most important suggestion regarding the next version is that there should be less reporting.’ Per Wiggo Richar dsen
DNV FORUM NO. 2/2000
33
‘DNV’s IQRS enables us to track our ogress pr year by year , and pinpoints wher e we must improve,’ says John Darby of Huntsman Polyurethanes in Everberg, Belgium
Photo: Cour tesy of Huntsman Polyur ethanes
34
DNV FORUM NO. 2/2000
PLASTICS PRODUCTION
IQRS IN PLASTICS
PRODUCTION
Huntsman Polyurethanes is aiming to win the European Quality Award, presented annually by the European Foundation for Quality Management. Huntsman has benefited greatly from DNV’s International Quality Rating System in its work of improving quality. rime benefit of using DNV’s International Quality Rating System,IQRS, lies in the rapid feedback,’ says John A. Darby, Business Excellence Manager in Huntsman Polyurethanes’ (formerly ICI Polyurethanes) Region for Europe, Africa and the Middle East. ‘ While it takes three months to prepare the documentation for the quality award – and a further six months to receive feedback - the IQRS gives us the answers at the end of a week’s assessmentwork. We achieved Level 5 in the IQRS and an EFQM score of 525 - so IQRS was accurately calibrated. ’
‘P
ment. We achieve a lower score in other areaswhere we know we can improve. Everyone can get better, and we are putting our efforts into those areas where there is most to be gained. ‘That way, we will also have other companies in the Huntsman group to compare ourselveswith. We can learn from them and they can learn from us. We can share best practices. Many units don’t know at present whether what they do is best practice. We want to avoid every site in the organisation reinventing the wheel, and wasting valuable resources. ’
DNV has broken the criteria for the European Quality Award down into some nine hundred specific questions – instead of 35 broad issues.Most questions call for a clear-cut ‘ yes’ or ‘ no’ or, for example: how many? or how often? Specific questions that give specific answers.
Seek independent audit
‘This year we expect to achieve the same benefit from using IQRS as we did last year from applying for the European Quality Award. The IQRS enables us to track our progress year by year, and we’re also told of clear areaswhere we must improve in order to win the fight for the European Quality Award,’ emphasises Darby.
Automotive industry the most demanding Huntsman Polyurethanes,of which ICI still owns 30 per cent, is a part of the Huntsman Corporation - the largest privately held chemical company in the world. The company works closely with a number of partners. The Global Polyurethanes market has shown significantly higher than GDP growth for the past 20 years,and the company cooperates closely with its customers in creating this market demand. In 1999 Huntsman came 15th among the large companies which applied for the European Quality Award. Thirteen of the applicants reached the finals, which were dominated by electronics, telecommunications and automotive firms. ‘Of our customers, those in the automotive industr y are the most demanding,’ Darby believes.‘This industr y changes quickly and demands a full insight into both technology and economics. So it ’s also satisfactory to seethat it is our automotive team which achieves the highest score in our IQRS assessments.These people are used to being tested and to working on continuous improve-
John Darby stressesthe importance of the DNV’s IQRS as a good self-assessment tool – with independent auditors trained by DNV. ‘Internal surveysare a poor wayof measuring employee satisfaction.We can seefrom our own surveysthat the degree of satisfaction varies from countr y to countr y. Internally , this may give causefor concern, but the way in which we now measure and use external benchmarking specialistsmeans that we can compare our results with those of similar companies elsewhere. Theseoften showthat the resultsare in line with the trend in that countr y – and not something that is particular to Huntsman. ‘New products are under development continuously - in fact about 60 per cent of Huntsman Polyurethanes’ hundreds of products are lessthan two yearsold. All the new products are given a new name – and we have a very disciplined introduction system. We particularly want our technical people to be close to the customer. We often know our customers’ production processes as well as they do themselves. Our German factory in Deggendorf is situated near the BMW car manufacturing plants, we’re close to the Clark’s shoe company in Somerset in England, and to Whirlpool in Italy. We also benchmark Huntsman against our competitors including Dow, BASF and Bayer .’ Recycling is another area to which Huntsman Polyurethanes is making a contribution. Wastefrom sawmillsis used to produce boards, and provide better utilisation of the forests. Old newspapers and old car tyres are recycled. New technology is also being developed to allow recycling of the polyurethane foam itself. ‘All these are important for a company seeking to demonstrate its quality credentials,’ says John Darby . Harald Bråthen DNV FORUM NO. 2/2000
35
CHEMICAL INDUSTRY
Helping chemical plants comply with
NEW SAFETY DIRECTIVE European Union Regulators are now obliged to close down chemical plants that fail to comply with new, goaloriented legislation aimed at improving safety in the European chemical industry.
‘This is our chance to ove pr to the public that our emergency contingency plans work,’ says Mike Dodson, safety manager of BG Storage Ltd.
M
Risk assessment ore than 100 major incidents of chemical plants releasing
‘This is our chance to prove to the public that our emergency
clouds of toxic gashave been reported worldwide since
contingency plans work,’ saysMike Dodson, safetymanager of
1946. Some 360 lives were lost, and there was significant physical
BG Storage Ltd. Dodson has been responsible for co-ordinating
and environmental damage.Adoption of the SevesoI Directive
the preparation of the SevesoII SafetyReports for a number of
in 1984 came as a direct consequence of these accidents. It
gasstorage sites,including the LNG Storage site at Partington,
aimed at preventing and controlling chemical accidents in all
near Manchester, England. Until recently, LNG Storage was
EU member states.
part of BG Storage Ltd, but is now the responsibility of BG Transco plc, a sister company in the BG group.
Publicity to reduce the risks The EU has now gone one step further , making the Seveso
Classified as a major hazard site, the former British Gas site
reports public and obliging chemical plants to test in practice
stores80,000 tonnes of liquefied natural gas(LNG) for the U.K.
their internal and external emergency plans. Under the new
gas transmission system.‘In order to meet our duties under the
‘SevesoII ’ Directive, operators and local authorities must notify
SevesoII Directive,’ saysDodson, ‘we are required to conduct an
everyone liable to be affected by a major accident, with information
assessmentof accident hazards arising from the storage of gas
on safety measuresand actions in the event of an accident.
and other materials used on the site. The assess ment considers potential effects on both people and environment.’
‘It is a challenge for the chemical-plant operators and the authorities to retain their grip of the safety management system
DNV has assessedthe on-site risks, and performed studies to
that is a core part of the new Directive,’ saysJürgen Wettig,
minimise the human causesof accidents and to ensure that site
environment directorate-general in the European Commission. ‘It
personnel can control or mitigate any incidents occuring. The
is not good enough to write down our intentions of emergency
results of the studies are part of a mandator y safetyreport
preparedness,we must prove that they work. Every part of the
that each chemical plant subject to the regulations has to submit
new Directive is only as good as its enforcement. ’
to the authorities in due time before the deadline. As soon asit is confirmed by the authorities, each report will be made public.
36
DNV FORUM NO. 2/2000
The Partington LNG Storage Installation is located in the largerington Car industrial complex some 13 km southwest of the centr e of Manchester . Its role is to provide security of supply for the gas transmission systemthinWest Nor England.
‘The challenge facing chemical plant operators is to use this as an opportunity for an effective dialogue between themselves and their neighbours,’ saysAndy Franks, coordinator for DNV’s SevesoII work in Europe. ‘The processof safetyreport preparation makes an operator think carefully about potential major accident hazards and how each of those hazards is controlled. Doing this on a regular basiscontributes to this being a living document.’
The Seveso II Directive: • Aims at preventing major accident hazards involving dangerous substances, and limiting consequences for life and the environment. • All member states and UN/ECE member countries that are party to the Convention on the Transboundary Effects of Industrial Accidents must comply with the Directive. • Time limits for implementation: Existing establishments previously covered by Seveso I Directive by 3 February 2001,
Challenge ahead It is expected that the number of European chemical sites to implement the Directive will increase sharply asmost operators begin to prepare for the first deadline in February 2001. This is a significant responsibility and a challenge for the chemical in dustry throughout Europe.
those not previously covered by 3 February 2002.
DNV Seveso II Services: • Gap analysis (addresses requirements to produce a satisfactory Seveso II safety report) • Review of Major Accident Prevention Policies and Safety
The challenge for the EU Commission will be to ensure a consistent and effective implementation and application of the Seveso II Directive during the next two years.
Management Systems • Identification of major accident hazards • Analysis of the consequences and frequencies of major accidents
• Risk assessment BeateØrbeck Photo: Cour tesy of rTansco LNG Storage/SKYCAM • Environmental risk analysis • Studies of human factors • Software for consequence analysis, hazard identification and risk analysis • Training in hazard identification and risk assessment techniques.
DNV FORUM NO. 2/2000
37
DNV appoints new president and CEO From 25 May 2000, Helge Midttun will become DNV’s president and CEO in succession to Sven Ullring. Midttun, 44, has been CEO of telecommunications company Stento AS since 1996. He holds an M.Sc. degree in economics from the Nor wegian School of Economics and BusinessAdministration in Bergen, and hasexperience in both the oil and shipping industries. His previous appointments include financial manager of Schlumberger Scandinavia, financial director of telecoms company ScanvestRing AS, and group director of Rieber & Son AS. He has also been a board member of Statoil. ‘I am convinced’, he says,‘that DNV’s work in protecting core valuessuch aslife, property and the environment will be more and more important in the future. ’
NOK 208 million profit DNV made a preliminary net profit after tax and financial items of NOK 208 million last year. Its turnover grew by NOK 200 million to NOK 4,629 million. At the end of 1999, DNV’s equity wasNOK 2.160 million, an increase of NOK 202 million on the year before. Det Norske Veritas had 5,500 employeesat the year-end, an increase of 800 on the previous year. The strong rise in the number of employeeswasdue to the acquisition of SAQ, a Swedishcertification and inspection company with 700 employees.This company was purchased from the Swedish State for NOK 280 million. CEO SvenUllring explains, ‘We have implemented long-term restructuring actions in the UK, Germany and Sweden.These costsare included in the preliminar y year-end accounts. We would have reached the low casescenario of 205 million NOK in operating profit if it had not been for this additional restructuring. ’ The yield from financial items made a contribution of NOK 136 million, which represents a 42 per cent rate of return on the capital administered. The high financial yield and lower taxes than expected compensate for the reduced operating revenues. At the end of 1999, 15 per cent of the world fleet in tonnage terms was classedby Det Norske Veritas, compared with 14.7 per cent the previous year. Of the newbuildings contracted worldwide, 17 per cent will be built to DNV class.More than 80 per cent of the world’s ships are built in Asia. China, in particular, has increased its share of the world’s shipbuilding sector, and around 30 per cent of all the ships built in China are to DNV class. In accredited quality systemcertification (ISO 9000), DNV has increased its share by 25 per cent over the past year, and is now one of the three largest certification bodies in the world. In the environmental certification sector (ISO 14000), the company’ s share has increased by 80 per cent. Profit and loss account (all figures are in NOK million) 1999
1998
1997
4,629
4,429
3,735
Operating profit
184
440
258
Net financial income/expenses
103
– 127
5
Tax
– 79
– 105
– 103
Profit for the year
208
208
160
Operating revenues
Sven Ullring, CEO and chairman of the executive boar d
Facts as of 31 December 1999 (1998 in brackets) DNV-classed fleet 4,656 ships (4,536)– a total of 81.3 million tonnes (78.8) Combined tonnage to DNV class 3.2 % more than last year Total share of world fleet – 15 % (14.7) DNV-classed rigs 134 offshore units (119) (semis, jack-ups, FPSOs, drilling ships) comprising around 2.7 million tonnes (2.4) – around 30 % of the overall tonnage Certification No. of certificates
ISO 9000 ISO 14000
22,230 (17,403) 1,186 (623)
No. of employees 5,500 (4,700) in more than 300 offices in over 100 countries
38
DNV FORUM NO. 2/2000
DNV buys risk-management Company DNV has acquired Principia, a Brazilian company that specialises in risk-management services. This is DNV’s first acquisition in Brazil, with the aim to provide comprehensive safety and reliability services to its offshore and process-plant clients. DNV has expanded its operations in South America with the acquisition of Principia, the leading technical risk management company in the region. ‘The products and services supplied by Principia will complement and enhance DNV’s current operations in South America,’ saysCarl Arne Carlsen, head of DNV operations in the Americas.‘Businessopportunities in Brazil are very good, particularly in the highly promising deeepwaterarea. This acquisition will help us provide a full range of risk-related services. These will include risk quantification, assessment and management ser vices.’ Founded in 1989, Principia pioneered work in reliability engineering and risk analysisat a time when this technology was considered a novelty in Brazil. Since then the company has made a significant contribution to the introduction and application of safetyand reliability methods to Brazilian industr y.
Principia’s President Dr Luiz Fer nando Oliveira and DNV’s Carl Arne Carlsen recently signed the deal in Rio de Janeir o.
World major opts for Nauticus DNV is to assign the class notation Nauticus to the Suezmax tanker Iran Sanandaj owned by the National Iranian Tanker Company (NITC), one of the world’s largest shipowners in the tanker sector. The agreement marks the first assignment of the classnotation Nauticus. In a brief ceremony to mark the occasion, chairman Souri of NITC stated his company’s commitment to make use of modern IT solutions to improve overall company efficiency and competitiveness. He stated that using Nauticus class to draw maximum benefit out of the Nauticus on board service fitted well with the long-term company objectives
From left (sitting): Dag Andr esen; M.Souri NITC From left (standing): DNV ’s Jens Riksheim, Øystein Goks øyr, Lawrence Borlos, Kaveh Mansoorian and Mr Mayahl, NITC.
The classnotation will be assignedto the Suezmaxtanker Iran Sanandajassoon asthe 3D model for the ship is delivered from the Nauticus Modelling Centre in Gdansk. Decisions on possible further assignmentsof the Nautcius class to NITC ’s fleet of modern tankers will be made after NITC has gained further user experience with the notation.
Q-Labs joins Strategic Initiative in German automotive industry Q-Labs has signed a contract with Robert Bosch Gmbh for its worldwide initiative BISS - Bosch Initiative for Software-determined Systems. The BISS initiative will be supported at corporate and businessunit level with a consultancy team of software engineering experts. The goal of BISS is to systematicallyand continuously improve software quality by adopting industr y best practices in software management and development. Q-Labsis a leading international provider of managing software risks, and DNV became co-owner of the company together with Ericsson in 1998. Q-Labs’
approach is based on the newly launched service package Quintum, which provides solutions for software process improvement in businessesoperating with high software dependency.
DNV FORUM NO. 2/2000
39
Sharper focus and faster decisions ‘Sharper focus on our most important markets and an ability to make decisions faster are two of the improvements we hope to achieve through re-organisation,’ says Sven Ullring. The new structure will also result in stronger global management and coordination. Three business areas, each with global responsibility for development and profitability within their lines of business,headed by Chief Operating Officers (COOs), are main elements of the new organisational structure approved by DNV’s Board at its meeting last December. The changestook effect from 1 January. The regions are to be DNV’s highest operating level, and the geographical divisions will be phased out.
Three Business Areas Maritime Industr y (MI) will be headed by Tom Virik, the present head of Division Asia Pacific. Oil, Gasand ProcessIndustries (OGPI) will be headed by Henrik Madsen, the present head of Division Nordic Countries. General Industr y (GI) will be headed by Miklos Konkoly-Thege, the present head of Business Areas. The three new businessareaswill have global responsibility for developing their lines of businessand for the global profitability of their activities. The regions are responsible for all operations that take place within them, including the profitability of their activities. In addition to activities within the three businessareas,all regions are encouraged to initiate local activities and business based on local needs.
One DNV ‘I believe that our new organisation will be seen as having clearer accountability,’ saysSven Ullring. ‘Changes in the market have made it in creasingly evident that we need to sharpen our focus on our main lines of business. From our customers’ point of view, the new structure should be easier to understand.’
The Chief Ooperating ficers. Of Fr om left, T om Virik, Henrik O.Madsen and Miklos Konkoly-Thege.
Frame Agreement with Ericsson DNV Certification in Sweden has signed a global certification frame agreement with Ericsson. DNV will provide services in ISO 9000 and ISO 14001. The agreement is initially valid for an 18 month period. DNV will appoint a global key account manager, train auditors and define the competence require ments jointly with Ericsson. The DNV assessments will focus on improved customer satisfaction to meet the needs and expectations of Ericsson'scustomers globally. This includes the quality of the products and services as well as improving time-tomarket and time-to-customer.
Boost in bulk-carrier orders
DNV and IPRES establish joint venture
‘We met part of the 1999 boom in new orders for bulk carriers and have been able to win an increased share of the newbuilding market,’ says Hans Viig, manager of the Bulk2000 project.
DNV has established a company, IPRM AS - Integrated Petroleum Risk Management - as a 50/50 joint venture with IPRES International Ltd.
DNV’s share of the world’s bulk-carrier newbuilding orders has more than doubled over the past year, from a total share of 7.6 % of the order book at year-end 1998 to 18.2% of new orders during 1999. ‘We have gained Scandinavian, Greek and Japaneseowners, and done well at Chinese yards,’ saysViig. ‘And we have secured three newbuilding contracts on bulk carriers ordered by Japanese owners at Japanese yards. ’ The Bulk2000 project is a market initiative that started early last year with the aim of increasing DNV’s share of the world’s bulk-carrier fleet. Behind its successlie market campaigns, including bulk-carrier seminars for owners and shipbuilders, design reviews for yards and internal Bulk2000 workshops to draw together a network of key bulk-carrier experts.
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DNV FORUM NO. 2/2000
IPRM aims to meet market requirements for integrated and independent decision-making support to administor oil and gas resourcesin the best possible manner. DNV and IPRESsigned a cooperation agreement in May 1999, based on the fact that integrated knowledge of reservoir and production technology will be in great demand for optimising the development and operations of oil and gas fields. This cooperation is now being extended through the establishment of IPRM AS. IPRMS'score expertise will be improved handling of important risk factors in order to ensure greater profitabilty for companiesin the oil industr y. It has been active in the North Seaand Middle East from the start, and is expected to expand throughout DNV's network. With this new company, DNV and IPRES plan to achieve useful synergies with their more traditional services.
Chernobyl project DNV Consulting has assessed and rated five different organisational models for permanently ensuring safety of the Chernobyl Unit 4 nuclear reactor. Phasetwo of the Chernobyl rescue work is about to start with the aim of finding a permanent safetysolution for the Chernobyl Unit 4 shelter. ‘We won the contract becausewe’re an in dependent company able to carry out unique ratings basedon a combination of Vitè, an organisational modelling tool that identifies and quantifies organisational modelling risks, and the DNV-developed risk assessmenttool Easy-Risk, ’ explains DNV’s Jan Thomsen, responsible for the project. The DNV report, which wassubmitted in December 1999, also looked at external aspectssuch as possible earthquakes, political and economical conditions, and cultural differences. ‘It wasan intensive four-weekproject with potential future assignments,’ saysJanThomsen, adding that they also analysedhow sensitivethe input data waswith regard to the final rating results and found them to be very robust. The project wascarried out on behalf of the European Bank for Reconstruction and Development. The international Chernobyl expert panel – of which DNV’s Pål Bergan is a member – will adviseon the efficient resolution of the Chernobyl challenge, basing its recommendation in part on the DNV report.
Risk-based inspection for Petronas
DNV to examine Virgin Rail
DNV Kuala Lumpur has been awarded two contracts in Malaysia to carry out risk-based inspection on onshore Petronas gas processing plants - the first two RBI contracts awarded in this country.
DNV Consulting in the U.K. has gained a contract to examine the health and safety sytems throughout Virgin Rail, one of Britain's largest train operating companies.
DNV Kuala Lumpur is also in the final stagesof being awarded a contract to carry out risk-based inspection projects on offshore platform structures and pipelines for Petronas Carigali Sdn Bhd. The offshore RBI project will cover the assessmentof 60 jacket structures and 286 submarine pipelines, including qualitative screening and a more detailed assessment of selected platforms and pipelines.
Virgin is buying new tilting trains from Italy, but until they are delivered it must operate older stock on an ageing infrastructure. DNV project manager Louise Smail saysthat the project will be a real challenge as the Group is tr ying to deliver top-classrail servicesacrossvery complex rail routes. The West Coast Main Line runs from London's Euston station to Scotland, while other routes criss-cross the country. The railways are becoming an important business area for DNV in the U.K.
Lead for Harwich Haven The Harwich Haven Authority on England’s east coast is the first harbour authority in Europe to receive certification to DNV’s Rules for Pilot Organisations. This new standard from DNV covers many of the safetyand environmental aspectsof pilotage which are at the forefront of the U.K.’s draft Port Marine SafetyCode. The governments’srecent pilotage review came about as a result of the grounding of the SeaEmpress at Milford Haven in 1996. Speaking at the certificate presentation ceremony in London, DNV’s Senior Vice President Tor-Christian Mathiesen said, ‘I see such certification as an important milestone in our efforts to achieve a safety culture throughout the maritime industr y. A safety culture means that we can alwaysimprove. It is thus about attitudes, beliefs and values.’ DNV’s Rules for Pilot Organisations go beyond the draft SafetyCode in that they also in clude quality management issues. Har wich Haven Authority is the conservancy and pilotage authority serving the ports of Felixstowe, Har wich, Ipswich and Mistley. The Authority has within its area a number of environmentally sensitive Sites of Special Scientific Interest and Special Areas for Conservation.
From left: Nick Rainsfor d, DNV auditor of Harwich Haven Authority; Tor-Christian Mathiesen, DNV Senior Vice President; David Shennan, Pilotage Manager Har wich Haven Authority; Nigel Pr yke, Chief Executive Har wich Haven Authority; Simon Davey , Harwich Haven Pilot.
DNV FORUM NO. 2/2000
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LAST WORD
QUALITY SYSTEM CHANGES This year will see the publication of ISO 9000: 2000. There are some significant changes and opportunities for improvement in the new version of the standard. Will this have a beneficial impact on companies who use it?
I
A customer-focused organisation will be needed to give rise to sustained customer satisfaction, with successbeing measured. Top management will have to take greater interest in what the customer expects in the future, what the consumer perception of the company is regarding employees, and being a good neighbour. Those companies that source from the Third World will need to embrace social accountability standards
SO 9000, the standard for Quality Systemsfirst published in
such as SA 8000.
1987, is about to be revised for the second time. About
250,000 companies worldwide are certified to ISO 9000 and
Internal communications will have to be addressed,with quanti-
many have seen the benefits of adopting and implementing
fied objectives being set by management.
the standard. However a significant number of these have failed to realiseits full potential asthey havetried to build paperbased systemsto reflect the requirements (and satisfyexternal auditor requirements). Companies who have been certified for some time have lost the focus of continuous improvement of their systems,and have become disillusioned with the adoption of ISO 9000. Many quality systemsare bureaucratic, an unfortunate result of the 1994 requirement for a documented procedure to
‘Top management will have to take greater interest in what the customer expects in the future.’ - Bruce Rees
cover each clauseof the standard. Fewerrequirements for documented procedures will be required in the new version of ISO 9000, which encourages a process-basedsystem approach.
Planning future strategy All this means that auditors must also change. They must now
User feedback has been that ISO 9000 quality systemsimplemented
understand how businessesoperate, concentrating more on
are too bureaucratic, lack simplicity and clarity, connect poorly
processesand lesson documentation (which is a small part of
to other standards,and most important do not fit in with modern
the process). The question will need to be asked:Is the process
business practice.
right for the business?Processesstart and finish with the customer!
User-driven changes
Companies must set objectives and begin to use process
Significant changes, user driven, are part of the evolutionar y
mapping as a tool to map all businessprocesses,and then link
processof standards development, the move to quality manage-
these to ISO 9000:2000and other standardssuch as ISO 14001
ment from quality systems,continuous improvement, competence
and OOHSAS 18001. This approach will aid companies who
rather than just training, process-basedsystems,and human
are integrating their management systems,and enable process
factors approaches. Management will now have to identify and
improvement. Such companies must consider waysof measuring
set objectives including:
customer satisfaction, communication effectiveness and continuous improvement.
• Creating products that are superior to those of competitors in the same price bracket. • Consistently giving customers what they want and at the time they need it. • Giving best possible service to internal customers. • Linking quality coststo the quality management system:this means benchmarking.
42
DNV FORUM NO. 2/2000
Bruce Reesis an independentconsultant, who until recentlywas Managerof Operations,DNV London.He is a specialistin theapplication of continuousimprovementtools, processmapping, manage ment training, ISO 9000 and integrated management systems.
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DNV FORUM NO. 2/2000
43
THE SEA OF CHANGE
Classification societies’ offshore role must adapt as the safety of offshore installations becomes ever more regulated and competitive. Many societies now offer clients a wide range of relevant services: from life-cycle risk management and integrity management to safety, environmental and human-factor consultancy. In this issue of DNV Forum, we look at how Det Norske Veritas is reacting to the new challenges, particularly in the promising deepwater sector.
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