Tanker Update 1-2012

Thenamaris

Maran

tanker update

ALMI

News from DNV to the tanker industry

No 01 2012

focus on greek shipping

contents

06 Thenamaris: Benchmark for success

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12

Maran Tankers Management: Finding success in tough markets

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Teamwork is the key to Almi Tankers’ success

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Front cover: ©NTB Scanpix

tanker update Focus on Greece: Emerging trends spell a bright future for Greek shipping.....................4 Thenamaris: Benchmark for success ...................6

We welcome your thoughts!

Maran Tankers Management: Finding success in tough markets......................10

Published by DNV Maritime and Oil & Gas, Market Communications.

Teamwork is the key to Almi Tankers’ success.................................................12

Editorial committee: Jan Koren, Business Director Tankers Magne A. Røe, Editor

DNV in Piraeus: A shared history of success ..................................16

Design and layout: coormedia.com 1205-066

DNV Research & Innovation Greece, Piraeus Developing next-generation solutions..........18 Verifying the quality of bunkers before use is now more necessary than ever................20 Computational tools for fuel efFIciency2����22 DNV secures continued high service level for chemical tanker operators..........................26 Tanker Operational Safety......................................28 Surviving in a stressed tanker market.............32 Recent delivery: M/T BNEIDER.................................36 2 | Tanker UPDATE NO. 1 2012

Please direct any enquiries to DNVUpdates@dnv.com Online edition of tanker update: www.dnv.com/tankerupdate DNV (Det Norske Veritas AS) NO-1322 Høvik, Norway Tel: +47 67 57 99 00 © Det Norske Veritas AS www.dnv.com

editorial

global leadership by Greek Shipping

It is again time for Posidonia, a major and well established shipping event attracting people from the international shipping community to Athens.

Greek shipping is

The power of being Fuel EFFICIENt

goes, Greek owners have now also entered the more specialized LNG and shuttle tanker segments. The 24 LNG carriers ordered

by Greek owners in 2011 represent more than 43 per cent of the LNG carriers ordered last year.

523 vessels or 25.9 m grt, equivalent to 17 % of the Greek controlled fleet are classed with DNV. Of the number of Greek orders placed last year, around 30 % were to DNV class. The majority of LNG carriers and shuttle tankers ordered were to DNV. In this issue of Tanker Update you will find articles about well reputed Greek owners representing long traditions and high quality operations.

Even in times of turbulent global business environment and dramatic

domestic challenges, these owners are among those who are looking forward with strength to grasp new business opportunities and continue their high focus on quality and safety.

We in DNV are pleased to take part in the development of Greek shipping. Our Greek customer portfolio is a major part of our total international classification market. Our ambition is to continue to strengthen our support to the Greek shipping community in their global operations. Our local setup there which includes DNV Research & Innovation Greece is offering support beyond basic class. You will also find an article about this in the following. Fuel efficiency is now a central focus area. Our Greek resources

related to this are part of our global resources set up to support the needs of the international shipping community’s efforts to reduce fuel bill which coincides with ambitions to reduce CO2 emissions.

Even with some bright spots in the international tanker market, analysts predict that there will be oversupply of tanker tonnage for still some time to come. Even so we now see that new designs are being developed and some owners are ordering and planning to order more ships. Low contract prices and reduced fuel consumption are their key to attract charterers and beat the competition.

We are likely to see scrapping of younger tonnage in years to come.

Enjoy the read!

Contribute to a green future When business conditions are tough, cutting costs becomes vital for survival.

Fuel is a major cost item today and DNV can assist with all aspects of reducing fuel consumption. Our experts have experience ranging from the implementation of operational energy management services to technical solutions, such as hull optimisation for newbuildings and retrofitting of fuel saving devices on existing ships.

Photo: NTB Scanpix

Jan Koren Business Director Tankers Jan.Koren@dnv.com

based on long traditions and competence developed over generations.

Highly developed skills covering the technical, operational and the business sides are behind the fact that the Greek controlled fleet today is the biggest in the world.

Previously Greek shipping was to great extent based on purchase of second hand tonnage. Now Greek owners are among the most active ordering new ships, and the major share of their fleet belongs to the tanker segment.

More than 19 per cent of the world’s tankers currently (March 2012) on order are to Greek owners, ahead of Chinese owners as number two with around 12 per cent. From the traditional trades including bulk and oil car-

www.dnv.com

Tanker update NO. 1 2012 |

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Focus on Greece

Focus on Greece:

Emerging trends spell a bright future for Greek shipping While tanker and bulk carriers continue to represent the majority of the Greek controlled fleet, investments in gas carriers and containerships signals a willingness by Greek owners to diversify into new segments.

Photo: NTB Scannpix

Text: alexander wardwell

According to data prepared by Fairplay and figures released by the Greek Shipping Cooperation Committee (GSCC) Greek interests controlled 3,760 vessels representing a total 264,054,167 dwt,

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including 437 vessels currently on order.

Despite an overall decline of 88 vessels from the year before, the Greek controlled fleet has never been larger, measured by dwt. Indeed, the GCSS reports that Greek

companies control 22 per cent of the global oil tanker fleet and 16 per cent of dry-bulk ships now in active service.

For a country with such an outsized impact on global seaborne trade, industry

Focus on Greece

analysts have long looked to Greece during poor markets for signs of recovery. In the past, a spike in Greek orders was a sure sign of better times to come, but in the wake of the recent global debt crisis, a more complex picture of the Greek shipping industry has emerged. While some owners took advantage of competitive prices offered by shipyards to order new bulk carriers and oil tankers after the crash, more recent investments in other segments represent a subtle, but significant, change in Greek shipping.

Expanding into new market segments While Greek owners (ex. Danaos, Costamare, Eurobulk etc.) have been active in the containership segment for years, the GCSS reports that 44 newbuildings are currently on order by various Greek shipping companies, many from owners new to the segment. At the same time, some Greek owners have been active in acquiring second-hand box ships, suggesting an effort to diversify into new segments. Hit hard by the global recession in 2008-2010, freight rates in the containership segment have rebounded on some trades, (ex. Asia and Europe and Asia and the US.) While it is unclear if this trend will continue, container shipping supports higher freight rates than either the bulk or oil tanker ship segment at present, encouraging many owners in Greece to move quickly to seize a larger share of is highly competitive global market.

Greek owners have also been active in the more capital-intensive LNG segment, with a total of 11 carriers in operation and 22 on order. While outside the traditional sphere of Greek shipping, the LNG segment represents an attractive business opportunity. By some estimates, demand for LNG transportation will grow by about 35 percent by 2020, driven by rising global demand for natural gas, especially in Asia.

As the global fleet of LNG carriers continues to grow, some analysts predict this segment will soon function more like the oil tanker market, which aligns this business even more with the traditional strengths in Greek ship management, technical

operations and an experienced pool of skilled officers.

Investment in new technologies While Greek owners have long enjoyed a strong global reputation for quality shipping, fierce competition and rising cost of bunker oil have spurred new investments

by Greek owners on fuel savings technologies and measures to optimize fuel efficiency.

As Greek controlled vessels represent a combined total of 17 per cent of the world merchant fleet, rising Greek spending on various technical innovations to improve competitiveness is likely to have a ripple effect on the industry at large. Indeed, Greek investments in new technologies have helped support the development of everything from innovative fuel-efficient engines to weather routing software, trim monitoring tools to optimised hull forms.

Keeping one step ahead of regulations As leading players in a number of international trade organisations (such as Intertanko and Intercargo, among others) Greek owners have worked with regulators to shape new and pending legislation on a broad range of issues. While some Greek owners have been criticised in the past for resisting efforts by regulators to manage environmental issues or for being slow to embrace some initiatives, an increasing number of Greek owners have vocally supported recent efforts by IMO to improve the environmental performance of the world fleet.

For example, some Greek owners with vessels under construction are already moving to comply with rules related to amendments to the IMOs Marpol Annex VI on energy efficiency (including the Energy Efficiency Design Index and the Ship Energy Efficiency Management Plan) which are not scheduled to come into force until next year. The fact that fuel saving is in line with imporved environmental performance is no disadvantage in this respect. Certainly, a number of Greek owners remain sceptical of how some of these and other rules will be implemented

and enforced, but it is clear that most have adopted a more proactive and cooperative approach to managing global environmental issues.

Back to the future The volatile global economy has also created structural changes to the Greek shipping community. Prior to the current downturn, the remarkable fleet growth cencouraged many new companies to enter the market.

With relatively low capital barriers to entry and access to affordable bank loans and keen investors, many of these new companies adopted an outsourcing model and were managed more like investment banks than traditional Greek shipping companies. However, when the market changed abruptly, many of these companies lacked the in-house competence to adapt to the new market reality.

By contrast, more traditional, privatelyowned companies with the experience to manage their fleets also in challenging markets, ready access to capital reserves for investment, and the ability to make quick decisions were in a better position to compete in challenging markets. With increasing bank restrictions on ship financing the market will continue to favour privatelyowned companies that have the flexibility and financiaø reserves to seize new business opportunities and run more efficient ship operations..

Looking ahead While the entrepreneurial spirit that has long characterised traditional Greek shipping remains intact, Greek owners have of late demonstrated a broader, more targeted approach to investments. Rather than simply ordering new oil tankers or bulk carriers in anticipation of improving freight rates, Greek owners have shown a willingness to diversify into new segments, invest in new technologies to improve efficiency and environmental performance. For those seeking a sense of how the industry will look in the next five years, the Greek owners’ focus on quality over just growth is a good place to start. 

Tanker update NO. 1 2012 |

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Thenamaris

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Thenamaris

Thenamaris:

Benchmark for success In a market characterised by high bunker costs, fierce competition and increasingly strict regulations, many shipowners are reducing costs to maintain profitability. But by collecting, analysing and using data to make targeted investments, Thenamaris Ships Management has improved its operational efficiency without compromising on quality.

Photo: Thenamaris

Text: alexander wardwell

Tanker update NO. 1 2012 |

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Thenamaris

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Photo: Thenamaris

Vasileios Lampropoulos, Manager, Technical Department, Thenamaris Ships Management

As one of the world’s leading independent ship management companies, Thenamaris has continued to perform well in challenging markets. Today, Thenamaris operates a fleet of 32 (oil and product) tankers, six bulk carriers and one container ship.

While the company’s bulkers and container ship are on long-term charters, most of the tankers are trading on the more challenging spot market.

can afford to pick and choose among transportation suppliers, we have seen that our focus on quality has become a genuine competitive advantage.”

Lampropoulos notes that unlike previous shorter downturns, factors including globalization, the entrance of more players, and the financial crisis combined with the oversupply of tonnage is continuing to depress freight rates and resulting in insta-

“We are investing time and resources to renew and optimise our fleet, putting us in a stronger competitive position now and in the future,” Vasileios Lampropoulos, Manager, Technical Department, Thenamaris Ships Management

Investing in quality According to Vasileios Lampropoulos, Manager, Technical Department, Thenamaris Ships Management, the company has remained profitable despite tough markets. “Thenamaris continues to invest in its fleet, crew training and management systems to strengthen its reputation for quality,” he says. “We are working with tight budgets.

However, in a market where cargo owners

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bility, putting intense pressure on tanker and bulk carrier operators to cut costs to survive. Meanwhile, many owners that took advantage of more reasonable prices at shipyards to add new vessels to their fleets remain uncertain as to future chartering prospects.

“In my view, the global financial crisis cannot be directly compared to the market shocks the industry has experienced

in the past,” he says. “When you consider that the lingering effects of the financial crisis, which began in 2008, still act as a drag on global trade, and that four years later the industry continues to cycle through tonnage overcapacity, you realise that the historical V-shaped recovery model may no longer apply.”

Adapting quickly to the new market reality Thenamaris has moved quickly to adapt to the new market reality. The company has invested in a broad range of tools and systems to streamline operations and improve vessel efficiency.

“As fuel expenses represent a large portion of our total costs, we have invested a lot of time and resources in energy management,” he says. “In addition to improving our margins, we understand that this is a critical competitive advantage when tendering for business.”

Holistic approach to fuel efficiency optimise energy performance Lampropoulos says that the company takes a holistic approach to

Thenamaris

Photo: Thenamaris

Diversifying into the LNG segment After eight years of monitoring the LNG sector, Thenamaris has ordered three LNG carriers which are set for delivery in late 2013 and early 2014.

The vessels are sister ships with a 160,000-cubicmetre cargo carrying capacity, optimised for efficiency with tri-fuel diesel electric propulsion systems, enhanced features and a reduced boil-off rate of 0.1 per cent per day.

energy management. “It’s not enough to simply acquire equipment and/or software from suppliers and hope for the best,” he says. “We have to understand in detail how each component functions, assess the impact of different elements on different vessel types and operating profiles, and evaluate how these fuel saving technologies interact with each other.”

To optimise its new-buildings, Thenamaris has collaborated with the shipyards to develop more fuel-efficient hull forms, matching the most suitable engine type for the expected operational profile and worked with a broad range of suppliers to install other energy-saving equipment.

As for the company’s existing fleet, Thenamaris has implemented an ambitious dry-docking programme, retrofitting older tonnage with a number of energy saving technologies. . “We have to be careful that the advantages of one system do not eliminate those of another or introduce undesirable side effects,” says Lampropoulos.

“From a technical standpoint, optimising vessel efficiency is a complex challenge, particularly for older tonnage.”

Lampropoulos acknowledges that these enhancements are important, but says that is important to focus on measuring and verifying results. “We are testing all of these systems to benchmark the performance of each vessel and trade,” he says.

“By collecting and analysing data from different ships with different fuel efficiency parameters on different trades, we can make more targeted and qualified investment decisions in the future. We can also back up our efficiency claims with hard evidence that allows us to prepare vessels for specific trades – something our customers appreciate.”

Performance-based management Thenamaris applies the same rigorous performance-based management to how it interacts with suppliers. “Part of our success has to do with building long-term relationships with suppliers – from shipyards to equipment manufacturers,” he explains.

“We are open to new ideas, but tend to work with suppliers who share our focus on verifying/measuring results.”

While Thenamaris works with other

Triple-E Rating In 2010, Thenamaris became the first company to receive DNV’s new Triple-E rating, which was awarded to the Seabravery tanker. The rating scheme, which is designed to demonstrate active environmental management and energy efficient performance, is a voluntary scheme developed in close cooperation with Thenamaris Ships Management in order to help ship operators to improve and document their fuel efficiency and environmental footprint. The company has devoted significant time and capital resources to benchmarking the energy management efficiency of its operations in order to identify areas of improvement.

class societies, Lampropoulos says DNV’s in-house technical expertise has helped support the company’s efforts to improve vessel efficiency. “DNV has staked out a leading position in the field of energy management, and we have benefitted from its research and industry knowledge in this field,” he says. “DNV also shares our focus on rigorous testing and measuring results.”

Cautious optimism Looking ahead, Lampropoulos is cautiously optimistic.

“Obviously, we have no control over freight rates, but we do have control over how we run our business,” he says. “Rather than waiting for markets to change, we are investing time and resources to renew and optimise our fleet and gathering data that will better qualify us for our investment decisions in the future. We are performing well today, andwhen the markets recover we will be in an excellent position to expand.” 

Tanker update NO. 1 2012 |

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Maran Tankers Management

Maran Tankers Management: Finding success in tough markets

“The focus on quality begins with people, not technology” Operating in an industry characterised by low freight rates, increasingly strict regulations and high bunker costs, many shipowners are struggling to adapt to the new market reality. But by working to exceed customer expectations, investing in new technologies to improve efficiency and moving quickly to seize business opportunities, Maran Tankers Management has emerged as a stronger player.

Text: alexander wardwell

As a unit of the privately owned Angelicoussis Shipping Group (ASG), Maran Tankers Management (MTM) operates a fleet of 36 tankers, with an additional seven vessels expected to join the fleet.

While some of the company’s existing vessels are on long-term charters, most are active in the spot market, where low freight rates persist. At the same time, rising bunker costs and new and pending regulations are resulting in dramatic changes to the industry.

Challenging markets According to Managing Director Stavros Hatzigrigoris, the tanker segment is continuing to experience tonnage overcapacity issues that have kept freight rates low. “We have seen some signs of improvement in the last two years but, overall, the weakness in the tanker segment continues,” he says. “However, ASGL has operated successfully in the shipping industry for almost 50 years, so we have experience in how to thrive in tough markets.”

While he acknowledges that today’s market conditions are not ideal, Hatzigrigoris is quick to say that all vessels in Maran’s tanker fleet are actively trading.

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“Today’s market favours the charterer, who can afford to be more selective,” he says. “Our long-term focus on quality, efficiency and building strong customer relationships has proven to be a genuine competitive advantage. In slow markets, quality matters.”

Creating long-term success MTM’s approach to quality has three main focus areas: optimising operations, evaluating and implementing technical innova-

controlled main engines and nozzle ring turbochargers, among other features. To improve the performance of its existing fleet, MTM has installed a number of innovative technologies, such as MEWIS ducts, boss cap fins and energy efficient rudder and propeller designs. The company is also evaluating a number of other fuel-saving innovations, including fouling release coating systems to improve hull performance.

“It all comes down to how we train both new and existing seafarers and build a culture of quality,” he says. “Crew training is where we cook.” tions to improve vessel performance, and the intensive training of personnel. These elements have helped MTM to build a strong reputation for quality over time and to adapt quickly to the new market reality.

For example, to help charterers reduce fuel costs, newbuildings have been optimised to improve fuel efficiency. The company has invested in new hull designs, weather routing systems, electronically

Beyond compliance At the same time, MTM has responded quickly to the introduction of new regulations. Over the past three years, regulations proposed or enacted by international regulatory bodies, such as the EU and IMO, and actions taken by individual states to create Emission Control Areas (ECAs) have led to an increased focus on environmental performance.

“We recognise that shipping represents

Maran Tankers Management

Photo: Maran

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an environmental risk and support global efforts to manage global challenges,” says Hatzigrigoris. “At the same time, we see a natural link between fuel savings, environmental performance and quality operations and take a ‘beyond compliance’ approach to regulations.”

Building a culture of quality Hatzigrigoris says that fuel savings and emissions control are as much about attitude as they are about technology. “In the past, bunkering has been considered a sunk cost, driven by market forces beyond the industry’s control, while managing harmful emissions was not a top priority,” he says. “Today, managing these issues effectively is business-critical. By considering all aspects of a vessel’s design and operations and working together with different stakeholders, we can make a big difference if we take a number of small steps.”

For MTM, the focus on quality begins with people, not technology. At present, the company has about 300 shore-side professionals and more than 3,000 officers and crew – all recruited and trained by the company. “Recruiting, training and

“Our long-term focus on quality, efficiency and building strong customer relationships has proven to be a genuine competitive advantage.

In slow markets, quality matters.”

Stavros Hatzigrigoris, Managing Director of Maran Tankers Management.

retaining our own crews require significant time and investment, but the only way we can guarantee quality operations is to do things ourselves,” he says. “We have developed a number of best-practice guidelines targeting safety, environmental issues and energy efficiency, but quality begins with a culture, not a manual.”

MTM applies the same rigorous standards in its interaction with suppliers, including DNV, which delivers a broad range of classification and advisory services to MTM. “We work with other class societies but, in addition to its technical expertise, DNV has demonstrated that it shares our focus on quality and customer service,” says Hatzigrigoris. “We have developed a strong relationship with DNV over the years, and believe it understands our business.” 

Maran Gas Maritime: new segment, same focus on quality In 2003, the Angelicoussis Shipping Group established Maran Gas Maritime (MGM), becoming the first Greek shipping company to order LNG carriers. Under the direction of Managing Director Stavros Hatzigrigoris, the company operates five state-of-the-art membrane tri-fuel LNG carriers and two LPG carriers. According to MGM’s Richard Gilmore, (Director, Gas Fleet), the company sees significant growth potential in the LNG segment “Demand for natural gas, particularly in Asia, has created a strong market for LNG transportation services,” he says. “While there are a number of more established players in the market, we have been successful in competing for long-term contracts and have done well in the spot market.”

Gilmore notes that the LNG carrier segment has matured and is no longer considered a niche market. “Barriers to entry are still relatively high, but we believe that, in the next five years, the global LNG transportation market will operate more like the oil tanker segment, which we view as a competitive advantage.”

Despina Moustaka, MGM’s HSEQ Manager, acknowledges that LNG carriers are technically more sophisticated than oil tankers, but says that the company has applied the same rigorous attention to detail that has earned Angelicoussis Shipping Group its reputation for quality shipping.

“It all comes down to how we train both new and existing seafarers and build a culture of quality,” she says. “Crew training is where we cook.”

Tanker update NO. 1 2012 |

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Almi Tankers

Teamwork is the key to Almi Tankers’ success Almi Tankers has just moved to a brand new, purpose-built and designed office building in Athens. The new building reflects the spirit of Almi Tankers – dynamic growth through people focus. “The key to success is teamwork and delegation,” says Captain Panayiotis Drosos, CEO of Almi Tankers.

Photo: Almi Tankers

Text: Magne A. Røe

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Almi Tankers

We meet him behind his desk at his new office. Drosos has been the CEO of Almi Tankers since 2009, and the company today operates five tankers, with another nine on order throughout 2014. Upon completion of the newbuilding programme, Almi Tankers will have a fleet of two Aframax, ten Suezmax and two VLCC vessels. The intensive launch of new ships, the new office, a CEO aged 37 and the average Almi employee age of 39 all underline the very dynamic approach of Almi Tankers.

“The young team – can you please explain how you go about reaping the benefits?”

“In my view, teamwork and delegation are the two vital success criteria. Teamwork means that we engage ourselves actively and by taking each other’s input into consideration. To me, Almi’s employees are our most important asset, which in many ways is a bold statement in a company where our ships are our revenue-making assets. But there are people operating those assets, and we will never be a successful operation if we do not put our people

first. So our company slogan is “Investors in People”, followed by “Improving Business Performance”, in that order. People first, then business results and our bottom line, which of course is very important to me and our shareholders. For this approach, we have also gained recognition according to the Investors in People standard, based on an assessment by Investors in People International. We have been committed to achieving IIP recognition from the beginning, and the aim of this is to improve performance through developing

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Photo: Almi Tankers

Captain Panayiotis Drosos, CEO of Almi Tankers

Tanker update NO. 1 2012 |

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Almi Tankers

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Almi Tankers AcGG outside new Athens headquarters.

people, following the cycle of ‘plan, do and review’. We started a business from scratch in 2009 and this meant we were free to create a company culture from scratch too. So a young team and a young spirit, where each and every employee gets to set up objectives and KPIs is important to me.”

“Almi Tankers is ‘Committed to operational integrity’. Can you please explain this in more detail?”

“We are stipulating personal objectives for everyone, as I mentioned, and here we use a balanced scorecard to create alignment

14 | Tanker UPDATE NO. 1 2012

to company objectives and the right balance for each person. In addition, we run an operation which clearly demands high standards on all levels. We run a very modern fleet of new ships and have very important customers to serve world-wide.

These customers demand the best and nothing but the best, and they need to be sure that we run a credible operation in all aspects. So of course operational integrity is a key factor for me. If we did anything in our operations that compromised our integrity, then we would have a problem.

And our ships, our operating assets, are

new, but they do not provide integrity as such – people do. So people are in focus, and I take a people-in-focus approach to management. When I attended Leicester University, I learned about the Deming Circle and Management by Objectives.

(The Deming Circle: plan, do, check, act.) So, yes, I am probably more involved in the people aspect than most CEOs in shipping, but to me this is a very natural approach and my key success factor. Here at the office I urge people to leave at five in the afternoon – have a life and take care of their families. All aspects have to add

Photo: Almi Tankers

Almi Tankers

Photo: Almi Tankers

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up, meaning your private life and your professional life should be as balanced as possible.”

“Training must be a key activity for Almi Tankers?”

“We focus on this, and here at our new headquarters we have created a training centre that I am very proud of. The new centre has all the technical tools you can expect in 2012 and this to me is the only way to achieve our goal – to man and operate an almost brand new fleet of ships.

Finding crew is a challenge but retaining

Brand new and purpose build Almi Tankers office building.

this crew is equally a challenge. So new masters, chief engineers and so on are brought here for extensive training and refresher courses on a regular basis – starting out with fifteen days of training. Then we have a continuous feedback loop where all the formal operational requirements are also taken into account, for example the ISM, ISO 9001, ISO 14001 and OHSAS 18001 standards are to be complied with – plus the vettings, the port state control requirements, class requirements and so on. Our customers are oil majors and we need to exceed their requirements in all aspects.”

“With a new fleet in terms of ship age, you must have built in the most fuel efficient engines the market can offer?”

“Yes, we have MAN B&W 7G80ME engines.

These are long-stroke engines on the VLCC. They are fuel efficient and will also reduce the consumption in port thanks to a bypass system. Our Suezmax vessels have similarly efficient engines. We have also included ballast water treatment systems (UV technology in combination with filters) as well as greywater tanks. We have larger diameter propellers which also reduce consumption significantly, in addition to the Moeves duct that we have added to ensure the improved

performance of the propellers. We have also worked closely with the DSME yard in Korea and its R&D department to ensure the best results and also to comply with future IMO and other requirements. In addition, we have trim optimisation programmes and will install scrubbers on the ships if and when these are needed to comply with even stricter environmental regulations. To summarise our environmental goals: we have put on board the most high-end solutions available and they are expensive, adding at least €30 million to our newbuilding programme.”

“You have expanded fast – will this growth continue in the future?”

“Yes, we will continue to expand. We are a single-owner company and our owner will clearly expect more. We may buy or order more ships, and we have plans to expand into the LNG market as well. I am a strong believer in sister ships and economies of scale, so we will stick to our designs.”

“The Greek economy is struggling. Do you have any comments on the situation?”

“I am not proud of the situation and we must change the mentality of the past generations. The country’s management tactics will have to be flexible and result-oriented!”

Tanker update NO. 1 2012 |

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DNV in Piraeus

DNV in Piraeus: A shared history of success Active in Greece since 1921, DNV continues to be a preferred supplier of quality classification services and technical support to Greek shipowners and managers. But with the industry in the process of rapid change, more owners are beginning to view DNV more as a long-term partner than just a provider of approval services.

Text: alexander wardwell

For more than nine decades, DNV has been a leading provider of classification services to Greek shipowners. In that time, the Greek-controlled fleet has emerged as the largest in the world (measure by dwt.), making Piraeus perhaps the most influential shipping cluster in the industry.

DNV has grown with the Greek shipping industry step by step. From its modest beginnings in a small office in the Cunard Building on Sotiros Street in Piraeus, DNV today employs more than 50 people serving the Greek market and 27 other countries in the region, including Cyprus, Turkey Croatia, Egypt, Israel, Azerbaijan and the Ukraine.

According to Business Development Manager, Georgios Teriakidis, DNV’s strong global reputation owes much to the organisation’s long-term presence in Greece. “Serving such a demanding market for so long has helped DNV develop the service quality, technical competence and a focus on building long-term relationships that make us different from other class societies,” he says. “Our success in Greece is critical to our efforts to grow the DNV-classed fleet not only regionally, but throughout the world.”

Teriakidis adds that since all class societies have offices in Piraeus, competition is fierce. “Our long history in Greece is certainly an advantage, but we have to prove ourselves everyday,” he says. “And since we compete on quality more than cost, we

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have to ensure that we have the competencies to meet, or exceed, the expectations of our customers.”

High quality services Today, DNV in Piraeus is organised into four key focus areas: Surveyors & Production, Research & Innovation, DNV Petroleum Services (DNVPS) and the Maritime Service Centre (MSC), headed by Dr. Loizos Isaias. Isaias says that the primary function of the MCS is to provide a broad range training courses, CAP and fatigue calculations, conversions, pre-contract and newbuilding support and approvals, support for water ballast treatment systems,

and is followed up by comprehensive performance-monitoring.”

Isaias acknowledges that low freight rates combined with high bunker costs have forced some owners to tighten budgets, but notes that many companies with a more long-term perspective recognise the value of using this lull in the market to optimise their vessels to achieve improved energy efficiency. “Bunkering remains the greatest cost for owners, so energy management is critical to remaining profitable in these tough markets,” he says. “And owners are beginning to recognise that operating a fleet of fuel efficient vessels is a genuine competitive advantage.”

“Serving such a demanding market for so long has helped DNV develop the service quality, technical competence and a focus on building long-term relationships that make us different from other class societies,” Georgios Teriakidis, Market and Business Development Manager, DNV

hull and stability approvals among other advisory services.

“In the past two years, we have seen increased demand for DNV services related to environmental performance and optimising energy efficiency,” he says.

“These services are based on a proven DNV methodology that identifies improvements, develops affordable solutions, structures implementation processes

Where experience counts Lead

by Andreas Pagalos (Manager, Greece and Cyprus), the Surveyors & Production department’s primary function is to provide approval and verification services for ships in operation. “Most of DNV’s work in Greece is related to surveys, but we bring a wealth of experience to the job that we feel is a big advantage over competing class societies,” says Pagalos. “Often,

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Andreas Pagalos, Manager, Surveyors & Production department, Greece and Cyprus.

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Georgios Teriakidis, Business Development Manager.

owners will call us for technical support, even if the vessels is classed by another society, because they trust that we have the right competencies and will respond quickly to their requests.”

In addition to managing the Surveyors & Production department in Piraeus, Pagalos is also a responsible for DNV’s activities in Cyprus. “While tankers and bulk carriers make up the majority of our work, developments in the offshore industry in the region have created an opportunity for DNV to expand the scope of its services to other industries,” he says.

Next generation solutions, today The Research & Innovation department has a staff of five research engineers, headed by Dr. Nikolaos Kakalis.

Established in 2008, the unit is responsible for developing next-generation solutions for more energy-efficient and greener maritime transportation. Kakalis says that the department frequently participates in joint industry projects with shipowners, equipment manufacturers and other stakeholders, and has an on-going strategic collaboration with the School of Naval Architecture and Marine Engineer of the National Technical University of Athens (NTUA).

“By placing this core competence at the centre of the Greek shipping cluster, we can get involved in exciting new projects and share competencies with key industry

››

Dr. Loizos Isaias, Head of Maritime Service Centre (MSC)

stakeholders,” he says. “Already, our strategic research activities have contributed with new knowledge and methods that have strengthen DNV’s competence in several areas and contributed to helping the industry improve its environmental performance.”

Building long-term relationships Constantinos Vlachiotis, Senior Principle Surveyor and Lead Customer Service Manager for DNV, says that while each department has a different focus, they all share a common goal. “Experience, technical competence, and responsive quality service are important elements to our success,” he says. “But the primary reason we have done well in Greece is because we understand the value of long-term relationships.”

Vlachiotis explains that unlike competing societies, who encourage the view that class should be considered a commodity, DNV seeks to work in partnership with customers to help them achieve their goals.

“At DNV we take the time to learn about the specific challenges our customers face and to develop solutions to help them get the results they want,” he says. “By offering services that create genuine value, we have successfully challenged the idea that all class societies are the same.” 

Photo: DNV

Photo: DNV

Photo: DNV

Photo: DNV

DNV in Piraeus

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Nikolaos Kakalis, Head of DNV Research & Innovation Greece

DNV Petroleum Services DNVs regional clients also have access to a dedicated team of five specialists working with DNV Petroleum Services (DNVPS), the industry’s leading provider of marine fuel management, fuel quality testing services and bunker quantity surveys. According to Station Manager Thenia Zournatzidou, DNVPS operates a global network of customer service offices and five specialist fuel laboratories strategically located in Singapore, Rotterdam, Oslo, Houston and Fujairah.

“Fuel quality has always had a big impact on engine performance,” she says. “However, with owners seeking access to more affordable fuels and bunker providers competing on cost, we have seen a genuine global decline in quality in the past few years. As a result, many owners are turning to DNV to provide quality fuel testing services to ensure that their bunker fuel meets engine specifications.”

DNV in Greece • DNV opened its first office in Piraeus in 1921 • DNV’s Piraeus office is staffed by more than 50 highly trained personnel • The office serves as a regional hub, managing customers in 27 different countries • Greek owners are increasingly turning to DNV to help lower fuel costs and corresponding emissions • DNV works closely with some of the regions leading owners, including the companies controlled by the Angelicoussis Group, Danaos Shipping, Geden Lines, Thenamaris, and Enterprises Shipping & Trading, among many others

Tanker update NO. 1 2012 |

17

Developing next-generation solutions

DNV Research & Innovation Greece, Piraeus

Developing nextgeneration solutions for improving the energy efficiency of tanker operations

Photo: DNV

Text: Nikolaos Kakalis, DNV

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From left: George Dimopoulos, Chara Georgopoulou, Nikolaos Kakalis, Jason Stefanatos, Alexadros Zymaris

18 | Tanker UPDATE NO. 1 2012

Developing next-generation solutions

Photo: DNV

DNV has focused on research and innovation for several decades, introducing new technologies and setting market standards. In 2008 DNV established the Research & Innovation (DNVR&I) hub in Piraeus, Greece, with the aim to develop and implement high-calibre solutions for the future needs of shipping in general and the Greek shipping community in particular. After 4 years of operation, DNVR&I Greece is now an established maritime R&D center, based on a team of highly qualified research engineers with a mix of strong skills in marine, mechanical and process engineering, and a significant international network.

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Nikolaos Kakalis, Head of DNV Research & Innovation Greece

The main R&D activities of DNVR&I Greece focus on the development of novel solutions for energy-efficient, greener and more effective maritime transportation.

The COSSMOS (Complex Ship Systems Modelling & Simulation) project led by DNV Research & Innovation Greece, develops the methods and a computer tool for modeling, simulation and optimization of integrated marine machinery systems.

Concerting efforts in DNVR&I Greece and Norway we employ systems engineering to explore, quantify, and maximize the benefits from the integration of components and systems. Aiming at supporting DNV’s

future class and advisory services, COSSMOS focus is on next-generation energy management and emissions reductions, assessment of innovative/alternative systems design with respect to performance and costs, reliability and safety.

Powerful example of the potential of this new tool is the monitoring and optimization of crude oil discharge operations for tankers, a main and energy consuming operation during each round-trip.

COSSMOS uses modeling and simulation to assess the performance of the involved machinery and then suggest strategies for improving the energy efficiency of the system to materialize the fuel savings potential. A successful pilot project was completed in 2011 with Thenamaris Ships Management Inc, and further collaborative projects are run in 2012 with Thenamaris and Samos Steamship Co. For DNV, such joint industry projects (JIPs) are significant steps towards developing new products and services. For our partner companies, it is also important as they receive a state-of-the-art service of topical interest and come close to the most recent DNV developments. Earlier pilot projects were carried out in collaboration with Arcadia Shipmanagement, Luis Cruise Lines, and Neptune Lines.

COSSMOS has also studied the technoeconomic optimization of waste heat recovery systems for large containerships.

Concurrently addressing space, operability, and safety requirements together with economics, a relative reduction of 10% or more can be achieved by an optimized heat recovery system making use of the potential energy in the exhaust gases on a modern containership. Depending on the market conditions and fuel price the payback period could be around 8 years.

Other studies include the assessment of the impact of seawater desulphurization scrubbers on the engine performance and fuel consumption, as well as the analysis of more innovative technologies such as marine fuel cell modules (in the PaXell German JIP) and hybrid propulsion systems (in the FellowSHIP 3 JIP).

A DNV position paper is also available

in DNV webpage providing more details on COSSMOS and its range of potential applications.

The results of DNV’s R&D in Piraeus are frequently presented at international conferences and in journal publications attracting the interest of the shipping industry and the academia. Efficient collaboration with DNVR&I in Norway ensures the optimal utilization of competence and creative transfer of knowledge across units and countries. The strong support and collaboration with DNV Maritime in Greece has also been important to our progress.

Another pillar in these efforts is our strategic collaboration with the National Technical University of Athens (NTUA) and its School of Naval Architecture and Marine Engineering. Our intention is to working closely, merging the expertise of our renowned organizations so that we can together develop more initiatives and achieve better results. After a successful first phase of research collaboration (20082010), in 2011 a second phase was signed and kicked off. DNV is sponsoring NTUA to fund three PhD students in Marine Engineering, including the supervising work of professors and involved postdoctoral researchers to materialize this new phase of the collaboration. Dynamic optimization of marine energy systems, optimal control of hybrid propulsion powertrains and dual-fuel marine engine optimization are the PhD topics funded for the period 2011-2014. Continuous interaction between NTUA and DNV’s R&D unit in Greece enhances further the cooperation and aligns it with industry needs.

Closing, our work and the strong interaction with one of the most dynamic markets worldwide, the Greek shipping community, enable us to take further initiatives and attract novel projects. The strategic research activities at R&I Piraeus contribute already with new knowledge and methods that will have a long-term impact on DNV. DNVR&I Greece will continue performing top-quality R&D in response to today’s questions and the needs of a sustainable future. 

Tanker update NO. 1 2012 |

19

fuel quality

Verifying the quality of bunkers before use is now more necessary than ever In the current shipping market, high bunker prices coupled with poor freight rates may be driving some ship operators to do away with bunker testing services for verifying the quality of fuel delivered to their vessels. This is a risky move as bunker quality has become considerably more volatile.

Text: Bill Stamatopoulos, Regional manager, DNV PS

Paradoxically, tighter fuel regulations are contributing to the uncertainty about bunker quality. For example, with stricter fuel sulphur limits, suppliers will have to blend more cutter stocks into the fuel to dilute the sulphur content. Given that the quality of cutter stocks is unregulated, and that for economic reasons suppliers are likely to use the cheapest possible blend components, the resulting bunker products could end up meeting the sulphur requirement at the expense of other critical fuel quality parameters.

New contaminants may also enter the bunker stream via the cutter stocks used for blending.

The following case history from DNV Petroleum Services (DNVPS) illustrates the bunker quality challenges facing ship operators. It also demonstrates the importance of timely fuel quality analysis in preventing major engine damage.

The case The Minitank One, an oil product/chemical tanker, bunkered 106 tons of 380 cSt HFO at Haifa, Israel, on 21 August 2011. During the bunkering, continuous drip samples were taken at the ship’s manifold.

One sample arrived at DNVPS Oslo for testing on 25 August 2011.

However, the testing was delayed due to a high level of hydrogen sulphide (H2S) detected in this sample.

An extremely toxic, flammable and colourless gas naturally present in crude oils, H2S causes olfactory loss, headaches and dizziness, and can be immediately fatal at high concentrations.

At the DNVPS Oslo laboratory, on detecting the smell of H2S when the sample bottle was opened, an H2S measurement was done at the sample bottle’s head space. The sample was isolated in a well-ventilated place to allow the H2S to evaporate and the testing was postponed until the H2S level in the vapour phase had reached a safe level.

20 | Tanker UPDATE NO. 1 2012

Photo: DNV

Photo courtesy of Ancora Investment Trust Inc.

fuel quality

››

Bill Stamatopoulos, Regional manager, DNVPS, Piraeus

Photo courtesy of Ancora Investment Trust Inc.

Ancora Investment Trust Inc., the owner of the Minitank One, was immediately notified of the high H2S content in the sample.

The vessel, which by then had also started consuming a small quantity of the fuel in question, stopped doing so at once.

The sample was tested on 26 August 2011 and the results showed that it contained an extremely large amount of catalyst fines (952 mg/kg of Al+Si).

Additionally, the fuel failed to meet the specifications for Used Lube Oil indicators (calcium + phosphorus + zinc), Density, Water Content, Total Sediment Potential and Ash Content.

DNVPS Solutions The analysis conducted by DNVPS Oslo showed that the fuel delivered to the Minitank One was significantly ‘off-spec’. As this fuel contained very dangerous levels of abrasive catalyst fines which onboard fuel treatment could not reduce to an acceptable limit, DNVPS advised Ancora Investment Trust Inc. not to use it.

At the level of catalyst fines indicated by the DNVPS analysis results, even small quantities of the fuel might lead to an increased accumulation of catalyst fines in the vessel’s settling and service tanks as well as in the engine, where damage to piston rings, cylinder liners and fuel

pumps could occur. Ancora Investment Trust Inc. was advised to take note of any increase in engine wear rates experienced by the Minitank One and to consider cleaning the ship’s settling and service tanks. The owner was also told to ask the engine manufacturer to measure the liners and conduct a replica analysis. If large amounts of catalyst fines had reached the engine, they would have been embedded in engine parts and could cause substantial and visible wear.

On the advice of DNVPS Piraeus, the Minitank One took four additional samples – from the storage tanks (No. 1P and 1S) and from the settling and service tanks. These samples were sent to DNVPS Fujairah for analysis. Samples from No. 1 Port Tank and No. 1 STBD Tank were found to contain very dangerous levels of catalyst fines and some water.

Based on the DNVPS analysis and investigations, the supplier agreed to debunker the off-spec fuel. Ancora Investment Trust Inc. took a debunkering sample in order to check the percentage of catalyst fines that had settled in the storage tank. After the debunkering, sludge in the contaminated storage tanks was removed and all the tanks cleaned.

Conclusion Proper sampling and analysis of the delivered fuel has helped the Minitank One avoid consuming off-specification bunkers which could cause major engine damage and jeopardise the safety of the ship.

The contaminated fuel on board the Minitank One was offloaded between 7 and 9 October 2011 at the charterer’s expense and the cost of all related damages was reimbursed.

Lesson Learned The quality of fuel is unpredictable and routine bunker analysis prior to use is now more necessary than ever in order to protect the vessel from major engine damage. 

Tanker update NO. 1 2012 |

21

fuel efficiency

Computational tools for fuel efďŹ ciency Significantly improved fuel efficiency is now high on the agenda of designers and of owners preparing to order new ships. The intention seems to be to stay ahead of competitors and get well below the required Energy Efficiency Design Index score defined by IMO regulations. Compared to existing industry practice so far, 10-20 per cent improved fuel efficiency is the ambition level in a number of cases. These numbers are realistic when the vessel operation is significantly changed. The resulting reduction of operating costs may be the only way to make a margin when rates are low and fuel cost stays high.

Photo: Coor Media

Text: JAN V. KOREN, DNV

22 | Tanker UPDATE NO. 1 2012

fuel efficiency

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‹‹

A part of DNV’s hydrodynamics team involved in a wide range of tasks, such as stability, seakeeping, wave loads and fuel efficiency projects, including hull optimisation, trim studies as well as resistance and propulsion calculations.

First row from left: Jaeouk Sun, Ingar Sarnes, Tormod Landet Ravnanger, Etienne Gernez.

Second row from left: Odd Olufsen, Serge Schwalenstocker, Vidar Ådnegard, Gabriele Mazza, Adam Larsson, Line Dahl, Håvard Austefjord, Nikos Violaris.

Photo: DNV/E va Rose

Olav Rognebakke (Ph.D), DNV, Head of Section Ship Hydrodynamics and Stability

A substantial reduction in fuel consumption for a new ship requires more than a new fuel efficient engine. In the current market many vessel types and classes trade at different speeds and drafts. The vessels were typically designed based on the fuel consumption at one speed and draft. This implies that changes to the hull lines and propulsion system are beneficial, including a new design of the forebody with a less pronounced bulbous bow. The design process is more demanding when the optimization is based on a higher number of design points. Efficient use of numerical calculations with appropriate accuracy makes this possible. A first step is to use computational fluid dynamics (CFD) to evaluate hull resistance and wake properties. DNV is currently investigating how to apply self-propulsion calculations by CFD to ensure a best possible combined effect of the hull and propeller in the design stage. Both the hull and propulsion are then included the same numerical analysis. This is a step further from using the nominal and approximated wake as an interface between the hull and propeller designer.

DNV has a strong team of experts able to support owners and designers in their efforts to achieve their high ambitions. Olav Rognebakke Ph.D is team leader for a highly qualified group of people focusing on hydrodynamics and naval architecture. The team also

includes people with experience of working in major yards, which is important in order to arrive at practical solutions.

Mr Rognebakke’s team has been involved in a number of joint development projects in which fuel efficient designs have been the challenge. He says that the time and effort needed should not be underestimated. Typically four to eight weeks are needed to adjust a design for a new operating profile, depending on the vessel type and starting point for optimisation. DNV’s role in such projects may be to support the designers by facilitating the process, to carry out sophisticated computer simulations or to perform actual modifications to the hull lines. Our state-ofthe-art computational tools and efficient work process combined with specialist expertise have proven to be valuable during the early design stage.

Although the numerical prediction of the resistance, propeller efficiency and powering is becoming very accurate, model tests are required to ensure the correct prediction of the speed and power to satisfy the contractual requirements.

So what is the background to DNV’s involvement in this area? During the past few decades, DNV has built a leading noise and vibration group that has a great deal of expertise in, for example, propeller design, clearances and the interaction between the aft ship and propeller. This expertise has been a unique and strong starting point for the development of fuel efficiency support. “When we noticed a strong demand in the market for fuel efficiency services and were asked for support by owners and designers, the decision to extend our existing services beyond their previous scope was not difficult,” says Olav Rognebakke. 

Tanker update NO. 1 2012 |

23

THE POWER to HANDLE THE COMPLEXITY OF RISK

24 | Tanker UPDATE NO. 1 2012

Swift and dramatic changes in business conditions, stricter regulations, intense public scrutiny: managing risk has never been so critical – and more complex.

Since 1864, DNV has built a global capacity to help our clients identify, assess and manage risk - whether they are designing and building a new cruise ship to operating a fleet of gas tankers. We can help you handle the complexity of risk and safely improve your business performance.

Photo: Getty Images

Classification • Strategy and change • People, competence and the environment • Verification • Technology and innovation • Operational excellence • Petroleum services

www.dnv.com

Tanker update NO. 1 2012 |

25

chemical tanker operators

DNV secures continued high service level for chemical tanker operators …when DNV’s chemical tanker expert Otto Nyquist hands over the wheel to the younger generation.

Text: marte B. glosli, DNV

Knowledge transfer In June 2012 Otto Nyquist will retire after 40 years in DNV. Otto has built up unique and impressive knowledge about Rules and Codes governing the world of chemical tankers. Otto was the first in DNV to issue a Chemical Code Certificate, when he was attending surveyor for a newbuilding at a Norwegian yard. All along since then, he has worked mainly with Chemical Tankers, and has been DNV’s representative to IMO’s Marine Environment Protection Committee (MEPC), and the Bulk Liquid Gases sub-committee. He participated in the revision of the Chemical Code, as this is his main field of expertise, and he has also extensive knowledge in MARPOL Annex I and the Gas Code. Otto has been a valuable resource for DNV the past 40 years, and will be missed by his colleagues in DNV and by many clients outside DNV, who have benefited from his knowledge and experience.

To ensure that as much accumulated knowledge as possible is made accessible to DNV and to our customers a knowledge transfer programme has been completed.

Otto’s complex expert competence and crucial involvements in personal networks required a more indebth and extended handover process. Consequently a Knowledge Transfer Process was established to plan for Otto handing over the wheel to Kristian Johnsen.

Kristian Johnsen is also highly qualified as he has worked with chemical tankers since 1994, first serving on board chemical tankers as Officer, and since 2006 as surveyor in DNV.

26 | Tanker UPDATE NO. 1 2012

The Knowledge Transfer Process was initiated last year, and is a type of extended and facilitated exit interview. During the process knowledge is passed from the expert leaving to the successor in a highly structured way, using a well-trained facilitator. Three tools are used: developing a Knowledge Map, addressing Task Risks and identifying the crucial Personal Network.

“This was a very good way to get “the big picture.”

The days set aside gives you a compact experience with lots of knowledge transferred in short time. The structured overviews we are left with in the knowledge map, in addition to the network overviews will be a great help in fulfilling tasks in the future” says Kristian Johnsen.

New software In parallel with the knowledge transfer programme, supporting continued high service level to the chemical tanker industry, software for handling product lists and addenda to the chemical certificates has undergone a major upgrade. The timing of this upgrade was important, as one of Otto’s last contributions was to assure the quality of the new software as part of the Knowledge Transfer Process.

With the new software we will be able to issue Certificate of Fitness and Lists of Products even more efficiently than before, and this also enables us to offer even better service to our customers. In cases where questions regarding Product Lists, gap-analysis for new products arise, we are now able to serve our customers even faster. 

chemical tanker operators

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Kristian Johnsen is looking forward to implementing the new software and says Customer Service will be even further improved

Photo: Scanpix

Photo: DNV/K nut Vadseth

Photo: DNV/N ina Rangøy

Otto Nyquist hands the wheel over to younger generations after 40 years in DNV, and ensures his knowledge and expertise is transferred before he leaves.

Tanker update NO. 1 2012 |

27

Tanker Operational Safety

Tanker Operational Safety Text: robin pitblado, DNV

safety, procedural and crew training, and technical design changes (e.g. double hulls). With this kind of success surely it is time put up one’s feet and accept the grateful praise of the public and regulators? Unfortunately no.

OHS 2.0 Today we have a new perspective on reducing the risk of major accidents.

Photo: DNV

Fantastic Successes - but More Improvement Required The tanker segment has achieved an excellent improvement in both crew occupational safety and oil spill statistics (International Tanker Owners Pollution Federation – ITOPF reports about a factor of 10 reduction in major spills in the past 30 years).

This is due to the focus on occupational

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Robin Pitblado, Director SHE Risk Management, DNV Houston

Machinery future Design reliability

Machinery operational competence

Electrical failure

Planned maintenance system

Formal inspections

Contingency plan

Electrical system design reliability

Operational competence

Planned maintenance system

Competent and qualified personnel

Fit for duty

Bridge resources management

Navigation equipment integrity

Weather reports

Crew competence

Navigation information

Crew competence

Human error

Serious or major injury Adverse weather

Minor injury Property damage accidents

3rd party/ external circumstance

Incidents with no visible injury or damage

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Accident Triangle

28 | Tanker UPDATE NO. 1 2012

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Figure 1. Example Bow Tie Diagram

Tanker Operational Safety

The accident triangle theory of reducing accidents in the workplace has been the prevailing theory for risk reduction for more than fifty years. The triangle shows the distribution of accidents from major accidents at at the top, narrow apex down to minor incidents and near misses at the wider base. Major accidents occur so infrequently that they are hard to measure for any one operator, and the theory says that if you manage to reduce the minor incidents and personal safety in the workplace (which occur often enough to measure accurately), then the major incidents will also be reduced by the same percentage. But according to new research, that’s not the case.

How the accident triangle got it wrong At a conference in New York in the 60s, a speaker asked why there had been amazing gains in medical science due to antibiotics and other “wonder” drugs, but the number of workplace accidents had not improved over many years. It

Marine crew resource management

Operation in area with insufficient water depth

was the automotive industry that first got it right – by switching from blaming the driver to enhancing the safety features, such as better brakes, safer windshields, and seatbelts.

Soon, OH&S principles were being implemented all throughout society to great benefit. Whole industries saw massive reductions in personal injury rates and even today the trend continues.

Implicit in OH&S theory, was that if minor incidents were reduced, so too would major incidents be. New research, however, shows that to be wishful thinking. And Pitblado says there is a very simple reason for this.

The fact is the things you need to do to address major accidents are different from the things you need to do to reduce occupational accidents. For example, with tankers – it was the requirement of double hulls that contributed to reducing spills from smaller collisions and groundings.

Activities that reduced occupational accidents would never have reduced oil spills.

BP and Transocean both had excellent OH&S performance before the Texas City refinery explosion and the Deepwater Horizon blowout. This did not help them to avoid those major catastrophes, and in fact, it misled managers into believing things were ok when they were not.

Ideas such as “system safety”, which is less familiar in maritime and oil and gas, but is commonly used in aviation, aerospace and nuclear, refers to the need for a different and more holistic approach to be taken in order to avoid major accidents. Unlike occupational accidents, major accidents often have complex causes, combining technical, human and organizational aspects.

A new approach So what should a new approach to addressthe major incidents look like? Pitblado says you first need to

Vessel design vulnerability

Contingency plan

Competence

Emergency situation management onboard

Minimize further structural damage, see 1

Emergency response support (ERS)

Damage control plan

Manoeuvring to a safer location

Minimize further structural damage, see 1

Safety and medical response plan

Injury/fatality response

Company emergency response

Watertight doors

Structural damage

Sinking

Formal inspections

GROUNDING Contingency plan (emergency procedure)

Contingency plan to avoid grounding

Marine crew resource management

Injury/fatality

Environmental damage

Minimize further structural damage, see 1

Cargo securing

Report of loss/damage

Cargo securing

Manoeuvring options

Ballast handling to improve stability

Oil spill prevention

Loss of cargo Shore support

Increased attention from authorities

Tanker update NO. 1 2012 |

29

Tanker Operational Safety

4

Reportable incidents per 200,000 manhours

3.5

3

API BP Chevron Texaco ConocoPhillips Dow ExxonMobil Shell Concawe

2.5

2

1.5

1

0.5

0 1992

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1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Occupational safety performance

see what has worked for other industries.

The best example might be in the North Sea where two major disasters occurred in the 1980’s, Alexander Kjelland and Piper Alpha. The response was a shift to emphasison risk management of major accidents in both the UK and Norway, and as a result no similar event has occurred in 25 years – where statistically one might have expected 4 – 5 additional total losses.

The key in the North Sea has been more penetrating risk assessment, greater emphasis on safety barriers, and building an effective safety management and safety culture. Since the tanker segment has worked hard on safety management and building safety culture, the biggest area for improvement is in safety barrier management.

So what is safety barrier management? Proffessor Reason developed the now well-accepted theory for accident causation called the “Swiss Cheese Model”.

In this mode,l each barrier or safeguard is a slice of swiss cheese and its reliability is shown by the number and size of holes.

Intuitively, a safer system has more slices of cheese and fewer and smaller holes.

30 | Tanker UPDATE NO. 1 2012

The Bow Tie barrier diagram captures this model in an effective risk management tool, now widely used in offshore O&G, rail and aviation industries.

In this diagram the threats lie on the left and the consequences on the right, with a top event in the middle. Barriers on the left side are prevention barriers and those on the right are mitigation barriers. In principle, both sides are equally important. Each bar is a barrier or safeguard that can ideally terminate the event sequence – which flows from left to right, either preventing the event or mitigating its consequences.

The reason this approach is so powerful is that it focuses specifically on major accidents and shows exactly how the organization prevents or mitigates these usually rare events. During routine operations, it is possible that these safeguards, some specifically in place for the rare, or potentially disasterous events do not receive the attention they deserve. An analysis of Texas City showed that 12 barriers failed, and a similar analysis of Bhopal showed 8 barriers failed. These are barriers were included by the design team, approved by and paid for by the company, but when handed over to operations were allowed to degrade and

eventually become unserviceable. The aim for barrier management is to maintain the focus on major accidents throughout the operating life and ensure that these critical barriers are always functional.

How is this achieved? Once all important barriers are identified, whole bow ties are assigned to senior managers who have overall accountability for all the barriers, and then individual barriers are assigned to operational staff, either on the vessel or onshore depending on the barrier. A performance standard is also established – exactly what is expected of the barrier and how it can be tested or measured for effectiveness. Smart software exists (e.g. BowTieXP) that can make these figures easy to produce and to print on large format charts to be used for staff training purposes. The software can also link to relevant documents (technical / procedural) and to recent measurements and outstanding actions. Thus, crew joining a vessel can see the totality of barriers deployed, the ones they are responsible fo., key associated documents, current barrier status and all outstanding actions.

It has been through a process like this

Tanker Operational Safety

Person slips/trips

Wear proper (non-slip) footwear

Worker did not wear proper footwear 17 – Failure to follow procedure/ instruction Footwear was uncomfortable 7 – Improper motivation Access alternative more comfortable footwear

Check surfaces conditions and adjust where necessary Surface condition not checked prior to work Failure to follow procedure/ instruction Worker did not understand importance of prior test 5 – Lack of knowledge

Working at height/person fall

Use personal fall protection 100% tie-off

Injured person stranded at height

Harness not adjusted to appropriate size, caused person to slip out 3 – failure to secure Not properly trained in use of equipment

Person fatality injured

Rescue service not on standby 29 – inadequate (safe) guard/barrier

5 – lack of knowledge

Inadequate planning

Carry out remedial retraining

20 – inadequate communication/ information

Carry out remedial training to reinforce importance of safeguards

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Know the work at height rescue requirements and how to initiate the rescue plan

Enhance prework planning

Figure 2. Extract from DNV BSCAT Barrier-based

Incident Investigation Tool

that major accidents in the North Sea have been reduced by a factor of ten.

OK – I’ve got it now – How do I know it works? A barrier system works only because of continual vigilance – and on board this would be the overall responsibility of the Master and the Shore Superintendent – but cascading down to individual barrier owners. Each barrier will have a system of test program, inspections, preventive maintenance, competence reviews, and audits. In principle, this should give a foolproof system. However, life is not like that.

Incidents still happen – even at the lower rates we see today because of ISM and the barrier programs we introduce. It is important that we harvest these smaller incidents and near misses for everything they tell us. By definition, incidents cannot happen unless some of our barriers have failed, even if some have worked and stopped the event becoming serious. For example, a grounding incident may have been due to a faulty navigation plan and inexperienced deck crew, but a GPS alarm may have sounded and prevented a serious event.

DNV has developed a new accident investigation tool, DNV BSCAT, jointly with Governors, the developers of BowTieXP. With this tool, a company can take a preexisting bow tie and extract the arms relevant to the accident. Then, each barrier in the sequence can be examined for why it failed. It is often said that accidents have multiple causation, but with the BSCAT system, companies can identify the root cause of the accident, including multiple causes and time lines. This is significant because often when multiple barriers have failed, typically each barrier fails for a simpler reason, often just one, but it is an important cause of the major accident. A further advantage of BSCAT, beyond its link to bow ties and its simplicity to apply, is that individual barrier performance can be tracked. Often the same barrier appears in multiple bow ties (e.g. competence, alarm systems, etc.) and if it fails in one incident it will likely be degraded in every bow tie in which it appears. Thus, lessons from a near miss grounding event can provide early warning to possible collisions or even oil cargo problems, especially if the degraded barrie is competence. This is important as a certain number of properly functioning

barriers are necessary to meet the company risk target. An extract from a BSCAT diagram is shown in Figure 2 .

Conclusions for Tankers Pitblado notes that the tanker industry has achieved impressive results in the areas of occupational safety and reduction of large oil spills. But like the rest of the maritime industry, well known major accidents, such as collisions, groundings, fires and explosions still occur. . Current safety approaches on occupational safety alone will not deliver the gains society and company management seek.

Barrier based bow tie risk methods have been shown to be effective in other industries and because they are simple and easy to communicate they provide tanker crews and shore based staff with an effective risk management program specifically focusing on major accidents. A complementary barrier based incident investigation scheme, that consideres the underpinning risk assessments, is also available. 

Tanker update NO. 1 2012 |

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tanker market

Surviving in a stressed tanker market After seven very good years – 2001 and 2003–2008 – the tanker industry is now in its fourth year of loss-making rates for long periods. The demand for tankers has not failed, but too many new ships have entered the market and the fleet is young so that the scrapping rate has been rather low.

Text: Erik Ranheim, Senior Manager, Intertanko

In order to better compare the trends in the tanker market, INTERTANKO has converted the oil demand trend, tonne mile trend and fleet trend to indices.

The graph shows that, until 2003, the fleet development was weaker than the oil demand and tonne-mile development, but since then the tanker fleet has grown strongly and will continue to increase for another couple of years.

However, we have still seen that at times, even over the last couple of years and with a low overall physical capacity utilisation of the fleet, there have been periods with strong freight rates. In 2010, this was mainly due to the large number of tankers used for floating storage, but we have also seen later that the market has reacted quite strongly to interruptions, such as at the beginning of this year with the tension related to the blockade of Iran.

The market appears to be tighter than the developments in the fleet’s physical dwt capacity indicate.

One important reason for the relatively

32 | Tanker UPDATE NO. 1 2012

strong market at the beginning of this year was stockbuilding. According to the International Energy Agency (IEA), the stockbuilding in the first quarter of 2012 was 1.2 mbd, and there are indications that stockbuilding in the second quarter will be even stronger. The US provides the most up-to-date figures, and commercial stocks in the US have increased by some 58 m barrels, or some 29 VLCC loads. Tanker demand correlates strongly with developments in Middle East oil production, which has increased by almost two million barrels per day since 2010, mainly in Saudi Arabia. During the first two months of 2012, the US imported 1.4 million barrels per day (mbd) from Saudi Arabia or 30% more than the average over the last three years. This increase in long-haul imports to the US was an important driver in the VLCC market at the beginning of the year.

However, in the long term, US oil imports, which are currently at their lowest level since 1998, are expected to continue to decline. According to the Annual

Energy Outlook (AEO2012) reference case projection, the US dependence on imported liquids will decline until 2035, primarily as a result of growth in domestic oil production, an increase in bio-fuel usage and slower growth in the consumption of transportation fuels. In this projection, the net petroleum imports as a share of total US liquid fuels supplied will drop from 49% in 2010 to 36% in 2035.

However, the most important reason for the overall tightness in the tanker market despite the strong increase in the fleet is reduced speed. The whole tanker fleet is trading at reduced speed, even during the laden leg where the contract restricts speed reductions. The tanker market is very volatile over time and fluctuations in demand mean there is a need for some slack in the tanker supply to be able to cope with the peaks. It is therefore reasonable that the market allows for reduced speed when demand is low, especially today with the strong pressure to reduce CO2 emissions.

tanker market

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Photo: Interta nko

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›› Erik Ranheim, Senior Manager, Research and Project Section, Intertanko.

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— Tanker fleet index — Oil demand index — Tonne miles crude tanker index — VLCC price index

›› Fig.1 Tanker indicies

21 19 17

2035: projected 36% net import

15

2005: 60% net import

2010: 49% net import

13 11 9 7

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Million barrels per day

INTERTANKO has developed a model that shows both the optimal speed and the CO2 emissions at different speeds. By entering the market rate for the particular voyage that the tanker is contracted for, the tanker’s service speed and the fuel consumption at this speed, an algorithm will calculate the optimal speed. The bunker consumption measured in tonnes per day is proportional to the speed to the power of three, a formula developed by the engine manufacturer MAN. The charterers’ higher capital costs caused by the increased number of days at sea are not included in this example but even taking these into account, it will be beneficial to reduce speed in the current market.

In fig. 3, the optimal speed will be 10.0/10.8 knots, which will increase the TC equivalent by some USD 9,500 per day.

Even if market rates are doubled to USD 50,000 per day, reduced speed will be beneficial and can increase the TC equivalent by some USD 4,500 per day.

Professor Victor Norman and Research

— Total demand

— Domestic supply

›› Fig. 2 US liquid fuel supply and demand.

Source: U.S. Energy Information Administration, EIA

Tanker update NO. 1 2012 |

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tanker market

40 0000

15 0000

12 0000

24 0000

9 0000

ts CO2 emission

32 0000

‹‹ Fig. 3 Optimal TC equivalent and CO2

emissions PS. Each ships will have its own speed consumption profile which operators should seek to measure and use.

6 0000

8 0000

3 0000

0

Optimal speed: Laden knots: 10.0 Ballast knots: 10.8

$/day 16 0000

TC equivalent at service speed: $25 000 Bunker price: $650 Bunker consumption at 14.5 kn laden – ts: 92 Bunker consumption at 15.5 kn laden – ts: 85 Emission factor HFO to CO: 3.1 Distane return to Chiba nm: 13.308 Reduction CO2 emission per tonne-mile: 12 versus 14 knots – % 27%

0

7.0

8.0

■ CO2 emissions

8.0

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— TCE Laden

11.0 12.0 Speed

14.0

15.0

16.0

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— TCE Ballast

Associate Tor Wergeland of the Norwegian School of Economics (NHH) conducted a study in 1977 which concluded that the combination of low freight rates and high fuel prices since 1973 has made it abundantly clear that one can no longer assume constant vessel speed when analysing shipping markets. The tanker market is very dynamic and a great deal of this dynamism is created by the fleet’s ability to speed up when the market is very tight because of interruptions caused by weather conditions, hostilities, congestions or other factors. Full speed in a market with a bunker price of USD 650 per tonne will in the above example not be economical until the market freight rates for the voyage in question are some USD 90,000 per day, which means only in exceptional markets.

The sustainability of the industry includes the industry’s contribution to society and environmental performance, but the critical factor is the economics of the market. During prolonged downturns in the market, it may be wise to bear in

34 | Tanker UPDATE NO. 1 2012

13.0

mind the words of the prominent social thinker and philanthropist John Ruskin (1819-1900): It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The Common Law of Business Balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.

There is a profusion of risks in the current tanker market, starting with the uncertain and fragile world economy. A prolonged high oil price above USD 100 will dampen both oil demand and the economy. The reduction in oil imports to North America is another factor threatening tanker demand. The demand side continues to be dependent on increasing Asian and Chinese oil imports, and long-haul

imports from West Africa could help.

Tanker supply is in the short term the most important threat, with many new tankers entering the market both this and next year. With an average fleet age of just over eight years, there will be limited scrapping, even though ships under 20 years are being sold for decommissioning.

However, high bunker prices which can represent more than 70% of the freight rate (up from 20% in 1992) have changed the economics in shipping and trading at a reduced speed is to everybody’s benefit.

Some risks and opportunities cannot easily be quantified or identified and markets are never completely rational or efficient – success requires the use of sound reasoning and trusting your gut feeling. The only predictable thing about the future tanker market is its unpredictability. 

Photo: Scanpix

tanker market

Tanker update NO. 1 2012 |

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Recent delivery:

Photo: Daewoo

M/T BNEIDER

Name of Vessel

BNEIDER

Type of Vessel

Tanker for Oil (And Oil Products)

Ship Yard

Daewoo Shipbuilding & Marine Engineering Co., Ltd.

Ship Owner Delivery Date

Class Notations

✠1A1 CSR Tanker for Oil ESP SPM COMF-V(3) E0 NAUT-OC VCS-2 HMON(A1,G4) CLEAN VIBR COAT-PSPC(B) PLUS BIS TMON NAUTICUS(Operation)

Kuwait Oil Tanker Company S.A.K.

Flag & Statutory cert.

Kuwait

2012-04-30

Dimensions (L/B/D)

L: 249,90m, B: 42,00m, D:21,5m

Capacity/DWT

DWT: 110587

Speed/Crusing range

Scantling Daft Speed: 15,0 knots; Design Draft Speed: 15,41 knots

DNV’s SITE TEAM Project Manager

Jurica Bašić

Project Team Member

Sung Wook Sim, Jin Woo Cho, Hyun Woo Jeong