DANISH
ERHVERVSMAGASINERNE
M ARITIME MAGAZINE 6 - 2011
Niels Smedegaard’s turn around:
Success for DFDS where others are depressed It works:
Continued strong Danish focus on combating piracy Shipowners fear wasted investments Making ballast water treatment cheaper
DANISH
ERHVERVSMAGASINERNE
M ARITIME
6-2011
MAGAZINE 6 - 2011
Niels Smedegaard’s turn around:
Success for DFDS where others are depressed It works:
Continued strong Danish focus on combating piracy Shipowners fear wasted investments Making ballast water treatment cheaper
DFDS
ISSN: 1903-5888 Editor René Wittendorff rw@erhvervsmagasinerne.dk Ads Mads Melin Phone (+45) 2785 0041 mads@erhvervsmagasinerne.dk
4 Ballast water problems: Shipowners fear wasted investments 6 Wartsila ballast water treatment: Don’t be surprised when the rush comes 8 Litehauz on ballast water systems: Still no boom in sight 10 Alfa-Laval: Setting new standards for ballast water treatment 11 Testing new concept: Making ballast water treatment cheaper 12 It works: Continued strong Danish focus on combating piracy 14 Niels Smedegaard’s turn around: Success for DFDS where others are depressed 17 Tough motivation: The DFDS way to do it 20 Danish minister for shipping: New strategy for Danish shipping to create growth 22 Danish ports also have a role to play 22 Exploit the green growth potential in The Blue Denmark 24 Turning the time 20 years back can solve EEDI problem within shipbuilding 26 Norwegians pioneer new lease of life for North Sea fields 28 Competence Development, Innovations, and Entrepreneurship in the Danish Maritime Cluster 30 Trade Event 2011
Publisher ErhvervsMagasinerne ApS Jægergaardsgade 152, Bygn. 03 I 8000 Århus C Phone.: (+45) 7020 4155, Fax: (+45) 7020 4156 Printing: PE offset A/S Layout: Michael Storm, Designunivers Image editing: Nini Wittendorff Next issue: 23rd of February 2012
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Peter Olsen, head of division in Danish Shipowners’ Association warns against huge investments without the prober environment results.
Ballast water problems:
Shipowners fear wasted investments The Danish Shipowners’ Association is not completely convinced of the environmental wisdom in the IMO’s ballast water convention, and the association worries, if the huge investments required are bringing about the right results. Regional North European implementation is not welcomed by the Danish shipping companies. - We are talking about massive investments with quite some challenges. The convention is from 2004, when the expectations were that today we would be further ahead with technological developments and solutions available, making the prices reasonable, says head of division in Danish Shipowners’ Association, Peter Olsen. - We must say that when we look at things right now, where markets are generally under pressure and some companies do not make much money, we worry if the time is right to go out and make investments for millions of DKK in something that you in reality might find a little unsure. Will it work? We must remember that there are requirements in the Convention that you should clean the tanks when at the same time there is a lot of fouling on the hull. The fundamental question is, whether this is actually an environmentally sound investment, he says. Extra regional demands - Another focus of ours is the question of regional implementation. The basis for the Convention has been that one should not mix invasive species from ballast water between the continents. But when we speak with the mari-
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Ballast water problems: Shipowners fear wasted investments
time administrations in Northern Europe it appears that they believe that the rules should apply to regional shipping as well. We are especially concerned, when this issue is connected with sulphur demands, because of which the sailing in the Baltic Sea will require scrubbers or oil with low sulphur content. We have to deal with both the sulphur problem and struggle to manage the massive investments in clean ballast water, Peter Olsen says and asks: - Is there a real danger if we don’t purify. The Convention offers the option that one can be excluded entirely from the procedure if you sail in one and the same area or even that you can get a time based exemption for up to five years if you have made prior risk assessment. Short sea pressure - It is said that when sailing between two specific ports there is no risk because the water you take up and emit is the same - there are no target species. For us it is crucial that short sea shipping will have an exemption. Otherwise it may be an economically heavy challenge, Peter Olsen says. By Finn Bruun
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Posidonia 4-8 June 2012, Metropolitan Expo, Athens Greece
A unique blend of business and social interactions at the heart of Shipping Be part of the great Posidonia experience at a state of the art new venue
The International Shipping Exhibition
Organisers: Posidonia Exhibitions SA, e-mail: posidonia@posidonia-events.com
www.posidonia-events.com The Pirate season is approaching
Photo: Wartsila Wartsila is a global leader in solutions for the marine markets and engaged in ballast water treatment system for the shipping industry.
- Progress has most of all been on the filter-side, which makes purpose built solutions to be used in retrofit current. We have at Wartsila been a little reluctant in order to get hold on how they think in the U.S. Coast Guard, which is a rather crucial point for us. So we have not implemented the full release of our product line. - We ran tests in a facility, which has recently been replaced with another one so as to run all our models in high flow, says Tom Nyman, General Manager, Water Solutions, Wartsila. - Perhaps we are a little late, but on the other hand we can an advantage: When we come out with our solution, it will be the latest update. - Now we have a test option that interacts with our redesigned filters enabling us to run land-based test on all models. We do not use scaling but validate at full capacity, he says. - At the moment the industry is waiting because there is much confusion on Port State Protocol and US Coast Guard position and Clean Water Act along with the individual states’ own acts. The USA is working to get a comprehensive solution. This will help both operators and customers. Today there is no definite ruling, Tom Nyman points out.
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DELIVERS TODAY - Carrying out all tests and documentations and consistency tests takes a long time and it requires a lot of efforts to get all tests to be consistent. You not only have to focus on the biological side, it takes a smooth operation as well. Today, very fine filters are used, says Tom Nyman, indicating that Wasila today can deliver certain number of sizes for ships. - We have half the line of products we plan to have in the future - every unit is tested completely for itself with its own flow control. We make parallel units that are 100 percent compatible. We operate worldwide and have 60 offices in 70 countries and a widespread service network. On the question of when demand for the products really will come, Tom Nyman answers: - I personally believe that it starts to go up in 2012, although some probably will wait until 2013-14. But that is almost too long to wait to order. - There are many suppliers, but very few who have the equipment ready. A good tip is to be ready by 1st of January 2012
Wartsila ballast water treatment: Don’t be surprised when the rush comes
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WARTSILA BALLAST WATER TREATMENT:
DON’T BE SURPRISED WHEN THE
RUSH COMES Wartsila plays an important role in the development of systems for ballast water treatment, and general manager Tom Nyman, Water Solutions division, warns that shipping companies might underestimate how long time it actually takes from order date to complete installation. The rush can come soon.
because ratification is imminent. Many states are about to sign, including Denmark.
EASY TO UNDERESTIMATE - But I think that some ship owners underestimate how much time should be calculated. It takes up to 6-8 months for delivery by suppliers and 2-3 months for installation. So I think it will all go quickly, and once the boom begins longer lead time must be expected, says Tom Nyman, who estimates that rapid installation hardly is any competition parameter for companies, because everyone will need it. - We’ve seen other regulatory situations such as the EU regulation on low NOx fuels in port. The shipping industry believed that it would take a long time, but it didn’t. Maybe they expect to have in ballast context a long transitional period and exceptions. I think that it gets tough, when the convention demands take effect, he indicates. - There are several suppliers with filter and UV solutions. Water treatment has taken place since the beginning of 1900 and all that has been tested on land must be tested at sea, it creates new innovation. But at sea there is a wide range of water quali-
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ties - ships move from Arctic waters to the tropics. So there must be an adjustment. This is reflected in our technology choices. - We can as a matter of fact deliver today, but the certification is determined by the endurance tests that we start up in the new year, says Tom Nyman.
EASY TO INSTALL Wartsila and Trojan Marinex cooperates on a compact design, making it easy to install and suitable for most vessels. The system treats the ballast water via a two-step process, first by filtering out larger organisms and particles, and then by UV disinfection. The UV irradiation either kills the remaining organisms, or renders them incapable of reproduction. Each unit is capable of treating 500 m³ ballast water per hour, with the possibility to install several units in parallel for higher flow rates. By Finn Bruun
Wartsila ballast water treatment: Don’t be surprised when the rush comes
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Litehauz on ballast water systems:
Still no boom in sight The ballast water challenge is approaching and a lot of shipping companies are preparing themselves. But they want to be sure to choose the right system. Today the number of systems with much on-board lifetime is small but for shipowners the investment is huge and it is a marriage for life once you’ve selected your system. Frank Stuer-Lauridsen of Litehauz, consultants specializing in ballast water questions, points out that a lot of companies are in the process of developing systems, but yet only few with a market ready system and even fewer, who can deliver a second generation system. This leaves shipping companies without many options. - The big problem is the lack of proven second generation systems that has lived for some years on the market. Everything is quite new and the Convention is not yet in force. But when it’s opened, fixed dates will be binding. We just need one large tonnage country to open it. - Here we talk about investments in the range of 50 billion USD. Companies like Maersk have placed orders in a few systems but not for the entire fleet. What you hear is that they’re still in open process. The orders are primarily to find the suppliers who are able to deliver what they need - not many other Danish companies have as far as I know placed more orders. The market lies fully open. Ship owners often want to be assured not only that the systems work but also that suppliers can actually live up to their commitments with parts and service. This means an even greater challenge for a small developer of ballast systems to convince the large carriers that they will be on the market in 5-10 years. It’s a little easier for large and reputable suppliers. Danish challenge Danish companies have a good chance to be a part of the coming development. They already are active. This also applies to Desmi Ocean and Bawat. Aalborg industries - today owned by Alfa Laval - has a robust system, which is now in focus. Frank Stuer-Lauridsen finds that even if only a few small suppliers are in the game, it is possible for them to gain the muscles through investors or the Danish Maritime Fund, where you can get funding for this kind of development. - There is no doubt that the Danish maritime sector has a strong position in the development of these systems. We have a Danish land based test center and it means a lot to have it in
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Litehauz on ballast water systems: Still no boom in sight
the neighborhood, enabling you to quickly make adjustments and to build up a competence in order not to waste too much time and make too many mistakes. The DHI test center in connection with the port of Hundested is up and running after receiving a grant from the Danish Maritime Fund. Boom in three to four years Litehauz as well is busy and probably the one advisor delivering the highest portion of consulting in this field in the world. We have 6-7 developers as customers, he says. - We provide guidance about the Convention and work with both authorities and shipping companies because the convention leaves room for interpretation. There are exceptions or exemptions that some companies might exploit, he explains. - Regarding systems, we help the developers get their strategy in place and to avoid mistakes and make agreements with subcontractors and write applications, he adds. - Ballast water is very important in our profile. Actually I thought that we already would be in the middle of a boom by now, but the market is so attractive for development and so important for owners that everybody will be sure to take the right decision. Therefore I expect that the market will not boom until three or four years from now. When about 50,000 ships need installation, the market the market will be huge, and then fall back to only newbuildings, where we will be down to maybe 1500 or 2000 ships. There will always be some work to do, he expects. He counts 3-4 different ways to treat ballast water, two of which are fundamental - namely to filter out the problem of the unwanted organisms and treat with light. The second way is to add a kind of disinfection - by chlorinating or using electrolysis or ozone. But you want to be sure that you have a system which is robust, he states. By Finn Bruun
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Frank Stuer-Lauridsen, Litehauz sees great opportunities for Danish maritime industry as suppliers of ballast water treatment solutions for shipping.
Photo: Frank Stuer-Lauridsen
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Litehauz on ballast water systems: Still no boom in sight
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Alfa-Laval:
Setting new standards for ballast water treatment Alfa Laval is already developing its next generation of ballast water systems and expects increased activity in this field even though the IMO ballast water convention has not yet been ratified. Today Alfa Laval has sold around 200 units for different types of ships. - We have been working in this field for a long time and see ourselves - which may well also be documented - as a commercial leader in the market for ballast water systems, says CEO of Alfa Laval, Denmark, Casper Andersen. - We have had a ballast water system since 2006, when we first launched it. Our system has been chosen by many customers, and we are the ones with the most installations onboard various ship types. Our company has a global platform of ballast systems for all ship types, and we have sold approx. 200 system units. Despite the lack of the convention, we meet interest from several companies, says Casper Andersen, who, however, is not expecting any sudden boom in demand.
- Carriers are working with other planning horizons, and rules come into force at different time for new ships and for already operating ships. Setting up a standard - I think that in case of ratification in 2012, we can expect a peek between 2016 and 2018, as the forecast looks now, he says, pointing out that companies work with different models of when they think it is the right time to put themselves in position. - We are at the technology side setting up a sort of standard, and the UV-based system, which we market, is considered to be a safe, reliable and chemical-free solution being relatively easy to install and integrate. It’s probably the platform of the market, he thinks. - Carriers as such have the issue on their agenda. It’s no surprise to anyone that the requirements are coming, but it’s probably different when you as a customer think that you will enter. - Meanwhile, we see an increased demand. Many companies place themselves in position and try to understand what the possibilities are and what kind of technology standard is under way. So there is increased activity on the ballast water-side, Casper Andersen says. - We have established a leadership position through the technology that we market and develop. We already have reached a version 2.0, which consumes less energy. Furthermore, we believe that it is important for companies that we do not use chemicals. There is a major environmental focus in the shipping industry, so if you solve one problem by creating another, you achieve nothing, he says. Pioneer - Denmark is a major shipping nation and also a pioneer in the environmental field and as a third dimension, one thinks more of water as a competence area, so it is a clear potential for Danish companies, he says, adding:
Casper Andersen, Alfa-Laval
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Alfa-Laval: Setting new standards for ballast water treatment
- There are many on offer also internationally but our conditions are good, and it is also one reason why Alfa-Laval as a Swedish / Danish Øresund business can play a significant role. Opportunities are good, but we have to get the Convention ratified, says Casper Andersen. By Finn Bruun
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M.Sc. Jan Hummer, Bawat is a specialist in tank cleaning and is recognized for his work to create a simple solution for cleaning ballast water.
Testing new concept:
Making ballast water treatment cheaper So far no easy short cuts to cleaning ships’ ballast water have been developed. The systems are quite costly and bulky. Only few of them have yet been long time tested. A new Danish design is on test. One of the new system designs that has created interest, is the Bawat solution - so much interest, that the Danish Maritime Fund chose to reward the designer Jan Hummer with a prize of 2011 in Copenhagen in November, presented by the minister in charge of maritime affairs – Danish minister for business and growth, Ole Sohn. Jan Hummer describes the system as being unique and explains that it is an “in-tank” treatment concept - contrary to “in-line” systems. Ballast water is re-circulated over the ballast tank, inert gasses are dosed into a circulation system where “intank” rotary jet heads secures a fast stripping of oxygen from the ballast water. The system has 2-5 rotary jet heads installed in each ballast water tank. Smaller and cheaper BAWAT A/S has received support from the Danish Maritime Fund to conduct a test of this technology being different from
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existing systems on the market. The project will be implemented at Alfa Laval and DHI in Denmark and the intention is that the pilot project will demonstrate “proof of concept” and provide a basis for patenting the system. The proposed system is based on known and existing components, and Jan Hummer expects that it will be smaller than known systems. Easy installation - And it will be much cheaper than existing systems, if it works, Jan Hummer explains. Among the advantages mentioned are: No disruption of normal procedures and low cost of installation and operation with low space requirement for retrofitting combined with corrosion protection, sludge control. The system is scalable. By Finn Bruun
Testing new concept: Making ballast water treatment cheaper
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The Royal Danish Navy has for some time been engaged in operations off Africa’s Horn as part of the international anti piracy efforts. The commitment continues.
IT WORKS
Continued strong Danish focus on combating piracy
The piracy problem is increasing and at a conference on piracy in late November in Copenhagen it was stated that the strong Danish response cannot stand alone. More international muscle is required, and the job is to create attention to the size of the problem. The Danish ministry of Foreign Affairs as well as the shipping industry is working full speed in this matter and the Danish navy is very active off Africa’s Horn. - Our efforts are actually effective, Commander Thomas Stig Rasmussen, from the Danish Navy concluded, when he at a conference on piracy in Copenhagen commented on the criticism that Danish naval vessels participating in the international anti-piracy efforts off the coast of Africa in several cases have had to release captured pirates. Recently, the Danish warship “Absalon” released a group of pirates, who had been captured at sea. They were released after being disarmed and held in a so called “catch and release” operation. The problem is that it is hard to prosecute them without firm evidence that they were actually engaged in criminal activities.
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It works: Continued strong Danish focus on combating piracy
- Normally we take their weapons, their equipment and their boat, and put them out of the game for 10-20 days. It has an effect. More pirates are caught and there are fewer successful hijackings, he said. The international naval forces in the Gulf of Aden today put so much pressure on the pirates that the number of successful pirate attacks this year has been declining. A matter of minutes Thomas Stig Rasmussen explained that in assisting the cargo ships the navy has priority on rapid response by helicopter and Special Forces in fast boats. It is often a matter of minutes, from the moment the alarm sounds from a cargo ship
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- Our biggest challenge is to get some broader shoulders to bear. Denmark is a great seafaring nation but a small country.
under attack to the whole thing is decided. - Either in the form of a hijacking or the escape or capture of the pirates. The significance of minutes was illustrated when the shipping company Clipper’s CEO, Per Gullestrup at the conference played a dramatic audio recording of communications between the Clipper vessel CEC Future’s captain and coalition naval force. “We are under attack,” the captain announced over the radio. He was instructed to perform evasive maneuvers and speeding up: “We can be there in five minutes”, the naval radio operator urged. Unfortunately, this was time enough for the pirates to win. In the audio recording you hear the captain loudly reporting of shots at the ship with “bazooka” and then: “The pirates are on board.” This was in 2008 and caused 72 days in captivity for the crew before the release was negotiated and ransom money dropped from the air to the pirates. Per Gullestrup told about the comprehensive crisis management and how the hijacking dramatically changed the company’s policy within the piracy area. Today Clipper employs a dedicated “piracy manager” and the company has decided to use armed guards on all its vessels when passing through the pirate waters. - And we comply with the IMO Best Management Practice 4, Per Gulllestrup said. Commander Thomas Stig Rasmussen saw no problems in shipping companies’ use of armed guards in the exposed areas. - We do not consider this a competition. We have an efficient cooperation with them. Deputy Director of Danish Shipowners’ Association, Jan Fritz Hansen, stressed at the conference that the fleet plays an indispensable role even if the companies are making use of armed guards. He expected these guards to be a standard
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procedure and announced that the shipowners will soon release some sort of industry-standard or guide for qualified use of armed guards onboard. - This will protect our ships but not solve the problem, he said. Strong Danish diplomacy The Danish ministry of Foreign Affairs makes great efforts in all relevant international forums to get the piracy problem on the agenda to initiate action, and Katrine Joensen from the ministry’s security policy section informed that the new Danish government will continue the strong Danish anti-piracy efforts. - It has high priority, she said, mentioning that many people are involved both in the ministry in Copenhagen and in the UN, EU, NATO and bilaterally with other countries. The ministry also has a strong commitment in the legal field in relation to Somali pirates. - Denmark can’t solve the problems alone, she said, and underlined that in the long run the pirate problem must be solved ashore. Jan Fritz Hansen pointed out that Denmark, despite its large merchant fleet is a small country. It requires international cooperation to combat piracy, he stated and pointed out that whereas the piracy issue gets much attention in Denmark, the question is often completely absent in the debate in most other states. He is pushing for the EU to play a more active role and announced a series of measures including activities in connection with the Danish EU presidency. - Our biggest challenge is to get some broader shoulders to bear. Denmark is a great seafaring nation but a small country. We need to have strong friends in this case, he said. The conference was organized by the Danish Society for Naval Architecture and Marine Engineering. By Finn Bruun
It works: Continued strong Danish focus on combating piracy
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If there is one thing, in which DFDS’ CEO Niels Smedegaard excels, it is to bring change and get hard decisions not only accepted but actually make them create positive momentum. His effort is to generate an overall motivation, which ploughs new mind furrows and makes money - as well as a rather unique position to expand activities despite the crisis. A keyword is to stick tightly to the strategy - and to communicate.
Niels Smedegaard’s turn around:
Success for DFDS where others are depressed - When I started in DFDS in 2007 one of my tasks was to create a new strategy and try to sharpen the organization a bit and get us to earn some more money. So it was pretty clear, what I had to do, DFDS’ Niels Smedegaard states. - After a few months, we announced a strategy, where we indicated that we wanted to take part in the consolidation that we expected would take place in our segment: Short sea shipping from Russia in the north to Spain in the south. - It was obvious that if we were to be a leading player, we had to become more efficient. Only then you have a fair right to buy other companies. You must have something to offer that makes things a little better. Therefore we initiated a strong improvement work in 2007-08 in the form of a “go forward plan” focusing particularly on the turnaround on one of our main areas: Passenger activity which had then faced 5-7
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years of fluctuating financial results after the stop of onboard duty-free sales and emerging new low cost airlines. - At that time, analysts said: Why don’t you sell it or close it down? - But we felt there was more we could do especially on the cost side, so we started a project where we as the first thing contacted all the unions saying: This is the situation. Now we must work together trying to improve it. We will be interviewing all your members, and we will make a plan, Niels Smedegaard tells. - The conclusion came in mid 2008 when we made changes in management and reduced staff in the passenger section by 20 percent and closed down one of our routes. Today we see the results: The passenger section is now one of the fields in the new organization with the best return on invested capital. Our Copenhagen-Oslo
Niels Smedegaard’s turn around: Success for DFDS where others are depressed
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2007 CEO DFDS Group 2004-2006 Executive Vice President, Gate Gourmet Global Sales Solutions 2000-2006 President & CEO, e-gatematrix, Atlanta, USA (a subsidiary of the Gate Gourmet Group) 1995-2000 Executive Vice President & CFO, Gate Gourmet Group, Zurich, Switzerland 1994-1995 Vice President, Head of Strategic Controlling, Swissair Associated Companies, Zurich, Switzerland 1993-1994 Finance manager, SAS Service Partner 1990-1993 Manager, Treasury, SAS Service Partner 1988-1990 Economist, SAS Finance 1988 Master of Business Administration, Copenhagen Business School Niels Smedegaard was born in 1962. He holds a M.Sc. in Business Administration.
• VESSEL PROTECTION TEAMS • CREW TRAINING • SECURITY CONSULTANCY AND route had one of the ships appointed Denmark’s second best workplace by the trade union 3F. It shows that despite the tough but necessary decisions it is possible to reverse the situation in terms of motivation. We now have a fantastic staff which is motivated and we have great momentum on these routes - in spite of higher oil prices and recession, where for instance hotels and restaurants have problems. We know how to hold on to our customers and expand our business: We have Denmark’s largest hotel with 1600-1800 beds crossing between Copenhagen and Oslo each day, he says. - This turn around model was the start for how to handle things in the company and showed the way to our next project, “Lightship,” which focused on the rest of our organization, on ships and on land operation. We subsequently have transferred this to other parts of the organization.
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ADVISORS • VESSEL SECURITY SERVICE AS Solution Marielundvej 46 E, st DK-2730 Herlev, Danmark Phone: + 45 35 25 10 10 e-mail: ecc@assolution.com web: www.assolution.com
Niels Smedegaard’s turn around: Success for DFDS where others are depressed
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We were ready - Then the financial crises showed up in the late 2008 and early 2009. But for us, this also meant the possibility of pursuing our consolidation plan. - So when Norfolk Line went on sale, we were ready - strategically as well as in efficiency performance. While everyone else reefed sails, we went out offensively. In fact, we prefer things to look a little dark and tough when buying up rather than acting when everybody says “buy now, buy now”. - In this period of uncertainty we met good support from our shareholders and after hard and intense negotiations with the seller, A.P. Møller-Mærsk, we reached a solution where they got half of the payment in equities and half in cash. - After that we could incorporate this company amounting to 60-70 percent of our own size. It was a great acquisition. Probably the biggest in Denmark in 2009, and while we were awaiting regulatory approval, we started to prepare for integration. So when the whole deal was closed in July 2010, we were immediately ready to find the synergies we believed existed. Because of the long planning, we could launch our script – containing new organizational structure, new management and new branding. And we knew, which routes were to be merged or maybe closed down. - All this made 2011 an extremely important year for us. Now we were to show that the synergies actually were there and that we responded to what we had started up.. The organization has worked hard and concentrated, and we can now - even before the end of this year – conclude that our integration is successful. Only the IT systems scheduled to be finished in 2012 remain. All other areas have fallen into in place - we have solved the problems in Ireland by selling a couple of routes and closing down two others. And we have merged terminals in Rotterdam and routes in the area, Niels Smedegaard informs. Higher turnover Altogether, we have trimmed the portfolio of activities in which we were not the best owner. We have, for example, deposed of DFDS Canal Tours. In this way, many things fell into place and we have just published our third quarter results, maintaining our second quarter upgrade expecting a pre-tax profit of 700 million DKK, which will be a record for us - despite a subdued market in the second half of 2011, our turnover will reach nearly 12 billion DKK this year. So, from the year 2007 up to now the turnover rose by 60 per cent and our bottom line by 75 per cent despite the worst financial crisis in 50 years. So we obviously are very pleased with what we have achieved - and it’s very motivating for me to see a workforce backing the strategy so well - and taking on extra work as well as going in the same direction. They have solved the problems with the highest marks. - They are, themselves, proud of the results which sharpens the appetite. Recently this has later been reflected in the fact that we are still in an expansion and consolidation situation
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with the possible purchase of SeaFrance activities on the Channel - still undecided - and the purchase in October of a route between Sweden and Estonia, he says. Looks good DFDS is today both a shipping company and logistics company forming two divisions with 7.5 billion DKK in turnover in shipping and 4 to 4.5 billion in turnover in the logistics business. - We do not experience as big fluctuations as many other shipping companies and we see ourselves more as a production/ service provider which supports our many customers with the broadest possible integrated logistics network, says Niels Smedegaard mentioning another improvement project in DFDS: - We were not satisfied with the earnings of the logistics company and set out at the start of 2011 to reverse the trend. And this year we reached our goal and expect to make a turnaround of more than 100 million DKK in the logistics business. So we are quite satisfied, he says and points out: - At the same time we have reduced our debt by 1.2 billion DKK compared to the same quarter the year before, so we are extremely well consolidated with an equity ratio of over 50 per cent. We are thus in a good position if the world comes into flat growth or a new crisis. Financially we can exploit the opportunities that may come. Things look quite well for us, unlike some of our colleagues in the industry who are under pressure because of the market conditions, he concludes. - With the acquisition of Norfolk we have proved that our strategy, organizational structure and ability to integrate new businesses is in place. Now we have “digested” the Norfolk Line transaction and is both financially and in management ready for new opportunities if the right opening occurs, he says. Foresight Niels Smedegaard will not himself take credit for the foresight characterizing the strategy from 2007, when he arrived to DFDS. - I don’t know if it was foresight, but when the financial crisis came, the possibility of consolidation occurred faster than we had expected. Shareholders backed up, and therefore we had an early opportunity to test the strategy - and given that the synergy that we originally calculated to 135 million DKK per year, already has come out with 200 million, we have created a track record with the board, the banks and the shareholders, creating confidence in our ability to handle that kind of opportunities and challenges – and support to continue. Experience shows that far from all mergers are successful, but Niels Smedegaard says: - We›ve been pretty convinced that it was strategically the right thing to do. We have prepared well and have had to make tough decisions, but we believe that being consistent and follow your strategy is the key word to be successful in our field – off course accompanied by a bit of luck and fair wind. We have had that. All has been accomplished faster and better than we had expected. But if you don’t try, you never succeed, he underlines. By Finn Bruun
Niels Smedegaard’s turn around: Success for DFDS where others are depressed
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Tough motivation:
The DFDS way to do it A basic principle when we integrated Norfolk Line and a great help to all my even closest - managers, was that to be successful, we needed the best man or woman for the job. So my entire management team was evaluated, also by external consultants, with whom I consulted, and on this basis I selected the future management team, Niels Smedegaard says. - Today management consists of old DFDS people and new ones who have entered the organization via Norfolk Line. This applies, for example, to Eddie Green, who in Copenhagen heads one of the divisions. At all management levels of the nine groups in our divisions we have a mix of DFDS people and Norfolk people. This is called “The new DFDS”, Niels Smedegaard states. - An important reason for our success is that we›ve sought out the best man or woman for the job regardless of history or passport. This has made us far more international in DFDS and here at the headquarters’ in Copenhagen, the language is English. We welcome various nationalities, which also prepare us for future acquisitions. People can see that you get a chance in the new company, no matter who you are. Two important elements in Niels Smedegaard›s management style exist both in acquisition context and in general: - It›s about being open and honest from the start. And to clearly announce: These are the principles for filling the vacancies.
- Naturally that created some uncertainty among the DFDS employees who felt they had an advantage. But in the end you get the best team through openness and honesty. - The style is also influenced by my own career, in which purchases and sales of companies sent me six years to Switzerland to the Swiss Air Group, where I got the chance and was one of the first foreigners in the head office - because of what I stood for. Not because of the passport. The same was true for my six years in the U.S: What matter was - and still is - who you are, what you deliver and how you enter into the team. - This is just the natural way for me to it given my international career - I›ve probably had more years away than in Denmark. - A process of change always creates surprises and someone will be disappointed, but it is eventually the only way to be a winner in your industry: Take the best for the job regardless of nationality or gender. My experience is that you get better decisions through the diversity within the teams. You get new angles on the solutions.
Tor Ficaria. Efficiency and speed is the goal for all DFDS’ operations.
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Tough motivation: The DFDS way to do it
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DFDS’ head Quarter in Copenhagen. The daily language is English and all nationalities are welcomed as employees.
The secret Niels Smedegaard’s secret as a successful leader is perhaps that he has no secrets. - We are not the sexiest industry. It is about hard work and it is about being as efficient as possible, learn from each other, benchmark against competitors and other industries and constantly improve yourselves. - When I joined the DFDS we were - without having to belittle anyone’s efforts - probably too focused on ourselves and our long history and the feeling that things went alright. But if you want to drive change and be at the top of the industry, it requires something extraordinary of everyone. But at the same time it creates a great motivation and satisfaction when people almost every month or quarter can see new figures indicating that so much has happened with the company and that they have a stake in the success. - It’s not just due to me that DFDS has evolved so much - it’s all the employees and managers who have driven this development. It is not something one man can do. I can put things in motion and swing the baton and take the front position, but my colleagues get it done - this principle applies no matter if it’s shipping, logistics, airline industry or a manufacturing business. That is what it takes to lead people successfully and make the company successful. - It is evident, that when you can show people that hard work and bold decisions bear fruit and produce results, you have the best leadership example.
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Tough motivation: The DFDS way to do it
- Before the turnaround of our passenger business, the staff felt that they to some extent were the “whipping boy” of the company and never were really satisfied. But going through a tough project – which no one other than I could knew well enough to have faith in would turn out a success - and afterwards seeing the results and even be hailed for their efforts, was motivating and triggered other parts of the organization to want to show that they could do likewise. Precisely this has been one of the foundations of DFDS’s development, which we have repeated in other areas - most recently in our logistics company, in which we after analysis have started a similar project with close follow-up on the tough problems – including having to say goodbye to some people. We are changing processes and increasing efficiency. This has created excitement and a success in which the participants can bask a little. It inspires because it has been obtained by courage and hard work. We cultivate this kind of examples and bring them out throughout the company via news updates. We call it the “DFDS way”, Niels Smedegaard says. It never stops - The philosophy is that change is the only constant. In all its simplicity: if we all do things just a little bit better every day, we unleash a great power, which is extremely difficult for competitors to copy and which brings us an inch ahead of others. It really works.
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- We follow up on things. Everything we do can be measured preferably in money - no matter what kind of situation we are dealing with. This has developed a unique tracking and monitoring mechanism which keeps people focused. It is not just talk but something that moves things. We keep people on the track without killing creativity or creating negatively. People must see and understand what we are doing. - We are here to earn money for investment in the company, enabling us to buy new ships, trailers or new companies - and develop our company to create satisfaction and job security, he states.
In all corners of the company managers and employees perform in the way, bringing the company forward so we can be in the forefront of our industry, as we have been through the last two or three years. - We have developed a complete standard process for how to organize ourselves when we change projects or create development or integrate. There are steering committees, project managers, work streams and weekly and monthly meetings - this is the backbone of how we do it, measure it and follow up, and how we continually meet the challenges, so things never drag on. - We involve people on the floor and in the expert fields. They are the ones with solutions in our workshops and this is where creativity is unleashed. We enable solutions and allow people to try, and we listen to them. We do this all over the organization. It motivates - and get people engaged. And it’s okay to fail. We can’t make the perfect solution every time. We have to go for what is 80-85 per cent right and then get it in place and follow up later. - Speed is of the essense - it’s incredibly important both when you have to make changes and solve challenges. Rather than having everything done perfectly and revised at four different levels, and eventually signed by the boss, we push far more influence and power out in the organization and decentralize decision-making – but with our backbone structure intact, says Niels Smedegaard, whose experience is that by listening and involving more people facing the same problem you get more creative and dynamic decisions that works better and faster.
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A lot to ask for - I know I have asked people to work very hard for a long time, but in spite of the large workload, there is an understanding that it’s more fun for people to help make decisions about their own future instead of passively letting others decide for you. The inner understanding within the organization today - and the same with our financial strength and strategic direction - means that no matter what happens, we will be well positioned relative to competitors to meet the future to come, Niels Smedegaard underlines. - We have made ourselves prepared to exploit opportunities where others see threats. It has given great confidence in us, but it does not necessarily mean that it will be a success next time. But anything we can control, we do try to control and thus we succeed in more cases than otherwise. We must set clear goals, communicate them to people so they understand them, involve people, delegate, monitor, control to some extent to create to a positive spiral, he says. - For me it is important that employees know where to go and are motivated to dare to change things, make decisions and understand that we must continually go on and be more effective, says Niels Smedegaard, who does not spare himself. Great plans - An exciting job like mine requires many hours of work. That goes with my good salary, so there are no complaints. At home we are organized in the way that my wife works at home taking care of the family - our three children and myself. I probably owe a few at home. But it works, and when I have time off, the family off course has the priority. But in my job there has always been projects, crises, acquisitions, and SeaFrance and so on. I keep saying that next year will be better - but they are starting to ignore this. It won’t ever change, and we have accepted this. We found a way that suits us well, says Niels Smedegaard, who given his entrepreneurial nature does not hide that DFDS has big plans and projects for 2012. By Finn Bruun
Tough motivation: The DFDS way to do it
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Ole Sohn is the Danish Minister for business and growth and thereby also minister for shipping. He announces a new Danish Maritime Strategy to create growth.
Danish minister for shipping:
New strategy for Danish shipping to create growth Danish shipping has long been the subject of a political consensus which has established stable framework conditions, and at a maritime growth conference in Copenhagen, Minister for business and growth in the new Danish government, Ole Sohn, announced that a new strategy for growth in the Danish maritime cluster, “the Blue Denmark” will be initiated. He did not only set the stage for a political agreement on shipping – the industry and other relevant maritime stakeholders were invited to participate in the creation of the strategy. The conference took place at Christiansborg, the building comprising the Danish parliament, and was organized by the Danish Shipowners’ Association, the trade union Dansk Metal and Danish Maritime representing maritime industries and was supported by the Danish Maritime Fund under the title “Growth in the Blue Denmark”. The general idea of consensus about Danish shipping was clearly reflected by representatives from different political parties, who had speakers at the conference. Ole Sohn stressed that it is important to get growth: - In this context, the Blue Denmark plays a crucial role, he said
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and welcomed the go-do attitude from the industry practitioners, who were present at the conference. - While the shipping industry is currently characterized by the crisis and experiencing somewhat low freight rates and some excess capacity, Denmark fortunately stands incredibly strong as a flag nation. We have sound shipping companies and a diverse maritime cluster, which is strong and innovative, and constitutes a unifying force with a global focus, the Minister stressed, pointing out that competitive force and focus on innovation and cost is required to create more growth. Stable framework conditions - The latest analysis shows that there are still good trends for the Blue Denmark. Therefore, we are launching the prepara-
Danish minister for shipping: New strategy for Danish shipping to create growth
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Lars Vang Christensen, CEO of herning shipping and chairman of Danish Shipowners’ Association is pleased that the minister sees shipping as a Danish stronghold that needs stable fremwork conditions.
tion of a new maritime strategy, which focuses on growth throughout the Blue Denmark both at sea and ashore with the involvement of all stakeholders, Ole Sohn said identifying four of the focus areas to be included in the strategy to create growth and employment opportunity both ashore and at sea. - Firstly, the Danish shipping industry must remain competitive at the global level. It requires good stable framework conditions, enabling us to continuously adapt to the global situation. - Danish shipping will continue to be characterized by high quality. In addition, we are to stay the best in safety, health, environment and climate and continue to work to make Danish shipping more green on the blue seas, he said, while he highlighted the need for research and development, where efforts to associate better with business are essential. - Finally, the strategy should include a commitment to maintain and develop maritime skills, he said and stressed the importance of the seafarers’ conditions. - The Maritime Denmark must stand together, he urged. Ole Sohn’s support for the idea of consensus was brought about by his new role as minister. Earlier this year, when he was still an opposition politician, he told the Danish Maritime Magazine: - Shipping is a stronghold and a main growth engine. It is vital that we maintain focus on further development. I believe it is crucial for the shipping industry and generally in business
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policy to have consensus. Changes should be adopted by a wide majority, so that as well the Danish business community as foreign investors can see a stabile common line in the parliament, he said then. Well received The establishing of a new maritime strategy has been well received by both the Danish shipowners as well as the unions. Chairman of the Danish Shipowners’ Association, CEO Lars Vang Christensen says: - We are extremely pleased that the Minister sees shipping as a Danish stronghold that needs stable international framework conditions to continue to compete globally and thus make a significant financial contribution to the Danish economy in a time where there is serious pressure on the economy. The trade union 3F’s transportation group also wants stable framework conditions. But not for Danish shipping only. The Group finds the strategy plan positive: - Especially because there is a wish to make a partnership that includes all stakeholders, the group states. By Finn Bruun
Danish minister for shipping: New strategy for Danish shipping to create growth
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Danish ports also have a role to play The EU Commission has adopted a proposal to transform the European transport systems into a unified transport network (the TEN-T). Although the core network only encompasses two Danish ports, all Danish ports are important, says Dimitrios Theologitis, Head of the unit “Ports & Inland Navigation” in the European Commission. Europe has more than 1200 commercial ports, which handle up to 90 per cent of EU’s external trade, and the ports handle more than 850,000 port calls every year. These figures signal the importance of the ports to the European economy. -We see a world changed by the globalization. We expect cargo to increase, and we expect a shift in demand. Demand for high quality goods will increase in the emerging markets, and the industrial production in Europe will change to service and high added value products. So explains Dimitrios Theologitis, Head of the unit “Ports & Inland Navigation”, the European Mobility Network Directorate in the European Commission. In this scenario much focus will be on the ports as an important part of the Trans European Network. The EU Commission has adopted a proposal to create a new core network that will remove bottleneck and improve cross border transport. The new core TEN-T network will be supported by another comprehensive network that will feed into the core network at regional and national level. The core network will connect 83 European ports with rail and road links. Among Danish ports only Copenhagen Malmö Port and the Port of Aarhus are included in the core network. It does not mean, however, that the rest are of no use. Dimitrios Theologitis emphasizes that Europe needs all the ports. Maritime cluster -We don’t have favorite children; we need all the ports, because they have multiple functions at the local level, the na-
tional level, and the international level. Denmark has a large number of smaller ports, but two ports are included in the core network, so Denmark is well represented in the European scheme. With the new port legislation that Denmark has prepared, the ports can play a role at the local level, Dimitrios Theologitis says adding that as one of the leading maritime nations, Denmark has an active maritime cluster, which also is an advantage for the ports. -The ports are well served in terms of shipping by the maritime cluster. Also at the international level they are well positioned as regards import and export in and out of Danish ports, he adds. He admits, however, that it is a matter of discussion in Denmark how to prioritize in times with scarce funding. Comprehensive network Almost 20 Danish ports are included in the comprehensive network, which include 340 ports that handle more than 2.4 million tonnes of bulk cargo per year. -We need all ports in North, South, East, and West. We need them all to have a solid system. Ports are the key for economic growth, when the economy grows, transport grows even more, Dimitrios Theologitis says. It is expected that the core network will be completed by 2030, while the comprehensive network will be completed by 2050. By Tina Altenburg
Exploit the green growth potential in The Blue Denmark In the spring of 2011, the European Commission passed ambitious regulations to reduce the climate changing emissions from the transport sector by 60 % in 2050. In June 2011, the International Maritime Organisation, IMO, passed the so called EEDI index which is to ensure that new built ships emit less CO2 in the future. Both regulatory schemes make perfect sense because there is a need to strengthen the effort for our climate and because these regulations – seen from a Danish perspective – provide good opportunities to create more green work places. The EEDI index is not as far reaching as we had hoped, as it only covers new built ships. As ships have long life spans – often up-
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Danish ports also have a role to play
wards of 30 years or more – the prospect for the index to have any significant environmental impact is very long. If we are to actively work for reducing the effect on the climate and environment, straining emissions from ships, also in the short term, green solutions for existing ships have to be found. The existing fleet is historically large. The average ship age is low. Therefore, a substantial number of the ships sailing today will be at sea for many years to come. Not only must these ships observe the climate and environmental demands of present day, they must also adhere to new requirements expected to come into force in the years to come. It is a big challenge. The Blue Denmark
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(the name used by the whole maritime cluster in Denmark) can and will meet this challenge. Denmark is one of the leading countries in the development of green technologies. Danish maritime equipment is known for its quality and in Denmark both the equipment producers and shipyards hold a leading climate and environmental position. The whole the Blue Denmark works to constantly develop innovative, green solutions which increase the sustainability of an already environmentally and climate friendly type of transportation. It makes good sense to transport goods by ship even over short distances. Favouring trucks over ships for transport result in three times as high CO2 emissions. When choosing plane over ship for transporting one ton of goods, the emission of CO2 is upwards of 36 times higher. Hence, it makes perfect sense to transport goods by sea in regards to the climate, the environment and the operating economy. The Blue Denmark is a vital Danish strength with a considerable potential for growth. But, if the industry is to take advantage of its potential, it is essential that the climate goals are backed up politically with actions providing good, stable operating conditions for the businesses in order that they may develop continuously better climate and environmentally friendly solutions and technologies. We need for Danish politicians to ensure a good, fertile base
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for research and innovation in order to give the businesses the needed support in the public research environment. They need availability of a qualified workforce which puts high demands on the Danish educational system. Also, Danish politicians have to steadfastly push to ensure fast political decisions in the European Union and other international organisations. Likewise, they are to work for equal competitive conditions worldwide. Lack of official focus on the production industry in Denmark has unfortunately led to an industry that does not have sufficiently competitive operating conditions. This must be changed before it is too late. The maritime industry is still standing strong in the international competition and is in the lead in the field of green solutions. This position of strength must be expanded upon. The green growth potential in the Blue Denmark must be exploited to its fullest state. By Claus Jensen, Chairman of the maritime committee of CO-industri (The Central Organisation of Industrial Employees in Denmark) and Jenny N. Braat, Managing Director, Danish Maritime.
Exploit the green growth potential in The Blue Denmark
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Turning the time 20 years back can solve EEDI problem within shipbuilding
Photo: Sculpture by Phil Billen
As of the 1 January 2013 the new Energy Efficiency Design Index will enter into force. It means that new ships will be forced to reduce the CO2 emissions by 30 per cent, a new requirement that will gradually be introduced in the period from 2015 until 2025. At least some of the problem can be solved by turning the time back within shipbuilding. The regulations for the Energy Efficiency Design Index, which were adopted by IMO’s Marine Environment Protection Committee (MEPC 62) on 15th July 2011 as a set of amendments to MARPOL Annex VI, will apply for new ships built after the 1 January 2013. The EEDI legislation means that the CO2 emissions have to be reduced by 30 per cent before 2025. The first phase of the EEDI legislation means a 10 per cent reduction in the period 2015-2020, in the second phase from 2020 until 2025 the emissions will have to be reduced by further 10 per cent, and the last 10 per cent will have to be reduced in the period after 2025. The EEDI legislation, which originally was a proposal prepared by the Danish Maritime Authorities and the Danish Shipowners’ Association, is the first of its kind , and it will probably force the whole shipbuilding industry to rethink the way new ships are built. Slow steaming is often mentioned as a way out of the problems. Slow steaming does, however, result in new problems,
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because a reduction of the service speed is causing new technical problems such as poor steering and need for a minimum propulsion power in bad weather, especially for tankers and bulk carriers with very blunt hull forms. But slow steaming is not the only solution, explains Hans Otto Kristensen, Senior Researcher, M.Sc., at the Technical University of Denmark. -The EEDI has gradually increased during the last 20 years; ship’s energy efficiency has developed in the wrong direction for the last 20 years. The block coefficient (displacement volume divided by length, breadth, and draught) has increased, while the slenderness ratio (length divided by the cubic root of the displacement volume) has decreased, he explains. As a general rule of thumb, the block coefficient shall be as low as possible whereas the length displacement ratio shall be as high as possible to obtain the lowest propulsion power requirement.
Turning the time 20 years back can solve EEDI problem within shipbuilding
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-The development has gone in the wrong direction because of the period with economic prosperity. The ship owners have tried to fill more and more cargo into the ships. The risk in periods with economic prosperity is that you build ships, which are not good enough from a hydrodynamic, i.e. a propulsion point of view. Building ships with a lower block coefficient The solution is according to Hans Otto Kristensen to turn the development 20 years back and build ships with a lower block coefficient. By prolonging a ship by five per cent the energy efficiency can be improved by 10 per cent without slowing down the service speed, he mentions. -Another solution is to use derated engines, you can typically also improve the energy efficiency by 10 per cent by using derated engines, Hans Otto Kristensen says. A derated engine is an engine running at a lower shaft speed and a lower mean effective cylinder pressure compared to the maximum cylinder pressure, such that the oil consumption is reduced approximately 3 per cent compared to a normal engine. Another advantage is that a derated engine can operate continuously at its maximum power (100 per cent MCR), such that the normal power reserve of typically 10 per cent is not needed when using a derated engine, be-
cause a normal engine typical operate at a continous power of 85 – 90 per cent MCR. -So the first 10-20 per cent we already know today without introducing new technical solutions, he says adding that the engines and perhaps also the propellers will probably also become more energy efficient in the years to come. -In the European research project ULYSSES we are also investigating different solutions such as using a ducted propeller, which also can improve the energy efficiency by 2-5 per cent. Although a number of technical solutions exist, Hans Otto Kristensen thinks the EEDI legislation will mean that the maritime industry has to rethink the whole shipbuilding process starting already at the design stage where the hull proportions are settled and can be optimized for lowest possible EEDI. However, it is possible to reduce the EEDI without slowing down the service speed. DTU (The Technical University of Denmark) and SDU(University of Southern Denmark) are developing new computerized design tools which can be used for optimization of the hull proportions to obtain the lowest EEDI under given design constraints. This work was originally sponsored by the Lauritzen Foundation and is now sponsored by Den Danske Maritime Fond in an extended project which is expected to be finalized in 2012. By Tina Altenburg
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Turning the time 20 years back can solve EEDI problem within shipbuilding
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Norwegians pioneer new lease of life for North Sea fields A wide range of metering and monitoring devices are supporting enhanced oil recovery technologies It is of course offshore Brazil, Australia and West Africa that offer the sexiest energy stories of the moment. But harnessing the reserves of these frontier regions will depend on developments in Norway’s buoyant subsea sector where new technologies are increasing recovery rates, extending field lives and making viable previously uneconomic satellite finds. There are significant implications for the offshore support and service vessel sector in its broadest sense. Subsea technologies are generating demand for a wide range of complex new vessels: from ultra-sophisticated seismic vessels that research and map data on geological formations under the seabed; to high-end subsea construction vessels, usually with their own remotely operated vehicles (ROV), which build the necessary underwater infrastructure. Then there is the latest generation of multipurpose anchor handling tug supply (AHTS) vessels which can be mobilised and demobilised for a variety of functions, and increasingly complex inspection, maintenance and repair (IMR) vessels, also with ROVs, which provide ongoing support. And there are also, as yet, just a few so-called light well intervention vessels designed to increase oil recovery rates at existing fields at roughly half the day rates of a rig deployed for the same purpose. Norway’s ground-breaking subsea drive is focused on Bergen, described as the country’s “subsea capital” where its subsea business cluster – the Norwegian Centre of Expertise, Subsea (NCE Subsea) – is headquartered. In and around Norway’s second city, a host of designers, manufacturers, subsea engineering firms, energy companies and suppliers of sophisticated subsea equipment are spearheading these initiatives.
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Norwegians pioneer new lease of life for North Sea fields
According to Trond Olsen, general manager of NCE Subsea, companies cooperate where possible and compete if necessary. But there are clearly common aims – including raising the typical global average oil field recovery rate from 25-30% to 40-50% or more; moving into new and more difficult, deeper waters and cold northern seas where further significant oil and gas deposits are likely to be found; and, of course, always ensuring maximum safety standards which, according to experts, are at their most robust in the North Sea. These new technologies are already being put to good use. Industry analyst Quest has estimated that as many as 475 new subsea wells could be brought on stream in the North Sea over the five years to 2015, split roughly half and half between the Norwegian and UK sectors. Capital investment is also expected to soar: Oslo’s Rystad Energy, an independent energy consultancy, has predicted that annual subsea spending on the Norwegian Continental Shelf could increase from Nkr 25 billion ($4.3 billion) in 2012 to Nkr 40 billion ($6.8 billion) by 2015. Enhanced oil recovery is the name of the game. And the results are already clear to see. Norwegian state energy company Statoil is aiming for subsea recovery rates of 55%, up from a typical 30% prior to the application of well intervention technologies. Recovery rates at Norway’s Ekofisk field, for example, where production commenced in 1971 and is expected to continue until at least 2050, have increased from an original 17% to an estimated 50% today. Meanwhile, the Troll field – which contains some 60% of Norway’s gas reserves but also significant volumes of oil – was originally expected to peter out in 2015 but is now expected to continue producing until at least 2030.
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Making the most of existing oil field assets is only one of the priorities. Tying in new outlying satellite reserves to existing subsea infrastructure promises additional yield, even in so-called mature regions like the North Sea. There are, however, significant challenges regarding flow assurance over longer distances and in deeper waters, and in monitoring oil field assets, including the subsea infrastructure, over long periods of time. A key structure in the subsea framework is the so-called Christmas tree, the primary function of which is to control the flow both in and out of a well. As companies strive to enhance recovery rates, the complexity of Christmas tree design and construction is accelerating. In addition to flow control, they often provide the means for chemical injection, well intervention, and gauges to monitor pressure, temperature, sand and water content, and corrosion and erosion rates. Multiphase meters, meanwhile, monitor flow rates so that revenues can be appropriately assigned to operating consortium members. As the subsea drive gathers pace, not only in the North Sea but also in other regions, particularly Brazil, demand for Christmas trees is soaring. NCE Subsea’s Olsen expects a huge increase in the number of Christmas Tree installations over the next few years. In fact, he says, the supply of new trees is likely to be a major constraint – even if all production were focused solely on the Brazilian market, there would still be insufficient capacity to meet demand.
Olsen, adding that there is, in any case, a significant cost associated with their disposal. His comments are borne out by Arne B. Riple, Vice President of Subsea Lifecycle Services at Aker Solutions which specialises in the installation of new trees and the refurbishment and upgrading of existing units at its workshops in Bergen. Tree upgrades, Riple explains, consists of “pulling”, dissembling, modifying, re-engineering and fitting them with the latest new components. Some are not that old – even five-year-old trees are sometimes pulled so that well flow can be more accurately metered and optimised. Tree upgrades can typically take a year and cost 80% of the cost of a new tree. The dramatic build-up in Bergen’s subsea cluster over the last five years – from about 30 companies to more than 120, and from a turnover of around $500m to more than $2bn – is a telltale sign of the future path in offshore energy development. The strides currently being made in Norway are directly applicable in other regions, but in a maritime perspective, the complex subsea technologies which will help to meet the planet’s hydrocarbon requirements tomorow will require a growing fleet of increasingly sophisticated offshore craft. By Paul Bartlett
Many of the North Sea’s 1,600 such structures, roughly two fifths of the world total, are of relatively simple design and require modification and upgrading to accommodate the latest monitoring and metering devices. In addition to this ongoing upgrade programme, the number of Christmas tree installations could well double over the next four to five years.
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But the maintenance, modification and continued operation of existing trees, which are usually well-specific, will be essential. “We can’t dispose of them. We need to re-use them,” comments
Existing Christmas trees are being "pulled" and upgraded. Demand for new ones will outstrip supply for years, say experts
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Norwegians pioneer new lease of life for North Sea fields
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Competence Development and improved Innovations within the Danish Maritime Cluster Maritime Development Center of Europe (MDCE) - the Danish Maritime Cluster representative - is now responsible for a new maritime initiative, which during the next three years together with 9 partners will launch activities enhancing future maritime competences and innovations.
Shipowers Ports Port related companies and operators
Publich Sector Goverment
Maritime Industriy & offshore
DANISH MARITIME CLUSTER
Education, Universities Knowlegde Institutions R&D
Shipping companies / Shipbrokers
Interest Groups Associations Network Finance, Insurance ClassiďŹ cation
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Competence Development, Innovations, and Entrepreneurship
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The project “Danish Maritime Cluster” intends to increase the supply of skilled labor among the maritime cluster firms to retain and attract jobs and businesses. The ambition is to maintain Denmark’s position as a leading global maritime industry cluster, despite the increased international competition. The project builds on a new collaboration between companies, authorities, business organizations, research-, scientific- and educational institutions that jointly develop and implement activities with the purpose to increase the level of competencies within the cluster. Activities include creation of new knowledge, as well as analysis of opportunities and challenges to enhance the maritime competence. Moreover it concerns the development of new maritime subjects and masters at the graduate level for navigators, engineers, ship officers and others; skills for business, including development of management courses for professionals and increase the small and medium businesses’ use of academic labor.
education levels, WP5: Development of Competences – Business, and WP6: Future Innovation and Growth in the Maritime Cluster. Further information about the project please contact project manager Merete Vestergaard, phone: +45 3333 7488, e-mail: mve@maritimecenter.dk
The project is divided into six work packages: WP1: Project Management, WP2: Communication: WP3: Analysis, WP4: Development of Competences – at higher
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Competence Development, Innovations, and Entrepreneurship
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Trade Event 2011 What do you need to become a success in shipping? Basically all you need is a few ships, contacts and a good deal of entrepreneurship and acumen in business matters. On the 24th of November, 75 Danish students aged 18-25 were given the chance to test their skills in a game of shipping. The game and the speeches given at this years’ “Trade Event”, were part of The Blue Denmark’s effort to recruit shipping, bunker trading, finance and broker trainees for the blue cluster. The event was hosted by The Blue Denmark’s recruitment campaign Worldcareers, and it was held at the Danish Shipowner’s Association in Copenhagen. Attending the event was also 17 shipping, bunker, broker and finance trainees, representing a wide array of companies within the cluster. Also attending was VP of Handymax chartering of DS NORDEN Thomas Jarde, who gave the guests an insight to the company’s shipping trainee education. The event marks the end of this year’s series of industry specific events, which started with the TECH Event in April, aimed at students wishing to pursue a career as naval architect, SHIP Event on the 18th November, welcoming young people looking for a career at sea and finally the TRADE Event. The events serve an important role in the Blue Denmark’s continuous effort to secure a constant flow of competent applicants to the industry’s many educations, and they will also be a part of the recruitment campaign in 2012. Pictures from the events can be found on the campaign’s Facebook page : facebook.com/worldcareers
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Trade Event 2011
EAGLE SHARK DA N I S H S P ECI A L FORCE S U N I T E D CON S U L T I NG
Eagle Shark udfører maritime sikkerhedsopgaver med præcision og erfaring fra de danske specialstyrker Jægerkorpset og Frømandskorpset. • Individuelle løsninger • Rådgivning og risikovurdering • Skibsspecifik risikovurdering • Bevæbnede vagter og/eller supervisorer • Gidselhåndtering • Løbende opdatering af sikkerhedssituationen i Adenbugten og Det Indiske Ocean
Telefon: 31 65 60 34 / 40 20 00 46 E-mail: info@eagleshark.dk www.eagleshark.dk
Daily news on www.danishmaritimemagazine.dk
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