Offshore Support Journal September 2018 by rivieramaritimemedia

September 2018 www.osjonline.com

CELEBRATING OSJ’s 20TH ANNIVERSARY

“Conventional shipping is not going to disappear soon; the most realistic scenario is that conventional and autonomous ships will coexist and share the same waters” Capt Andy Goldsmith, marine technical adviser, IMCA, see page 44

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Contents www.osjonline.com

Regulars 3 INDUSTRY COMMENT 33 NEWBUILDING ORDERS AND DELIVERIES 44 IMCA NEWS

Area report 4 West Africa: Can Nigeria shed its legacy of corruption and red tape to take advantage of the region’s decommissioning opportunities?

Cranes, A-frames and winches

September 2018 volume 21 issue 7

Head of Content: Edwin Lampert t: +44 20 8370 7017 e: edwin.lampert@rivieramm.com Production Editor: Kevin Turner t: +44 20 8370 1737 e: kevin.turner@rivieramm.com Deputy Editor: Martyn Wingrove t: +44 20 8370 1736 e: martyn.wingrove@rivieramm.com Brand Manager – Sales: Ian Glen t: +44 7919 263 737 e: ian.glen@rivieramm.com

9 3D-printing, modularised cranes and new winches are among the developments driving the sector

Sales: Indrit Kruja t: +44 20 8370 7792 e: indrit.kruja@rivieramm.com

Decommissioning

Sales: Colin Deed t: +44 1239 612384 e: colin.deed@rivieramm.com

12 A raft of new projects will keep the industry busy for decades to come

Offshore construction 14 A cautious optimism pervades the sector, on the back of stabilising oil prices and more tendering activity

Technical: LNG fuel on OSVs

Head of Sales – Asia: Kym Tan t: +65 6809 1278 e: kym.tan@rivieramm.com Sales – Asia & Middle East: Rigzin Angdu t: +65 6809 1277 e: rigzin.angdu@rivieramm.com

16 LNG is the future, say its many advocates, so why has its take-up been slow in the OSV sector?

Sales – Southeast Asia & Australasia: Kaara Barbour t: +61 414 436 808 e: kaara.barbour@rivieramm.com

Commercial: LNG fuel

Production Manager: Ram Mahbubani t: +44 20 8370 7010 e: ram.mahbubani@rivieramm.com

21 With many alternatives on offer, what advantages does LNG offer from a commercial perspective?

Company focus 25 Siem Offshore is well-positioned to take full advantage of Australia’s push towards LNG

Simulation and training 28 Thorough and effective training is now a distinct possibility using high-end computers and simulation software

Operator profile

Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Production: Hamish Dickie Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

36 Swire has an enviable position in the global OSV market, but how will it transition in these difficult times?

Market data

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42 Any hopes of a recovery in June will have brought only disappointment

ISSN 1463-581X (Print) ISSN 2051-0594 (Online)

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Annual review – Designs and deliveries: this issue will feature the most notable vessels that have been delivered or ordered during the last 12 months

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Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

Offshore Support Journal | September 2018

Extending the Reach

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INDUSTRY COMMENT | 3

Don’t forget to keep it simple, stupid I Simon Tandy, Auto-Maskin

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come from a generation of seagoing engineers where the basis was big spanners and even larger hammers. To get the injector out of an old RD Sulzer, forget the jacking gear, that was what the overhead crane was for! A wise old chief told me then to “Keep it simple, stupid” (KISS) as I was no doubt trying to be way too ‘modern’. Which brings me to the crux of this piece. That advice remains sound, but I feel it is rapidly being ignored to the detriment of our industry. I came ashore and have spent nearly 30 years in the commercial marine engine business, seeing that world change from non-IMO to EPA Tier 4, and the technologies that come with that change. I have also watched vessels change in that time, and the systems that go with them. Look on a modern OSV bridge now and the complexity and volume of information that is there is overwhelming. Every piece of equipment on board, from the propulsion system to a breaker reporting that the galley is using the range, is feeding these mountains of information to the operators. Gigabytes of information are collected, sometimes stored, mostly ignored and forgotten. The buzz today within the marine sector is big data. Anyone who dismisses the benefits big data can bring has their head in the sand. Benchmark any other industry that has used this strategy, such as aviation or process industries, and you can see the long-term advantages in straight dollars to the bottom line. But big data, or even a subset of it, does not belong with a crew member or a vessel. The poor individual trying to manage the day-to-day rigours of running a vessel safely and efficiently really needs KISS in today’s environment. Crew members today are expected to multitask over a broad range of skill sets, potentially with only superficial knowledge of the systems they are operating. Those systems today are complex, developed in the most part by some seriously smart people, who develop fantastic capabilities and functionalities into those systems. But consider the washing

machine at home. Mine has 27 programmes (I counted!), we use three. Developers of vessel systems need to revert to KISS to help crews be safe, efficient and – importantly – enjoy and relish their jobs. How hard is it to find and keep good people? Have a think about this – an owner needs his crew to focus on what really matters, safe navigation, protection of life and limb, efficient operations, and protecting his or her investment. A crew member just needs to know everything is working OK so he or she can focus on those core activities. A KISS ship would show nothing to a crew member UNLESS it needed attention. That does not mean to say the vessel is ignored until something dire occurs. We have already recognised the benefits of big data, so the vessel is sending the mass of information to specialised shore-based resources, who in fact shield the crew from much of the minutia that would otherwise swamp them. My final swing of the bat regarding KISS leads to the simplest crew solution of all. Autonomous ships. It is coming, probably well after I retire, but ships like this will have little or no permanent instrumentation, crews on shore will be counted on to report deviations and non-compliances… oh, and tell the guy with the big spanner and even larger hammer where to hit, because we all know that need will never change! OSJ

“My washing machine has 27 programmes; we use three. System developers need to revert to KISS to help crews be safe, efficient and enjoy and relish their jobs”

Offshore Support Journal | September 2018

4 | AREA REPORT West Africa

Nigeria belatedly tackles maritime reforms The Nigerian maritime sector continues to struggle under the weight of an inefficient and out-dated regulatory regime, coupled with endemic corruption. But could the possibility of a decommissioning boom be a much-needed catalyst for change?

s the largest offshore producer of oil and gas in Africa, Nigeria should be able to claim a highly efficient, maritime-friendly environment. Certainly one might expect so, given the maritime industry is expected to pump US$56.8Bn in capital expenditure into the country between now and 2025, according to research by Swire Pacific Offshore. Yet, the country – or rather it’s officialdom – keeps shooting

Many operators prefer to avoid Nigerian ports because of “cumbersome regulations”

itself in the foot through mismanagement, red tape and missed deadlines that continue to hamper its infrastructure projects. As a result, the offshore support fleet is seriously handicapped by chronic inefficiencies in Nigeria’s ports, including the main one of Lagos. At Nigeria’s annual maritime conference in mid-2017, SIFAX founder and chief executive Taiwo Afolabi described the country’s ports in the following damning terms: “The huge infrastructure deficit has led to deplorable access roads, faulty cargo scanners, a non-existent

West Africa AREA REPORT | 5

rail system, non-functioning truck bays and other [problems].” He continued: “Our sector cannot continue to reel under the burden of infrastructural decay if we want to contribute meaningfully to the economy and fulfil the [maritime] industry’s potential.” He is far from the only domestic critic. In a late 2016 report entitled Nigeria: Reforming the Maritime Sector, the Lagos Chamber of Commerce and Industry estimated that trillions of local-currency revenue was being lost each year because of inefficiencies and infrastructural shortcomings in the nation’s ports. As the report pointed out, the nation’s ports, including the Port of Lagos, are bedevilled by slow border clearance, time-consuming and inefficient yard-handling systems and -- an endemic problem in an infamously corrupt country -- a well-established network of “informal payments” to customs and various government agencies. It takes an average 14 days to clear TEUs from Nigeria’s port, compared with the two days that is considered efficient elsewhere. In late 2017, following an expensive but fruitless campaign by Nigeria’s Maritime Administration and Safety Agency (Nimasa) to be re-elected to the council of IMO, Ship Owners Association of Nigeria president Greg Ogbeifun noted bluntly: “The world has told us that our maritime domain is sick and almost moribund, that we are not a maritime nation that can be relied on for maritime trade.” Backing up Mr Ogbeifun’s gloomy view, the World Economic Forum’s latest annual Quality of Port Infrastructure Rating gives Nigeria a 3.0 on a seven-point scale, placing it narrowly ahead of laggards Mauritania (2.7) and Sierra Leone (2.8), also in West Africa. (Ivory Coast comes out on top with a score of 5.2.)

“According to the World Trade Report, handling costs for low-scoring ports are typically three times higher than those of high-scoring ports”

These ratings are important and give a good indication of the costs of operation for shipping companies. “Port infrastructure has a significant impact on freight costs,” noted PricewaterhouseCoopers in an April 2018 analysis entitled Strengthening Africa’s gateways to trade. “According to the World Trade Report, handling costs for low-scoring ports are typically three times higher than those of high-scoring ports,” it explained. For comparison, countries in the eurozone rate an average 5.1. Red tape is a big part of the problem and one of the reasons Nimasa is opposed to proposals to create yet more maritime organisations. Director general Dr Dakaku Peterside acknowledged this when discussing the issue in July: “I have been receiving a lot of complaints by shipowners that different government agencies board their vessels to request documents; this [often] result in duplication of duties and increases the delay in turnaround times.” Still, there is little sign of much urgency in rectifying the problem. As PricewaterhouseCoopers noted, the construction of two greenfield ports in Lekki and Badagry is currently way behind schedule; the terminal at Lekki, including a 1,200 m quay, was supposed to be in operation by 2016, with International Container Terminal Services as the main operator but the group terminated the contract in 2017 citing delays. Similarly, Badagry, with a quay length of 7 km, was due to start up in 2018 but is also behind schedule. “It appears that limited progress has been made,” noted PricewaterhouseCoopers. And all the while Nigeria is losing out. Many operators prefer to berth at the competing port of Contonou in Benin, avoiding Nigerian ports because of “cumbersome regulations”. Despite the government’s attempts to boost the local shipping industry, Nigeria’s maritime fleet remains overwhelmingly foreignowned and operated. A 15-year-old cabotage law, for instance, has largely proved a failure. Designed to boost business for locallyowned ships in the coastal trade, the law lacked teeth and has been weakly enforced.

Signs of progress

Yet some progress is being made. The government has launched a campaign to train up a pool of talent that, it is hoped, will provide the crews for a revived domestic shipping industry. And although there is little evidence of reforms among the existing ports, the federal government plans to develop the Ibom deep-sea port, located in the free-trade zone in the south of the country. Bidding for Ibom,

Offshore Support Journal | September 2018

6 | AREA REPORT West Africa

which is intended for very large vessels, closes in late 2018. Further, oil and gas giants such as Shell are doing their bit to develop local talent to work on the rigs and elsewhere. Working with Esso, Total and Agip under a production-sharing contract with the NNPC, the Anglo-Dutch group is producing oil from the Bonga North West field lying at a depth of more than 1,000 m in the Gulf or Guinea. The key contractors there are Aker Solutions, FMC Technologies, Invensys/Sidler, Saipem and Weltek. The partners have made a long-standing commitment to developing deep-water engineering skills in Nigeria. Among other initiatives, they have upgraded local contractors’ facilities and provided specialised training in the broader energy industry. Bonga North West is one of the results. “More than 90% of the people who designed and built the project were Nigerian,” Shell points out. “[The partners] awarded all five of the major engineering and construction contracts for Bonga North West to companies that were either indigenous, have local staff, or invest in the country.” One of the largest vessels of its kind in the world, the Bonga FPSO, is a 300 m-long giant held in place by 500-tonne anchors linked by 20 km of mooring lines. In a typical arrangement in the Gulf of Guinea, the oil does not go through Nigerian ports but is piped underwater to the FPSO. From there the oil is loaded onto tankers and shipped around the world. Meantime, Shell will soon be heavily involved in developing Nigeria’s abundant gas reserves. A dominant operator in the Nigerian oil and gas sector is the China National Offshore Oil Corporation (CNOOC), one of the big three Chinese oil giants. On top of the US$14Bn that CNOOC has already poured into Nigeria, in July the state-owned group announced it would invest another US$3Bn into its oil and gas operations. According to CNOOC chief executive Yuan Guangyu, Nigeria is the company’s “most strategic and important business undertaking.” There may also be decommissioning opportunities in the future. Although Nigeria has not yet seen a major decommissioning project and lacks legal and practical guidelines to guide operators, some of the offshore infrastructure is approaching its dismantling date and the country should be prepared. At the last count, there were over 170 structures, mainly platforms, off the coast that at some point will need dismantling. “The country has yet to come to terms [with the fact] that oil is a diminishing commodity,” points out economic forum Financial Nigeria, in a study entitled Prospects of decommissioning oil and gas installations in Nigeria. “There is a global consensus that the end of the oil age is Taiwo Afolabi (SIFAX): Highly not a matter of whether, but critical of government support of when.” for the maritime industry And as the world consumes

Offshore Support Journal | September 2018

“[The partners] awarded all five of the major engineering and construction contracts for Bonga North West to companies that were either indigenous, have local staff, or invest in the country”

less fossil fuel, the study adds, “a rare opportunity might be presenting itself for the development of a decommissioning sector in Nigeria’s oil and gas industry.” It would therefore be opportune for indigenous suppliers to start building up their decommissioning skills. Under present legislation, which is more than 50 years old, decommissioning requires the complete removal of any infrastructure. But, as Financial Nigeria points out: “The difficulty with the extant regulations is that they treat onshore and offshore facilities alike, without considering the special nature of offshore facilities.” Like much else in Nigeria’s maritime sector, decommissioning processes need urgent attention.

Need for security

The most pressing problem currently facing the offshore support industry is security. For years now, the Nigerian Administration and Safety Agency has been working with the military and navy to reduce wholesale theft of oil and tackle piracy, especially in the Gulf of Guinea, where pirates threaten and harass vessels. But the agency has not had much success. In the first three months of 2018, according to the International Maritime Bureau (IMB), eight out of the 11 vessels that came under fire on the world’s oceans were in Nigeria’s territorial waters. “The Gulf of Guinea is a major area of concern [that is] consistently dangerous for seafarers,” said IMB director Pottengal Mukundan, adding “Signs of kidnappings are increasing.” The Nigerian government is working on a series of laws designed to crack down on piracy, something which it must do in a hurry to meet the concerns of foreign operators engaged as jointventure partners to boost gas supplies. In mid-July, the Nigerian National Petroleum Corporation (NNPC) signed seven critical gas development projects that are projected to deliver about 3.4Bn standard cubic feet a day by 2020. One of the biggest operators, Shell has taken on three of the projects. The “big seven” gas projects are considered vital for the country and there is a plentiful supply. According to BP’s research, the nation’s gas reserves are probably the largest in Africa at 5.2Trn m3. The fuel is seen as more environmentally friendly than oil and it would provide the power for a future manufacturing industry that is almost non-existent. If long-overdue reforms to the onshore oil and gas industry are taken as a guide, the good intentions may actually deliver this time. Following decades of corruption, wholesale theft of oil, politicking and violence, peace has finally broken out in the Niger Delta after local pressure groups, government agencies and foreign operators worked out arrangements that look like keeping the oil flowing. As Shell Nigeria Gas managing director Ed Ubong, among others, pointed out, the future of the big seven projects pretty much depends on such guarantees holding up. OSJ

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CRANES, A-FRAMES AND WINCHES | 9

Huisman investigates 3D printed crane hooks, wins Jumbo HLVC crane contract

uisman is continuing to investigate the potential afforded by 3D printing. In January it loadtested the world's first 3D-printed offshore crane hook and in June the company announced the formation of a consortium to produce a class-certified offshore crane hook with the same technology. In the January test, a 3D-printed crane hook passed a load test of 80 tonnes and all associated quality-control checks. The new consortium will be working to produce a 3D-printed hook based on a Huisman four-prong design. It will measure approximately 1 m2 in external dimensions and will weigh close to 1,000 kg. The hook will be the world's largest 3D-printed steel object in terms of weight and is targeted to have a safe working load of 325 tonnes. Huisman uses a 3D printing technique called Wire & Arc Additive Manufacturing (WAAM), employing an electric arc as a heat source and wire as a feedstock. In Huisman's case, WAAM is used to produce medium- to large-sized components with high-grade tensile steel. Equipment produced using WAAM benefits from fast delivery times and a reduction in raw materials. Other members of the consortium are WAAM specialist Ramlab, Autodesk, DNV GL, Bureau Veritas, ABS and Voestalpine Böhler Welding. As well as producing the crane hook itself, the consortium also aims to advance common rules and guidelines for WAAM in the offshore and maritime context. Huisman was recognised for its innovation at the Offshore Support Journal Conference, Awards & Exhibition in London in February, winning the award for Innovation of the Year for its fibre rope technology. On the commercial side, Huisman netted a contract in March with Netherlands-based Jumbo to design and construct two offshore mast cranes for new heavy-lift crane vessel (HLCV) Stella Synergy, which will be delivered in the first quarter of 2020.

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Huisman is providing the main and secondary cranes for Jumbo’s Stella Synergy (credit: Jumbo)

The HLCV’s main crane will have a capacity of 2,500 tonnes, a triple hoist to allow for complex upending and an active heave compensation auxiliary block of 600 tonnes, with a depth rating of 3,000 m. The second crane will have a 400-tonne capacity with an active heave compensated main hoist. This crane, which will be fitted with a man-riding whip hoist, has a 3,000 m depth rating and will be positioned for easy servicing of the vessel’s moonpool. Jumbo’s managing director, Michael Kahn, said “Our new HLCV, equipped with these cutting-edge cranes, enables Jumbo to further step-up, scale-up and diversify into the global offshore energy market.” Stella Synergy was designed by Jumbo in cooperation with Ulstein Design and Solutions B.V. and features Ulstein’s distinctive X-Bow hull design, which provides a more consistent transit speed and makes for better workability in severe weather. The HCLV will measure 185 m by 36 m and will be powered by dual-fuel engines, with the ability to run on LNG.

Liebherr relaunches compact board offshore crane series Germany-based crane specialist Liebherr relaunched its compact board offshore (CBO) series of cranes, which are intended for general-purpose applications in the oil and gas industry, at the Offshore Technology Conference in Houston that ran from 30 April to 3 May. CBO-series cranes have a lifting capacity of up to 100 tonnes, are available with boom lengths between 21 m and 63 m, and have a tail swing radius of less than 4 m. Constructed using Liebherr’s lattice boom structure, the CBO series have A-frame, rope luffing and a slewing bearing system and are designed so that the cabin position allows for an unobstructed view of the load. OSJ

Offshore Support Journal | September 2018

10 | CRANES, A-FRAMES AND WINCHES

Techano commences modularised subsea crane project

Dana Brevini launches new winch series

Van Aalst Group-owned Techano has commenced a project with a Dutch pipelay operator to design and build a unique, modularised subsea crane. In a press release, Norway-basedoffshore crane specialist Techano said the subsea crane would “be provided with several new gamechanging features.” The project is financially supported by Innovation Norway, the Norwegian Government’s instrument for financially supporting innovation and development of Norwegian enterprises and industry. Techano has also secured a contract for multiple offshore winches for a major upgrade of a North Sea rig. Dordrecht-based Van Aalst became a majority stakeholder in Techano in late 2017, having already acquired patented 3D crane technology from another Norwegian company, A-Lifting.

Gulliver travels into service with Scaldis Dutch shipbuilder Royal IHC delivered self-propelled crane vessel Gulliver to Scaldis in April. Gulliver has a maximum tandem lift of 4,000 tonnes, with both starboard and port cranes fitted with two 1,000 tonne main hoists and two 15 tonne auxiliary hoists each. The cranes have a maximum lift height of 78.5 m above the vessel’s deck and are equipped with a skidding system to maximise available deck space. Fitted with four azimuth thrusters, Gulliver has a transit speed of seven knots. It has a dynamic positioning class of DP2, is fitted with a helicopter deck and is capable of accommodating 78 people. Royal IHC managed the complete scope of work from design, procurement and ship construction in China to commissioning in the Netherlands. Scaldis is an offshore contractor specialised in marine heavy lifting work and sees uses for Gulliver in offshore infrastructure installation, decommissioning and deconstruction for the offshore oil and gas industry, and installation of offshore wind farms. Gulliver joins the non-self-propelled crane pontoon Rambiz to become the second vessel in Scaldis’ fleet.

Dana Brevini launched its new Evolution Series of winches at the Intermat Construction and Infrastructure Exhibition in Paris in May. The Evolution Series is designed for stationary industrial applications in the marine and offshore sector. Winches in the series come equipped with Brevini hydraulic motors and a range of controls. To date, four winches, offering capacities from 8.5 to 16 tonnes, have been launched. The range will have a total of 13 sizes, with smaller winches set for launch in the Q4 of this year and larger versions, capable of supporting lift capacities between 22 and 30 tonnes, set to be made available in 2019. All four Evolution models launched so far can be equipped with a second safety brake, allowing them to be used as personnel lifting winches. The new series includes features such as the option for a smooth or grooved drum, a fixed or variable displacement high-speed axial piston motor, a pressure roller, a speed sensor, an electric or hydraulic limit switch and an electric or hydraulic rotary limit switch. Dana Off-Highway Drive and Motion Technologies president Aziz Aghili said: “Dana’s offering includes a fully integrated system that provides end users with the tools necessary to avoid damage to the winch and the crane, and most importantly, protect personnel on the jobsite.” OSJ

ABOVE: The Evolution Series will eventually comprise 13 winches of varying sizes LEFT: Gulliver’s cranes have a tandem lift of 4,000 tonnes and are fitted with a skidding system (credit: Royal IHC)

Offshore Support Journal | September 2018

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12 | DECOMMISSIONING

New decom hotspots opening up The offshore support industry faces a busy few decades as numerous decommissioning opportunities present themselves around the world

n April, Ocean Installer’s construction support vessel, the Normand Vision, took up station in the Chinquetti field, 80 km off the coast of Mauritania in West Africa, as it began one of the region’s main new decommissioning projects. The contract, which was awarded by Malaysia’s state-owned Petronas, highlights one of the latest “decom” hotspots that will keep the offshore supply industry on its toes for the next 20-30 years. A new wave of decomissioning activity is emerging as time runs out for dated infrastructure in offshore exploration areas other than the North Sea and Mexico, the busiest areas until now. According to a report entitled Preparing for the next wave of offshore decommissioning released in April by Boston Consulting Group (BCG), three of the busiest regions will be Southeast Asia, Latin America and West Africa, where about half of the fixed platforms and wells are due to become uneconomical in the next 20 years. Other, newer fields are also approaching abandonment. According to BCG, Egypt, India and Italy each have about 150-200

Offshore infrastructure in Brazil is coming due for dismantling

structures and 700 to 1,000 wells that will have to be dismantled by 2038. China, which has some of the oldest fields in the world, will also have to start decommissioning up to 200 platforms and 2,000 wells in coming years. Further south, Australia has about 50 structures and 700 wells of a similar age. The Arabian Gulf is also shaping up as a future decommissioning hot spot. Within the next 20 years, more than 1,000 structures and 3,000 wells there will be more than 30 years old and become due for dismantling. And in the Northern Hemisphere, besides the usual action in the North Sea, 40-year-old infrastructure in the Celtic Sea off southern Ireland is approaching its use-by date. In July two companies – PSE Kinsale Energy and PSE Seven Heads -- applied for permission to decommission a range of production facilities lying up to 70 km off the coast of County Cork.

Hive of activity

For the foreseeable future, the North Sea will remain a hive of plug and abandonment activity. According to the Oil and Gas Authority, the all-in decommissioning costs could reach US$150Bn, a sum that covers the cost of taking down more than 600 fixed installations and plugging and abandoning more than 7,000 wells. One of the more immediate projects is the dismantling of Equinor’s 36-year-old Huldra Field facility in the Norwegian North Sea that stopped production in 2014. Norwegian regulator, the Petroleum Safety Authority, signed off decommissioning approval in July. As such, most of the infrastructure built in the 1970s is coming down and creating a new era of work for the offshore support industry. “Decommissioning is a costly challenge and for many countries, the value at stake in handling these projects properly could be worth several billion dollars,” noted BCG. The potential opportunities have led to the establishment of new kinds of specialists, such as Maersk Decom, which was established in April to offer “bundled decommissioning solutions”. To begin with, the group will cover up to 80% of the entire decommissioning operation and use outside contractors for the rest, but eventually it intends to pull all of it under the Maersk Decom umbrella. That comprises project management, well plug and abandonment, removal of subsea infrastructure and towage. The removal of offshore infrastructure presents special challenges. While age is obviously a determining factor, so is the period of disuse. For platforms that have been left to the elements for several years, the difficulty of the job goes up several notches, and so do the costs; the helipad may no longer be useable; walkways and handrails have often become unsafe; original lifting equipment such as cranes may have rusted; and in certain cases the infrastructure has deteriorated so badly that it has to be partially

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DECOMMISSIONING | 13

Normand Vision has started decommissioning work in the new hotspot of Mauritania (image: Ocean Installer)

rebuilt before it can be brought down. “We have seen instances in which decommissioning took nearly twice as long as planned because contractors needed to make repairs before the project could proceed, leading to significantly higher costs,” reported BCG. Another recurring problem is a dearth of information on which to base the project. Sometimes, say contractors, there is no documentation at all and even if information is available, it may be outdated, for instance because pipelines may have moved from their original location on the seabed.

Red tape

Regulatory scrutiny is intensifying just about everywhere. In the UK Continental Shelf, contractors must deal with more than a dozen different governmental and non-governmental organisations before projects get the green light. The Netherlands has recently updated its decommissioning regulations. With about 150 offshore platforms and 1,800 still active wells, the country has come up with a 20-year blueprint known as the Netherlands master plan for decommissioning and re-use. The stakes are high – the North Sea nation estimates it will cost around US$9Bn to retire its offshore infrastructure. The programme is billed as the world’s first national platform for decommissioning. As in the UK, the Netherlands’ plan is based on collaboration between operators, contractors, government bodies and other interested parties. Other nations are also pursuing aggressive decommissioning goals, albeit with varying degrees of success. By early 2018, Brazil had only overseen the removal of six fixed platforms and five floating ones, equivalent to less than 5% of its total offshore platforms. As a result, the government is now fine-tuning its decom system. Similarly, Thailand has only just established a legal framework for decommissioning under the Petroleum Act, while an initiative known as Decommissioning 2.0 is designed to streamline the process with a one-stop service for obtaining approvals. It appears that the realisation is now dawning that state agencies need to get organised. “A country with decommissioning liabilities of US$14Bn, the median level among the top 30 countries by total liability, could generate savings of more than US$1Bn by improving its decommissioning performance,” noted BCG. This would be based on a 25% reduction in the average cost per well, or a 30% saving per tonne in the removal of topside infrastructure. With these kinds of savings on offer, it makes a great deal of sense for governments and regulators to take a close look at the processes they currently have in place.

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The need for speed

In decommissioning projects speed of execution is everything, as Scotland-based James Fisher Offshore (JFO) can vouch. Among a variety of recent work, in Thailand the company was contracted to dismantle pipelines from the seabed and cut them into sections for transportation to shore. In Australia, JFO’s offshore technicians undertook a rapid-response assignment at 24-hours’ notice to fix faulty pipelines and in Malaysia, using subsea equipment, they assisted in the decommissioning of a floating storage and offloading vessel. In the Middle East, JFO has repeatedly deployed a formidable array of equipment, including four large demolition shears for pipeline demolition and recovery projects, sometimes undertaking several projects at once. “JFO has been busy on many projects,” explained managing director Jack Davidson. “Customers appreciate the way we bring complete methodologies and cost-effective solutions for what are often highly complex offshore projects. And we like to work fast.” Decommissioning vessels are becoming more specialised all the time, as Ocean Installer’s Normand Vision illustrates. A type VARD 3 06, the ship is built for the kind of heavy construction (or deconstruction) work required by large dismantling projects offshore. Among other equipment, the vessel boasts a 400-tonne capacity active heave-compensated crane and a launch system for remotelyoperated vehicles that do much of the subsea inspection. In China, construction will start later this year on two new 96 m multi-activity jack-up units (MAUs), one of the workhorses of decommissioning projects. Ordered by Netherlands-based Overdulve Offshore Services International and classified by DNV GL, the fourlegged, self-elevating vessels are designed to work fast, with two cranes that have a combined lifting capacity of 2,400 tonnes when hoisting in tandem. Self-propelled by four steerable thrusters, the MAUs will also have the latest advanced dynamic-positioning systems. “The MAUs will be equipped for light drilling operations to close wells,” explained DNV GL Maritime’s business development manager for Benelux Bas Veerman. “In addition, they can deconstruct the topside of an oil rig’s structure and remove the jacket structure.” In deconstruction work, speed is essential, especially in hostile waters. Early last year, Antwerp-based Scaldis Salvage and Marine was able to dismantle Tullow Oil’s Horne and Wren field in the North Sea in just three days with the aid of the Rambiz, a heavy-lift vessel. In that time Scaldis completed an in-and-out seabed survey, removed the topside and fastened it on board the Rambiz, dredged and cut the jacket piles, installed internal lifting tools and hoisted the jacket off the seafloor. With the jacket suspended from a crane and the topside on deck, the Rambiz was then towed back to Flushing in the Netherlands. OSJ

Offshore Support Journal | September 2018

14 | OFFSHORE CONSTRUCTION

Offshore construction: A long wait for better days With the oil price continuing to climb and Baker Hughes’ rig count showing a wavering but upward trend worldwide, there is a cautious optimism in the air, writes Ed Martin

s Westwood Global Energy group director Thom Payne told Riviera’s Middle East Offshore Support Journal Conference in Dubai in May: “We may have a while yet to wait before we see concrete signs of increased upstream activity. [But] we are starting to see a greater volume of offshore drilling projects being sanctioned around the world – although drilling will not start for another 18 to 24 months – so we are still a little bit off from that big recovery in global rig counts”. Offshore and subsea construction operators reliant on such projects know all about waiting. The maturity of pre-downturn projects and the scarce, lower-margin projects that accompanied the downturn are still taking their toll on balance books. Some are anticipating better times, though, with Norway-based DOF Subsea choosing to tempt fate by adding “Preparing for the

recovery” to the cover pages of its 2017 annual report and firstquarter 2018 reports. In the report’s forward-looking statement, the Norwegian company’s board of directors noted that the market has continued to be challenging, adding that this “may lead to reduced earnings and impairment of the non-current assets of the group.” The statement did, however, acknowledge that the stabilisation in the oil price has led to increased tendering activity, potentially indicating an improvement in the subsea sector that could see increased demand for DOF Subsea’s services in the medium term. The company has at least seen a boost in cash flow, to NKr293M (US$35) from NKr223M for the same period in 2017. The orderbook seems to be remaining steady as well, with a constant flow of contract awards (some short term but many long term) and renewals, which will be served by DOF Subsea’s 27 vessels and 71 remotely operated vehicles (ROVs). Also worth noting is the delivery in June of Skandi Recife, a flexible lay and construction vessel that is jointly owned by DOF Subsea and TechnipFMC (more on whom later) that immediately started an eight-year contract with Petrobras in the Campos, Santos and Espirito Santo basins offshore Brazil. The vessel is 140 m long by 28 m wide with a 10,800 dwt. It is equipped with a 340-tonne vertical lay system tower, a 2,500-tonne underdeck carousel and two work-class ROVs. It hold’s DNV GL’s “Clean Design” notation and can lay flexible pipes in water depths of up to 2,500 m. Sister vessel Skandi Olina is currently under construction at Vard Promar, with a high rate of Brazilian national content.

Cautiously positive

Jointly owned by DOF Subsea and TechnipFMC, Skandi Recife immediately started an eight-year contract with Petrobras upon delivery in June

Offshore Support Journal | September 2018

The same general theme was evident in UK-based Subsea 7’s second-quarter results presentation on 26 July. While the company’s second-quarter revenue was US$1.2Bn, up 13% on the previous year, adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) was US$186M, down 45%. Chief financial officer Ricardo Rosa explained that the reduced Ebitda is accounted for by there being fewer completions of large projects in the quarter, projects signed in the downturn having lower margins, and lower activity levels across the company’s renewables and heavy lifting and i-Tech Services units. The company was awarded seven contracts in the second quarter of 2018, with new projects offshore West Africa and Egypt and in the Gulf of Mexico and North Sea. Chief executive officer Jean Cahuzac noted that this represented the third consecutive quarter where the number of contracts awarded had increased, with most of the projects being tie-backs. He added “We continue to expect a gradual recovery of offshore oil and gas awards, led initially by tie-

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OFFSHORE CONSTRUCTION | 15

TechnipFMC remains the only subsea operator to offer fully integrated solutions for now, but this could change by year-end

back projects and followed by larger greenfield developments.” A major event for Subsea 7 this quarter was the completion of the company’s takeover of Siem Offshore Contractors (subsequently rebranded as Seaway Offshore Cables) on 10 April, along with installation support vessel Siem Moxie (to be renamed Seaway Moxie) and cable-lay vessel Seaway Aimery (which was previously named Siem Aimery). Part of the company’s strategic investment in renewables, Seaway Offshore Contractors was consolidated within Subsea 7’s Renewables and Heavy Lifting business unit and is largely active in the offshore wind sector. The company is also continuing with work to establish an integrated service offering with oil field services company Schlumberger, said Mr Cahuzac, adding “We expect to complete this before the end of the year.” Mr Cahuzac also formally announced the name of Seven Vega, a reel-lay vessel currently under construction. The new vessel features a twin-tensioner pipelay ramp that can be tilted, allowing for installation of pipelines in shallow waters or in depths of up to 3,000 m. It will be fitted with Hyundai diesel-generator sets, a Wärtsilä thruster package, and a Huisman 250-tonne active heavecompensated offshore crane. The vessel’s design focus suggests Subsea 7 is continuing to bank on tie-back projects forming a large component of its business, with executive vice president of strategy and commercial Stuart Fitzgerald saying at the time of its keel-laying ceremony, that it incorporated technologies to address “the growing trend towards longer tie-back developments.” London-based TechnipFMC also released its second-quarter results on July 26, continuing the general theme of optimistic anticipation, with chief executive officer Doug Pferdehirt declaring “strong operational performance across all business segments.”

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Looking just at offshore and subsea, while the company’s subsea revenues declined by 30%, from US$1.73Bn to US$1.22Bn compared to the second quarter of 2017, and onshore/offshore revenues saw a decline of 26% – from US$1.81Bn to US$1.34Bn – its orders exceeded revenues across all segments. Total inbound orders rose to US$4.2Bn, the highest quarterly order figure the company has experienced to date, while this was the second quarter in which orders exceeded revenues. Looking ahead, the company’s backlog shows steady growth year-on-year and Mr Pferdehirt is bullish about the company’s market position, due to a “rapidly emerging trend towards subsea project integration.” “This approach represents a significant departure from ‘business as usual’, where distinct project scopes are bid independently,” he said. “As the only single-source provider with all these capabilities, we remain uniquely positioned to lead this market evolution.” However, while it may be true that TechnipFMC is currently the only subsea operator to offer fully integrated solutions, it may have a competitor by the end of the year, if Subsea 7’s joint venture with Schlumberger stays on track. On the same day it disclosed its second-quarter results, TechnipFMC also announced it had won a subsea installation contract for Chevron Australia, to work on the Gorgon Stage Two development offshore Western Australia. Operating in water depths ranging from 250 m to 1,340 m, TechnipFMC has been contracted to cover project management and engineering, transportation, installation and pre-commissioning of umbilicals, flying leads and manifolds. It also covers fabrication, transportation, installation and testing of rigid spools. OSJ

Offshore Support Journal | September 2018

16 | TECHNICAL LNG fuel on OSVs

LNG as a marine fuel offers plenty of opportunities, but its take-up among OSV operators has been slow. Mark Pointon looks at why this is and what can be done to expedite its use

A slow burner: why LNG is viewed with caution in the OSV sector

ith emissions regulation focusing on exhaust gases such as SOx and NOx, there is a growing body of opinion that believes compliance can best be achieved by using a fuel that does not contain the chemicals that produce such components during combustion. This is good news for LNG, the future of which as a marine fuel in the OSV sector now seems quite positive. There are clouds on the horizon however, notably the cost of retrofitting an LNG system. Effective 1 January 2020,

Offshore Support Journal | September 2018

the global sulphur cap will be reduced from 3.5% to 0.5%. This, coupled with the 0.1% limit for SOx and particulate matter that has been in force since 2015 in emission control areas (EMA), has focused the minds of shipowners on finding a solution that best fits their unique circumstances. In the Offshore Oil and Gas sector, some companies have invested in LNG/ MGO dual-fuel technology. The world’s first LNG dual-fuelled PSV was Eidesvik’s Viking Energy, chartered by StatOil in April 2003 for delivering supplies to oil

and gas platforms in the North Sea from its home port of Haugesund, Norway. It was powered by Wärtsilä 6L32DF dualfuel engines. In recent years, notable additions to the LNG dual-fuelled fleet have been made by Siem Offshore and Harvey Gulf International, for example, Siem Symphony, Siem Pride, Siem Thiima, Harvey Liberty, Harvey Energy, Harvey Power and Harvey Freedom. These vessels are classed with DNV-GL and ABS respectively with “Gas Fuelled” and “ENVIRO+ Green Passport” notations.

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LNG fuel on OSVs TECHNICAL | 17

As the industry develops, support functions are expected to grow in tandem

“The Siem Thiima design offers a combination of environmentally-friendly operation, while having its focus on improving fuel economy,” explained Charlie Baker, marine manager with Siem Offshore Australia, which is operating the Siem Thiima with Woodside Energy. He emphasised the fact that “Significant efforts have been made to assure a tailored combination of LNG operation and optimal hull shape for future cost benefit in the demanding OSV market.” From discussions with other shipowners and fellow marine professionals, there is a perceived wisdom that goes along the lines of: The challenges presented in the adoption of LNG as a marine fuel can be overcome more easily with a newbuild vessel. When it comes to retrofitting existing tonnage, the perception is that it is too complex and too expensive. A deeper look at the issues involved with the design, building and operation of LNGfuelled OSVs supports this line of thought.

The main challenges

The challenges of adopting and implementing LNG fuel in the Offshore Oil and Gas sector are numerous, but

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broadly fall into four categories: technical; regulatory; operational; and financial. In terms of retrofits, two of these categories are most troublesome, financial and technical. For many vessels in this sector, their existing engines/generators are likely not capable of dual-fuel operation, potentially representing a significant capex investment. Dual-fuel engines manufactured by companies such as Wärtsilä, Rolls-Royce and MAN, run on either gas or diesel fuel. In gas mode, the engines run on the OttoCycle and in diesel mode they run on the Diesel-Cycle. Dual-fuel engines comply with IMO Tier II regulations, when operating in their liquid fuel oil mode and with IMO Tier III regulations when operating in gas mode. From a regulatory perspective, The International Code of Safety for Ships using Gases or other Low-Flashpoint Fuels (IGF Code) is the mandatory IMO instrument that applies to all gaseous and other low-flashpoint fuels in shipping, and to all gas-powered ships other than gas carriers. The IGF Code was adopted by the IMO in June 2015 (MSC.391[95]) and came into force on 1 January 2017,

establishing an international regulatory basis for the design and construction of LNG-fuelled ships. The most common rules and guidelines developed by classification societies are: • DNV-GL Rules for Gas Fuelled Ship Installations. • American Bureau of Shipping (ABS) Guide for Propulsion and Auxiliary Systems for Gas Fuelled Ships. • Bureau Veritas Safety Rules for GasFuelled Engine Installations in Ships. • Germanischer Lloyd (GL) Guidelines for Gas as Ship Fuel. These standards and rules specify arrangements for the installation of engines, equipment and systems for gas-fuelled vessels. The main installations defined are the inherently gas-safe machinery space, the emergency shutdown, protected machinery space and the gas fuel storage tanks. Examples of the complexity involved in achieving compliance with these rules include a requirement for double wall, air-locked compartments that are equipped with ventilation and gas detection systems. When combined with cold box encasement, these will occupy

Offshore Support Journal | September 2018

18 | TECHNICAL LNG fuel on OSVs

approximately three times as much space as a conventional marine gas oil tank, containing the same energy-equivalent amount of fuel. LNG fuel tanks that are fitted inside enclosed spaces require protection from shipside and bottom, external fire and mechanical impact. To aid protection in the event of a collision or grounding, the tank(s) must be as close to the centre of the vessel as possible and be the lesser of B2/5 and 11.5 m from the ship’s side, and the lesser of B/15 and 2 m from the bottom of the ship. Equally importantly, they must not be placed closer than 760 mm from the shell plating. In a newbuild scenario, this can be factored in at the design stage, to minimise costs and optimise the utilisation of space. The application of the IGF code requirements and class rules in a retrofit scenario will add more capex investment to the project. The cost of re-designing the vessel’s structure and carrying out the construction work in dock would be significant. To give an indication of the cost, research indicates that on a newbuild vessel, the cost of compliance with the IGF code element can add 20% or more to the build cost.

The safety concern

Another major challenge that must be addressed in the design or redesign of LNG dual-fuelled vessels involves the safety aspect. According to DNV-GL in its document LNG as ship fuel - A focus on the current and future use of LNG as

fuel in shipping, the main safety challenges revolve around the fact that there are significant differences between LNG as a fuel source and existing hydrocarbon fuel sources, such as MGO. Natural gas, which is essentially methane, has to be lowered to a temperature of -163°C in order to change its state to a liquid. In the event of spillage this can lead to catastrophic failures in structures that are not designed to be subjected to these low cryogenic temperatures and in the case of human exposure, severe frost burn injuries can occur. Consequently, this introduces the need for the suitable LNG safety measures to minimise these inherent risks. Further, because LNG is a relatively new type of marine fuel, particularly in the Offshore Oil and Gas sector, the crews who will be operating the vessels are inexperienced in its use. Part D of the IGF Code deals with this issue and places the responsibility onto the shipowning company to document that its personnel have acquired and maintained the necessary knowledge to ensure safe operation according to the standards established in the code. The training outcomes have been included in Chapter V of the STCW code and training is generally presented in a Basic or Advanced course format, depending on the participant’s position on the vessel. The entire operational crew requires training in gas-related safety, operation and maintenance prior to the commencement of work on board. Crew members with a direct responsibility for

Safety must be addressed in the design or redesign of LNG dual-fuelled vessels

Offshore Support Journal | September 2018

the operation of fuel-related equipment on board, such as the master, chief officer, chief and second engineer receive specialist training that includes information on the chemistry and physical properties of LNG, the safe operation and monitoring of an LNG fuel system, the associated health, safety and environmental precautions required and how to perform and monitor LNG bunkering operations. Sources in a number of companies have indicated that the overall cost of this training in the current economic climate, where there is still downward pressure on rates and an emphasis on cost control/ efficiencies, is proving difficult to justify without the surety of a long-term charter for a vessel. The MARPOL Annex V1-driven changes are going to occur in 2020. Unfortunately, even this late in the day, there are unanswered questions and unknown variables still in the equation. Owing to uncertainty in the supply chain for LNG globally and because of the widely variable costs of LNG marine fuel in different regions, it is extremely difficult to evaluate the case for LNG/dual-fuel options against other emission requirement options. A number of operating companies have indicated that they were operating their vessels with “Clean Class” notations and that they were already compliant. Discussions with a source at VIVA Energy, an Australian fuel distributor for Shell, highlighted the fact that the only marine diesel available in Australia was Diesel 10, which had a maximum sulphur content of 10 mg/kg. As a result of this supply chain uncertainty and the issues discussed above, many OSV operators that have not invested in “Clean Class” technologies to date are taking the view that, in the short term, it is easier to justify a business case for the use of low sulphur fuels and the installation of catalytic converters and scrubber systems across a fleet. Others who are still considering their options are working with Classification Societies like DNV-GL and ABS, which offer services in this area. On a positive note, no one is discounting the LNG dual-fuel option completely. Feedback from multiple companies indicates that when the supply chain is assured, the market is more stable, and clients are offering longer-term charters, we will probably see an increase in the number of LNG-fuelled offshore vessels being built. OSJ

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LNG fuel COMMERCIAL | 21

The commercial case for LNG When considering LNG as a marine fuel, offshore vessel operators must consider not only the pros and cons of LNG itself, but also the alternatives on offer, writes Mark Pointon

igh on the list of factors that may influence an operator’s choice of LNG as fuel is compliance with the requirements of Marpol Annex VI after 1st January 2020. This is especially true if the vessel will be operating within emission control areas (ECAs) where the sulphur limit is 0.1%, compared to the global limit of 0.5%. Within the offshore oil and gas sector a wide range of strategies have been adopted to meet this requirement, ranging from LNG dual-fuel for new buildings, to the installation of abatement systems and even switching to alternative fuels. Even within an individual operator’s fleet, different approaches are being adopted depending on ship size, trading area and investment ability. Weak earnings from reduced charter rates and the lack of LNG availability in some areas has made some owners reluctant to fund technical solutions, with most planning on MGO or alternative fuels.

Data from the OECD International Transport Forum indicates that globally there are 56,000 ships greater than 500 gt trading today. It has been estimated that up to 4M b/d of fuel production will have to change from 5% sulphur to 3.5% or lower. The stark reality is that because of Annex VI, in less than two years’ time, 75% of the marine fuel consumed globally will have to change. One market source estimates that 2-3% of the global fleet will be using LNG fuel by 2020. There are currently 242 ships using LNG as fuel. This figure does not include LNG carriers consuming cargo boil-off. Within the OSV sector, there are a number of high profile companies that have invested in LNG dual-fuelled vessels. Typically, these investments have been made with vessels that operate on short voyages, in areas like the North Sea and the Gulf

A Harvey Gulf dual-fuel offshore supply vessel bunkers with LNG at the company’s dedicated fuelling station in Port Fourchon, Louisiana

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Offshore Support Journal | September 2018

22 | COMMERCIAL LNG fuel

of Mexico where there is a ready supply of LNG bunkers that are on long-term charters. Factors considered in these investments will have included the size of the fuel tanks, a cost benefit evaluation of dual-fuel capability on auxiliary engines and boilers and whether to use low pressure or high-pressure engines and supply systems. As a general rule, the cost of building a new dual-fuelled vessel is approximately 20% higher than building a conventionallyfuelled vessel. This higher capital investment is offset by the lower operational costs that result from lower fuel consumption and reduced fuel costs. At present, it is not economic to retrofit LNG fuel systems to existing tonnage. Specific prices vary regionally, but generally LNG is in the region of 30% cheaper than conventional bunker fuel. Whether this will remain the case after 2020 will depend on whether it is sold at a “reasonable” return on investment price, or if it is priced in competition with alternative fuels?

Alternative diesel fuels

A large and growing number of OSVs operate under environmental class notations, like DNV-GL’s “Clean Design”. This means that they already comply with the 1 January 2020 changes. Swire Pacific Offshore (SPO) is an example of a company that has adopted this approach, SPO Australia technical manager, Eric Duck explained that “SPO has processes in place to ensure compliance with all the Marpol regulations and Classification Society Clean Design Class Notations relating to fuel quality. For our operations in Australia, we use fuel with sulphur content lower than that prescribed by the 2020 Marpol Sulphur Cap. An example of such fuel is “Diesel 10”, which is available from local bunker suppliers with sulphur content of 10 mg/kg max.” “Clean Design” is a voluntary environmental class notation that requires owners and operators to design and operate their ships in an environmentally sustainable manner. The aim is to reduce the emissions from each vessel, so that the overall environmental burden from shipping is reduced. One of the requirements of this notation is that emissions to air are controlled within strict limits. The emission levels in DNV-GL’s rules are lower than those in Marpol Annex VI. A major commercial reason that so many offshore vessels have this notation is that major oil companies require them to do so to tender for charters.

Abatement technologies

The current advantage of operating a vessel on heavy fuel oil, for the owners/operators, is the low price compared to distillates. The IMO 2020 regulation implies that ships can continue to use sulphur-rich fuels if they have exhaust gas cleaning systems (scrubbers) installed. The basic function of a scrubber is to use seawater to wash out the sulphur in the exhaust gas. There are currently three types of scrubbers available: open loop, closed loop and hybrid. An open loop scrubber discharges the sulphur-rich wash-water directly into ocean. With a closed loop scrubber, the wash-water is treated with chemicals and particles are filtered out before it is reused many times. A hybrid scrubber combines the two modes and can run in open mode at sea and in closed mode in ports and sensitive areas. With increased use of scrubbers, it is likely that there will be ports where open loop scrubbers will be banned, while hybrid scrubbers running in closed loop mode will be allowed.

Offshore Support Journal | September 2018

Estimates of scrubber installations by 2020 range from 1,000 to 3,000, which is lower than expected

Today, the cost of an open loop scrubber starts at around UD$1.5M, with a hybrid scrubber having a starting cost of US$2.25M. Interestingly, research shows that running a scrubber increases energy consumption by 2% compared to using low sulphur fuels. Sources estimate that at the end of 2017 there were 450 to 500 vessels fitted with scrubbers and that estimates of further installations by 2020 range from 1,000 to 3,000, which is lower than expected.

Fuel pricing/availability

The commercial case for all of these alternatives is influenced by the price and availability of fuel. The question of how fuel pricing is likely to change post 2020 is one of the most discussed by ship operators, fuel producers and suppliers. Fuel pricing forecasting is complex and subject to price volatility; you only have to look at the variations in the cost of filling your car to appreciate that. Industry sources have indicated that typical prices paid for IFO 380 in 2018 have been US$375 per tonne and US$600 per tonne for MGO. Current low-sulphur blends are priced at 5-10% below the price of MGO, compared to IFO 380 which is 38% below MGO. There is a common expectation that after 1 January 2020 there will be a “base case” shift from IFO 380 to MGO. Past experience shows that whenever fuel regulations and the supply chain have changed, as will be the case in 2020, problems with out-of-specification fuel will spike, resulting in increased costs to the vessel operator and lost time. OSJ

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Siem Offshore COMPANY FOCUS | 25

Siem Offshore – An LNG pioneer An 89.2 m PSV is proving a catalyst for change in Western Australia, placing Siem Offshore at the vanguard of environmentally aware operations, writes Mark Pointon

Siem Thiima can operate on either conventional marine diesel fuel or LNG

ustralia is on target to become one of the world’s largest producers of liquefied natural gas (LNG). There are currently extensive major developments either in production or planned, supported by an extensive network of companies and vessels. Of these, Siem Thiima is unusual in being able to operate on either conventional marine diesel fuel (MDO) or LNG. Working within a 50-strong fleet of offshore oil and gas vessels for Woodside Energy, Siem Thiima is the only duelfuelled LNG vessel in operation and a first for an OSV in Australia. The rationale in bringing the Siem Thiima to Australia was part of an overall strategy driven by environmental concerns, upcoming global regulation changes and commercial considerations. With the potential for an over-supplied market and a weak pricing structure, Australian LNG producers, of which Woodside Energy is one of the largest,

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recognised that an opportunity existed for its use as a marine fuel. A key driver for this development was IMO’s proposal to reduce the sulphur content of marine fuels from the current 3.5% to 0.5% by January 2020. There are many different fuel and technological options available to meet both IMO’s requirements and other proposed environmental legislation associated with the 2016 Paris agreement on climate change. Among these, LNG has been shown to substantially reduce exhaust emissions to levels lower than the Marpol requirements. Sulphur oxides and ozone-damaging particulates are almost zero. Nitrogen oxide is reduced by 90% and carbon dioxide is reduced by 25%. Platform supply vessel (PSV) Siem Thiima was built by Remontowa shipbuilding in Gdansk, Poland and was delivered in November 2016. It was awarded a charter contract, as a duel-fuel (LNG/MGO) PSV in April 2016. “This contract represents a significant

milestone in terms of the commitment to Australia and the Asia Pacific region for Siem Offshore, and [is] a significant step towards sustainable transportation on behalf of Woodside, given the environmental benefits of LNG as the primary fuel source,” Siem Offshore said in a statement. This sentiment was mirrored by former Woodside Energy chief operating officer Mike Utsler who said, “We’re thrilled to be the first company to bring one of these vessels to the southern hemisphere. Australia is on track to become the world’s largest producer of LNG, so it makes perfect sense to build duel-fuel capabilities for our marine fleets here.” On 23 February 2017, Siem Thiima was successfully refuelled by EVOL LNG at the King Bay Supply base near Dampier. The company, an industry leader in the safe handling of LNG in the Australian power generation, transportation and industrial markets, designed and fabricated the LNG bunkering system for Woodside; it is fully

Offshore Support Journal | September 2018

26 | COMPANY FOCUS Siem Offshore

compliant with the international bunkering standard, ISO 18683:2015 Siem Thiima is classed with DNV GL with a gas-fuelled notation. The Wärtsilä duel-fuel engines can operate on natural gas or MDO. This fuel flexibility reduces operational expenses, offers compliance with the most stringent emission standards, and ensures full redundancy to enable uninterrupted operation. Siem Offshore Australia marine manager Charlie Baker explained that crew can switch seamlessly between fuel sources. This is particularly useful if the vessel is in port and not running all engines, or must operate longer than expected between bunkering stops. He explained that “Siem Offshore’s primary activity is the ownership and operation of one of the world’s most modern fleet of OSVs. The Siem Thiima is environmentally friendly and focused on improving fuel economy.” High-end technical features assure the vessel is fit for multiple tasks besides safe supply duties, such as fire fighting, oil recovery and standby/rescue operations, while all the while reducing the NOx, SOx and CO2 footprint. “Significant efforts have been made to assure a tailored combination of LNG operation and optimal hull shape for future cost benefit in the demanding OSV market,” noted Mr Baker.

Design challenges

The Siem Thiima is fitted with a 230 m3 cylindrical Type C LNG bunker tank situated adjacent to the four engines. One of the design challenges was its positioning and placement of this

Siem Thiima tracking image

Offshore Support Journal | September 2018

“Significant efforts have been made to assure a tailored combination of LNG operation and optimal hull shape for future cost benefit in the demanding OSV market”

unit. When combined with its cold box encasement, air lock system and gas monitoring system – required to comply with the International Code of Safety for ships using gases or other lowflashpoint fuels (IGF Code) – the resulting compartment required approximately three times as much space as a conventional marine gas oil tank containing the same energy equivalent amount of fuel. Mr Baker indicated that during the charter period, the Siem Thiima had undertaken LNG bunkering operations twice monthly at Karratha. He explained that the LNG fuel was loaded at a temperature of -162 degrees centigrade and that the operating pressure of the fuel tank was maintained between 3 and 7 Bar. Operationally, Siem Thiima has been working primarily between the King Bay supply base and the offshore facilities at Goodwin, Rankin, OHKA, Angel, Nganhurra and Ngujima-yin.

An analysis of vessel utilisation in 2018 shows that the vessel has spent the majority of its time at sea. The emission figures returned are very impressive: the duel-fuel emissions of NOx and SOx were significantly lower when compared to similar vessels operating on conventional fuels alone. To ensure environmental and crew welfare, all crew with designated safety duties are given Basic training that complies with IGF and STCW code requirements. In addition, Advanced training is given to masters, engineer officers and all personnel with immediate responsibility. The Siem Thiima is playing a key role in demonstrating the capability and efficiency of LNG as a marine fuel in Australia. DNV-GL Singapore’s plans for the future include developing a “green corridor” along the route of the existing Australia to Northern Asia iron ore trade. Supported by Perth-based LNG Marine Fuel Institute, the “green corridor’ initiative is a collaborative joint investment project between a group of companies that includes BHP, Rio Tinto, Woodside, shipping companies and classification societies, to assess the commercial viability of LNG as a marine fuel in the Australia to China bulk iron ore trade. Sources close to the project have indicated that it is highly likely that it will lead to the building of a fleet of LNG-fuelled iron ore carriers in the near future. The LNG bunkering hub currently under development in the Pilbara, will provide these vessels with enough fuel to undertake the round trip to northern Asia and back to Australia. In addition, Woodside Energy has publicly stated its intention to ultimately extend the use of LNG fuel to all of its offshore vessel logistics fleet. OSJ

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28 | SIMULATION AND TRAINING

Virtual and augmented reality are set to revolutionise the way crews are trained, increasing safety while reducing costs

SIMULATION AND TRAINING | 29

Keeping a workforce engaged through simulation Training not only improves crew competence and skills, it helps ensure morale remains high during periods of business change, writes Martyn Wingrove

s the offshore sector tackles the pressures of moving out of a prolonged market downturn, vessel operators need to ensure their crews are well trained and remain motivated. There have been a number of mergers, acquisitions and company failures during the last four years as the offshore sector has had to evolve in a lower oil price market and this can have significant ramifications for staff. For example, the merger of three Norwegian vessel operators into SolstadFarstad led to multiple changes to that workforce. There are others in the pipeline, with McDermott’s proposed merger with CB&I and plans for Schlumberger and Subsea 7 to form a joint venture, according to Dynama regional director for the northern hemisphere Lee Clarke. Dynama produces workforce management programmes that include elements of crew training and competence tracking. Mergers make sense in the boardroom, but can leave offshore crews demotivated and demoralised, which can have a detrimental impact on business, said Mr Clarke. Mr Clarke suggested that industry consolidation has a major impact on the workforce and companies need to have methods to prevent offshore teams from becoming demoralised. He said vessel owners that are involved in industry consolidation need to ensure they communicate the benefits to the workforce “to settle nerves and maintain productivity”. They need to ensure that staffing requirements are combined with physical assets such as the vessels and other equipment and that crew have the “correct qualifications to deliver compliant and successful offshore projects on time and on budget”. There also needs to be stability of the business after a merger or acquisition and companies need to be prepared for an uplift in the offshore industry, that would include growth, said Mr Clarke. He believes consolidated companies need “a variety of skills and equipment to meet the diverse capabilities and challenges”. Training is a key requirement of this. It would also be important for vessel owners looking to diversify into offshore renewables. “Where possible, maintain business as usual with meaningful training programmes and a clear career path,” he advised. “Take simple steps that increase employee engagement and highlight the potential for new opportunities,” said Mr Clarke. Training should be an integral aspect for an offshore vessel owner

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going through mergers and acquisitions, or a consolidation of their own businesses. It should include a blend of programmes, courses, simulation and mentoring that delivers the best outcomes for staff and the company.

“Cheaper than having an accident”

Training is vital across the whole of the offshore vessel sector, not just in companies involved in consolidation. It is essential to maintain safety levels and for career development, said Transas leader with Wärtsilä Voyage Solutions, Frank Coles. He said that training “is inexpensive compared with the cost of an accident and loss of life.” Simulator-based technology would be

Frank Coles (Wärtsilä): “Training is inexpensive compared with the cost of an accident”

Offshore Support Journal | September 2018

30 | SIMULATION AND TRAINING

“Simulation is green technology as there are no emissions; it is also good for scoring exercises and measuring improvements in a structured environment”

a vital element of a training regime, especially in offshore, where crews would be working with heavy equipment in sometimes harsh conditions on multi-million-dollar projects. This is one of the drivers for investment in simulators in academies worldwide. “We have seen increasing demand for full size simulators in schools and for moving more people through simulation training,” said Mr Coles. “Simulation removes the dangers and allows trainees to do scenarios,” he said. It is also more environmentally friendly than putting trainees through actual operations purely for training: “It is green technology as there are no emissions and it is good for running exercises with scores for measuring improvements in a structured environment.” Simulators enable more progressive training and more professional development, he added. Transas, which was acquired by Wärtsilä in May this year, has focused on improving fidelity of its simulation programmes so that they appear as life-like as possible to trainees. It has combined full mission bridge and engineroom simulators and incorporated elements such as dynamic positioning and crane simulators to produce a digital twin of a full vessel. Mr Coles said improving fidelity involves “refinements in algorithms and mathematical models” and includes additional data from vessel technical specifications. Transas engineers go on board vessels that they base digital models on to take measurements. “Then we fine-tune the simulation until masters can tell us it is close to the real thing.” The next step is to add environmental information, such as

Gamification technologies are part of Videotel’s enclosed space e-learning program

Offshore Support Journal | September 2018

weather, ocean conditions, tides and currents. Offshore infrastructure would also be included if training involves vessels interacting with platforms, offshore turbines or floating production systems. Sound can also be added to the programmes. “Then we are at a point that it is fairly close to the real thing,” said Mr Coles. He is an advocate for training seafarers on whole systems, not just individual elements. For example, using full mission bridge simulators compared with conducting just ECDIS courses. Mr Coles also believes in the importance of continuous training and the development of competences. “Vessel officers should use simulators once or twice a year to retain their skills,” he said. Retraining could also be conducted on a desktop simulator onshore, or on a ship if the owner has invested in one. “We expect to see more desktop simulators on ships,” he said. New crew members could conduct e-learning and desktop simulator courses within the first few days of joining a vessel and then “every three months do the courses again”. Simulation training is then about maintaining skills. “Certification is one thing and competence is another,” said Mr Coles. “It measures all skills on one platform to become an integrated certificate.”

Gamification in e-learning

E-learning is another method of onboard and onshore training. It involves conducting computer-based training courses, using either an online connection or an already downloaded platform. KVH subsidiary Videotel is one of the leaders in providing e-learning courses. It has developed gamification elements for existing and future courses, said Videotel creative content director Raal Harris. It first introduced elements of computer games into a training course in 2011 when it unveiled a course covering entry into enclosed spaces, following deaths of seafarers on an offshore support vessel in Aberdeen. Gamification involves setting trainees tasks to achieve in a video game environment and highlighting the consequences of their mistakes. Mr Harris said there is more interest in gamification for e-learning now than there was five years ago. “We are now introducing these elements into our existing e-learning courses,” he said. This means seafarers can explore scenes and find objects or elements in a game environment as an addition to these courses. For those without the connectivity or hardware to use a gamification package there will still be a basic level to the course. Videotel is also developing virtual reality (VR) training courses for engineering and safety requirements. Mr Harris expects the first of these courses will be available later this year and will be accessible using Oculus technology. This enables a user to apply a VR application on the latest generation of Android mobile phones. Korean Register of Shipping has also developed VR training for its vessel surveyors and is applying this to other areas of shipping. OSJ

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25.5ͦ

35ͦ41.2610 ’N 139ͦ34.2570 ’E

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F O R YO KO HA MA NAV T E X

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AREA SYNOPSIS 212100UTC D E V E L O P I N G L O W 9 9 6 H P A AT AT 4 0 N 1 4 9 E

MOVING EAST

HDG SPD COG SOG UTC 2018-07-01 GPS 39ͦ ͦ 37.9510N TARGET INFORMATION VECTOR LIMIT POSN

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FQJP63 RJTD 272100 SYNOPSIS AND FORECAST

001.6 020.0

280120

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1.3

9.41

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35ͦ41.2610 ’N 139ͦ34.2570 ’E

123ͦ

FQJP63 RJTD 272100

3.37 9.41

F O R YO KO HA MA NAV T E X AREA SYNOPSIS 212100UTC

18.00

17.23

AIS TRAILS TT ID BRG RANGE COURSE SPEED OPA TOPA BCR BCT

36ͦ36.818 ’N 138ͦ10.663 ’E

TRUE

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UTC 2018-07-01 GPS 39ͦ ͦ 37.9510N

TT ID

051.3

4310 > 4310 > BS:0 > 4310 > 4310 >

139 ͦ 50.000 ͦ E @ 15:12 (EXT) TEL Rx: 4357.0/Tx: 4065.0KHz 1)

ROT ͦ/min 10.8

051.3

ID 9876654321 TIME 15:12 (UTC) POS 35 ͦ 33.000 ͦ N 139 ͦ 50.000 ͦ E @ 15:12 (EXT) TEL Rx: 4357.0/Tx: 4065.0KHz

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9.41

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NEWBUILDING ORDERS AND DELIVERIES | 33

A busy month for deliveries masks a weak outlook Many of the deliveries that took place in June were OSVs that were ordered years ago and had been delayed. The lack of new contracting shows recovery is still a long way off

The PSV Paul Candies entered the fleet in June and was launched from the family-owned shipyard

he Paul Candies was one of four PSVs that entered the fleet in June. It was delivered to Otto Candies LLC, a company with a long tradition in the US offshore scene. Paul Candies is the product of the relationship with the Norwegian design group Marin Teknikk, and a version of Marin Teknikkâ&#x20AC;&#x2122;s MT6020 design. Paul Candies was launched last in 2017 by Candies Shipbuilders in Louisiana, and is 101.3 m long and 20.6 m wide, with a capacity of 4,500 dwt. The vessel is named after Paul Candies, who was a long-serving member of Otto Candies LLC (11 executives carry the Candies name), chairman of the International Grand Isle Tarpon Rodeo and one half of the legendary drag-racing team, Candies & Hughes. After his death in

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2013, he was inducted into the Louisiana Sports Hall of Fame. Staying in the USA, offshore industry giant Tidewater took delivery of Youngs Tide, which is 91.4 m long and 18.9 m wide with a capacity of 5,300 dwt. The medium-size PSV Artemis Offshore was launched from Yuexin Shipbuilding in June, for the account of Chinese owners. The yard was one of the first to build to Norwegian designs. The vessel is 85 m long and 22 m wide with a capacity of 3,000 dwt. The yard only produced one offshore vessel in 2016 and 2017, but so far this year, it has delivered three offshore units. There are 11 offshore vessels still on the shipyardâ&#x20AC;&#x2122;s orderbook. Other PSV newbuildings entering the fleet in June included

Offshore Support Journal | September 2018

34 | NEWBUILDING ORDERS AND DELIVERIES

Vroon Offshore Services’ VOS Patriot, which was named in a ceremony in Rotterdam. The new vessel is the last of six PX-121type built for Vroon at COSCO Guangdong shipyard in China. All six vessels are designed with Ulstein’s X-Bow hullform, which allows for smoother vessel movement through water, resulting in enhanced fuel efficiency and crew comfort. VOS Patriot is 83.4 m long with a breadth of 18 m and has a capacity of 4,200 dwt. Its propulsion system comprises four diesel engines: two of 1,630 kW each and two of 990 kW each, along with two 1,600 kW azimuth thrusters and two 880 kW bow thrusters. It has a maximum speed of 13.5 knots and a dynamic positioning class of DP2. Seaway Heavy Lifting has chartered VOS Patriot for at least 70 days at the Trianel Windpark Borkum II on the German continental shelf, to provide noise-mitigation assistance. VOS Patriot’s five sister vessels are managed by Vroon and are all active in northwest Europe and the Mediterranean. Meanwhile, Solstad Farstad will take two of its PSVs out of the fleet for conversion to hybrid power systems. Normand Server and Normand Supporter are being rebuilt in accordance with DNV GL’s Battery Power notation. In 2012 DNV GL published the world’s first battery-class rules. These were tentative because technology was still developing. In 2015, the society published a more consistent and prescriptive rule set. And in 2017, another update was published based on the knowledge acquired so far and which aligned with Norwegian Maritime Authority’s requirements. These rules consist of two notations: a battery safety notation that is the only notation followed if the batteries are only going to be used for peak shaving; and a battery power notation concerned with the capacity and availability of the battery. The conversion will result in a 15%20% reduction of emissions from the PSVs. Westcon Power & Automation will provide the batteries for the two vessels and sister company Westcon Yards will carry out the conversion, which is supported by the Norwegian NOx fund and is set to take about two weeks. Normand Server and Normand Supporter were built in 2011 and 2012, respectively.

VOS Patriot was named in Rotterdam and is the last of six PX-121type built for Vroon at COSCO Guangdong shipyard in China (source: Kriss Torn)

Offshore Support Journal | September 2018

No PSV orders in June

There were no new PSV contracts in June. The orderbook currently holds 116 orders, with 95 scheduled to be delivered in 2018. So far this year, 23 PSVs have been delivered, which suggests around 50% of the PSV orderbook is likely to be delayed until the following years. However, three PSVs were deleted from the fleet in June, including two newbuildings. According to VesselsValue, the PSVs L 46 and L 48 have been cancelled/scrapped after receiving heavy damage in the Larsen & Toubro shipyard in India during a cyclone in 2016. The third PSV to come out of the fleet was the 1984-built Sea Meadow 01, which was under Vietnamese ownership and is believed to have been recycled in Vietnam.

AHTS deliveries

On the handling tug supply (AHTS) front, the Norwegian yard Kleven Verft delivered Maersk Minder to Maersk. The AHTS is the fourth of sixth Salt Ship Design SALT200 vessels the yard has been contracted for under Maersk’s “Project Starfish”, which aims to provide vessels capable of deepwater anchor handling and oilfield operations, with an emphasis on reliability, safety and minimised environmental footprint. Maersk Master, the first Project Starfish AHTS to be delivered, was awarded Vessel of the Year at the Annual Offshore Support Journal Awards 2018. The Project Starfish vessels are 95 m long with a 25 m beam and are built for deepwater operations. They have an ice class of 1A FS, a dynamic positioning rating of DP2 and carry DNV GL’s Clean Design notation. Each vessel has a bollard pull of 230 tonnes from five medium-speed engines, with a total output of more than 23,000 bhp. As well as two controllable-pitch main propellers, each AHTS has three 1,580 bhp bow tunnel thrusters and two 1,580 bhp stern tunnel thrusters. Maersk Minder will join Maersk Mariner, Maersk Mover and the aforementioned Maersk Master in service, with the fifth Project Starfish vessel due for delivery later this year and the sixth also under construction. A 12,000 bhp AHTS Ming Yuan 9 was delivered in June from the Chinese shipyard Sanmen Jiantiaogang to the new owner Ningbo Mingyuan Shipping. The Ming Yuan 9 is 77 m long and 18 m wide, with a capacity of 3,100 dwt. Troubled Nam Cheong International of Malaysia has 13 OSVs in the water, and 13 on order with eight different shipyards across China. In June the company took delivery of two AHTS but from two different yards. SK Marquee was delivered from Fujian Funing. The SK Marquee is 65 m long and 16 m wide with a capacity of 2,100 dwt. The other AHTS, SK Marquis, was delivered by Fujian Southeast, but to the same design as SK Marquee. Conversely, Capo Gee is the only AHTS listed to Martens Marine of Singapore. Capo Gee is 65 m long and 16 m wide with a capacity of 2,294 dwt; it was delivered in June 2018. The vessel is the result of Nantong Rainbow Offshore & Engineering (ROC) working with two leading vessel designers to market designs for liftboats and AHTS vessels, the company’s chief marketing officer Roy Yap told OSJ in 2015. In 2011, ROC tied up with trading group Xiamen ITG to build a pair of PX121 PSVs. The Martens Marine AHTS is one of the later vessels from the collaboration. Meanwhile, Island Diligence has entered service for Island Offshore. The company has 26 offshore vessels in the fleet, with another three on order from Vard Brevik in Norway, from where the Island Diligence was delivered in June 2018. The PSV is 86 m long and 18.5 m wide, with a capacity of 4,200 dwt. Island Diligence is likely to be one of the OSV deliveries that were delayed in 2015. OSJ

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36 | OPERATOR PROFILE

How Swire built an offshore empire Swire has built on a heritage dating back more than a century to become a global leader in the provision of OSVs. Mark Pointon looks at how the company plans to develop its offering in these difficult times

SPOâ&#x20AC;&#x2122;s fleet of MPSVs provide heavy-lift cranes and accommodation and undertake a variety of specialist operations

OPERATOR PROFILE | 37

ingapore-headquartered Swire group operates a modern, diverse fleet of 77 wholly owned and operated vessels, the majority of which are dynamic positioning- (DP) classed as DP1 or DP2. The company’s core areas of operation include anchorhandling tug supply and platform supply vessels; however, in line with one of its key strategic objectives - to reduce its reliance on the oil cycle – it also operates seismic survey, windfarm construction/support, accommodation and multi-purpose support vessels that service the seismic survey, exploration, drilling, pipelay, subsea construction, production and floating production storage offloader markets. Swire Pacific Offshore (SPO) is part of the Swire Pacific Group of companies, one of the leading commercial groups in the Asia Pacific region. SPO rarely builds or purchases single vessels; a central tenet of its new build strategy is that the company utilises its own experience and expertise to play a central role in the design, specification and build process for each new series of vessels. This ensures that the vessels are fit for purpose and that the fleet has high quality, standardised equipment, enabling the fleet to benefit from strong inventory and supply chain arrangements. The fleet is supported by a network of regional offices in Angola, Australia, Azerbaijan, Brazil, Brunei, Cameroon, Canada, Denmark, Equatorial Guinea, Ghana, India, Indonesia, Kenya, Malaysia, New Zealand, Norway, Philippines, Qatar, Russia, Scotland, Trinidad and the United Arab Emirates; allowing the company to maintain a close and personal relationship with clients and customers. A direct benefit of this is that a detailed understanding of each project is possible across the specific technical, personnel and commercial areas.

Fleet overview

Anchor-handling Tug Supply (AHTS) AHTS are an essential feature of the offshore Oil and Gas Industry, undertaking the towing, positioning and mooring of drilling rigs and other marine equipment. They are powered by powerful engines, are highly manoeuvrable and are fitted with specialised high-power winches. In addition, AHTS are required to carry out supply duties. This includes replenishing other vessels and rigs with a diverse range of supplies, such as mud, drilling fluids, cement, fresh water, fuel oil and equipment. The four categories of AHTS are broadly based on the vessels break horse

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Pacific Orca is suited for the transport and installation of offshore foundations and wind turbine generators, among many other operations

power (bhp): Small: 4,000 to 9,999 bhp Medium: 10,000 to 14,999 bhp Large: 15,000 to 19,999 bhp Ex Large: 20,000+ bhp Within the Swire Pacific Offshore fleet, operating globally in all areas outside North America, AHTS vessels represent the largest number of vessels by type. There are 44 vessels across six different classes, the most recent being the D Class vessels and the eldest the W and R Class vessels. In terms of size, 28 of these vessels fall within the small AHTS category, six are medium size and the remaining 10 are large AHTS, that primarily operate in deep water. D Class vessels, of which Swire operates eight, are built to work in deep water environments with Clean Class SPS 2008 specifications. They are fitted with 500 MT Rolls-Royce Marine Brattvaag winches and feature safety-improving anchor recovery frames and travelling cranes. Equipped to DP Class 2, their design focusses on fuel efficiency and reducing environmental impact.

fluids, mud, cement and methanol in their tanks, and equipment such as casings, drill pipes and containers on their decks. Deck containers are used to carry supplies such as food, spare parts and provisions. PSV’s are categorised as small, medium or large, depending on the clear deck space and their cargo carrying capacity or deadweight (dwt). Small: clear deck up to 300m2 and 1,000 dwt. Medium: clear deck up to 500m2 and 2,000 dwt. Large: clear deck space 900+ m2 and 4,000+ dwt. PSVs represent the second largest number of vessels within the SPO fleet. There are 22 vessels in four different classes. (L, H, G & A Class) All the L, H & G Class vessels are categorised as Large PSVs.

Platform Supply Vessels (PSV) Platform supply vessels specialise in the logistical support required to operate in an offshore field. Typically, they work between an onshore supply base and a variety of offshore locations such as rigs, platforms and construction vessels. They transport essential supplies such as drilling

Windfarm Installation Vessels The formation of Swire Blue Ocean gave SPO the capability to operate in the wind energy sector. It currently operates two O Class vessels, the Pacific Orca and the Pacific Osprey. These are six-legged jack-up vessels that have the capacity to work with components

Seismic Survey Vessels The seismic services division offers a “one stop shop” survey solution and operates two vessels, the Pacific Falcon and the Pacific Finder. These perform offshore seismic exploration and collect 2D and 3D data.

Offshore Support Journal | September 2018

38 | OPERATOR PROFILE

up to 1,200 tonnes above and below the water. The vessels are DP-controlled for precision positioning and have a dieselelectric power system that delivers up to 24 MW power. Multi-Purpose Offshore Support Vessels (MPSV) MPSVs undertake a variety of specialist operations, including construction support, inspection, maintenance and repair, remote operated vehicle (ROV ) trenching and dredging support and

Offshore Support Journal | September 2018

decommissioning support. The SPO MPSVs in the fleet provide heavylift cranes rated up to 100 tonnes; accommodation for up to 95 persons; deck/hold space between 800 and 1,000 m2; ROV systems deployed by moonpool LARS; and AHC A-frame rated to between 3,000 and 6,000 m.

Installer having 236 berths and the Pacific Intrepid 372. Both vessels have cranes rated at 200 tonnes safe working load that are capable of working at up to a depth of 1,000 m. In addition, they can carry liquids, mud and dry bulk cargo and provide warehouse facilities to support projects.

Barges Swire operates two, I Class vessels that are barges with multi-purpose capability. They offer accommodation facilities with Pacific

Based in Hong Kong, publicly quoted Swire Pacific Limited has five operating divisions: Property, Aviation, Beverages, Marine Services and Trading & Industrial.

Corporate structure

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OPERATOR PROFILE | 39

The divisional portfolios include: major property developments in Hong Kong, International Aviation Carrier, Cathay Pacific and extensive aviation support interests, such as aircraft engineering and air cargo terminal operations. In 2017, the group had an operating income of HK$80.29Bn (US$10.29Bn) and profits of HK$4.7Bn. SPO operates as part of a larger group, meaning that within the business cycle, higher performing divisions can be used to underpin poorly performing divisions during cyclical downturns.

SPO rarely builds or purchases single vessels, preferring to use its experience to support the design and build of new vessels elsewhere

This is highlighted in the current 2017 Swire Pacific Annual report published in April 2018. Weaker results from the Aviation and Marine Services Divisions were offset by better results from the Property, Beverages and Trading & Industrial Divisions. The group’s ability to operate in this way is linked to its proven track record over more than a century, of conservative, prudent financial behaviour. One of its primary objectives when managing capital is to ensure that it operates as a going concern, so that it can secure access to finance at a reasonable cost. Factors such as credit rating, gearing ratio, cash interest cover and return cycle on investments are monitored to ensure a sound capital structure. To secure funding for itself and its subsidiaries, Swire has entered into financial covenants in respect of gearing limits and the maintenance of minimum consolidated net worth. These financial covenants, together with the long-term objective of maintaining a high credit rating, establish the framework within which the capital structure of the Group is determined. To date, none of the covenants have been breached. The figures for 2017 show a healthy gearing ratio of 23% that is well below limits. Credit ratings of A3, A- and A- with Moody’s, Standard & Poor and Fitch respectively were reported in December 2017. The dividend structure within the group involves two share types: ‘A’ and ‘B’. In the latest annual report, the directors declared second interim dividends of HK$1.10 (US$0.14) per ‘A’ share and HK$0.22 per ‘B’ share; together with the first interim dividends paid in October 2017, this amounts to full year dividends of HK$2.10 per ‘A’ share and HK$0.42 per ‘B’ share. In the annual report, former group chairman John Slosar outlined the group’s aim of generating sustainable long-term growth in shareholder value: “We deploy capital where we see opportunities to generate long-term value. The difficult market conditions faced by some of our businesses have led them to take measures to reduce costs and to improve efficiency where possible and to focus on profitable core operations. This should serve us well in the longer term.”

Commercial performance

The weak levels of exploration and production spending by oil majors, despite an increase in oil prices, together with the oversupply of OSVs, has adversely affected

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vessel utilisation and charter hire rates across the offshore support industry. SPO was no exception. SPO reported an overall utilisation rate of 62.5% across its fleet for the year-ending 31 December 2017. Average charter hire rates were US$18,900 per day, which are generally in line with industry figures. In 2017 SPO recorded a loss of US$154M. In line with the group’s prudent financial policies, a review was undertaken of the realistic book value of the vessels in the fleet. This led to a downgrading of the fleet value by US$130M. This was presented as an accounting impairment charge in the 2017 annual report. Altus Oil & Gas Services was sold as part of a company re-structure, along with five vessels (four older AHTS and one older PSV ). In terms of charter hire revenue, the largest proportion (43%), came from construction and specialist vessels. This represented a 7% increase from 2016. AHTS vessels provided 42% (2017: 44%) and platform supply 15% (a 5% drop from 2016). Across the fleet, there are four AHTS, an accommodation barge and two seismic vessels in cold stack

Looking ahead

Globally, industry conditions remain difficult, but there are signs that the offshore support market may be bottoming out. Exploration and production spending is expected to increase modestly in 2018/19 and the utilisation of mobile offshore drilling units and other OSVs is gradually recovering. Charter hire rates remain depressed, but there was an increase in rig fixing activity in the first half of 2018, which is encouraging and in line with predictions. SPO is adopting a twin-track approach to the economic situation. On the one hand, it is reducing its operating costs by stringent cost controls and the disposal and removal from active service of underutilised and loss-making vessels. On the other, it is seeking sustainable growth in a broad range of businesses over the long term. To this end, SPO has invested US$105M in new assets, which include two PSVs delivered this year and a further four to come across 2018/19. An additional specialist construction vessel is also expected.

Swire: Company history

The Swire Maritime lineage and heritage can be traced back more than a century

Offshore Support Journal | September 2018

40 | OPERATOR PROFILE

to The China Navigation Company, which was founded in 1872 to operate Mississippi-style paddle-steamers on Chinaâ&#x20AC;&#x2122;s Yangtze River. The company quickly expanded its operations throughout South East Asia, Australia, New Zealand and Japan. Today, the company operates a global network of multi-purpose liner services, through its three core operating divisions: Swire Shipping, Swire Bulk and Swire Bulk Logistics. Swireâ&#x20AC;&#x2122;s involvement in the offshore oil industry began in 1975, with the formation of a joint venture with Northern Offshore Limited to develop Offshore Support operations. In 1980 Swire Pacific Offshore (SPO) a wholly owned subsidiary of Swire Pacific Limited, acquired full control of the joint venture business and assets. In what was a pioneering era, the company operated initially with six vessels. The company is headquartered in Singapore, which is beneficial in terms of its strategic location and because it provides various incentives and schemes, including tax concessions, that encourage companies to register their ships and locate their businesses there. Consistent growth, initially through the building of the J Class vessels, followed by the building of the subsequent S and B Classes, established the company as a leading anchor-handling operator. Swire successfully negotiated the turbulent economic situation of the early 2000s, strengthening the fleet with the building of the P Class, R Class, V Class and W Class vessels. This, combined with

Offshore Support Journal | September 2018

Consistent growth, initially through the building of the J Class vessels, followed by the building of the subsequent S and B Classes, established the company as a leading anchor-handling operator

BELOW: Pacific Installer is a multipurpose capability barge with 236 berths and cranes rated at 200 tonnes safe working load

a series of acquisitions and joint ventures, enabled Swire Pacific Offshore to widen its service offering in the first decade of the century. 2007 saw the establishment of the Swire Survey Services Division, followed in 2008 by the establishment of marine salvage, oil spill preparedness/response services. In 2010, the company acquired Blue Ocean Ships, which it re-named Swire Blue Ocean to manage its operations in the offshore wind industry. 2012 saw further expansion, with the acquisition of the Norwegian company Seabed AS, which provided SPO multipurpose support vessel capabilities and high specification remote-operate vehicle capability. A strong emphasis on quality, a proactive attitude to safety and a strategic objective to build an industry-leading team, led to the establishment of Swire Marine Training Centre in 2007. Based in Loyang Singapore, this world-class centre provides training in safety management, anchor handling (basic level through to advanced skills), dynamic positioning (operations and system maintenance), electrical and control systems engineering and engineroom operations, using bespoke state-of-the-art simulations. In recent times, the fleet has been further expanded with the building of the C Class, UT736 AHTS vessels and the 17,864 bhp, 220 tonnes bollard pull, D Class AHTS vessels. In the platform supply vessel market, multiple G Class, H Class and L Class vessels have been built. OSJ

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42 | MARKET DATA

Hopes of a North Sea trade festival in June fell flat The North Sea in June should be a fertile hunting ground for owners, but this year they have been left a little disappointed, writes Craig Jallal

s the month of June progressed, the number of PSV charters awarded for summer work increased. The largest single tranche was from Maersk Oil North Sea, which awarded contracts for four PSVs operated by Solstad Farstad. Sea Tantalus and Far Server were booked to support Ocean Valiant, a semi-submersible drilling rig, for approximately two years from June 2018. Sea Tantalus is an STX 05-L CD design built at Cochin Shipyard in 2013, measuring 82 m by 17.03 m, with a capacity of 4,047 dwt. Far Server is a Havyard 832 CD design built at Fjellstrand in 2010 and has a length of 78.6 m and a width of 17.6 m, with a capacity of 3,735 dwt The other two Solstad Farstad vessels were Normand Flipper and Sea Springer, which will support hook-up and commissioning of the Culzean gas field development from July 2018 for approximately nine months. Normand Flipper is a UT 745E design built in 2003 at Kleven Verft and measures 88.8 m by 18.8 m with a capacity of 4,340 dwt. Sea Springer’s fleet companion Sea Spark has also been contracted

for a year by BP Egypt from June 2018, and Sea Supra and Sea Spear have been contracted for three months with options for an undisclosed client, commencing mid-2018. Sea Springer, Sea Spark, Sea Supra and Sea Spear are all PX 105 designs built at Zheijiang Shipbuilding in 2014 or in Sea Spark’s case, 2013. They feature Ulstein’s X-Bow hull design and measure 89 m long by 19 m wide, with a capacity of 4,459 dwt each. No rates were reported for any of the above charters. Maersk Oil North Sea also took a fifth vessel; the 2012-built PSV Rem Mistral was chartered from Rem Marine for a firm period of two years to support Maersk Oil’s drilling campaign with jackup rig Maersk Highlander. Rem Mistral was built by Hellessoy Verft in Norway in 2012 and is 85 m long and 20 m wide, with a capacity of 5,500 dwt. Staying with the North Sea, in June Aker BP awarded fourmonth contracts to PSVs Normand Arctic and Normand Skude, and a two-month contract to PSV Far Solitaire. Norman Arctic is 94.3 m long by 20 m wide with a capacity of 4,900 dwt. Normand Skude is 85.6 m long and 20 m wide with a capacity of 5,300 dwt. Far

Shell chartered the hybrid-diesel electric Edda Ferd in June 2018

Offshore Support Journal | September 2018

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MARKET DATA | 43

Damon B Bankston rescued survivors from the Deepwater Horizon disaster, but is now sold out of the industry

the AHTS Normand Ferking for one year. This means that the vessel’s contract is firm with Equinor untill September 2019. Normand Ferking was built in 2007 and is 89.4 m long and 22 m wide and has a capacity of 4,600 dwt. In addition, Solstad Farstad reports that a major oil company in Brunei has awarded a contract for the AHTS Far Scimitar to support its drilling operations. The contract will commence early July 2018 for a firm period of four months, plus four one-month options. Far Scimitar was built in 2008 and is 78.3 m long and 17.2 m wide, with a capacity of 3,068 dwt. Rates were not reported but were generally perceived to have increased in June.

AHTS sale and purchase activity

Solitaire is 91.6 m long and 22 m wide, with a capacity of 5,800 dwt. Shell also chartered the hybrid-diesel electric Edda Ferd in June for a firm period of six wells, with 12 further one-well options. The rate was not reported.

PSV sale and purchase activity

“Values have softened for PSVs” said VesselsValue head of offshore Charlie Hockless. “Only seven sales were confirmed this month,” he added. Notable sales included Damon B Bankston, a 3,000 dwt 2002-built PSV, which sold for US$3.2M to Seafreeze for nonoffshore related work. Damon B Bankston was instrumental in the rescue of the 115 survivors from the Deepwater Horizon and subsequently worked on spill response following the Macondo disaster in the US Gulf in 2010. Viking Supply Ships offloaded its three medium PSVs: Nanna Viking, Freyja Viking, and Sol Viking, all for undisclosed prices. The latter two spent some time in lay-up in 2016.

AHTS Charters

Reported AHTS charters were thin on the ground in June, and mainly in the Brazilian market. The Brazilian-built Havyard 843 design CBO Xavantes was chartered for eight years by Grupo CBO to the Petrobras Prorefam project. The rate was not reported. Petrobras also extended contracts for two Solstad Farstad vessels and re-contracted another for three years to support its exploration and production activities on the Brazilian continental shelf. A new three-year contract, with a possible two-year extension, for anchor-handling tug supply BOS Topazio will commence in Q1 2019, in direct continuation of its current charter. The vessel was built in 2005 at the Itajai shipyard and has a bollard pull of 146 tonnes. Far Santana, another AHTS, has had its contract amended to be firm until Q2 2019, with commencement taking place in Q2 2018. The vessel, built by Ulstein in 2000, has a 203-tonne bollard pull and is equipped with a Fugro FCV work-class ROV, capable of operating in depths of up to 3,000 m. Construction support vessel Far Saga’s contract has been firmed until Q2 2020, with commencement also due to take place during Q2 2018. Built by Simek in 2001, it is equipped with two i-Tech 7 work-class ROVs, which can operate in water up to 3,000 m deep. Outside the Brazilian market, Solstad Farstad announced that Equinor has declared its option to extend the present contract for

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“AHTS and AHT values have firmed slightly,” commented VesselsValue’s Mr Hockless in reviewing the June AHTS market. He noted that Topaz energy offloaded two of its more vintage AHTS units, Topaz Addax and Topaz Salalah. While they both went for undisclosed prices, the VesselsValue values on the day of the sale were US$0.75M and US$0.65M, respectively. The AHTS sale and purchase market was active. Solstad Farstad subsidiary Deep Sea Supply sold the AHTS Sea Jackal to an undisclosed buyer, according to a company press release. Sea Jackal was built by ABG in India in 2011 and has a length of 63.4 m, a width of 15.8 m, a draft of 5.5 m and a capacity of 1,900 dwt. The AHTS has a bollard pull of 91 tonnes, a dynamic positioning class of DP1 and a firefighting class of FiFi 1. This is the sixth OSV and the fifth AHTS the company has offloaded this year, following the sales of AHTS vessels Far Senior and Far Sailor and PSV Far Supporter in May and AHTS vessels Nor Chief and Sea Badger in April. The sale price was undisclosed but according to VesselsValue Sea Jackal had a market value of US$2.39M as of 24 June 2018. Solstad Farstad said the vessel’s sale “will result in a minor negative accounting effect” for Q2 2018. OSJ reported in February that Solstad Farstad was looking to sell “non-core assets” and in March that it had postponed payments to creditors while it reorganised its capital structure.

OSV charters centre on Brazil contracts

In June Petrobras contracted DOF Subsea Brasil’s Skandi Salvador OSV for a 650-day contract, with the option to extend by a further 640 days, commencing in July. Skandi Salvador is an STX ROV 06 OSV and was built at Vard’s Niteroi shipyard in Brazil in 2009. It measures 106 m by 21 m with a capacity of 3,600 dwt. In other OSV news, Geosund and Skandi Skansen have been contracted by undisclosed parties for inspection, maintenance and repair work throughout Q2 and Q3 this year. Geosund is a multipurpose vessel built in 2001 and converted in 2006. With a dynamic positioning class of DP2 and accommodation for 88 people, it measures 98 m long and 18 m wide, with a capacity of 3,624 dwt. Skandi Skansen is a combination anchor handling tug supply and construction support STX AH 04 design. The vessel was built in 2011 at Vard’s Aukra yard in Norway. Skandi Skansen measures 107 m long by 24 m wide with a capacity of 4,982 dwt and can accommodate 90 people; it has a bollard pull of 349 tonnes. DOF described one of the contracts as being for “a subsea services frame agreement in the UK with a major North Sea operator.” Geosund and Skandi Skansen’s work will include seabed mapping, surveys, pipeline and structure inspection, light construction and repair work. OSJ

Offshore Support Journal | September 2018

44 | IMCA NEWS

In support of IMO’s autonomous regulatory scoping exercise IMCA’s marine technical adviser Capt Andy Goldsmith analyses IMO’s decision to review autonomous surface shipping

utonomous shipping made its way onto IMO’s agenda in May 2018. IMO recognised that it should take a proactive and leading role on the subject, given rapid technological developments in the operation of various autonomous modes of ships. It is to conduct a “Regulatory scoping exercise for the use of Maritime Autonomous Surface Ships (MASS)” for completion by 2020. IMO has agreed four degrees of autonomy: • Ship with automated processes and decision support: seafarers are on board to operate and control shipboard systems and functions. Some operations may be automated. • Remotely controlled ship with seafarers on board: the ship is controlled and operated from another location, but

Capt Andy Goldsmith (IMCA): Autonomy should be used to improve safety, reliability and efficiency of operations

Offshore Support Journal | September 2018

seafarers are on board. • Remotely controlled ship without seafarers on board: the ship is controlled and operated from another location. There are no seafarers on board. • Fully autonomous ship: the operating system of the ship is able to make decisions and determine actions by itself. IMCA supports the regulatory scoping exercise, which will take place in two stages: the identification of relevant provisions in IMO instruments applicable to MASS; and an analysis to determine the most appropriate way of addressing MASS operations, considering, for example, human factors, technology and operational factors. In addition, a Correspondence Group on MASS has been established under the coordination of the flag state of Finland. The group will test the framework and methodology of the scoping exercise, conduct an initial analysis of safety of life at sea regulations, make suggestions for improvements, and submit a report to IMO’s Maritime Safety Committee in December 2018. Once the scoping exercise is completed, and subject to agreement by IMO member countries, work is likely to commence to revise the regulations, although it is understood that IMO’s intention is for the existing international framework to remain intact. Conventional shipping is not going to disappear any time soon; the most realistic scenario is that conventional and autonomous ships will coexist and share the same waters. However, if autonomous shipping is to be successful, IMO will need to address a number of predicaments, such as liability and compensation issues, cyber risk management, maintenance and operation, and the human element. There is a possibility that national rules for domestic shipping may emerge

while IMO is still conducting its scoping exercise for MASS. Hopefully, this will not lead to a national fragmentation of rules, but rather as input to a future international harmonisation of the regulatory framework.

MASS in the offshore sector

While autonomous ships operating globally might seem a long way off, in the shorter term we might expect to see experimental or developmental OSV units operating in national waters. For instance, Kongsberg Maritime is working with Automated Ships Ltd and Bourbon to finance a prototype OSV, Hrönn, that will work in the offshore energy, hydrographic, scientific, and offshore fishfarming industries. It could also be used as an ROV and AUV support ship and standby vessel to provide firefighting support to an offshore platform in cooperation with manned vessels. In August 2017, Wärtsilä successfully tested the remote control of a ship’s operations through a sequence of manoeuvres using a combination of dynamic positioning (DP) and manual joystick control. Using a Gulfmark Offshore vessel in the North Sea, the remote-control navigation was carried out from Wärtsilä’s office in San Diego, California, 8000 km away. For vessels to become fully autonomous, new requirements are needed in sensor capabilities, decision algorithms, ship-to-shore communication, machinery design and maintenance, onshore control centres and cyber security. Progress is being made to improve these aspects. It does not take much imagination to envisage OSVs operating either fully or partially autonomously, but autonomy should not be a goal in itself. Instead, autonomy should be used to improve safety, reliability and efficiency of operations. OSJ

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