Frontier Energy Winter 2016

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS

www.frontierenergy.info WINTER 2016

ARCTIC NORWAY Barents Sea promise

Polar Code 2016 state of play

Shipping routes Risks and rewards

Oil spills

Marine research Cross sectoral technology

The Arctic challenge

Remote communications Investment trends

NEWS • RESEARCH • SHIPPING • TECHNOLOGY

AS G & M IL O SIU IC PO E T C YM SU R A S IS

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CONTENTS

08

12

26

28 Winter 2016

OIL, GAS & SHIPPING IN THE ARCTIC AND ICE-AFFECTED REGIONS

www.frontierenergy.info WINTER 2016

ARCTIC NORWAY Barents Sea promise

Polar Code 2016 state of play

Shipping routes Risks and rewards

Oil spills

IN THIS ISSUE Features

Regulars

Marine research Cross sectoral technology

The Arctic challenge

Remote communications

NEWS • RESEARCH • SHIPPING • TECHNOLOGY

06 ARCTIC NORWAY It is a crucial period for Norway’s frontier Arctic region, as industry tests its potential in the face of some harsh economic truths

Investment trends

AS G & IL M O SIU IC PO E CT YM SU AR S IS

08 ARCTIC NORWAY Despite plenty of interest in the area, drilling in the Norwegian Barents Sea is likely to be subdued this year

10 ARCTIC NORWAY A tremendous response to Norway’s 23rd bid round On the cover Northern Lights rising high above Norway

bodes well for future Barents Sea exploration

12 ARCTIC NORWAY Lower oil prices provide an opportunity to take stock and reflect, according to Norway’s Petroleum Safety Authority

14 ALASKA Far from being depressed about Shell’s 2015 exit and low oil prices, this state lives by its motto…North to the Future

16 SHIPPING ROUTES An analysis of the future development of the Northern Sea Route and other emerging frontier polar shipping lanes

18 SHIPPING ROUTES As industry explores new shipping routes in the high north, it will not be all plain sailing

20 OIL SPILL RESPONSE Despite drilling disappointment off Alaska last year, the US remains committed to oil spill research activities in the offshore Arctic

21 OIL SPILL RESPONSE With space at a premium on a vessel’s bridge, radar developers are innovating on capabilities, usage and size

22 POLAR CODES With less than a year to go before the Polar Code comes

04 NEWS US Coast Guard starts process for new Polar Class icebreakers; Novatek announces Yarudeyskoye oil field start up; Statoil upbeat on future for Johan Castberg; China insurance group buys into Yamal LNG; Arctech delivers new icebreaker to Russia; White House hopeful plans to ban Arctic drilling; Wartsila to power new Antarctic support icebreaker

28 INSIGHT The role of technology is helping to improve safety and operations in remote science and research faculties in Antarctica

into effect, there’s still plenty for the maritime industry to think about

24 REMOTE COMMUNICATIONS The challenges of keeping the lines of communication open in hostile environments such as the Arctic

26 MARINE RESEARCH Even with an oil industry in the doldrums, Norway’s economic future still critically hinges on the oceans and their preservation

www.frontierenergy.info WINTER 2016 01

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EDITOR’S LETTER

FRAM* “Norway’s latest licensing round offers plenty of encouragement with a long queue of companies bidding for blocks in new areas in and around the Barents Sea, and along the Arctic border with Russia”

www.frontierenergy.info Editor Martin Clark martin@frontierenergy.info Editor in Chief Bruce McMichael Canadian Correspondent Andrew Safer Publisher Stephen Habermel publisher@frontierenergy.info Design & Layout In The Shed www.in-theshed.co.uk © 2016 All material strictly copyright, all rights to editorial content are reserved. Reproduction without permission from the publisher is prohibited. The views expressed in Frontier Energy do not always represent those of the publishers.

Every care is taken in compiling the contents, but the publishers assume no responsibility for any damage, loss. The publisher, Renaissance Media, assumes no responsibility, or liability for unsolicited material, nor responsibility for the content of any advertisement, particularly infringements of copyrights, trademarks, intellectual property rights and patents, nor liability for misrepresentations, false or misleading statements and illustrations. These are the sole responsibility of the advertiser.

Printed in the UK. ISSN 2047-3702 Published by Renaissance Media Ltd, c/o Maynard Heady LLP, Matrix House, 12-16 Lionel Road, Canvey Island, Essex SS8 9DE. Registered in England & Wales.

Company number 5850675.

The Arctic is, without a doubt, a challenging and foreboding environment.

That’s not just in terms of the climate and the ultra harsh natural landscape, but also in the scope for business and industry, whether that’s shipping, oil and gas, telecommunications, or other areas. Environmental scrutiny, high costs, remoteness, and lack of infrastructure, are all major barriers to trade.

And yet interest in the area remains strong. The idea that this untapped resource with the potential to provide hydrocarbons and other minerals to support the planet’s growing population - can be, if not quite tamed, developed in a safe and sustainable manner remains something quite compelling. Not to all, obviously. Environmental groups and many others remain vehemently opposed to most development activity with the exception of further scientific research and climate change studies.

Still, attitudes to the Arctic and its potential as a place for business remain comparatively resilient given the low oil price at present and any ongoing environmental opposition. After a fairly sombre period in which Shell’s summer drilling campaign in the Chukchi Sea ended in failure, and resulted in the US halting offshore exploration in the area, the mood, at least in Europe, remains reasonably intact.

Norway’s latest licensing round offers plenty of encouragement, of course, with a long queue of companies bidding for blocks in new areas in and around the Barents Sea, and along the Arctic border with Russia. Past discoveries nearby have been enough to lure the industry in, from the very largest players to a few minnows, regardless of the testing oil market.

Then there is the much anticipated flow of crude oil from the mighty Goliat field, the most northerly oil field in the world. It’s true that the project is late and over budget, and that it faces a stern economic test in light of current oil prices, but operators Eni Norge and Statoil have shown what is possible in this extreme location, many miles off the northern Norwegian coast.

The same is true in the shipping field where there are great hopes for the potential to reduce transit times and trim costs by accessing previously unreachable northern sea corridors. And, in the telecommunications sector, this largely untouched wilderness offers plenty of opportunity for connecting people, ships and rigs as traffic in the area increases. Again, there are plenty of challenges here and unknowns too, which are discussed in this issue of FE. Those who have been working in the oil and gas industry for many years will understand the cyclical nature of the business. It was less than 20 years ago that oil prices were comparable (or lower) to those of today. And for all their analysis, oil experts do not know what the oil price will be in 10 years or even one year. At some point it is reasonable to assume that confidence will return.

Even after the subdued atmosphere that followed Shell’s 2015 drilling campaign in Alaska, there are still believers that the Arctic could deliver great benefits across all of these fields. It may well be long term potential we are talking about, but that’s the one thing that was never in doubt when discussing the Arctic as an oil and gas frontier.

Martin Clark, Editor

*

Fram is not only the Norwegian word for ‘Forward’, it is also the name of the one of the first ice-strengthened and most famous polar exploration vessels of the late 1800s and early twentieth century. It was captained by Norwegian explorer, Fridtjof Nansen, a Norwegian explorer, scientist, diplomat, humanitarian and Nobel Peace Prize laureate.

Sharing his polar travel experiences with fellow adventurers and scientists, his technology innovations in equipment and clothing influenced a generation of subsequent Arctic and Antarctic expeditions. The word encapsulates what we aim to bring you with the magazine – a forward looking guide to the future of oil, gas and shipping activities in the Arctic and other ice-affected regions while keeping environmental protection and safety at the heart of operations.

Get connected!

Follow us at www.twitter.com/frontierenergy for the latest news and comment

www.frontierenergy.info WINTER 2016 03

NEWS

US Coast Guard starts process for new Polar Class icebreakers

IN NUMBERS 800,000 metric tons of crude oil produced in 2015 at Russia’s Prirazlomnaya platform, equivalent to 16,000 bpd

11.93%

the amount of recent shares acquisition

by Statoil in Lundin Petroleum AB

T

he US Coast Guard is drumming up interest from shipbuilders and designers interested in participating in a new 'Polar Class Icebreaker Replacement Program'.

Currently the US has just one heavy icebreaking cutter, the USCGC Polar Star. By contrast, Russia has dozens of icebreakers in service or under construction.

The US is planning an Industry Day, expected to take place during March, to raise awareness of the initiative.

Coast Guard Commandant Adm. Paul Zukunft said the new icebreaker would fulfil several roles from a floating command post to a vessel capable of operating unmanned systems in an Arctic environment.

Statoil sees a bright future for Johan Castberg

Novatek announces Yarudeyskoye oil field start up Novatek has started commercial production at the Yarudeyskoye oil field in northern Russia.

Production is expected to rapidly reach a level equivalent to approximately 3.5 million tons of crude oil on an annualised basis.

Nefte Petroleum Limited is a partner on the project.

The field’s infrastructure includes a central oil treatment facility, oil and gas gathering systems, a pumping station, and crude oil and gas pipelines linking the field to the trunk pipeline systems, as well as 36 production wells.

Leonid V. Mikhelson, chairman of Novatek’s management board, said: “We have successfully ramped up our liquids production over the past three years, and the Yarudeyskoye field allows us to sustain doubledigit growth rates next year, as well as to contribute substantially to our free cash flow generation.”

He added: “The field’s high quality reserve base and the application of state-of-the-art drilling and completion technologies enabled us to ensure record high flow rates as well as very low per unit development and lifting costs.”

Statoil upbeat on future for Johan Castberg Norwegian oil major Statoil plans to develop its Arctic-based Johan Castberg oilfield after having cut costs by half, with a decision on investment in 2017, its chief executive said on January 19.

Concerns had been raised by the high costs of operating in the Barents Sea, with the Norwegian oil major last year delaying a final investment decision on the project.

"The investment estimate is almost halved from around Nkr100 billion ($11.29 billion) to between Nkr50 and 60 billion," chief executive Eldar Saetre told an industry conference in Norway in January.

He said costs for the field, expected to contain up to 650 million barrels of oil equivalent, could fall further.

"We still have possibilities to improve the project and I think we will make it work, now that we have decided to focus on one solution," Saetre told Reuters in an interview.

China insurance group buys into Yamal LNG

China turning the taps on Yamal LNG financing

04 WINTER 2016 www.frontierenergy.info

More than 40 Chinese insurance companies and asset managers have jointly started an investment firm, raising 40 billion yuan ($6 billion) for a first fund to finance energy and infrastructure projects overseas, China's insurance regulator said, reports Reuters.

The new firm, China Insurance Investment Ltd, will boost China's energy security by directing part of its first fund to finance Russia's $27 billion Yamal liquefied natural gas (LNG) project, the China Insurance Regulatory Commission (CIRC) said in an online statement, without providing details.

Yamal LNG, due to start production in 2017 will consist of three lines with a capacity of 5.5 million tonnes a year each.

The project has been struggling to raise funds because of international sanctions on Russia over its involvement in the conflict in eastern Ukraine.

NEWS

12%

reduction in estimated investment cost for the first phase of Statoil’s Johan Sverdrup scheme

14,000 the number of people working on the Johan Sverdrup project on a daily basis so far in

2016

90 billion

estimated barrels of oil within the Arctic Circle

1913 the year the Russian Maritime Register of Shipping was founded

50%

estimated cost overrun of Eni Norge’s Goliat project

Arctech delivers new icebreaker to Russia

480km

2017

TARGET Polarled gas pipeline START DATE connecting Aasta Hansteen FOR FIRST field in the Arctic Circle YAMAL LNG with Nyhamna PRODUCTION Sources: Statoil, Gazprom Neft, Bloomberg, RS, USGS

Headling north: a new icebreaker fleet

Finland’s Arctech has delivered the new Baltic icebreaker ‘Murmansk’ to Vyborg Shipyard JSC, the second of three vessels which the Russian Ministry of Transport ordered in 2012 from the Russian yard.

Vyborg Shipyard JSC will deliver the new ship to the customer, Rosmorport.

Arctech was responsible for the construction, outfitting and testing of the new vessel, which measures 119.8 metres in length.

It will be used for icebreaking, cargo transportation, towing and assisting heavy-tonnage vessels and offshore structures, and and for fire fighting and aiding any vessels in distress.

In a separate project, Arctech has laid the keel at its Helsinki yard for a new icebreaking offshore supply vessel on behalf of Sovcomflot, the first in a series of four vessels.

Capable of breaking through ice as thick as 1.5 metres, the vessel will be outfitted for emergency evacuation, rescue and fire fighting operations, oil spill response and platform support activities.

It is earmarked for work in the Sakhalin-2 production area for transporting supplies and people between land bases and platforms and for various ice-related duties in the Sea of Okhotsk.

“Arctech has successfully built many similar kind of vessels for use in the rough weather conditions of the Sakhalin area. The series of vessels currently being built and designed at Arctech will further secure the energy production in the area,” said Esko Mustamäki, managing director of Arctech Helsinki Shipyard.

The 100-metre-long vessel will be delivered in the summer of 2016.

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ARCTIC NORWAY

LNG loading in the far north

A view of Eni Norge’s Goliat platform

Norway squares up to ARCTIC OIL CHALLENGE

O

il prices might be nearing record The $6 billion price tag is all the more lows and the environmental eye watering given the current slump challenges facing operators in world oil prices. Analysts reckon the taking on the Arctic project needs an might be daunting oil price of around - but Norway’s $100 per barrel to Outside the crucible of hopes for the high break even given north region remain the high investment shareholder expectations intact. commitments and return on investment, Indeed, interest required, but that the Norwegian government’s in the area is looks remote when arguably at an crude trades are belief in the high north area all-time high, taking place at remains undiminished following a hugely closer to $30 per successful 23rd barrel. Still, the oil licensing round business is a long in which nearly all of the blocks up game and, once production is flowing for grabs were located in the country’s which now looks to be sooner rather than Barents Sea. It includes the exciting later, after a series of delays - it is expected new Arctic province of the Norwegian to continue for decades to come.

Southeast Barents sea.

There are hopes that the project will A solid bidder turnout - 26 companies launch first oil soon after safety watchdogs from all over the world applied for the granted consent to proceed (see box). frontier acreage - suggests that interest in Norway’s Arctic is very much alive and Hopes undiminished well. The question is: ‘why’?

For sure, there have been other setbacks Outside the crucible of shareholder too, including the cost overruns and time expectations and return on investment, lag facing the flagship Goliat project, the though, the Norwegian government’s belief most northerly oil project in the world. in the high north area remains undiminished.

06 WINTER 2016 www.frontierenergy.info

Sissel Eriksen, exploration director at the Norwegian Petroleum Directorate (NPD), believes this is borne out of results in the field, as bold explorers rise to the challenge of the area and, bit-by-bit, deliver results in the field.

“The interest in exploration in the Barents Sea has increased significantly following the exciting discoveries in recent years; 7324/8-1 (Wisting), 7120/13 (Gotha) and 7220/11-1 (Alta),” she commented when announcing the country’s 23rd licensing bid round last year.

It is now over 50 years since Oslo announced the first licensing round on the Norwegian continental shelf. With that hindsight, the new areas in the southeast Barents Sea are “particularly interesting”, she notes.

These are all areas which are hitherto unexplored, and could open up a whole new petroleum province in and around the Barents Sea area.

The latest (23rd) licensing round helps keep activity levels in the area high, she said, although it is essential to prioritise “step-by-step exploration” in the new areas, given the environmental sensitivites attached.

With 26 bidders applying for 57 blocks,

Images: Statoil, Eni Norge

It is a crucial period ahead for Norway’s frontier Arctic region, as industry tests its potential in the face of some harsh economic truths

ARCTIC NORWAY

and with the new production licences set to be issued in the first half of 2016, this is certainly an active and hopeful time for the industry eyeing this new exploration zone.

Bucking the trend According to analysts Wood Mackenzie applicants are attracted to the acreage as it could hold over two billion barrels of new oil and gas reserves. However, potential discoveries will have to be very large to breakeven because of the remoteness of the location and expected challenging reservoir characteristics, it says.

Despite this, major oil and gas companies will view the south-eastern Barents Sea as a long-term strategic move, whilst taking advantage of reduced exploration costs afforded by the Norwegian tax system.

It’s a licensing round that bucks the trend, given the low oil price environment, providing access to a frontier region, where producers can benefit from the cheap exploration via the the Norwegian tax system in the form of a 78% tax rebate, as well as benefitting from an established service sector and, crucially, the least severe operating conditions of any Arctic basin.

This is a relatively benign environment compared to most other Arctic regions and with virtually no sea ice. The main challenges will come in the form of the remoteness from infrastructure and the potentially difficult hydrocarbon reservoir conditions.

Dr Andrew Latham, vice president of exploration research at Wood Mackenzie, says exploration costs in the Norwegian Barents are significantly less than everywhere else in the Arctic offshore.

A consortium of over 30 companies has already shared acquisition costs for new 3D seismic.

He believes future Norwegian Barents exploration wells might cost around $20 million, when taking the tax rebate into account. This is five to 10 times less than the cost per well offshore Greenland during 2010-2011, and more than 20 times less than the drilling costs in both the Russian and Alaskan offshore Arctic

xxxxx

Current oil & gas activity off Norway’s northern flank

during 2014-2015.

"We wouldn't go as far as to say that success in the south east Barents will spur wider Arctic interest or exploration activity, because the environmental conditions and associated costs are incomparable,” said Latham.

However, from the range of applicants in the 23rd bid round, it could be the start of a new era.

“It's clear that we are entering a significant new stage in Norwegian exploration, and this could eventually be a major source of production."

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ARCTIC NORWAY

Industry is excited by the Barents Sea potential

2016 will be a quiet year for drillers

Barents drilling subdued in 2016 Despite the high level of interest in Norway’s Barents Sea, exploratory drilling is likely to be subdued this year

Lundin determined Smaller firms are showing greater resilience, however, and pressing on with their upstream drilling projects irrespective of the challenging oil price market.

Perhaps the frontrunner is Lundin which remains unflinchingly determined in its southern Barents Sea oil pursuit. The “under explored” southern Barents Sea remains a core exploration focus, the company told investors in a December presentation.

The exploration firm is a major licence holder in the Loppa High area.

In the December update, it said the

08 WINTER 2016 www.frontierenergy.info

Gohta/Alta discoveries “opens up the area for significant new discoveries”.

Two appraisal wells are to be drilled on Alta during 2016, while “development options are being reviewed” for the range of discoveries made to date, it added.

OMV cleared to drill Another active player is OMV which was recently cleared by the Norwegian Petroleum Safety Authority to drill a pair of additional Barents Sea wells.

There may well be a discernible level of interest mounting in Norway’s frontier Barents Sea area but that does not equate to a particularly busy year in the field in 2016 The wells, 7324/7-3 S and 7324/83, sit in production licence 537 in an area around 166 nautical miles north of Hammerfest and 250 nautical miles north-east of Tromsø.

OMV is the operator of the block and will deploy the Transocean Spitsbergen semi-submersible rig for the work.

The PSA confirmed that it had granted consent for the wells on December 22.

Kvalross spud Wintershall and Faroe Petroleum have also started to drill the Kvalross (Walrus) prospect in the Barents Sea production license 611 in early 2016.

In a recent operational update, Faroe said the well will target a new play of Lower Triassic clinoform reservoirs within a megaclosure. It will also target the Kvaltann Prospect consisting of channel sandstones in the Middle Triassic Snadd Formation.

PL611 was awarded under the 21st Norwegian licence round and is the company’s second licence in the Norwegian Barents Sea. Faroe plans other wells in the area and in the Norwegian North Sea. However, it said that the Dazzler well in the Barents Sea, which was previously expected to be drilled in 2016, is now expected in 2017.

More to come With new entrants coming in via the new licensing round, it’s still possible to take some encouragement even in the face of gloomy oil prices.

That may not translate into many wells this year - although there will be a notable few to sustain the interest levels but it shouldn’t mask how industry feels about the region’s longer term potentials.

Lundin’s chief executive Alex Schneiter has said that his company hopes to replicate its big Johan Sverdrup discovery in the Barents Sea where the firm is currently active.

The 2010 Johan Sverdrup find is estimated to contain up to 3 billion barrels of oil equivalent.

“The Barents Sea is the answer . . . It’s like going into a new country. We are only scratching the surface,” Schneiter told the FT in a recent interview.

“The southern Barents Sea is ice-free, it’s similar to the North Sea, it’s not a difficult area,” he added. “What is missing there is the infrastructure.”

Photo: Statoil

T

here may well be a discernible level of interest mounting in Norway’s frontier Barents Sea area - as evidenced by the rush for blocks in the recent 23rd bid round - but that does not equate to a particularly busy year in the field.

Drilling activity during 2016 is likely to be subdued at best, judging by the plans of the main operators. Upstream, the clear highlight, of course, will be the arrival of Eni Norge’s long-awaited $6 billion Goliat production. Here, work is largely complete, with endless production drilling and finishing taking place over recent months and years, as the industry now eagerly awaits start-up.

Statoil is certainly expected to keep quiet in the field this year. Whilst it has a busy upstream portfolio planned for the year ahead, this does not include further drilling in its Arctic areas. Indeed, it indicated at the end of last year that it would not likely sink any new wells in the area until it has acquired additional blocks. Statoil is one of the main bidders in the latest licensing round.

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ARCTIC NORWAY

Licensing round bodes well for BARENTS SEA EXPLORATION Keen response to Norway’s 23rd bid round underscores interest in Barents Sea region

N

orway’s most recent licensing round, which includes a heavy chunk of new Barents Sea acreage, saw a strong indication that the energy sector remains interested in this frontier territory, even in the face of such challenging oil markets.

Some 26 oil and gas companies have applied for blocks in the new 23rd licensing round, which includes areas and parts of the Barents Sea along a previously disputed maritime border with Russia.

Russian oil companies OAO Rosneft and Lukoil PJSC are among the roster of bidders.

"It's a good sign for the future petroleum activity in the high north that a broad selection of companies compete for new acreage in the Barents Sea,” said Norway's petroleum and energy minister Tord Lien.

The blocks - subject to both fishery and environment related conditions - are expected to be awarded during the first half of this year, and the government hopes to see first drilling in the new areas during 2017.

Lien said the fact that such a diverse group of companies are competing for new exploration acreage in the Barents Sea is “promising” for the future of petroleum activity in the north.

"New exploration acreage is crucial for long-term activity and value creation in the petroleum sector, and thus employment throughout the country. It is therefore encouraging that so many companies have submitted applications, and that there is competition for many of the blocks, in particular for the newly opened area off the coast of East Finnmark.”

Oslo offered a total of 57 blocks to industry in January 2015, the majority in and around the Barents Sea. The number of blocks in the 22nd licensing round was 86, but the latest round opens up some exciting new untested areas.

Some 34 blocks are in the southeastern Barents Sea, in parts disputed by Russia until a 2010 border agreement. It marks the first new area to be opened to exploration in Norway since 1994.

Another 20 blocks are located in other parts of the Barents Sea plus three in the Norwegian Sea. Other applicants include international majors like Statoil, BP, Shell and ConocoPhillips.

Overall, the bidder list reveals a broad player landscape with mostly large and medium-sized companies, but also a few smaller and mid-size firms, such as Dong Energy, Det norske oljeselskap

Norway’s Barents Sea The Barents Sea is the largest area of the Norwegian continental shelf, covering 313,000 square kilometres. The Barents Sea South (south of 74o30’ N) has been opened for petroleum activities, but the Barents Sea North has not.

The only field in production in the Barents Sea is Snøhvit (Snow White), which came on stream in 2007. Gas from Snøhvit is transported by pipeline to the Melkøya onshore facility, where it is processed and cooled to produce liquefied natural gas (LNG), which is delivered to the markets on specialised LNG carriers.

The oil field Goliat is under development and is expected to come on stream in 2016.

Most of the Barents Sea is considered to be a frontier petroleum province, even though there have been exploration activities there for more than 30 years, and the first discovery was made in the early 1980s. The 23rd licensing round, which was announced in January 2015, includes 54 blocks in the Barents Sea, many of them in the previously disputed area west of the delimitation line between Norway and Russia. For the first time for more than 20 years, this licensing round includes completely new and unexplored areas.

10 WINTER 2016 www.frontierenergy.info

BP Norge is a keen bidder

ASA and Lundin Petroleum AB, as well as the Norwegian units of Dea and EON SE, both acquired by Russian billionaire Mikhail Fridman.

Sissel Eriksen, exploration director at the Norwegian Petroleum Directorate (NPD), said it showed a healthy interest in the region.

"It is gratifying to see that so many competent companies want to explore in new acreage during a time when we are experiencing low oil prices and cost cuts.

This shows that the companies recognise opportunities and the potential of finding oil and gas in these new areas.”

She said that since the blocks are located in frontier areas, more exploration work is needed in order to clarify the area’s resource potential.

"It is exciting that new companies want to enter the Norwegian Shelf,” she said.

“The authorities have worked for many years to facilitate the establishment of new players here, as we are certain that this can contribute to enhanced value creation."

The opening of the frontier area between Russia and Norway is also highly significant. It follows a 2010 bilateral agreement between the two sides on where the Arctic border should be drawn.

The two countries had been locked in a dispute over a 175,000 square kilometres area in the Barents Sea for 40 years, effectively quashing any hopes of exploration in the region despite the fact that reserves there could be worth billions of dollars.

ARCTIC NORWAY

23rd Offshore round bidding blocks

Maps: www.npd.no

23rd licensing round bidder list

the round, which implies there are big Russia, like Norway, is keen to get to prospects to test." grips with its Arctic oil potential - it is There could be over 2 billion barrels of oil active on other projects inside its own and gas in the southeast Barents area alone, territory - but needs private investment the company reckons, but the scale of any and expertise to make it happen. finds will be of the Delineating utmost significance. the border in the Wood Mackenzie region almost analysis shows that six years ago is New companies minimum economic regarded as a key want to enter the field sizes in this step forward in Norwegian Shelf new area - volumes both countries yielding at least a accessing this 10% return - at previously base case price prohibited area and assumptions are 0.5 billion barrels of oil creating new opportunities for both local equivalent (boe) for oil and 1.1 billion boe or and foreign oil and gas companies.

Clearly the opening of the south eastern 6 trillion cubic feet (tcf), for gas/condensate.

“Therefore it will be important to Barents Sea has piqued the interest of industry, says Malcolm Dickson, principal find larger discoveries or a critical mass of smaller finds to make development North Sea analyst at Wood Mackenzie. economic,” said Dickson. “However, we "This is the first time in 20 years that new exploration acreage has opened up in could see lower minimum economic field sizes if companies can reduce spend on Norway and because of the potential for wells, either through more efficient drilling large discoveries, it's no surprise to see or cheaper rig contracts. In this case, we so many companies involved, despite the could see the minimum economic size for current oil price. Four of the majors - BP, oil drop to 300 mmboe, for instance."

Shell, Statoil and Chevron - have bid in

26 companies have applied for production licences, individually or in groups, for new blocks predominantly in parts of the Barents Sea • • • • • • • • • • • • • • • • • • • • • • • • • •

A/S Norske Shell BP Norge AS Capricorn Norge AS Centrica Resources (Norge) AS Chevron Norge AS ConocoPhillips Skandinavia AS DEA Norge AS Det norske oljeselskap ASA DONG E&P Norge AS E.ON E&P Norge AS Edison Norge AS Faroe Petroleum Norge AS Idemitsu Petroleum Norge AS INPEX Norge AS KUFPEC Norway AS Lukoil Overseas North Shelf AS Lundin Norway AS Moeco Oil & Gas Norge AS OMV (Norge) AS PGNiG Upstream International AS Pure E&P Norway AS RN Nordic Oil AS Spike Exploration AS Statoil Petroleum AS Tullow Oil Norge AS Wintershall Norge AS

www.frontierenergy.info WINTER 2016 11

ARCTIC NORWAY

Safety training on the bridge

Supporting Norway’s offshore, safely

TIME TO TAKE THE LONG VIEW

N

othing happens in Norway’s far north unless it gets the green light from officials, which puts the country’s Petroleum Safety Authority (PSA) at the centre of future developments. It sanctions all wells in the area and has been instrumental in making sure things are done the right way in any development work. That includes fine tuning systems in connection with Eni and Statoil’s mighty Goliat project, which is now tantalisingly close to start up.

It has been a story decades in the making, however. “Petroleum activities in the Barents Sea have been ongoing since 1980, when the first exploration well was drilled,” Thor Gunnar Dahle, PSA’s senior communications adviser told FE. “Since then, 108 wells were drilled during the years 1981 to 2013. This implies that the industry, as well as the authorities, have gained experience over more than three decades. It is this experience that has led to the appreciation of the identified specific Barents Sea challenges.”

With the flagship Goliat scheme almost ready to enter the operational phase, and with more companies showing similar appetite for exploration acreage in the region, it is likely that the PSA will have an even greater role to play going forward. During 2016, its goals include assessing the need for adjustments to or updating of any current regulations, and following up the industry’s work on existing standards for Arctic operations.

Speaking in the Authority’s bi-annual magazine, Dialogue, PSA director for professional competence, Finn Carlsen, is interviewed about the challenges related

12 WINTER 2016 www.frontierenergy.info

to petroleum sector activities in the north. standards in the Barents Sea to help reduce costs in the current climate, but He believes that the current downturn the industry can come up with solutions in the oil markets offers important which satisfy the regulatory requirements breathing space for the industry as it in a cheaper and simpler manner, Carlsen contemplates the long term exploitation adds. “We must be open for that - as long and development of the Barents Sea area. as the safety standards are met.”

“We believe that the industry should In the Barents Sea context, however, make positive use of this downturn from a safety perspective. It’s got a chance to stand there is still work to be done in setting these industry-wide standards. back, assess alternatives and think afresh,” “A good deal of work remains to be he says. “Put briefly, the companies should done here. But a lot is also happening. use this phase in a sensible and forwardNorway’s been very looking way. A active in developing long-term approach standards, in part is a concept we’ll be through the Barents repeating often in The industry should make 2020 project. connection with the positive use of this downturn The industry is Barents Sea.” from a safety perspective generally well This means underway with allowing time and producing norms space for long-term for far northern petroleum operations.” planning to arrive at the right solutions for He cites Technical Committee 67 (TC67) the area. “The industry and the individual of the International Organisation for company must not be tempted to choose Standardisation (ISO) which is working short cuts during downturns - and give a on six specific standards for this area. lower priority to work on research and Both the PSA and others have called for standardisation. Short-term thinking now could close off acceptable solutions in safety a collaborative approach in the Barents Sea, which the industry is now responding terms later,” he adds. to. This includes the work of the Barents Key issues where work is required Sea exploration collaboration, or Basec. industry-wide cover such things as “The formation of Basec is very logistics and emergency preparedness in positive, as is the fact that Statoil and the Barents Sea, for example. Challenges the others behind this initiative decided related to the great distances involved to open it up,” says Carlsen. “Sixteen also need to be assessed under a longcompanies will now work together on term perspective, among a number of solutions for far northern exploration. other notable areas.

But such collaboration should be At the heart of everything is the expanded. Specifically, we’re challenging unflinching need for safety. There the industry to establish a corresponding is certainly no scope to relax safety

Photos: Statoil

According to Norway’s Petroleum Safety Authority, the slump in oil prices presents a chance for the industry to take stock of the country’s high north and do things the right way as activity starts to build

ARCTIC NORWAY

The NCA provides assistance to Eni arrangements and Eni Norge’s activities project for development and production specifically for the Goliat field and at the Goliat field. solutions in the Barents Sea. The industry adjacent areas along the West Finnmark “It represents a strengthening of stands to gain a lot from that, including coast. Assistance by Eni to the NCA is the capacity both within oil spill in safety terms.” restricted to the coastal waters between protection, towing and search and rescue Evidence of the PSA’s call for a more the Hekkingen lighthouse in the southoperations off the coast West Finnmark,” collaborative approach can also be seen west and the Fruholmen lighthouse in the through its active participation in the Arctic Andreas Wulff, Eni Norge’s external north-east. Two emergency support vessels communication manager commented Offshore Regulators’ Forum (AORF).

Esvagt Aurora and Stril Barents, as well as when the pact was announced in 2015.

During the PSA’s Arctic Safety Summit the supply vessels Njord Viking and Troms In essence, it bolsters operations and in Tromsø last October, it hosted the Pollux, will be made available by Eni emergency response capacity in a remote first regular meeting of the Forum, a Norge, under the arrangement. collaborative body for regulators in Canada, area where there is little other air-based or marine traffic.

Finland, Greenland, Iceland, Norway, Russia, Sweden and the USA. The intention is to discuss and evaluate challenges and opportunities in order to contribute to a high level of safety for the petroleum sector in the emerging Arctic, providing an important basis for communication with the industry.

Carlsen believes it’s important to have that dialogue with other regulators on their follow-up of company activities in other Arctic areas to share experience and knowledge on a wider scale.

“Regulation is also high on the agenda. A number of the countries in the AORF are currently assessing their rules with regard to operations in the far north.

In Norway, we’ve opted for an integrated approach to regulation, with the same safety requirements applied across the whole NCS. At the same time, as I say, we see there’s a need to develop a number of standards aimed directly at the For proven experience, call on Crowley. operations in the Barents Sea.” The Goliat project - already a pioneering oil field development THE PROJECT: Installation of a natural gas production platform,16 miles in so many ways - is again of underwater pipeline and an onshore production proving to be a test case in this facility in Cook Inlet, Alaska. collaborative approach.

Last year, operator Eni Norge and the Norwegian Coastal THE CHALLENGE: Infamous tides, extreme currents, harsh conditions and Administration (NCA) entered a short season. into a mutual assistance agreement for support vessels around the Goliat field. The agreement is the THE SOLUTION: Crowley provided installation engineering and project first of its type in Norway and management services, acquired specialized marine provides an effective way to make assets, and built and managed a team of 300 experts use of shared oil spill protection from around the world. resources in northern Norway.

The agreement entails the provision of mutual assistance THE RESULT: Incident-free project successfully completed by vessels in connection with on schedule. the NCA’s emergency towing

Extreme challenges call for creative solutions.

907.891.8241 | Crowley.com/MarineSolutions

ALASKA

Two of Crowley's high-deck strength barges, 455-3 and Marty J, towed by tugs Warrior and Commander, transported processing and utility modules, and other smaller structural components more than 8,000 miles from Gulf Island Fabricators in Houma, Louisiana, to Point Oliktok in Kuparuk, Alaska. The modules and components, each weighing nearly 4,000 tons, will support Italy’s Eni development of Nikaitchuq oil field. Oil recovered from the field will be the first from the North Slope not processed by facilities owned by BP or Conoco Philips.

North to the FUTURE S

hell abandoned its offshore drilling port and as US regulations were evolving. efforts in September 2015 after Falling global oil prices have hit the reporting disappointing results Alaskan economy hard. Since 2014, the from its Chukchi Sea exploration project state’s oil revenue has fallen by 88%. and pressure from a sceptical market Reports from the state legislature suggest concerned that its exploration dollars that Alaska is facing a $3.8bn public could be better spent elsewhere. The accounts deficient, which will not be company has also come under fire from met by oil and gas income normally environmentalists expressing concerns received through the royalty received about the impact of any oil spill in Arctic from extracting hydrocarbons from areas waters and the hotly debated impact of outwith the federally owned lands and global warming. the Arctic National Marvin Odum, Wildlife Reserve Shell’s US President (ANWR), an area Shell ‘ultimately executed a at the time of believed to hold the company’s up to 16bn barrels very technically successful ambitious of oil. exploration program’ exploration Bruce Harland, work, said in late vp Alaska for February that Crowley Maritime, Arctic was ‘a big bet’ for the company. believes that there is plenty of potential “If the oil that we had hoped was there in the Alaskan Arctic, just not for a few and probably was there at some point in years. “There is plenty of opportunity geological history - in the quantities we there,” he says, “but it just won’t be as were looking for, this would have been a soon as people thought”. Collapsing oil fabulous success,’ he said. prices have put pressure on the state’s Although disappointed in the outcome, economy, as it has done in other similarly Odum said, he was still proud of the less diversified US oil-states including Alaska project because Shell “ultimately North Dakota and Wyoming, says executed a very technically successful Harland. Alaska derives around 85-90% exploration program,” in an area about of its annual GDP. 1,000 miles from the nearest deep-water Alaska governor Bill Walker (Republican) 14 WINTER 2016 www.frontierenergy.info

wrote recently that when the Arctic National Wildlife Refuge (ANWR) was established, the national government specifically designated an area of the coastal plain—the 1002 area—for oil exploration.

“It holds up to 16 billion barrels of oil, is located just miles from our existing pipeline and the portion we need access to makes up just 4% of ANWR. But Alaska is restricted from exploring for oil there,” he said.

“Restriction of access to the 1002 area is partly why the trans-Alaska Pipeline System (TAPS), the 48inch oil pipeline Bruce Harland, from Alaska's vice president, Marine North Slope to Solutions, Crowley tidewater, is now three-quarters empty. The low flow of oil through TAPS on top of low oil prices is what's dealt the crushing blow to our economy.

In mid-February Governor Walker and Alaska LNG project partners ExxonMobil, BP and ConocoPhillips agreed work together to explore options

Photos: Crowley Maritime

Depressed oil prices and international oil giant Royal Dutch/Shell pulling out of upstream operations in Alaska have made headlines across the world. The recent past had been a troubling time for both the industry and supermajor, with technical issues dogging its drillships and oil spill prevention and recovery. But it’s a frontier land, writes Bruce McMichael, with an optimistic state motto … North to the Future

ALASKA

to advance the Alaska gasline project. The state and the producers are actively engaged in defining the best way to maintain the AK LNG project momentum in difficult economic times.

Alaska LNG Project participants have approved a budget of more than $230 million to advance work on the proposed export project.

Partners Alaska Gasline Development Corporation, BP, ConocoPhillips and ExxonMobil agreed to support 2016 project funding to continue preliminary engineering and optimisation efforts on the estimated $45$65 billion project that would commercialise Alaska’s North Slope natural gas resources.

As a key component of the approved 2016 work program, the team will develop and execute a comprehensive contracting strategy to provide sufficient time for bidders to prepare competitive and quality bids for front-end engineering and design (FEED), the next stage in the project’s development. To date, the project sponsors have spent $350 million on pre-FEED work.

“The project participants see an opportunity in 2016 to advance activities that were initially planned for the FEED stage of the project,” says Steve Butt, senior project manager for the Alaska LNG Project. “This early effort will provide participants with higher quality information and analysis to help better support a FEED funding decision.”

Proposed facilities include a liquefaction facility in the Nikiski area on the Kenai Peninsula; an 800-mile, large diameter pipeline; up to eight compression stations; at least five take-off points for instate gas delivery; a gas treatment plant located on the North Slope, and transmission lines to transport gas from Prudhoe Bay and Point Thomson to the gas treatment plant.

Diane Francis, senior fellow Atlantic Council Eurasia Section in Washington DC, wrote recently that “… Alaska's gigantic oil fields in the North Slope have been dramatically declining after several decades of huge production. The result is that the Valdez shipping terminal is threatened with eventual closure unless new volumes are brought to its port facilities for loading onto oceangoing vessels around the world”.

Hovercraft Arctic Hawk operating in Prudhoe Bay

Marine support Crowley Maritime, the US-based marine services company, has been providing marine, petroleum distribution and energy support services throughout Alaska since 1953. Its operations run from the North Slope to southcentral Alaska, along the coast and into some of the most remote inland areas, including communities along the Kuskokwim and Yukon River. Corporately, the company is diversified across several markets across the world, notably in the Gulf of Mexico and Alaska helping it ride business cycles smoothly, says Bruce Harland, vp Alaska for Crowley.

In 2015, the company logged over one million man hours while safely escorting 236 tankers through Prince William Sound, transporting 185 million barrels of oil in one of the harshest environments in the world. Today, with a storage capacity of more than 39 million gallons, Crowley provides transportation, distribution and sales of petroleum products to more than 280 communities across the state. The North Slope energy industry is supported with summer tugand-barge sealifts of large production modules and various marine transportation services.

At the southern terminus of the Trans-Alaska oil pipeline, the company provides tanker escort and docking services in Valdez Harbour and Prince William Sound for Alyeska Pipeline Service Company’s Ship Escort/Response Vessel System (SERVS). Crowley also provides tanker assist and escort services at Tesoro Alaska’s Nikiski refinery in Cook Inlet.

In Valdez, Crowley is contracted with Alyeska Pipeline Service Company's Ship Escort/Response Vessel System (SERVS) to deliver tug escorts for tankers travelling through Prince William Sound to and from the Valdez Marine Terminal, assuring safe passage, says Harland. The tugs also provide docking and undocking services at the oil product loading terminals.

In 2015, Crowley continued its support of SERVS by planning and supervising classroom and field

training exercises for a seasonal fishing vesseltraining programme. This training involved over 400 boats and 1,700 attendees, who gained familiarity with the equipment, tactics, and resources needed to quickly and professionally respond to an oil spill incident in Prince William Sound.

Crowley's nearshore response barge 500-2, and company-owned tugs visited the communities of Cordova, Whittier, Seward, Homer, Kodiak and Valdez in further support of the training.

With a storage capacity of more than 39 million gallons, the company provides transportation, distribution and sales of petroleum products to more than 280 communities across the state.

“We support the energy industry on the North Slope with summer tug-and-barge sealifts of large production modules and various marine transportation services. At the southern terminus of the Trans-Alaska oil pipeline, we provide tanker escort and docking services in Valdez Harbour and Prince William Sound for Alyeska Pipeline Service Company’s Ship Escort/ Response Vessel System (SERVS), using some of the world’s most powerful, technologically advanced, shallow draft tugboats. We also provides tanker assist and escort services at Tesoro Alaska Company’s Nikiski refinery in Cook Inlet,” says the company.

Harland adds that the company supports ExxonMobil’s Point Thompson operations.

ExxonMobil is expecting to pump up to 10,000 barrels of natural gas condensate per day with production set to start this year. www.crowley.com

Crowley’s barge DBL 165-2 with tug Nachik

www.frontierenergy.info WINTER 2016 15

SHIPPING ROUTES

Opening up the

The future development of the Northern Sea Route presents enormous opportunity for shippers, but faces multiple challenges.

By Dr. Bjørn Gunnarsson, Managing Director, Centre for High North Logistics (CHNL), Nord University, Norway

O

n June 8, 2015 the Russian government released its Integrated Development Plan for the Northern Sea Route 20152030. The plan stresses the importance of providing safer and more reliable navigation through the Northern Sea Route (NSR) for maritime export of Russian natural resources and also the strategic importance of the NSR for Russian national security. The plan hopes to increase international transit cargo on the NSR in partnership with Asian countries and, in particular, with China.

The Russian Ministry of Far East Development released a public tender in December 2015 for a detailed NSR feasibility and development study, prepared by the Far East Development Fund. The study should be completed over a period of six months or by July 1, 2016.

The organisation chosen to complete the task was the Analytical Centre for the Government of the Russian Federation.

This means Moscow’s future development plans for the NSR should become clearer during the second half of this year.

Demonstration voyages But what are the long-term prospects for the NSR to develop not only into Russia-Asia and Russia-Europe maritime trade routes, but also into an international trade route between markets in the North Atlantic and the North Pacific?

An effective way of evaluating future possibilities for NSR transit shipping 16 WINTER 2016 www.frontierenergy.info

was to perform several exploratory or demonstration voyages with both Russian and non-Russian flag ships between 2010-2013. This was needed to satisfy commercial shipping and insurance companies’ needs for reliable information and data on vessels’ operational conditions, and better assess the overall risk picture of shipping on the NSR. Around 120 full transit voyages took place during these three years by Arc4 ice-strengthened cargo vessels transporting different types of cargo at different times during the summer-autumn navigational season and encountering different sea-ice conditions and other weather-related operational conditions.

These demonstration voyages showed the NSR can be relatively safe and reliable providing there is escorting and guidance from the Russian icebreaking fleet and the use of Russian ice pilots (navigators).

Some prerequisites But to be of interest for commercial shipping, the NSR needs to provide not only safety but predictability and punctuality for cargo transport. Regularity of year-round supply of goods is no less important than the cost of transportation.

The current limited seasonal window for trans-Arctic voyages of five months (July-November) will be a limitation to the NSR’s full development and economic viability. During the remainder of the year the whole Arctic Ocean freezes over with an average ice thickness of about 1.6 metres making shipping much more difficult and dangerous.

But year-round operation on the NSR will be a prerequisite for the route’s full integration into the world’s transportation system. Another prerequisite for increased growth in transit shipping on the NSR is the availability and regularity of cargo transport from Europe eastwards, and from Asia westwards. Currently, a limited

number of vessels with adequate ice class represents limitation on the utilisation of the NSR. And then it is the economy of scale, as the NSR is vulnerable to competition from much larger vessels going via Suez and the Cape.

To make the NSR safer and more reliable as a transport route both for Arctic resources as well as more attractive as an alternative trade route between markets in NW Europe and NE Asia, a number of important changes need to take place. This includes strengthening the NSR’s overall administration and management, transport services, and, last but not least, maritime infrastructure.

Administration and management Today in Russia there is no single organisation that oversees all of the NSR’s activities, services and marketing, provides analysis of efficiency and route optimisation, traffic coordination, and strategies to promote commercial activities. Such an organisation should also be the one determining tariff rates, predict future NSR traffic, cargo volumes, and demand for icebreaker assistance and other support services. Subsequently, the NSR administration’s role needs to be expanded to include these additional services in line with the role the Suez Canal Authority plays for the Suez Canal.

An online multi-language information portal also needs to be developed for commercial shipping on the NSR. The NSR management also needs to find ways to reduce risks of shipping delays due to sea-ice by improving sea-ice predictions and ice reconnaissance. Before a voyage, a detailed assessment and forecasting of ice conditions and other operational conditions on route needs to take place and presented to NSR users.

Tariffs need to be dependent on the type of cargo (and subsequently the type of vessel). Transportation cost in the overall

Photos: Sovcomflot, Visit Norway

The tanker Svet: the first VLCC in the Russian merchant fleet

NORTHERN SEA ROUTE

SHIPPING ROUTES

Tourism, freight and energy shipping could all benefit from the northern sea routes

and passenger/crew facilities. Of vital cost of delivering goods to consumers importance for the NSR is to facilitate may be very different for different types access to Russian ports for loading and of cargo: establish a system of tariff discharging for non-Russian flagged discounts for regular users, discount on vessels with the large transported purpose to create volumes, and on round voyage return passages Without cost-sharing possibilities. in ballast. A tariff SAR and oil spill discount should the upfront capital costs response facilities also be given for of establishing proper and operations passage in convoy maritime infrastructure are need to be further compared to developed within individual sailing. prohibitive and too high for the NSR water Tariff rates Russia to take on alone area, including should be tied land-based and to the cost of offshore (floating) bunker oil and to infrastructure to be able to respond to conditions on the freight market. Users emergencies in time and deliver needed also need an official online information assistance and supplies (e.g. medical) and resource to quickly be able to calculate conduct evacuations and oil spill response tariffs for icebreaker assistance and ice from remote areas. Again here, new pilotage. And, finally, the tariff system powerful Russian icebreakers and multineeds to be user friendly and fees purpose emergency and rescue vessels (e.g. competitive and similar to canal fees on Baltika) will act as floating support units southerly routes (Suez/Panama). in case of accidents. To do so effectively these vessels need to be strategically Transport services located and readily available to assist and Icebreakers and ice pilot services guide transiting vessels in need. are key elements of the NSR’s support And finally a major effort is needed services. Sufficient icebreaking capacity to improve NSR’s navigational and needs to be available to assist vessels in communication system. Extensive transit and to keep the route open during hydrographic surveying needs to take place, pre-scheduled navigational periods, as well as the updating of navigational regardless of sea-ice conditions, and charts to provide better real-time remove the risk of delays - optimising information concerning the operational icebreaking capacity, including the environment, including improved voice and strategic locations of icebreakers, along transmission coverage, and vessel traffic the full length of the NSR. But the monitoring and reporting. problem is that Russian icebreakers have since 2014 been primarily engaged in Maritime infrastructure Arctic oil and gas projects and this will likely continue to be the case over the We need a detailed study that shows the next several years. structural and design characteristics of a Russian Arctic ports along the NSR new NSR transport and logistics system need to be fully modernised and provide - a system that we would like to see put deep-draft access, refuge and salvage in place in the near future, for example services as well as cargo handling by 2040 or 2050, to satisfy our safety,

reliability and environmental requirements.

The results should be displayed as interactive maps with effective visualisation components, animations and a series of videos showing the proposed structural and design features of the required physical infrastructure, communication and navigational systems and response services.

In other words, give all stakeholders a clearer picture of how various components of the logistics chain are tied together and how the whole logistics system should operate and function.

Model simulations should be based on various development scenarios and feasibility and sensitivity analyses for different cargo types being shipped, volumes and trade flows, types and sizes of vessels being used, transshipment, seasonal or year-round operations, and other factors. Full-scale, year-round transit shipping on the NSR requires different physical infrastructure and support services than the current seasonal operation during the five months of summer and early fall which is taking place in largely ice-free waters. This modelling of a new maritime transport and logistics system should be a joint exercise between the industry and research community, based on the safest, the most sensible, cost-effective and environmentally sound solutions.

If an agreement is reached on the design of a new NSR’s maritime transportation and logistics system then the next step is estimating the costs of the various infrastructure components of the new system and establishing international cooperation and partnerships for putting the required infrastructure in place.

Russia has already stated that its ideal partners would be countries in NE Asia that see benefit in greater access to Russian Arctic resources and a shorter trade route to NW Europe (notably China, South Korea and Japan).

The build-up of new infrastructure will take many years and will be costly, however. Without cost-sharing the upfront capital costs of establishing proper maritime infrastructure are prohibitive and too high for Russia to take on alone.

Infrastructure build-up is also needed along the whole length of the North East Passage not just the Russian defined boarders of the NSR. Assessment of different funding mechanisms in financing long-term capital-intensive maritime infrastructure projects within the Eurasian Arctic needs to take place. Joint funding among interested parties and governments should be a viable solution. www.frontierenergy.info WINTER 2016 17

SHIPPING ROUTES

As industry explores new shipping routes opening in the high north, it will not all be plain sailing, writes Michael Kingston

I

n Reykjavik last October, approximately 1,500 delegates from across the world gathered at the 3rd Arctic Circle Conference, led by Iceland’s President Grimsson. His aim is to establish his country as a transshipment hub for cargo ships that will travel through the Northern Shipping Routes.

But how realistic is this concept?

What are the advantages over traditional routes? What are the pitfalls? And what rules will govern this traffic?

Certainly, there is a lot already taking place.

On September 11, 2013, COSCO’s Container Ship Yong Sheng arrived in Rotterdam following a 35-day voyage from Dalian in China. The conventional route, taking ships via the Indian Ocean, the Suez Canal, and the Mediterranean Sea, takes 48 days to complete. However, 13 days were shaved off the voyage as the ship travelled through the Arctic Circle, transiting the Northern Sea Route, becoming the first Chinese commercial vessel to do so.

A week later, on September 17, 2013, Nordic Orion, carrying 74,000 tonnes of coal, left Vancouver and transited the Northwest Passage on her way to the Finnish port of Pori, saving travel time by taking advantage of the 1,000 km shorter route and avoiding the Panama Canal, allowing the vessel to carry 25% more cargo. It was the first bulk cargo vessel to transit the Northwest Passage, assisted by Canadian icebreaker support.

In September 2014, Fednav’s Nunavik became the first bulk cargo vessel in history to transit the Northwest Passage unassisted.

To put this in context, when the Norwegian, Roald Amundsen, made the first successful complete transit of the Northwest Passage in 1906 it took over three years.

At the Arctic Circle Conference there was a significant presence from China, led by foreign minister Wang Yi. In their ‘country presentation’, Cai Meijiang, 18 WINTER 2016 www.frontierenergy.info

COSCO’s general manager of the Safety Supervision Department explained that not only did these transits save time, but there were fuel savings and, importantly, reduced carbon emissions - a key requirement for the maritime industry.

The routes chosen also removed almost completely the threat of piracy.

In 2012, Arctic sea ice coverage was at a record low. As the ice continues to melt, some experts have estimated that shipping via the Arctic could account for a quarter of all cargo traffic between Europe and Asia by 2030 and, according to trade estimates from China, 15% of Chinese international trade will pass the Arctic by 2020.

And if there is any doubt about the interest in the future of the Arctic shipping routes, one needs to look no further than the country delegations, in addition to the Arctic nations and China, who were in attendance in Reykjavik: the European Commission, Germany, Japan, South Korea, Brazil, Singapore and the United Kingdom, with keynote addresses first by Prince Albert II of Monaco, and then President Hollande of France.

There is no doubt therefore that the maritime world is looking north. The melting ice-cap, coupled with huge advances in technology, is changing the face of the world’s shipping routes, while the number of Arctic maritime transits has increased significantly in recent years.

For example, in 2010, there were four transits through the Northern Sea Route.

In 2013, there were 71. Whilst at present these transits are relatively few in number, they are very much part of future plans.

However, there remain major concerns for shipping in general, not only because of the sheer scale of the physical obstacles and dangers represented by the extreme conditions in the area, but also because of the corporate governance and reputational risks the region presents for companies operating there.

Because of this, apart from those very experienced, marine underwriters very rarely provide insurance cover for ships in Artic waters because the sheer lack of information makes it very difficult for them to analyse any risks involved.

For instance, Hull & Machinery policies

require the vessel operator to inform the underwriter if they are going above 70°N latitude. P&I Clubs do not generally impose navigation limits in or around the Arctic region on their members; however, the rules require the clubs to be consulted if a voyage does not fall within a vessel’s normal trading pattern. And, of course, polar waters are not a normal trading pattern for most ship operators.

For ships not equipped to operate in Arctic conditions, the extreme cold can cause engine problems and make it difficult or impossible for safety or other equipment to work. Coverage by navigation aids such as GPS is significantly reduced and magnetic compasses are unreliable at such high latitudes, a situation which is not helped by the lack of accurate charts of the area. Also, visibility is restricted 90% of the time and the weather is highly unpredictable. Violent storms can occur at any time. And the lack of infrastructure means salvage facilities are almost non-existent.

Although a search and rescue agreement has been signed by the Arctic states not a huge amount of progress has been made in practice. Russia has made some moves in relation to location of equipment along the Northern Sea Route area, but much work remains to be done on a practical level.

If the difficulties for owners and insurers needed a timely reminder of the consequences of getting it wrong they need look no further than the small and beautiful Island of Giglio in Italy. Just after Yong Sheng arrived in Rotterdam, and only one day before Nordic Orion left Vancouver, a third historic, but very different, operation was taking place.

The Costa Concordia was being righted and stabilised in a significant phase of the most complex and costly wreck removal in history. The difficulties of affecting salvage operations or wreck removal in the Arctic due to the harsh environment and lack of salvage equipment was highlighted by Lloyd’s subsequent 2013 Removal of Wreck Report ‘The Challenges and implications of removing shipwrecks in the 21st Century’. Food for thought as the industry seeks to navigate the pristine waters of the polar region.

Photo: Sovcomflot

NS Yakutia on the Northern Sea Route

THE RISKS AND THE REWARDS OF THE HIGH NORTH

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OIL SPILL RESPONSE

US steadfast in oil spill research

T

he Arctic is still very much central in the minds of US oil spill planners. Yes, oil prices might be perilously low, and the US may well have lost a lot of enthusiasm for drilling off Alaska, but Washington is taking its responsibilities seriously when it comes to the management of potential oil spills in frontier territory.

Certainly judging by forward budget plans there is a continuing interest in the Arctic, even if this is not currently borne out by drilling work or the political posturing among America’s presidential hopefuls, some of which have vowed to prohibit any further offshore exploration in the area.

The government’s 2017 financial proposal includes $14.9 million to be allocated to oil spill research, equal to the 2016 request level. The money is to address key knowledge and technology gaps, focusing research particularly on deepwater and Arctic environments.

It’s small change compared to other enormous federal budgets, but there’s no doubt that the US is looking to up its preparedness for the Arctic challenge.

The Bureau of Safety and Environmental Enforcement (BSEE) says its oil spill research programme plays a pivotal role in initiating applied research to support decision making to prevent or mitigate spills.

The funds are be to used to sponsor testing of new equipment or methods and also to support the bureau’s oil spill and renewable energy testing facility, Ohmsett (National Oil Spill Response Research and Renewable Energy Test Facility) in New Jersey, which boasts the largest outdoor wave/tow tank facility in North America.

Some of the more recent testing activities there included oil spill response equipment testing in a simulated Arctic environment, remote sensing of spilled oil, wave energy conversion device tests, skimmer and boom tests, dispersant tests, alternative fuel recovery tests, and 20 WINTER 2016 www.frontierenergy.info

industry oil spill response training classes. advance response technologies and procedures to ensure the least impact to The heart of Ohmsett is a large, the environment and to human safety, the outdoor, above-ground concrete test tank DOI said. that is 667 feet “Efforts also long, 65 feet wide, continue with 11 feet deep and The government’s 2017 Arctic nations to filled to a depth financial proposal includes plan and execute of 8 feet with 2.6 circumpolar spill $14.9 million to be allocated to million gallons response exercises, of crystal clear oil spill research, equal to the develop databases saltwater.

2016 request level of Arctic-specific The facility response equipment, recently completed address questions on a scheduled fivemovement of equipment and people across year test tank renovation and built a borders during emergencies, and assessing new warehouse to replace one destroyed the risks of oil spills as the Arctic waters during Hurricane Sandy. become more accessible to shipping and hydrocarbon exploration and production,” Arctic challenge it noted in the briefing document.

Significantly, Arctic exploration - and Of course, the BSEE money is tiny in preparing for a spill - has been cited as comparison to the DOI’s total $13.4 an important area for ongoing study, in billion budget request for 2017, yet it spite of the subdued mood facing the highlights that the Arctic remains in the industry in the wake of last summer’s minds of officials in Washington. disappointing drilling campaign by oil Even after Shell departed Alaska major Shell in the remote Chukchi Sea. following the Burger J well, the company As part of the Obama Administration’s said that the region might one day form commitment to developing America’s an important part of America’s long-term domestic energy resources safely, the energy future.

Department of the Interior (DOI) issued And lower oil prices may have just proposed draft regulations in 2015 to bought enough time for all to get better help ensure that any future exploration in prepared for the next wave of exploratory the Arctic is done responsibly and subject drilling, whenever that may be. to the highest safety standards.

Recognising the complexities of an Arctic response to any spill, BSEE is also working with federal partners in the creation of a plan that would support a government presence in Alaska during a major spill, the DOI said in a detailed briefing document outlining its latest budget plans.

Responding to an oil spill in the Arctic environment presents unique challenges where the harsh environment, remoteness and prolonged periods of low light all test current technology - which explains The Polar Pioneer rig used by Shell why funding will continue to be utilised for its offshore Alaksa drilling last summer to understand these implications and

Photo: Judy Patrick

Oil spill response training in Valdez, Alaska

After the furore that surrounded Shell’s drilling off Alaska last year, the US appeared to have lost interest in its Arctic oil potential.

But don’t be fooled, as officials press on with oil spill technology research geared to this frontier region

OIL SPILL RESPONSE

On watch for oil and ice Innovation in radar technology is increasing rapidly, with enhanced processors providing much more information than traditional navigation radar

Image: Rutter

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nnovation in radar technology is increasing rapidly, with enhanced processors providing much more information than traditional navigation radar systems. This allows for new applications such as detailed ice imaging, detection and tracking of smaller and more manoeuvrable targets, detection and aiding clean-up of oil spills, and measuring the characteristics of waves and currents.

These enhanced processors often connect to standard navigational X-Band radars. But when more than one application is required, multiple systems from different vendors are often needed.

This means more equipment is required when multiple radars are needed on a vessel to get 360° coverage when a single radar would be obstructed by masts, derricks, or other superstructure.

The extra equipment takes up additional space on already cluttered bridges, and requires additional manpower and training to operate on an ongoing basis.

And that’s a real concern when, now more than ever, operating in icethreatened regions like the Arctic is such an important part of marine operations.

Canadian electronics company Rutter, developers of the sigma S6 radar processor systems, has tackled this problem head on. It offers a range of radar applications under the sigma S6 brand that can be fully integrated, combining several radars on a single display, and monitored by a single operator.

One of these, the sigma S6 Ice Navigator, is used for various ice navigation solutions, with four distinct applications available: 1. The sigma S6 Ice Navigator system enables vessels operating in ice to differentiate between open water, ice pans, open water leads in ice fields and the ice ridges that impact operations in ice zones. High resolution image processing provides enhanced ice imaging, leading to superior detection and tracking. In

Radar, the captain’s view

open water, the system has the ability to reliably detect small bergy bits and growlers that can significantly damage a vessel or platform.

2. The sigma S6 Oil Spill Detection (OSD) system combines proven capability in early detection of oil on water with tools that generate essential information for containment and clean up. This helps to minimise environmental damage and clean up costs after oil spill events.

3. The sigma S6 Small Target Surveillance (STS) System also provides enhanced radar imagery, target detection and tracking in the marine environment.

It’s a practical solution for special radar applications such as search and rescue it can detect and track a range of target profiles, from people in the water to small manoeuvring craft and larger vessels – as well as asset protection and surveillance applications including antipiracy and coastal water protection.

4. The newest addition to the sigma S6 product line, is OceanWaveS GmbH’s WaMoS II (or WaMoS II).

This is a radar-based wave and surface current monitoring system providing

measurements out to 4 km from a radar site. It measures and reports on all essential wave field parameters in real time: 2D-directional wave spectrum, significant wave height (Hs), peak wave period (Tp), peak wave length (Lp or λp), and peak wave direction (Өp) for both wind, sea and swell, as well as surface current speed (Us) and direction (Ud).

Unlike traditional wave buoys and current profiling devices, the radar covers a larger area, simultaneously measuring and reporting on multiple locations within the radar’s field of view with lower ongoing operational and maintenance costs.

All of the sigma S6 applications are available on a single system with one versatile user display. This allows for a simplification of bridge operations saving space, manpower, and easing training requirements. Where multiple radars are needed to provide complete 360° coverage, there’s aother solution. Rutter’s SeaFusion merges independent data streams from two to four radars into one composite view, maintaining seamless operation of its sigma S6 systems across the connected radars with a single operator. www.frontierenergy.info WINTER 2016 21

POLAR CODES

The Arctic shuttle tanker Mikhail Ulyanov serving Russia’s Prirazlomnaya platform

POLAR CODE 2016 With less than a year to go before the Polar Code comes into effect, Michael Kingston outlines key considerations for all players as the 2017 deadline looms, including proposals for a best practice forum

22 WINTER 2016 www.frontierenergy.info

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• The safety aspects under the Safety of he Polar Code comes into Life at Sea Convention (SOLAS 1974). force in January 2017, by These conventions include the tacit way of amendments to the acceptance procedure which allow three ‘cornerstone conventions’ of the International Maritime Organisation (IMO): the Committees of the IMO to agree amendments which will automatically • The environmental aspects by way become law 12 of an amendment months after under the a period of six International It is very important that months from Convention for best practice standards are adoption, unless the Prevention of in that six month Pollution from developed that have the input period more than Ships (MARPOL) of all stakeholders one third of parties • The crew (i.e. the combined training merchant fleets of certification aspects which constitute not less than 50% of the under the International Convention on gross tonnage of the world's merchant Standards of Training, Certification and shipping) have notified their objections to Watch (STCW)

Photos: Sovcomflot

The industry must work together to ensure safe operations in the polar regions

POLAR CODES

the amendments.

In order to achieve a proper implementation of the Polar Code it is important that everyone understands its requirements and the important knowledge required to determine the inputs for best practice in areas such as hydrography, meteorology, communication, ice charting, and crew training.

But there is a limited amount of expertise in Arctic operations available and it is very important that best practice standards are developed that have the input of all the stakeholders. In the absence of risk data, a best practice regime devised with the input of the various industries, including the insurance industry, is essential in order to prevent incidents.

Best practice A proposal for a Best Practice Forum to be set up to achieve Collaboration is required to protect the northern seas this has been made to the Arctic Council’s Protection of the Arctic Marine Environment Working Group (PAME). pollution from fixed structures, an This would help to educate all eventuality for which there is no crossconcerned, including operators, flag jurisdictional regulation in place. states, insurers, financial markets, and port state control about the Polar Code and the required data to be relied upon.

Under the US Arctic Council We need a detailed study Chairmanship, which lasts for two years (until April 2017), navigational safety is that shows the structural the number one focus and there is hope and design characteristics of that this suggestion may be prioritised. a new NSR transport and Indeed, the proposal was tabled at PAME’s Jan/Feb meeting in Stockholm. logistics system We wait with interest to see how the Arctic Council receive the formal suggestion.

Collaborative effort The argument being put forward is that the Polar Code is an example of what we can achieve before a major disaster occurs - but it will only be as good as we make it through education and enforcement. We all have a duty to assist in that process. It is important that all concerned are aware of the rules so that a third party or a rogue operator does not bring the house down for everyone in a sensitive place like the Arctic.

Additionally, the Polar Code only goes so far as it only applies to vessels over 500 tonnes and it does not cover

Whilst it does not directly provide solutions to all issues of concern in the Arctic, it will definitely help to prevent accidents if it is enforced and it will help produce an operational culture which will allow best practice to be achieved.

Education, education But it is going to be up to governments and the various industry sectors to educate everyone about it and its requirements, including providing funding to help close the knowledge gap.

President Hollande of France rightly said at the 3rd Arctic Circle Conference in

Reykjavik last year that we have a duty to our future generations: “What we do now will be the legacy for our future generations and when we look back we will need to be able to say we have discharged our duty to those who come after us.”

He is right. We either get it right now or we will pay a huge price for our new shipping routes in our failure to protect life at sea and our environment.

It is also about having respect for the indigenous communities of the Arctic, and the Arctic countries. It was refreshing to hear big shippers such as COSCO promote a responsible approach at the same event. Maybe we can get it right by working together and creating the right behavioural atmosphere. If so, we will have exciting times ahead up north.

Michael Kingston is a partner in DWF LLP’s Marine Trade & Energy Group in London and was awarded Lloyd’s List Global Maritime Lawyer of the Year 20142015 and the United States Coast Guard Challenge Coin in July 2015 for his work on Arctic risk and the Polar Code. For further information visit: dwf.co.uk

www.frontierenergy.info WINTER 2016 23

REMOTE COMMUNICATIONS

The oil sector has huge data requirements

KEEPING THE LINES OF

COMMUNICATION OPEN

The remoteness of the Arctic

As interest levels in the polar regions continues to grow, research firm NSR discusses some of the primary challenges facing communications operations in these challenging and remote areas

24 WINTER 2016 www.frontierenergy.info

to anticipate market developments and assess their market position in both existing and new segments that offer either long-term revenue opportunities or a highly risky investment.

He told FE: “The report was to examine the region’s market opportunities in terms of pent-up and growing demand as well as address the interest of satellite operators and service providers in assessing the supply and demand dynamics of the Arctic and Antarctic regions more closely in order to determine whether investments and forward-looking initiatives will yield healthy returns.”

Growth markets The major players servicing this market include Iridium, Inmarsat, SES and Telesat.

‘Basic’ services exist today, including C-band and Ku-band capacity but these aren’t always 100% available due to look angles at above 65 degrees for the Arctic and below 65 degrees in the Antarctic. Indeed, these are the main challenges: coverage, availability and reliability that have restrained market growth over the past decades. Iridium is the most reliable being 100% available, however, it is constrained currently by

Photos: BP, Statoil, Inmarsat

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he polar region has gained attention in recent years, specifically in the enterprise sector with the opening of sea lanes and opportunities presented by key industries such as oil and gas, mining and commercial airlines increasing the number of flights using the polar route. Tourism has likewise led to consumer-oriented opportunities as the number of Arctic and Antarctic visitors rises annually.

Yet the region’s geography presents technical and coverage challenges for satellite operators that must assess the risks associated in launching capacity dedicated to serving the region. Economic conditions are likewise tenuous as exploration has diminished in the once highly promising oil and gas sector, which was a key market driver for satellite investments.

A new report by experts NSR assesses current and future polar satellite requirements by application, vertical and by frequency platform, offering key insights for industry players looking to navigate and gain insights into the market’s future supply and demand potential.

According to Jose Del Rosario of NSR, the report enables satellite operators, service providers and equipment vendors

REMOTE COMMUNICATIONS

Satellite infrastructure is a costly investment

throughput. As such, the video markets, and to some degree legacy telephony and carrier services, constitute a large part of market demand.

There is Inmarsat BGAN and HTS available today, which should lead to better performance and throughput. Over time, LEO-HTS and other programs such as Iridium NEXT should improve the solution suite, which should then expand the market potential for key services that include broadband access and VSAT services for enterprises. Wireless backhaul can be another area of growth but it is still quite challenging in terms of deploying systems in harsh and remote environments.

The one application that is relatively constant is commercial mobility as the increase of aeronautical polar route traffic should continue over the short to long term.

“In revenuev terms, video, broadband access and VSATs as well as commercial mobility are expected to see the largest shares over a 10-year period,” said Del Rosario. “The big move is expected to take place in the Broadband Access and VSAT market driven by the entrance of LEO-HTS systems. Better cost structures plus coverage should lead to higher procurement by households and enterprises.”

Variable networks The communications landscape also varies according to the geography. The Antarctic region is mostly government-led in terms of usage and demand supporting mostly scientific research for ‘temporary’ residents. Tourism is present as well but is still relatively limited.

On the other hand, the Arctic region

has a higher mix of usage and customers that lead to a broader range of services to support the oil and gas industry, mining, tourism, commercial airline routes, video neighbourhoods and broadband access for ‘permanent’ residents.

“In terms of new capacity at the poles, there is very little capacity which is ‘dedicated’, or launched purely for the polar regions,” said Alan Crisp, analyst of NSR. “Existing capacity on C-band and Ku-band, as well as GEO-HTS, is effectively addressing spillover demand – demand which is primarily for North America, Europe, or Russia, and have beams which are accessible beyond 65 degrees North. New capacity will be primarily about LEO-HTS capacity, with its worldwide footprint, reaching the Arctic and Antarctic. This means that the financial challenges are no different to adding capacity to other regions. The best example of this today is OneWeb which had announced in June 2015 that it has raised $500M for its LEO-HTS constellation through Virgin, Intelsat, Airbus and a number of other investors.”

New investment In terms of new investment, the main economic and commercial consideration for operators has, is and will continue to be consistency of long-term revenues for key applications. In other words, investments and expansion will only be supported and risks will be taken if there is a sustainable, long term business case that supports a healthy return on investment for costly new infrastructure.

For some applications, ‘build it and they

Charting new waters

will come’ applies, broadband access, and connectivity for commercial airline routes for instance. However, for certain other applications, revenue prospects are less consistent. “For example, with the current low oil prices and the pullout of Shell from the Alaskan Arctic, there will be limited oil and gas revenue growth opportunities, at least in the short term,” said Crisp.

The lack of long-term commitments from governments to dedicate resources, through military or civil government including scientific research also makes launching dedicated polar capacity a risky endeavour, especially combined with the additional capital and operating costs driven by the logistics of operating in such a remote environment. Nevertheless due to pent up demand in the polar regions – especially the Arctic – investment will be high risk but potentially high reward.

Crisp believes that the major industry players - the likes of Iridium, Inmarsat, SES and Telesat - remain bullish to a certain extent but also cautious on the region’s prospects due to population demographics and economic prospects.

“For instance, the oil and gas industry was/is a major component of economic growth; however, with the pullout of Shell from Alaska as well as the difficulties in exploration, it is uncertain whether an economic stimulus that leads to an overall in communications demand will be forthcoming.”

Polar Satellite Markets, the new report published by NSR, is available now. For further information visit: www.nsr.com

www.frontierenergy.info WINTER 2016 25

MARINE RESEARCH

Norway is investing in more research to help protect the oceans and marine life

OCEAN OF PLENTY Norway is providing more money for research and to preserve the oceans of the north in a move that underscores the rise in significance of fisheries and allied sectors, versus an oil industry in the doldrums

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hen the price of fish is higher stimulate the global economy and the than the cost of a barrel of demand for oil. Historically, at least, that oil, you know the world is. Nowadays there is also a lot of talk economy is going through some kind of that we are entering a whole new era. major adjustment. What the long-term significance is may be hard to predict - oil Environmental preservation prices are notorious for their volatility Whatever happens with the oil price and have a track record of bouncing or the global economy, the Norwegian back - but clearly it is causing plenty of government remains certain of one thing: sleepless nights among strategists, policy that its future is inherently linked to the makers, not to mention stressed oil oceans, and that means the Arctic. company chief executives.

Norway´s three most important In a country such as Norway, where industries – seafood, offshore and oil and gas has long been a fundamental maritime – are all ocean-based. economic platform, it’s a big challenge.

Almost 90% of the country’s export “A few weeks ago you could read in revenues are the Norwegian derived from seanews that the price based activities of a fresh, gutted There is potential for the and resources. salmon weighing fisheries and aquaculture Moreover, 80% of 4.5 kilos was higher Norway’s maritime industries to draw on than the price of a areas are north of barrel of North Sea expertise and technological the Arctic Circle.

Oil,” Norwegian advances in the maritime and Whether it’s fresh Prime Minister salmon or barrels offshore sectors Erna Solberg told of oil being pulled the Arctic Frontiers out of the deep blue business conference sea there remains in January. a strong commitment to preserve this It’s a remarkable twist and something national asset. inconceivable just a year or so ago.

The Ministry of Foreign Affairs in Still, on the bright side, the oil and gas February announced that it would industry has been through major slumps be providing NOK 14.3 million for a before, and has kept growing. Although project to reduce environmental risk in bad for Norway, low oil prices ultimately 26 WINTER 2016 www.frontierenergy.info

connection with oil and gas activities in northern sea areas.

“It is crucial to reduce the effects of human activities on the marine environment in the Arctic,” said Minister of Foreign Affairs Børge Brende.

Entitled 'A Transatlantic Innovation Arena for Sustainable Development in the Arctic' it brings together the University of Tromsø, the Institute of Marine Research, the International Research Institute of Stavanger and the Canadian governmental body Fisheries and Ocean Canada.

The project will be implemented by research firm Akvaplan-niva in Tromsø through to 2020, with the international petroleum industry set to be consulted as part of the research.

The project will identify measures to reduce environmental risk in the northern sea areas, specifically from the oil and gas industry.

The aim is to develop knowledge, technical solutions and plans that address the specific environmental challenges within Arctic waters.

“Supporting this project is an important contribution to sustainable development of key natural resources in the Arctic.

These resources include petroleum and could offer major opportunities for value creation,” said Brende.

The funding comes from the Arctic grant scheme Arctic 2030, which has a budget framework of more than NOK 150 million for this year alone.

MARINE RESEARCH

New paradigm The history of the ocean economy is in many ways the economic history of Norway, even though less than 10% of the population live north of the Arctic Circle. And, clearly, it remains vital for the nation’s future.

Drives to cut costs and adapt to challenging market realities perhaps bode well for the future of the petroleum sector, both in the far north and in other offshore areas. Statoil’s recent announcement that it plans to develop the Castberg field in the Barents Sea confirms these dynamics.

Still, officials now appear to be planning for a new paradigm.

“Based on the current situation it would appear that the petroleum industry may have reached its peak,” the country’s prime minister said at the Arctic Futures meeting. “This means that the Norwegian economy needs other industries to increase their activities and contribute to diversifying and greening our economy.”

Even in the absence of a thriving energy sector, he said the goal is to make the far north one of the most innovative regions of Norway, and to position it as a hub for knowledge and science gathering.

In Norway’s extreme north, there is potential in the maritime sector, the seafood industry, the mineral industry, tourism, and space technology, among other innovative areas.

Oslo has drawn up an ambitious long-term plan for research and higher education that stakes out a course for policy through to 2024.

Whilst resources (hydrocarbons and fisheries) will continue to play an important role there is a greater emphasis on new and advanced technology.

Solberg says ocean-based industries are likely to play an increasingly significant part in the future, with growing markets for new ocean-based industries such as

Tourism is one of a number of industries opening up in the far north

aquaculture, offshore renewable energy and new marine resources supporting new opportunities and solutions.

Cross sectoral technology

If anything, it means that interest in the Arctic region is only just getting going, despite the struggles of the oil companies.

History shows how increased knowledge of the sea has meant gradual refinements to the design and engineering of ships and improved methods of fishing.

Protecting the vulnerable Arctic environment is a key challenge, however, whatever the shape of business and technology that is taking place.

Cross-sectoral technological cooperation could be the key to solving these future challenges, in exploiting biological and mineral resources, and simultaneously protecting the natural marine environment.

“We are currently looking into how we can use technologies and relevant expertise from the offshore sectors in other oceanbased industries,” said Solberg.

For instance, there is potential for the fisheries and aquaculture industries to draw on expertise and technological advances in the maritime and offshore sectors.

Offshore drilling platform technologies are now being applied to make offshore fish farming possible. Fish farming operations in more exposed waters require using platform concepts borrowed from oil and gas production. Anchoring and logistics are also being Trondheim, the location for the new adapted, and offshore Ocean Space Centre research and technology hub suppliers are already

Ocean Space Centre Norway is also planning to develop a new centre for maritime technology research and education – an Ocean Space Centre – in Trondheim.

The centre will conduct crosscutting marine and maritime research and development and become an international knowledge hub for maritime construction and ocean technology.

The hope is that it will ensure that Norwegian businesses and research institutions across all sectors continue to utilise and create wealth from the bounty of the oceans.

One of Oslo’s major research infrastructure projects, the centre will be closely aligned with relevant industries and corporations.

Kongsberg Maritime recently cited its links with the centre as it unveiled the acquisition of ship simulation and consultancy company Ship Modelling & Simulation Centre (SMSC), which is also based in Trondheim.

adjusting to the new market.

Offshore windmills also draw heavily on offshore technology, and environmental technologies are being developed for use across the marine, maritime and offshore sectors so that these industries can take part in the green shift.

For all of this to happen, access to modern maritime research infrastructure is vital, in order to realise the vast potential of the oceans.

What’s for sure is that Norway’s Arctic adventure remains in its infancy, irrespective of the price of fish or a barrel of oil. www.frontierenergy.info WINTER 2016 27

INSIGHT The continent’s katabatic - or descending - winds, that carry air downward, can reach 250 km/h

No more getting lost

Technology explorers Polar team to be fitted with state-of-the-art tracking devices to make sure that everyone and everything - comes back safe and well Frontier lands: technology is aiding Antarctic research efforts

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he days of getting lost in the Arctic wilderness could Rachid Touzani, director of the Belgian Polar Secretariat, said be over. For a century or more, explorers have faced the safety of all men and women working in the region was perilous conditions as paramount. “This partnership they brave extreme cold and will allow us to test technology rapidly changeable weather that could be useful for the patterns in the polar regions. safety of our operations in The SticknTrack GPS devices - attached Despite talk of climate Antarctica.” he said. to pinots, skidoes and containers change on a global level, Antarctica is the earth’s not only relay information about the the weather in the Arctic coldest, windiest and harshest and Antarctica - sub-zero continent. In the wintertime, location of any materials or assets, they temperatures, fierce winds, poor temperatures reach a minimum can also report temperature, usage and visibility, not to mention the range of -80°C to -90°C; highs other points of interest sheer unpredictability - remains during summer are 5-15°C, much the same as it was in the near the coasts. days of Scott and Amundsen.

The continent’s katabatic - or But technology has moved on. This is evident from a new descending - winds, that carry air downward, can reach 250 km/h. project to remotely connect the Belare polar expedition, based in the Princess Elisabeth Antarctica Polar Station.

Internet of things People on the expedition and moving materials or equipment Kristoff van Rattinghe, co-founder of Sensolus, said the within a range up to 40 km around the base station are now StickNTrack device is low in energy use - it works for 10 years monitored with 45 SticknTrack GPS trackers from Belgian company, without a charge - industrial rated and easy to install with Sensolus, based on the SIGFOX communications network. no wiring involved. He said the Antarctic project tests these The goal is to strengthen safety and security during research features in real-life harsh conditions in a remote area. and field operations.

“We strongly believe that sustaining operational missions is the kind of real innovation we can achieve with the Internet Asset tracking of Things,” he said. “And this is only possible through strong The Belare expedition consists of a team of technicians and collaborations like the one set up for this mission. Via this researchers specialised in glaciology, climatology and geomorphology collaboration, great opportunities are created to take big steps in charge of various Belgian and international scientific projects. forward in the team’s knowledge of climatic changes and The SticknTrack GPS devices - attached to pinots, skidoes and mission management.” containers - not only relay information about the location of any The company has released other similar projects including materials or assets, they can also report temperature, usage and Sticknsail for the maritime sector, which enables users to track, other points of interest. protect and share yachting experiences.

28 WINTER 2016 www.frontierenergy.info

NEW FRONTIERS! NEW TECHNOLOGY! NEW CHALLENGES! Frontier Energy is the world’s first magazine dedicated to the oil & gas and shipping operations in the Arctic and other challenging ice-affected regions.

Each issue will offer an exclusive insight into the technologies being used to overcome the challenges of this unique environment. Supported by a weekly e-newsletter, the magazine brings readers informative special reports and up-dates on all the latest developments.

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