ABS Surveyor Magazine Fall 2016

A Quarterly Magazine from ABS

Fall 2006

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ow much steel is required for a robust vessel and where should it be located?

With the recent introduction of the new International Association of Classification Societies Common Structural Rules (CSR) for tankers of 150 m in length and greater,

and for bulk carriers of 90 m in length and greater, it is expected ships designed and built to the new standards will require more steel. The question in this case is how much more. The new rules take a rational approach to identifying the high stress areas within the hull structure to which the increased scantlings must be applied. The world’s shipbuilders are now developing the detailed designs that will, in time, indicate the percentage increase in steelweight to which each type and size of ship will be subject, compared to their non-CSR predecessors.

A Quarterly Magazine from ABS

Fall 2006

COVER: An underlying theme that emerges in this issue of Surveyor is the overriding importance of people to a shipowner, manager and shipbuilder’s safe and efficient operation. The executives interviewed for articles on Unisea, Lotus, ITM and Noble, and the account of the approach that Samsung HI takes to safety training all highlight this critical human element. Dr. Phil Anderson, a leading consultant on ISM related issues, gathers many of these strands together in his assessment of the practical implementation of the ISM and ISPS Codes.

FEATURES: 2

A Legacy Goes Forward

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Management, Personalized

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View from a Niche

Unisea Shipping Ltd. builds the future on traditional values.

ITM brings traditional shipowner principles into modern tanker management.

Nick Efthimiadis of Lotus Shipping looks at the challenges and changes in the chemicals trade.

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Misunderstood and Misapplied

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85 Years of ‘Imagineering’

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Reasons to be Cheerful

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UK’s SOSREP – A Man Alone

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FPSO: Favored Offshore Production Solution

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Where Safety Enhances Production

An assessment of the application of safety management systems.

Noble Corp. built an empire by cultivating and motivating a high-value workforce.

A profile of Folke Patriksson, the embodiment of positive energy.

The UK’s SOSREP has full command and control to intervene with ships in distress.

Published by ABS.

Thirty years on, the FPSO has become king of offshore production technology.

For permission to reproduce any

Samsung has made safety part of its efficient workplace.

portion of this magazine, send a written request to: Stewart Wade ABS World Headquarters

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Viewpoint

ABS Plaza

Keppel FELS’ CEO Choo Chiau Beng on the ‘Can-Do’ attitude.

16855 Northchase Dr. Houston, TX 77060 USA Joe Evangelista, Editor Rhonda Patterson, Editorial Assistant Chirstopher Reeves, Graphic Designer Sharon Tamplain, Graphic Designer Sherrie Anderson, Production Manager Stewart Wade, Vice President Copyright © 2006 by ABS.

Photo Credits Cover, 2, 4, 5: courtesy Unisea Ltd.; IFC: ABS Library; 7, 8: courtesy Ulf Bendroth; 10: courtesy Lotus Shipping; 13: courtesy Phil Anderson; 14-20: courtesy Noble Corp.; 21, 22: courtesy Transatlantic AB; 24-28 courtesy the UK Maritime and Coastguard Agency; 29-31, 33: courtesy SBM; 32: courtesy Petrobras; 3, 6, 9, 11, 21 (center), 34-35: Joe Evangelista; 36: courtesy Keppel FELS; IBC: Christopher Reeves.

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Unisea Shipping Ltd. tackles modern corporate obligations with an approach rooted firmly in tradition. hen the Livanos family’s Ceres Hellenic Shipping Enterprises announced the billion-dollar sale of its crude carrier fleet last year to publicly held Belgian tanker corporation Euronav, trade papers around the world echoed the fears of shipping enthusiasts that yet another historic name was preparing to exit the industry.

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Less than two years earlier, the heirs of shipping magnate Stavros Niarchos quit the business, announcing that “politically motivated regulations and liabilities affecting ship operations” made it no longer worth the risk. But Ceres Hellenic was taking a far more complex approach to the problem. The transaction turned a large part of the Ceres fleet into shares in Euronav and catalyzed the conversion that refit the legacy with a corporate structure for sailing into the future.

As the turn of the millennium approached, the challenge facing the company’s next2

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generation shipowners was how to take its legacy forward under new-generation rules and regulations that demanded core changes in the way that traditional shipowners go about their business. Their solution was to transform the various shipping activities into a group of distinct, transparent corporations that would be able to meet modern professional and regulatory expectations while also maintaining a strong continuity with the past.

The result was the creation of three distinct ship management entities established to take the business forward. Ceres helped Euronav establish its own ship management company in Greece, Euronav Ship Management (Hellas) Ltd., which opened for business in November 2005 staffed by former Ceres employees and run by ex-Ceres Technical Manager Stamatis Bourboulis.

Ceres LNG was established to supervise the construction of a series of LNG ships being built at Samsung Heavy Industries in Korea and also to manage the fleet of LNG ships

for the British Gas account. The creation of Unisea Shipping Ltd. as the vehicle that would manage the shipping legacy into the future completed this transition.

“There are many ways of utilizing the great things that Ceres had in the past and taking them forward, one of which is the good pool of well qualified, dedicated people that Unisea has been able to employ,” says Adamantios M. Lemos, of Unisea Shipping Ltd. “The people in Unisea and in Ceres LNG are mostly exCeres staff – all familiar faces that have been around a very long time.

“At Unisea we consider our personnel ashore and at sea to be our most important asset,” he says. “We feel that this focus on the human element of our business gives Unisea an edge at being able to excel in running ships to the highest quality and safety standards. This is done through our emphasis on dedicated people, shown by the high retention rates of senior officers.

The seafarers stay with Unisea because they are happy on the ships, are treated well, and know they have support from the top management of the company.”

Unisea’s main business lines are Unisea Shipping Ltd., a provider of ship management services headquartered in Piraeus; Unisea Philippines Inc., a crew management firm; and Japan Marine Inc, a newbuilding supervision company active mainly in Japan and South Korea. To keep Unisea at the forefront of this constantly changing industry it is actively involved in a number of industry bodies including the UK P&I Club Board of Directors, Helmepa Board of Directors, Intercargo, Castec, The International Parcel Tankers Association (IPTA) and the ABS Greek National Committee among others.

Refitting its legacy to meet the professional expectations of a more corporate future required a thorough review of every activity and tradition within the organization – an exhaustive exercise, but one that Lemos calls necessary for longstanding, traditional companies to be certain that corporatization is not robbing them of core strengths whose origins may no longer be obvious.

“It’s very healthy every now and then to reexamine what you do and how you do it – to say to yourself, we need to do things because they make sense not because we’ve always done them. It’s also very important to remember where you came from, what worked in the past, and why you are here,” says Lemos. “These lessons learned from past generations in shipping should be used as the textbooks for the next generation.

“I think the secret of success for Greek shipping was that the traditional shipowners were able to retain good people who ran their ships very well,” he adds. “They did specific things that others did not do and at which they were very successful – like being very close with their crews.

Adamantios M. Lemos, Unisea Shipping Ltd.

“We have worked hard to be close to our people. It’s very easy to get into the corporate environment of boards and CEOs and CFOs where the temptation is to run things impersonally,” he says, reflecting on the maritime industry’s professional evolution. “The challenge is always to keep sight of how and why we are all able to be here.

In operation for just over a year, Unisea Shipping Ltd. is still a work in progress, says Lemos. “Our intention is to acquire ships when the market is right, to build the fleet and take it forward with modern tonnage. A lot of effort has gone into the Group to make it well positioned for the future, creating this large organization, the corporations, the newbuilding supervision company, and devoting ourselves to the Philippines. We will build up the fleet when market opportunities arise which is why we set up Unisea to run both tankers and bulk carriers.”

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Many of the philosophies that got us to this point still apply – even though they may have been formed several generations ago – and they will apply going forward.”

Manning the Future “Greek crews are absolutely top notch, but there aren’t enough of them,” says Lemos.

“As we examined the options for crewing our ships in the future, we knew for certain that we didn’t want to be calling manning agents and saying ‘send me a captain’ as if we were ordering a can of paint,” he says. “The traditional Greek shipowner was very close to his crews. We wanted very much to retain that,” he explains, “and to cultivate a reliable pool of people who would grow within the company, grow aboard our ships and grow to feel that they are part of our organization.”

They appear to have achieved that goal.

Unisea today has qualified crews top to bottom from the Philippines and recently celebrated the appointment of the first Filipino Captain to work his way up through the company from Cadet to Master, Captain Arnel Plaza.

“Our personnel are our most important asset, whether ashore or at sea,” says Lemos. “We need to be close to them and we need to let them know they are close to us. They are the key to what we do and an aspect of our business to which we’ve devoted considerable time and effort.”

On Unisea’s vessels the Master, Chief Engineer, Chief Officer and Second Engineer are dedicated to their ship, rotating six months on, three months off. They feel so at home aboard, says Lemos, that they leave their clothes and pictures on board when they are relieved. “We always knew our Greek crews on a first-name basis. They were dedicated to their vessels, which were like a second home for them,” he explains.

“We are very proud that, after years of commitment and perseverance, we have been able to duplicate in the Philippines the natural

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closeness that we have with our Greek crews – and the same sense of belonging among the seafarers.”

Shipmanagement is foremost among Unisea’s activities. Set up to operate tankers and dry cargo vessels, the company presently runs a fleet of capesize and panamax vessels. Its crew management services are provided by Unisea Philippines Inc., which also runs a selective third-party crewing business.

The rationale for taking on limited, non-Unisea-related clientele was to achieve a size sufficient for cultivating and maintaining a pool of capable people whom Unisea could continuously train and employ.

Ceres became involved with a Filipino manning agency through its entry into the Coeclerici dry bulk pool in the mid-1990s.

Over the years the agency worked hard to create a system that blends the personal touch of traditional shipowning with the rigorous requirements of modern crew management. Last year, the agency became Unisea Philippines Inc., the crew management subsidiary of Unisea, run by former head of Safety and Marine at Ceres, Captain Mike Shuker.

The curriculum at Unisea Philippines’ training center includes classes on such broad topics as ISM and planned maintenance, supported by seminars on focused subjects ranging from oily water separators to cold-water survival. The classroom experience is reinforced by a training regime on board, provided by dedicated trainers, active Chief Officers and Engineers, who circulate through the fleet.

Unisea presently crews over 40 ships, supplying over 1,100 seafarers last year including junior officers and

Captain Arnel Plaza, Unisea Shipping Ltd.

ratings for Ceres LNG and Euronav. The idea behind taking on third-party business was to build the company up to where it could support “extras” like on-board training and also ensure its ability to continually employ, train and retain a pool of qualified reliable people.

The training center is also a focal point for supporting Unisea’s larger goal of bringing the shipowners close to their crews.

“We have two crew conferences in the Philippines each year, in which we gather the crews ashore and get to know them better,” he says. “You can have the greatest ship in the world, but if you don’t put the right people on board, train them right and treat them fairly, you’re finished,” he adds.

As a midsize company, Unisea can also take advantage of the economies of scale offered by large suppliers. For example, the company employs an Italian caterer to provision the ships under its management.

It is an economical solution, says Lemos, because the caterer, whose major clients are in the cruise industry, has a worldwide distribution network already in place. It is a practical solution as well, considering that the quality of food on board is of prime importance to the traditionally-minded shipmanager.

“My father used to say, ‘there are two things that change every day on board a ship: the weather and the food. You can’t do anything about the weather, so you’d better make sure the food’s good,’” Lemos recalls, pointing out that for Unisea the art of shipmanagement is more than a question of economics alone.

“We have sign-on bonuses and an incentive package designed to retain good people, as do most good owners, but that’s not what keeps people coming back year after year.

The people stay with us because in addition to the financial benefits they are happy on the ships.

“That might sound as if we’re all soft and cuddly – we’re not,” he adds, explaining that the shipmanager’s challenge is to be simultaneously tough and fair. “We’re quite tough about discipline, regulations, training and so on. We have the ships back up their checklists and reports using digital photos so that we can, for example, verify that the safety committee has met on schedule, that lifeboats have been swung out and lowered during exercises, or that everyone came on deck in his fire suit during drills.

“Ships will sometimes have problems – that’s inherent to the business,” he says. “But the people on board want most of all to be certain that they have support when there is a problem, and that they don’t have to fear losing their jobs if something doesn’t go well. We work very hard to let them know that, at the end of the day, we’re all in this together. The focus is on how to respond and work through issues as a team.

“This approach and our emphasis on the human elements of our business is something we’ve embraced and done ourselves because we believe in it, but it is not unique to us,” he says. “I know it can be done by other companies; it’s just something the owner has to drive.

“At Unisea, as at Ceres before, we believe that our people, ashore and at sea, are the most important assets we have and that is how we treat them. This aspect of ‘human factors’ is something to which we have dedicated a lot of time and effort. You can’t have consistently safe, reliable, quality ship operations if you cut corners.”

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Management, Personalized International Tanker Management brings traditional shipowning practices into the ship management milieu.

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o Ulf Bendroth, managing director of International Tanker Management (ITM), ship management is an art best practiced by handling the vessels in one’s care with a shipowner’s touch. As a seafarer, ship superintendent and maritime executive who for years worked with traditional owners in his native Sweden, Bendroth has seen first hand the benefits the personal touch can bring to an organization and endeavors to cultivate that approach within ITM. “We consider ourselves part of the owner’s organization,” he says, “and take the same kind of personal interest in the ships and our crews as do traditional shipowners.

We are focused on tankers because

Ulf Bendroth (left) discusses technical details with Wolfgang Buttgereit, ABS Principal

it is a demanding sector that needs a specialist. In this sector, now more than ever, success depends on maintaining a quality organization which you can do by taking a traditional type of approach to management.”

International Tanker Management was established in 1998 as a spin-off from ship managers Barber International, to provide a service dedicated to the tanker industry’s particular needs in ship management, crewing, post-fixture management, newbuilding supervision and insurance matters.

Headquartered in Dubai, with technical management in Hamburg, Germany and offices in Singapore, ITM currently has around 70 vessels under management – full or post-fixture – and hopes to expand the fleet to 100. But for Bendroth, success is not measured by getting the numbers up but by getting them up while maintaining fleet quality. Reflecting the idea of being part of the owner’s organization, ITM manages a mixed fleet whose handful of dry cargo vessels belong to existing tanker clients.

Casting his net beyond the KG sector, Bendroth identifies several streams in which to fish for new business: traditional family-run tanker owners with small fleets who are finding management costs getting out of hand; traditional owners with growing fleets who are experiencing difficulty finding crews and continuing the level of management they enjoy; and owners who wish to expand the fleet, but not the organization.

Surveyor in Hamburg.

“Many small family companies are doing management largely from nostalgic reasons,” he explains. “Nostalgic, in the sense that the shipping business is a very human business, full of emotion and feeling. Many older-generation shipowners have grown up with ships; they have lived on board with their families, or passed the Kiel Canal for the first time at the age of two. I even know a few who were born on board. These types are extremely knowledgeable about shipping, and they enjoy solving problems.

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“This older generation is very skilled and, when you talk with them about technical matters, you can see they have worked aboard with their hands from how deeply they know the ships. As very much hands-on owners, I can understand that they don’t want to give control of their ships to someone they consider an outsider. To just sit back, review figures and sign checks is not for them. But the younger generation of owners is different and, as they take over, I am sure many will see it as a smart business move to employ the services of a trustworthy ship manager,” he says.

“Many of the new generation owners have grown up thinking like managers,” Bendroth adds. “The industry is continually scrutinized by the oil majors and rightly so; the vetting regimes have pushed the industry to improve quality. It is also pressed by new legislation.

Nearly all the new regulation that has come down on the maritime industry over the past decade has been directed at tankers. To run a tanker fleet today, you need to maintain your own safety and quality organizations – which can overwhelm owners with constantly increasing details to track and constantly rising costs.”

As a fleet grows, it crosses thresholds at which these safety and quality groups must grow with it. Unfortunately, labor laws tend to make the reverse untrue. This reality makes owners seeking to expand, without expanding employment rolls, another group that Bendroth sees turning to ship managers for assistance.

he says.

“In the past, the owners themselves sailed the ships and crewed them from local islands; now that they have a large fleet, they find the traditional labor pool no longer sufficient.

“On top of that, they do not have the time or the organization to search all over the world for the kind of quality crew they are used to. So, either they hire people just to find more people to hire, or they make the move to hire someone who has a large crewing network and the right attitude about using it.”

When a traditional owner takes the big step of considering a ship manager, he will look for someone who reflects his own values and ethics, says Bendroth. Conversely, when a conscientious ship manager seeks new clients, he does the same.

“We look for clients who have quality on their

In the end, he says, choosing a ship manager will become, for many traditional-type owners, merely a sound business decision. “In coastal Scandinavia, for example, there are many formerly small owners who now have big fleets,”

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minds,” he says. “To build a good reputation as a ship manager, especially of tankers, you have to be careful about who you accept as your client. You need owners who understand ships and who are willing to spend the money required to maintain a quality ship. Otherwise, you will have problems.”

Respect and Quality According to the philosophy that Bendroth describes, the logic chain of quality for an organization starts in the mind of the manager and goes something like this: from management attitude, to staff morale, to organizational motivation and, ultimately, to the business’ success. In this belief, then, the link between money and quality is not as strong as that between attitude and quality.

“You can’t build a company of quality people on salary alone,” he says, “because, if all you offer is salary, then

“Certainly, we are not only friendly, we are also demanding – and rightly so. The client expects a good product from us. Similarly, we should expect a good product from our people,” he adds. “Shipping is very much a human business and, as a manager, our asset is people. They do the work on board and we are here to support them.

“The atmosphere in the head office spreads out to the ships,” he says. “If you treat people as professionals, they will behave professionally. Take human error, for example. If you encourage people to make decisions and take action, sometimes they will make mistakes.

Our attitude is that we are all in this together and everyone shares the fault. So, when there is trouble, it is not a question of finding somebody to blame but of correcting the error and learning from it. A professional will learn from a mistake and spread the word, making sure others don’t repeat the error.

“In the same way, an inhuman atmosphere in the office will spread to the ships. That is not only unprofessional, it is also bad business,” he adds.

you must always be on top to keep your best people. But if you are competitive on salary and treat people well, so that they feel respected, you can attract good people to your organization and keep them.”

Likewise, he says, the quality philosophy limits one’s options when pitching new business. “You can’t compete on fees, not the management fee nor the operations budget,” he says. “These are things that you cannot cut if you are serious about your work. The place where you can compete is on service; and the quality of your service is, ultimately, based on how you treat your people.”

He offers a simple formulation: “Recognize your people. Recognize their effort. Listen to what they say,” he says, “and bring the crew into the picture so they can help make decisions that affect the ship.

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ITM trains its crews to do their own purchasing, beginning by passing along the quotations for parts ordered. “When people know the costs of things, they become cost-conscious and spend the company’s money wisely,” says Bendroth. “So, we give them a monthly budget and, more or less, leave the decisions to them. You have to guide them at first, of course, but as a professional manager, I find it amazing how quickly they learn to evaluate quotations.”

“Every decision will either cost money or save money,” he contends. “So it is in the manager’s interest to educate the crew about making good decisions, and then get them involved in the running of the ship.”

In the end, he says, the human aspect of the business comes down to an approach that is as challenging to maintain as it is simple to state: “Keep an eye on things but leave decisions to the ship.”

Challenge and change in the chemicals transport sector, seen by one of Greece’s longtime chemical tanker operators.

Nick P. Efthimiadis, Managing Director Lotus Shipping Company

parked by opportunities arising out of the recent freight rate boom, a number of Greek shipowners have launched themselves into the specialist field of chemicals transport. Igniting the drive was a combination of rising costs in one sector and market stability in another, says Nick P. Efthimiadis, Managing Director of Athens-based Lotus Shipping Company.

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Lotus is among a handful of longtime Greek companies established specifically to run tankers carrying chemicals and petroleum products. Today, the company is run by brothers Nick, Panayiotis and Yannis Efthimiadis, whose father Capt. Pantelis Efthimiadis founded Lotus in 1986 as a niche operator of small IMO Class II and III chemical tankers in the 3,000- to 20,000-dwt range. Lotus presently runs six ships, including two newbuildings. After taking delivery of a further four newbuildings over the next few months, the company expects to have a fleet of 10 sophisticated chemical carriers in operation by first quarter 2007.

“Two years ago, a number of shipowners, particularly in the dry cargo sector, seeing extraordinary vessel prices in their sector,

discovered that prices in our sector were still in a rational state,” says Nick Efthimiadis.

“They also saw the stability of our market and the indications that freight rates will continue to be strong through 2007 at least. These are the most important elements in the recent drive among Greeks to buy chemical tankers.”

Those incentives were sweetened when the sector’s oil major clientele began hiring the newer, more sophisticated ships to haul the simpler products. “Simple products like fuel oils have traditionally been carried in the less-sophisticated ships,” he says. “You would expect, for example, that our two newest ships – which are working for oil majors – would be carrying chemicals. Instead, they are carrying petroleum products and lube oils because oil companies today desire double-hull ships for all their products.”

The growing demand for new, sophisticated ships coincided with the opportunity to build them affordably. At present, for ships in the size ranges below 20,000 dwt the cost difference between building a regular tanker and a chemical carrier is only about 5 percent of the purchase price – not a very significant increase when calculated against the much Fall 2006

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operational transparency and reporting to which many tanker owners are still adjusting.

“I believe the dry bulk operators getting into the sector will do their best to comply with TMSA, but it is a very difficult exercise that requires a lot of time to meet even the basic requirements,” says Efthimiadis. “Even so, complying with TMSA might be considered easy compared with the difficulty of operating these vessels,” he adds.

wider marketing available to a chemical tanker. The result, says Efthimiadis, is that “nearly all small tankers constructed in recent years have been built to IMO II or III chemical carrier regulations. The trend is even extending into the larger size ranges, with an increasing number of 30,000-dwt tankers being built as IMO type III carriers.”

A further incentive appeared when the development of sophisticated coatings made it possible for normal steel tanks to handle chemicals previously carried only in expensive stainless steel tanks. With high-level ships now available to lower-level budgets, the door to the small chemical carrier sector opened to a new range of players.

A Challenging Sector “The common belief appears to be that, because the vessels are small they are easy to operate,” says Efthimiadis. “But in reality it is a very demanding sector. We have 28 people in the Lotus office operating six ships and, believe me, everybody’s free time is limited!

This is one reason why I expect to see many of the new entries quitting the sector. The new players will have to pass through a period of great difficulty before being taken seriously by the oil majors,” he adds.

Among the foremost hurdles for today’s tanker operator is satisfying the management review requirements of the Tanker Management Self-Assessment (TMSA) program. First issued two years ago by the Oil Companies International Marine Forum, its suite of management assessment guidelines has brought to the wet bulk sector a demanding new level of 10

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Some of those difficulties spring from the short voyage time between loading and discharge ports, combined with the terminals’ need for clockwork deliveries to support their continuous operation. The vessels load, discharge and return in a nonstop cycle that allows for very little downtime. Several of Lotus’ ships, for example, are in services for which passage time is just 20 hours. The shipowner who supports these ships lives on the alert. Altogether, he says, small chemical tanker operation is as demanding on the operator as it is on the vessels and crews.

As a critical part of an industrial supply chain, the chemical tanker owner’s most prized assets may not be its vessels but its crews, on whose speed, accuracy and competency this fast-paced business depends. The average crew compliment on one of Lotus’ small carriers is 20 – the same number found on much larger vessels. Each has an important job to do and, says Efthimiadis, “no one is sitting around wondering what to do next.”

To control the quality and training of its crews, Lotus operates a manning office in Russia and has its own port captain training seafarers in its Filipino manning agency. Such a level of attention is necessary to be a longterm player in the sector, says Efthimiadis.

With little time for on-board maintenance and cargo operations always just around the corner, forethought and planning are the critical elements in good, efficient ship operation, he adds. “Planned maintenance is extremely important in this business,” says Efthimiadis. “A tanker in short hauls cannot have spares on board to cover every eventuality, so if the owner isn’t prepared to service the ship instantly, he risks making several voyages at less than full capability. When that happens the ship risks operational problems, which bring complaints from the terminal and the charterers and may ultimately result in the vessel going off-hire. For smooth opera-

tions, then, especially to places where repair or obtaining spares is difficult, the operator is obliged to keep more spares in stock and to carefully program and coordinate all maintenance programs and ship surveys.”

Even before setting to sea and confronting the organizational and operational challenges, the chemical tanker owner faces his first ordeal in the shipyard. Partly because the available shipyards need an expert’s guidance to do the job properly, building one of these ships today is itself a difficult chore, says Efthimiadis. “These days you are not dealing with big, sophisticated yards to build a small chemical tanker. With all the big ship orders today they don’t want the small ships. By definition, then, you have to turn to smaller yards. Of those, the most affordable are newer yards that do not have much experience with this kind of complex ship.

“The benefit to working with the smaller, less-experienced yards is that they know they have a lot to learn and tend to be very cooperative,” he adds. “With the very big, very sophisticated yards you either take their standard designs and equipment packages or you move on. The newer yards, instead, are willing to work with you. You can teach them techniques you consider important and train them to handle your technical specifications.

The trade-off is that everything needs careful testing and supervision, meaning the ship owner needs a bigger site office, a very experienced staff and, in general, must expect increased supervision costs.”

who would then discuss it with the Master before any communication could even be sent to the office,” he explains. “Today, with everyone connected by computers, all this communication is instantaneous and each person can know exactly what the others know. By this very simple and elementary use of computer systems, you not only save quite a lot of time, you also eliminate the potential for problems arising due to poor communications or reporting.

“So, for example, the description of a problem or some condition that needs attention on board is now much clearer. You see a problem, you take a picture of it. That’s it. There is no way for the office to misunderstand the situation when a visual image from a digital camera backs up the description. Good use of IT simplifies many things at once – but it won’t solve all your problems.”

Though the small chemical carrier niche is full of promise, in the end, he says, the challenge within the opportunity will discourage many of the new players. As a result, he expects to see an upswing in vessel sales in the near future. “I think many of the new players responded to the sale and purchase opportunity, but do not fully realize what they are getting into,” he says. “This is a very difficult sector to stay in long-term.”

ABS surveyor Chris Harris examining the double-hull construction of one of Lotus’ new ABS-classed chemical tankers building at the Nok Bong shipyard in South Korea.

IT is a Key to the Future Like Lotus, many operators counter the growing complexities of the chemicals trade through the use of sophisticated computer systems and information technologies, which are becoming increasingly important utensils in the chemical operator’s toolkit.

“To properly run a fleet of chemical tankers, you have to think and plan for the long term,” he says. “You also need to maximize the efficiency of the whole company, which was the main reason for computerizing our planned maintenance system last year. Over the past few years, IT has revolutionized our operation.

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An assessment of the application of safety management systems.

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oncompliance with the ISM Code often results from a lack of understanding of the Code rather than from unwillingness to cooperate with it, says prominent ISM Consultant Dr. Phil Anderson.

“I see a lot of misunderstanding in many of the cases I work on,” says Anderson. “It is a problem that goes back to the introduction of ISM. Many companies, and individuals, have still not quite grasped ISM, nor what it is trying to achieve, nor how. ISM is based on a systems approach to management, which is quite different from the system under which most mariners have been trained.”

Anderson is a 25-year insurance industry veteran, immediate past President of the UK-based international professional body, The Nautical Institute, and former Director of North Insurance Management, a whollyowned management company of the North of England P&I Club. He is also a Master Mariner and an internationally acknowledged expert on the application and practical effects of the International Safety Management (ISM) Code.

“Most mariners have been brought up with a series of rules, regulations and manuals to which they could turn for instruction while ISM, instead, is a goal-setting approach that relies on a cycle of continuous improvement,” he explains. “Unfortunately, there has been little education for mariners on the nature of a systems approach, how it should be working and how they could get the best out of it.”

What happened, he says, is that many in the industry, from owners and managers to their advisors, initially misunderstood the nature of ISM and interpreted it to be a new set of rules requiring certain forms to be filled in, rather than as a set of goals to be achieved and so “developed” their SMS [Safety Management Systems] by buying a set of manuals from a consultant. As a result, they 12

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ended up trying to adopt a management system that was not based on the way they worked or their understanding of their jobs.

“An SMS that is bought is essentially the same from one company to another, which is against the principles behind the whole thing,” says Anderson.

Difficulties in Compliance The difficulties of adjusting to the new mentality in the ISM Code were compounded by the addition of the International Ship and Port Facility Security (ISPS) Code in 2004, Anderson contends. “As we approached Phase One implementation in 1998, accident and liability claims did drop off a bit,” he says, “and by the Phase Two implementation in 2002 you could actually start measuring a fall-off in accident rates. When ISPS came in, however, a great many companies, recognizing they had to appoint a security officer, gave the security officer’s job to the Designated Person (DP) for ISM – and in doing so lost the whole plot of it.

“In many companies I have visited, the DP gave most of his attention to monitoring security and little to monitoring safety,” he says. “I have often seen the DP tucked away in some room surrounded by piles of paper, focused on making sure that people are sending in their forms. Unfortunately, this overworked individual is most often not really doing anything with these forms when they are received but only making sure that, if there’s an audit by Port State Control, the company will be able to show its people are filling in forms. The sad story is that all this effort is yielding no benefit for the company.

“Though few statistics are currently available, P&I clubs in particular have raised premiums every year for the past five years,” he adds.

“That indicates the value of claims is going up, not down.”

Insurers’ Initiative As an investigator, Anderson is most often instructed by the insurer’s lawyers after a major incident to find out if there were serious weaknesses in the SMS before they decide whether to defend or settle a claim.

“When I am asked as an expert to investigate these matters, I ask to see not only the records of hours of work but also the overtime sheets.

The overtime sheets are usually quite accurate,” he says.

“Port State Control doesn’t often have the time to inspect documentation in great detail and flogged records can seem correct on first look. An investigator looking into a disputed multimillion-dollar claim, however, will have the time necessary to look into things in great detail.

“Knowing the jobs of Second Mate, Chief and Master, because I have sailed in those positions, I can tell fairly easily the accuracy of the ship’s records. The records might, for example, tell that during a port call the ship was taking on bunkers or stores, or doing a crew change, or performing other activities.

Knowing that at least one deck officer would be involved in those operations, I then can go back and check on whether the hours were recorded. Discrepancies in this area can cast considerable doubt on the truth of the entire documentation.”

The upshot is that seafarers falsifying ISM documentation may think they are doing the company a favor but in reality may be setting up the shipowner for very serious trouble should something go wrong.

renders a decision based on the arguments.

Three have been run so far – two in London and one in Athens – and on each occasion played to a sold-out crowd of spectators.

The Center’s Founding Director, Risk Management Consultant Dr. Aleka Sheppard, is optimistic that with further education and training on issues surrounding ISM and Quality Management, the philosophy and proper application of the Code will be more broadly understood. “The industry is keen to learn new approaches to risk management and is well aware that it needs quality education and training, which we at the Center will continue to carry out. The mock trials were appreciated because they drew attention to what might go wrong – in terms of legal consequences – if the directors of a company do not pay due attention to the philosophy of the ISM Code,” says Dr. Sheppard.

“Each trial brought up issues of hours of work and improper record keeping,” says Anderson, who was invited to participate in the trials as an expert witness. “While not binding, they do reflect how the most senior lawyers are starting to think and how they will argue some of these cases should they ever get their day in court.”

Mock Trials Predict Trends So far, nearly all cases raising issues related to the on-board Safety Management System have been settled before trial. Because the issue is not being argued as such in court, the London Shipping Law Center, an industry forum for education and training associated with University College, London, began running mock trials in which leading barristers argue cases based on imaginary but realistic scenarios. The lawyers argue the case, live and unrehearsed, and the judge

Dr. Phil Anderson ISM Consultant

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Since 1921, Noble Corporation has thrived by combining an aggressive focus on growing its business with an equally intense focus on cultivating its people.

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n 1921 a young entrepreneur named Lloyd Noble caught the oil fever, bought a used drilling rig on money borrowed from home and started drilling for oil in Oklahoma – not an unusual scenario for the time. Unlike most of his contemporaries, Noble left the world in 1950 a wealthy man, making his mark in a highly competitive and volatile business. The company he built, Noble Drilling, became animated by some of his own outstanding personal traits: a innate curiosity that led him to embrace emerging technologies;

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a hard-driving spirit that led him to explore and excel in new fields of endeavor; and a sincere belief that great goals are reached only through team effort, which led him to set employee encouragement as a foundation stone of his enterprise.

Noble Corporation has grown and changed dramatically over the past 85 years but, if several recent industry awards and milestones are any indication, has managed to retain its founder’s culture of encouragement – calling

it ‘The Noble Way’ – and built a reputation for a commitment to people and safety equal to its commitment to technology and business.

In 2005, a panel of judges from the US Coast Guard, Minerals Management Service and National Academy of Sciences’ Marine Board awarded Noble the prestigious National Ocean Industries Association (NOIA) Safety in Seas Award. Since 1978 the award has singled out high achievers in the ocean industries who, by action, design or influence made a notable contribution to improving the safety of life offshore.

Later that year, introducing Noble at Banc of America Securities’ annual investment conference, offshore drilling analyst Doug Beck noted that “We refer to it [Noble] as a ‘blue-chip offshore driller.’ They consistently have the highest full-cycle returns on invested capital and they are able to grow the earnings base while maintaining that discipline of return on invested capital.”

In 2004, Noble became the first driller to have all its mobile offshore drilling units and shore bases certified to the ISO 14001 environmental standard – a factor in its winning the first annual Robert W. Campbell Award. Jointly sponsored by the US National Safety Council and ExxonMobil, the Campbell Award recognizes companies that have achieved a leadership position in business and financial performance while also making health/safety/environmental (HSE) concerns a priority in daily operations.

Integrating HSE, social and financial performance is a key element of business sustainability. In 2005, Noble was added to the Calvert Social Index™ Fund and qualified for the Storebrand Socially Responsible Investment standard based on its leading environmental and social performance. Noble is also a component of the Dow Jones Sustainability Index.

People, Performance, Profit The company’s numbers put the meat on the bones of such accolades. When Noble became a publicly listed corporation in 1985, its stock sold for $2 a share and its market capitalization was about $28 million. Today its stock goes for about $80 a share and its market value tops $11 billion. Net income for 2005

came in at $296.7 million on operating revenue of $1.38 billion, double 2004’s results of $146.1 million net income on revenues of $1.06 billion.

Meanwhile, for the past 15 years the rate of losttime incidents (LTI) aboard Noble’s growing rig fleet has steadily declined to where, today, 59 percent of that fleet has operated without an LTI for more than four years and 20 percent of the fleet has operated without an LTI for over eight years.

James Day, CEO,

In a 1999 letter to stockholders, Noble Corporation CEO James Day summed this record up by saying, “We have been asked why we have been successful when others in the drilling sector have had disastrous failures and my response has been, quite simply, ‘our people’.”

Noble Corporation

Day joined Noble in 1977, became President and CEO in 1984 and, over the next two decades, oversaw its metamorphosis from a largely land-based driller with a domestic business into an offshore drilling contractor of international stature. With the annual rate of chief executive departures in the US at about 12 percent, few corporations of this size can claim CEOs who are also lifelong employees.

This long relationship may explain another Noble distinction. For three of the past four years, Day has been selected by the magazine Institutional Investor as ‘Best CEO in America’ in the Oil Services and Equipment category.

The award is based on a poll of portfolio managers and analysts at leading financial institutions and its winners, say the editors, ‘share a talent for charting, executing and openly communicating their vision.’ While Day’s vision has guided the company offshore, he has repeatedly noted over the years that “it was everyone at Noble rowing together that has brought it there successfully.”

Part of Lloyd Noble’s legacy to his company was a decentralized organization in which managers and division officers have decisionmaking authority. With autonomy and Fall 2006

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Noble Eddie Paul

responsibility as rewards, the system naturally draws capable people upwards. Day built on this flexible and high-functioning framework and, through a series of acquisitions beginning in 1988, accrued for Noble not only the equipment that would make it an offshore driller, but also the employees and allies who would make it a deepwater star.

One of those allies has been Houston-based investment bankers Simmons & Company. In 1988, with its stock selling for $2 and its cash pool on the low side of shallow, Noble turned to Simmons to broker a deal to acquire two distressed drillers held by GE Capital. It took some doing to convince GE to take a stake in Noble as partial payment, but the risk paid off as Noble’s fortunes climbed.

Noble Paul Wolff

The deal opened the supermarket door and Noble stocked its pantry with the fruits of an industry’s consolidation: Bawden Drilling (1988); Transworld Drilling (1991); Western Oceanic (1993); Chiles Offshore (1994); Triton Engineering (1994); Neddrill (1996); and Maurer Engineering (2001). Today Noble Corporation provides contract drilling, well site and project management and engineering services and – unusual in the world of drilling contractors – also runs its own research and development programs.

Noble’s success rests not only on acquiring talent, but also on trusting that talent to do its job, says Dave Beard, Vice-President Engineering - Planning and Technical Support, who came into the organization

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15 years ago through Transworld Drilling.

“The first thing I noticed about this company when I came in is that Mr. Day lets you do your job,” says Beard. “And as long as you do a good job he doesn’t second-guess you or get in your way. As a consequence he expects more of you but, at the same time, he doesn’t run you off if you make a mistake. Most important of all is that he empowers us to do our jobs, which lets us perform.”

This cultivation of talent has, in the drilling industry’s current intense burst of headhunting, seen the Noble organization mined to people the executive floor of more than a few new drilling companies.

Long Love Affair with Technology Noble has had a love affair with technology that dates to its earliest days. In 1925, the company took delivery of a new coarse-cone drilling bit developed by the Hughes Tool Company and began setting depth and speed records throughout the region. That same year, Noble was hired by Royal Dutch/Shell to perform what became a landmark study of hole deviation, at the time a new problem that had appeared as drillers plumbed ever-greater depths and discovered their holes wandering off track, sometimes into a neighboring claim.

In 1928 Noble drilled its first well over water, through a river in Oklahoma, using an innovative solution that set the derrick on the riverbed and linked it with tubes and cables to onshore boilers, mud pits and pumps.

This bit of fancy engineering was the first deposit in a knowledge bank that the company would draw upon over two decades later in the offshore oilfields of Bay Marchand, Louisiana, where in 1954 its use of a 13,000volt submarine cable made it the first driller to power a rig with electricity from shore.

A year later Noble took a step further offshore, ordering its first jackup – a new invention that had only recently made its first appearance in the Gulf of Mexico.

Four decades later the company made its own contribution to jackup evolution with the 1994 development of the Extended-Reach Cantilever (ERC) system. The ERC lets the jackup’s derrick skid 70 ft off the platform

over the sea, allowing the unit to drill a wider area than previously possible.

But when people talk about Noble Drilling and technology, the item that generally comes to mind first is the EVA-4000 project.

The 1991 Transworld acquisition, which had brought Noble five jackups and seven semis, also included seven low-value assets that the seller couldn’t unload: triangular submersible drilling rigs that Transworld had built in the early 1980s, and which had rarely worked in more than 80 ft of water. Noble’s plan was to convert them into deepwater semisubmersibles capable of working in 4,000 ft depths. In the end, the engineers topped their initial hopes and built rigs with depth capabilities of 6,000 ft and beyond. One, the Noble Paul Wolff, was turned into a dynamically positioned floater for 8,900 ft.

“We have been asked why we have been successful when others in the drilling sector have had disastrous failures and my response has been, quite simply, ‘our people’.”

– Noble Corporation CEO Jim Day, 1999 letter to stockholders

“When we started we didn’t even know if it was possible. While we were working on it, nearly everybody called us crazy to even try. When we finished, we had accomplished a great thing,” Beard adds. “Look at the Wolff: the last well it drilled before conversion was in 70 ft of water, and the first well it drilled out of the saddle broke the world depth record at the time, in 8,700 ft.

“The way we did it was to get very deeply involved in the shipyard process,” he adds.

“Any time a change was needed, we made the decision before going to bed that night. Any time a problem came up we’d resolve it right away. Because we were empowered to make decisions, we were able to get the job done.”

Among Noble’s latest projects are some dramatic semi conversions and its first

newbuild jackups since 1982. The semisubmersible next out of the dock will be the Noble Clyde Boudreaux, which is presently undergoing conversion in Pascagoula, Mississippi. The unit after that, a sister rig beginning conversion in China, is named the Noble Dave Beard. It is one of Noble’s highest honors to put your name on a rig.

Noble Homer Ferrington

The Beard and Boudreaux are sisters to a 1999 conversion, the Noble Homer Ferrington, though none of them look much like sisters any more. Originally six-column moored units when purchased in Russia, the latter two now have eight columns, though the Boudreaux has its deck height raised eight meters above the original design to give an added capability for harsher environments. The Beard, meanwhile, will have six very much larger columns, use dynamic positioning and, under Noble’s environmental policy, will be virtually an allelectric rig to minimize the use of hydraulic systems. The massive conversion of the Beard will take the bones of a rig designed for operation in 2,000 ft of water and produce one capable of operating in depths of up to 10,000 ft – and in doing so will quadruple the unit’s steel weight from 5,000 to 20,000 tons.

Noble Clyde Boudreaux

‘Imagineering’ at Work Like the EVA project, Noble’s latest newsmaking technology also has a long intellectual pedigree. Noble had acquired Dutch drilling contractor Neddrill in 1996 to grab a lead spot in the emerging field of deepwater drilling but found in its farsighted technologists an asset as great as its deepwater drillships.

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an even more exotic aluminum alloy into an ultra-deepwater riser capable of reaching 12,000 ft.

Meanwhile, the company has used its aluminum alloy expertise to replace the steel nitrogen bottles of rig motion control systems, further decreasing the weight the rigs need to carry.

Noble Amos Runner

At Noble, they call this ‘imagineering’. As coined, the term referred to the combination of creativity and practicality behind the EVA project. But the sense of it can be expanded to encompass the atmosphere in which such ideas are born and nourished, and a corporate attitude towards its people and the culture of merit that frames their activities.

This culture was outlined long before the invention of the ‘mission statement’. In his will, Lloyd Noble set down his guiding principles, which Noble’s management appear to have read as a Constitution of sorts.

They call this excerpt their ‘Legacy of Management’:

tive materials for drilling risers, hoping to increase the operating depth of Neddrill’s existing equipment without incurring conversion costs, and had just turned their attention to a once-secret aluminum alloy originally developed for use by the Soviet military. With a strength close to steel but at nearly half the weight, the exotic material held great promise for deepwater drilling.

Noble immediately moved to continue the project, beginning a five year, multimilliondollar development and design project to produce the industry’s first aluminum alloy riser. A prototype was produced in 2001, and the first full alloy riser string was in service offshore Brazil in depths ranging to nearly 5,000 ft by 2003. With a submerged weight half that of steel pipe, the riser is enabling Noble’s deepwater rigs to go as much as 25 percent deeper.

Today a second string is in service in the Gulf of Mexico, with more on the way. Noble has already taken the next step and is developing 18

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“My hope is that when into other hands are placed the responsibilities for the management of our mutually built enterprise, those in command will not lose sight of the fact that no individual builds anything worthwhile by his effort alone; that, though none of us can be totally fair, as we are human, our companies will continue down through the years to attempt to give people associated with them an equitable portion of the fruits of their labor which, of course, bears with it the like responsibility on the part of management to weed out those who do not make a sincere contribution, in order that room may be made for those who do.

“It has been my further belief that it was the duty of management…to so build the organization that when men evidenced capabilities to give them a part of my work and find other tasks to do which might result in increased benefits to the organization, or step aside; and should death intervene, to have matters so arranged that I would be missed personally, while the machinery continued to function smoothly.”

‘EVA’ and ‘The Noble Way’

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n 1996, its 75th anniversary year, Noble Corporation embarked on a startling transformation, committing itself to offshore drilling by selling off its entire land-based drilling operation and acquiring deep-water drillship specialist Neddrill. At the same time, it announced a daring plan to convert a set of submersible drilling units, which had rarely worked in more than 80 ft of water, into semisubmersibles with operating depths up to a hundred times deeper.

The submersibles had come to Noble in its 1991 acquisition of the marine assets of Transworld Drilling from independent energy company Kerr-McGee. Designed and built by Transworld in the early 1980s, they featured a triangular deck mounted on three bottle-shaped legs.

Once popular, this type of rig had fallen out of favor in the industry and no buyer appeared eager to take them. An attractive price wove the submersibles into the acquisition and they did prove serviceable in shallow-water and sensitive environments. They also revealed a hidden value five years later when Noble’s deep-water aspirations advanced an ambitious plan christened EVA (for ‘economic value advantage’) to transform them into deepwater stars.

The new rig class was originally named EVA-4000, because, at the project’s outset, Noble’s hope was to achieve a 4,000-ft operating depth. That limit grew as engineering progressed and today six of the seven submersibles have been converted to operate in depths ranging from 6,000 to 8,900 ft.

Structurally, the EVA solution called for doubling up the columns and interconnecting the footings with pontoons to increase buoyancy. “It’s a cheap solution and a great idea, giving older rigs an extended lifetime and better capability for a relatively low investment,” says Aldert Schenkel, Noble’s Director of Technical Engineering.

Schenkel, who came to Noble from the Neddrill organization, refers to the EVA effort as a multilevel breakthrough for the company – a technical breakthrough because it was a radical conversion that also pushed forward the normal operating depth range for even conventional semis, and a mental breakthrough in that it took the company beyond its conceptual boundaries.

The company crossed a mental boundary by taking the whole engineering project in-house, with little third-party assistance. “We looked at the hassle of using an engineering firm and figured the advantages of doing it ourselves outweighed the challenges,” says Schenkel. “An idea does not move quickly through a big, third-party engineering company because it has to go through too many levels to get approval. Going that way it would have taken months longer to develop a detailed design.

“In a sense, the project went against all odds,” he adds. “It says something about a company that someone had an idea and was encouraged to develop it, while practically the whole outside world was saying it would never succeed – even today, colleagues approach me and tell me how amazed they are that it worked. But through persistence and by developing an economical solution, we were able to make it work out.”

The EVA rigs brought Noble respect as a deepwater operator, particularly when the second EVA rig, appropriately named for pioneering rig designer Paul Wolff, twice broke the world water drilling depth record.

Dave Beard, Noble’s Vice President Engineering Planning and Technical Support, worked on the EVA project and points to the experience as an example of where ‘The Noble Way’ migrates from a philosophy for management to a formula for success. “Many companies are unsuccessful with big, complex projects because they have so many channels and management levels to go through that making a change or an important decision becomes a real struggle, a real war,” he says. “But the EVA conversions were a real team effort. When we had to make changes we made them; we didn’t have to go running to the big boss for approval. Because management trusts us to make the right decisions and do the right job, we can in fact do the job right.”

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Lloyd Noble (1896-1950)

L

loyd Noble was born in 1896, in what was the Chickasaw Indian Nation before Oklahoma statehood. Studious and reserved, he grew motivated by an insatiable curiosity about the people around him which made him known for lengthy interrogations about the jobs they did. In trying to find his path in life, young Lloyd explored various careers, including ranching and schoolteaching, before settling on oil drilling.

He came to drilling through good fortune. His father ran a hardware store in their small town of Ardmore, where he was known as a generous businessman who, during hard times, allowed customers to pay through barter. This brought the family some land parcels, including one on a former cotton farm that turned out to be rich in oil, assuring his widow a tidy income when strikes were made in 1919.

This connection to oil drew Lloyd’s curiosity, perhaps because it was an exciting field in which instant fortunes were being made. Despite an initial inclination to deal in land leases, he chose to become a driller, reasoning that drillers would always have work no matter what the fortunes were of the players in the energy industry.

Partnering with friend Art Olson, he founded Noble Drilling in 1921 with the simple employment philosophy to “find good men and keep them” – which, in his split with Olson in 1930, led him to choose the rigs he would keep by the people that crewed them and, in later years, led him to open one of his industry’s first profitsharing plans. The policy paid off through the 20

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years by giving Noble a long-term workforce and decades of capable managers, technologists and executives.

A hard-driving businessman and a tough but fair employer, Noble built Noble Drilling into a successful company and, by 1945, was a very rich man. Moved by the plight of local farmers battling against increasingly depleted lands, he endowed the Samuel Roberts Noble Foundation that year, naming it for his father – ‘the most charitable man I ever knew’ – and dedicating it primarily to encouraging development of agricultural sciences, in addition to advances in science, literature, education and religion.

The Noble Foundation grew greatly in scope over the years. With assets of some $900 million today, it encourages agricultural, scientific and social development throughout the country and matches dollar for dollar many of Noble Corporation’s own charitable efforts, particularly in college donations.

Though a man of few words, Lloyd Noble left behind much of the guiding philosophy that still animates the company he founded – including this observation on corporate citizenship and the responsibilities of success recorded in 1943: “The obligation that rests squarely on the shoulders of each generation is not what they inherit, what they have handed to them, what they acquire from the standpoint of wealth or position, but what they do with the wealth and power they have in their hands.”

Reasons to be Cheerful Profile: Folke Patriksson, Chairman, Rederei TransAtlantic AB ad Folke Patriksson not found success as a shipping man, he would surely have found it as a motivational speaker.

A shipowner for over four decades, he talks about the shipping business with the joy and energy of a young captain with his first owned vessel, secure in the belief that any goal can be reached, every problem solved, provided one is willing to work for it with full force.

His is a potent enthusiasm that makes an hour’s conversation a kind of medicine for melancholy.

H

It lends extra meaning to his words that he has lived what he believes and made a success of it. Today, in his mid sixties, he is Chairman of Rederei TransAtlantic AB, a company formed on 1 April 2005 after the merger of forest products carrier Gorthon Lines into B&N Nordsjöfrakt, the shipping group he co-founded in 1990. TransAtlantic’s fleet stands at 30 vessels owned and 15 more under management operating in the dry bulk, roro, forest products and offshore services sectors.

“I tend to see the good in things,” he says.

“For example, when my wife and I are out sailing and we’re caught in a storm and the wind is blowing and the rain pouring down, I’ll say to her, ‘oh, look, the weather is improving’. She’ll tell me I’m being unrealistic because, of course, it’s not improving when I say it; but I know the sun will be out later

on – just like I believe that for every problem there is always a solution. That’s how I live.”

Patriksson was born in Skärhamn, the principal port town on the island of Tjörn, about an hour’s drive from Gothenburg. On this part of Sweden’s west coast, the weatherbeaten beauty of an endless archipelago has spawned countless generations of seamen and shipowners who count hard work and simplicity among life’s main virtues. It was, in fact, the career of two Skärhamn boys, Vilgot and Lars Johansson, that inspired him at the start of his shipowning career.

Many years ago, the Johanssons bought the bankrupt Broström name and rebuilt it into a big tanker operation. “For me, as an entrepreneur, the Johanssons showed that a simple boy without money can do whatever he dreams of doing if he just has a goal or target and keeps to it. When we started out, they were the proof we could be as big as we wanted if we could just do it right.”

And apparently they did. Patriksson bought his first ship at age 22, in partnership with a cousin and with help from his father who ran three-masted schooners out of Skärhamn. For the second vessel he brought his brother-inlaw into the partnership. The three became the cornerstones for what was to come. “Any time we wanted to get another vessel, we Fall 2006

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Wilhelmine, which became Patriksson’s first ‘big’ ship,

Sandön.

would find as partners for it captains and engineers, not more than 25 years old – young, hungry and motivated,” he says. “With the three of us as the base, they could be part owner of their own ships and that would be their motivation to run the vessels well and cheaply.”

With the Captain of each vessel focused on controlling costs while taking full responsibility for the ship, Patriksson’s outfit had a serious competitive edge. “Nobody could beat us on running costs,” he recalls proudly. “We were great ship managers.”

Notably, they built a profitable shipping business while flying the Swedish flag at a time when it was among the most expensive around. “We could succeed under Swedish flag because our ships had the lowest crew numbers in the world,” he says. “In 1977 we had an 8,000-dwt ship that became the first vessel allowed to sail with two mates instead of three. When we proved we could run her with a crew of eleven it opened the door for reduced manning. Even so, we had to quit the Swedish flag in the mid-1990s. Today, under EU rules, the flag question is over. But to run ships cheaply, in good condition and with good performance – that is still what makes the difference between one owner and another – that’s where we are best.”

“Reduced crews have to work at 100 percent all the time,” he adds, “and that makes teamwork a very important part of the business. It takes a certain mentality, not focusing on stars but on the team. A hardworking team with good leadership can do amazing things.

“Ideas for the next generation of ships are often developed by ex-captains,” he adds, “but that kind of thing only happens when the company encourages it.”

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“In Sweden we say we have three basic personality types: Anderson, Svenson and Hanson,” he says. “Hanson is a captain. He only sees possibilities, like me.

Maybe sometimes he’ll even leave the quay without casting off all the ropes! Anderson, on the other hand, sees the problems and difficulties in things, and is always thinking about how to make things work.

Svenson is the social one. So Anderson takes the responsibility for what Hanson is trying to do, maybe toning down his enthusiasm a bit and keeping him in reality, while Svenson, meantime, is making sure everyone is social – everyone should laugh at least ten times per day. If you put these personalities together, you have a complete team.”

An “Impossible Name” Under his original business model, additional vessels meant additional partners and the association eventually grew awkwardly large.

In the early 1980s, with the group too big to manage effectively, the partners pooled their parts into one company, Nordsjöfrakt, in which everyone was a shareholder. In 1990, Patriksson took the company to the next level by joining forces with old friend Lennart Bylock, a financier who had established a successful industrial group in Geneva.

“Bylock & Nordsjöfrakt – an impossible name!” says Patriksson with a laugh. “A family name and a company name mixed together and one nobody outside Scandinavia could pronounce!”

Maybe they couldn’t pronounce it, but certainly they knew what it was about. B&N grew rapidly through a program of acquisition focused on old shipping lines that Patriksson describes as “having no clear owners anymore.” Their hit list included such familiar names as Portland Lines, Swedish Orient Lines and Gorthon Lines – most of the acquisitions paid for in cash and shares in the rapidly growing B&N Group, which soon commanded a fleet of 50 owned vessels.

The company hit trouble in 1998 when illness forced Bylock to leave the partnership. Rather

than sell the company, then worth SEK 800 million (about $100 million), they reshuffled its assets and split it into three stocklisted companies: B&N Nordsjöfrakt, Swedish Orient Lines and Gorthon Lines. B&N would concentrate on bulk carriers, roros and offshore/icebreaking operations; Gorthon focused on paper transport, and Swedish Orient on reefer and liner services. When the dust settled, Patriksson and the original major owners of Nordsjöfrakt were left with about 35 percent of the votes in B&N. “One problem with putting a shipping company on the stock market is that the market likes to think in quarters and a shipping company has to think in years,” he says. “It was a mistake not to keep majority ownership when we put the company on the market. We had a great platform and should have stuck to it.”

centralized their lending offices. Our banks, for example, have their shipping offices in Norway. It is harder, of course, but absolutely it can be done,” he says.

“When we started out, we were young, crazy and the sky was the limit. And because we believed it, it was so,” he says. “That is why you can make it today and in the future.

Because one thing that never changes in shipping is that you have to love it, to see ships not as just an investment, or some quick business, but as a long-term commitment.

Shipping is very traditional in that way. If you look at world shipping, you’ll find that only a small percentage of it is publicly owned. The reason is that, to stay in this business takes patience; you have to feel for it, to really enjoy it. Look at me. I have worked with ships all my life and I have had a great time!”

The episode left him disappointed but, he says, entrepreneurs like difficult times.

“We get stronger when the storm is blowing because that’s when you must be creative and your mind has to work really hard.”

The clouds parted this year after three years of effort when B&N reunited with Gorthon Lines to form a new company for which Patriksson acquired the historic name TransAtlantic. Today, the new Rederei AB TransAtlantic stands on four legs: bulk shipping, liner services, forest products and offshore services. “Now we are back,” says Patriksson, “and we will not lose it a second time. Today we only own 30 ships but that’s a good start!” he says with a laugh.

Asked what distinguished his from the small, family-owned shipping companies that characterize Sweden’s west coast, Patriksson says simply, “We wanted more.”

And after a pause, with another infectious laugh, adds, “and maybe we were the craziest of all as well.”

Despite new barriers to entry, Patriksson is convinced that it is still possible for a new generation to do today what he accomplished in his time. “What you need today is more financial creativity than in the past. Back then, banks had a different relationship with shipowners. Very often the banker knew you personally and that figured in the decision, which many local banks made directly. That is not the case any more as many banks have Fall 2006

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Ultimate control of any salvage operation where there is a threat of significant pollution of the UK environment must be exercised by the Secretary of State’s representative acting in the overriding public interest…the SOSREP. – Lord Donaldson of Lymington, in Command and Control

ith its establishment of the Secretary of State’s Representative for Maritime Salvage and Intervention (SOSREP) in 1999, the British Government solved in one bold stroke many questions on handling ships in distress.

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Reporting directly to the Secretary of State, the SOSREP exercises considerable powers of command and control over a maritime incident. He can, for example, order a vessel taken into port for offloading or repair, moved into sheltered waters or even destroyed if necessary. He can establish exclusion zones, direct

the actions of people in control of installations, land or private premises, or take over, close or evacuate a port. The SOSREP is empowered to intervene, make decisions and issue directions to take any action of any kind whatsoever without recourse to any higher authority – a brief without direct precedent anywhere.

The need for such a representative was described in the 1999 report Command and Control, in which a team led by the late British jurist Lord Donaldson of Lymington reviewed the 1996 Sea Empress oil spill and other incidents for lessons learned regarding marine salvage and intervention and their command and control.

Donaldson’s previous enquiry into the 1993 Braer incident, entitled Safer Ships, Cleaner Seas, became a blueprint for the UK maritime industry’s approach to pollution prevention. Likewise, the 26 recommendations in Command and Control changed the UK approach to incidents threatening maritime pollution and contributed to a revision of the country’s National Contingency Plan (NCP) for Pollution from Shipping and Offshore Installations.

One of the fundamental conclusions of Donaldson’s review is that the involvement of Ministers in operational decisions in a potential pollution incident is not a practical option. Ministers, says the review, should be informed as the incident progresses and may be held accountable to Parliament for their policies but, while operations are in progress, must stand aside, and be seen to stand aside, leaving operational control in the hands of the Robin Middleton, UK Secretary SOSREP. of State’s Representative for Maritime Salvage and Intervention

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“We cannot overemphasize that the Chief Executive (of

the MCA) and Ministers must not interfere in decisions being taken by SOSREP during an incident or give the appearance of being in charge,” says the report. “Whilst operations are in progress they must either back SOSREP or sack him.”

long reach, wide grasp The SOSREP is responsible for threat mitigation of all sorts, not just pollution scenarios, and his obligations are as broad as his authority. The SOSREP is responsible for all cargoes aboard all ships anywhere within the UK Pollution Control Zone which extends 200 miles offshore or to the median line with neighboring States.

The SOSREP’s powers are effective up to 12 nautical miles offshore with regard to safety, and throughout the Pollution Control Zone for incidents threatening pollution.

His authority extends to offshore installations as well, where he is the only person who can take responsibility to go outside the Safety Case. His mandate to take action when people and property are threatened, and to assign a place of refuge if needed, has widened the SOSREP’s scope into the world of counter-terrorism.

In addition, the SOSREP cannot abdicate responsibility or ignore a situation once he is made aware of it. Once the trigger point is reached he has an ongoing, inescapable duty to monitor the situation and control the whole salvage operation if necessary.

Inaction is seen as tacit approval.

“I represent State intervention,” says Robin Middleton, the current SOSREP and the first to hold the office. Since his appointment in 1999, he has been involved in nearly 500 incidents in which he has affected the outcome, formally intervening on 35 occasions, including 23 in which he had to invoke full response under the National Contingency Plan.

“I only get involved if someone is doing something threatening the interests of the UK, or if there’s disagreement about what to do during an incident – in which case I have the ultimate say,” he says. “But if someone is making the right response, my job is to be invisible and to enable it to happen.”

support from the mca Though completely independent, the SOSREP is based in the Southampton headquarters of the Maritime and Coastguard Agency (MCA), the organization providing the primary support for his work. Officers representing each region of MCA activity serve as his support staff. Other MCA officers serve throughout the response effort, providing intelligence and ensuring that all salvage and counter-pollution assistance is available.

The MCA supports the SOSREP with equipment as well as personnel. The organization operates four governmentowned firefighting/anchor-handling tugs located at strategic points around the UK; maintains surveillance aircraft and massive stockpiles of counterpollution equipment for all conceivable cargo threats; and runs a team of ten specially-trained surveyors who board vessels in distress to act as the SOSREP’s eyes and ears.

Private resources are available to the SOSREP through the Coastguard Agreement for Salvage and Towing (CAST). Under the CAST system, contracts are signed with private operators to provide services at agreed-upon day rates. This allows the salvor to sail towards a potential salvage knowing he will get something for his troubles – either the salvage award or towing contract if they render services, or the basic CAST contract payment if they do not.

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A continuous chain of communication is established as soon as the UK Coastguard finds a ship in trouble whose situation may become a salvage, pollution, navigation or security threat.

The MCA also provides the SOSREP one of his most valuable tools: expert lists. Before overriding a coastal or port authority in, say, designating a place of refuge, the SOSREP must be confident that he is fully and correctly informed. The National Contingency Plan recognizes this and directs the SOSREP to seek expert advice for which the MCA has compiled lists of experts for consultation on virtually any subject. The people on these lists range from CAST-contracted scientists to appointed representatives of environmental, coastal and owner interests.

Take, for example, the case of the ship laden with 3,300 tons of ferrosilicon that was passing southeast England when it hit a Force 9 southwesterly gale and suffered an explosion on board that blew off the first two sections of hatch. With its cargo open to the elements, the ship requested refuge. A cargo review revealed that, although ferrosilicon is not listed as dangerous, its data sheet makes note that contact with liquid causes the mineral to produce hydrogen, acetylene, arsine and phosphene gases – a poisonous and combustible mixture.

The nearest place of refuge was in the River Medway where, to complicate matters, the

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stricken vessel would have to pass close by the sunken wreck of a World War II ship so loaded with munitions that even today it is considered too dangerous to salvage.

Envisioning a cloud of green gas choking the countryside before blowing everything skyhigh, local environmental and health authorities began considering evacuating all of Kent.

Locating a CAST-contracted expert to advise on this unusual scenario, Middleton learned that the cargo does evolve these gases, but at a very slow rate – so slow that it is often stowed in open-sided warehouses vented by the wind. Reassuring the harbormaster and the authorities, he granted the ship entry, where a salvage team erected a canvas tunnel to let the wind do its cleansing work.

Tanker threats are resolved using the same action template. One evening the tanker Magnitude, carrying 90,000 tons of crude, was waiting about 30 miles outside the port when the crew became aware of a powerful cargo odor. Inspection at dawn revealed the ship was in the middle of a huge slick coming from a crack in the side shell.

Instantly the ghost of Sea Empress arose. In the wake of that incident, the Milford Haven

port authorities reviewed their harbormaster’s decision-making process and, after being prosecuted for the incident, issued instructions that they would not be party to any such decision in the future.

“When I’m called to step in, we warn them first and ask if there’s something we can do to help. Foreign owners love that to pieces because they don’t know UK waters. This isn’t a big hammer; this is assistance.

Without the SOSREP’s intervention, the port’s reluctance to allow the ship entry and risk suffering another spill – and the further indignity of prosecution – could have led to an environmental catastrophe. When Middleton stepped in, he brought together salvors, the port, the harbormaster and the local environmental authority and, in a matter of hours, achieved consensus that the best action was to bring the ship in to discharge.

“But if they don’t do what’s necessary, we will make it happen,” he adds. “Say a ship breaks down in the Dover Straits and the owner is happy to let it lie on the side of the shipping channel. I'm not happy to have it there where it’s a danger to navigation, so I insist he gets towed out. He knows that if he doesn’t comply, I will make sure he takes a line from one of our tugs and we get him out of there – and that owners get the bill. That is usually enough to get the right thing done.”

“The ship discharged, there was minimal pollution and all parties agreed it was the right thing to have done,” says Middleton. “Hardly anyone remembers the incident; it was just one of a number that were successfully resolved and then went away. You never hear of the near misses – which is part of the problem,” he adds.

For seven years the SOSREP system has attracted international scrutiny and won wide acclaim for its efficiency and successes – particularly in Europe, where many industry groups are promoting the UK system as a model. Middleton has already given seminars to governments interested in developing similar systems.

how it works Good communication is what makes the SOSREP regime work, says Middleton. A continuous chain of communication is established as soon as the Coastguard finds a ship in trouble whose situation may become a salvage, pollution, navigation or security threat. The counterpollution salvage officer notifies the SOSREP of the situation, contacts the master or owners of the vessel in question, liaises between ship and SOSREP as the situation progresses and relays any instructions to ship and owners.

As a situation worsens, the SOSREP mobilizes the necessary equipment so as to be ready for the trigger point. The priority in an intervention is safety of life first, followed by salvage and cleanup. The response effort involves five teams: the Major Incident Liaison Team, which handles search & rescue operations; the Salvage Control Unit, for disposition of the incident; the Marine Response Center, for at-sea cleanup; the Shoreline Response Center, for shoreside cleanup; and the advisory Environmental Group.

The Salvage Control Unit (SCU) is a high-pressure universe with the figure of the SOSREP at its center. The SCU is defined in the NCP as “a small group of specified persons who alone can represent key interests such as the salvor, the casualty owners or a harbor authority,” and can include “any

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advisors that are felt necessary such as a specialist independent salvage advisor or a chemical cargo specialist.” The NCP further notes that “the SCU is not a committee – at all times the final decisions will be the sole responsibility of SOSREP.” While the SCU is in operation, Middleton keeps a tight rein on the flow of people and information. “At one point during the Sea Empress incident, authorities identified a highly explosive atmosphere within the vessel such that there was a real chance of it blowing up. Then they realized that they had intelligence saying there were 29 people on board.

No one knew exactly who these people were, where they were, when they had arrived, what they were doing or even if they carried any protective equipment!

“Turns out they weren’t crew but representatives of all sorts of commercial interests,” he says. “Now when there’s a casualty, I put an exclusion zone around it and allow in only people who are assisting the response. A marine surveyor looking after the owner’s interests is a person I would welcome aboard.

The lawyers can go to the media center.”

During a major incident, the MCA establishes an off-site media center to keep the media informed. “If you don’t give the media accurate and up-to-date information in the form in which they want it, they will make up their own version and transmit it,” he says.

“That said, it is a guiding principle in the Donaldson report that key response personnel should not have to give interviews during operations,” he adds. “Thus, the only time that I personally will appear before the media is at the end of operations – to report on

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another success story or, should things go badly wrong, to let the media speak with ‘the person in charge who got it wrong.’”

Built into the SOSREP regime is how to handle the aftermath of things gone wrong, for which it has won broad industry support.

Once the State intervenes, it accepts responsibility for its actions and directions. This means that people who take direction are relieved of the responsibilities for following those directions and that a chosen place of refuge can expect compensation should damage occur.

UK legislation also makes it clear that costs incurred by ports resulting from a direction are payable by the shipowner and that the state can, should it so decide, make the payments and subsequently go for recovery of costs from the shipowner.

“The UK position on places of refuge is that anywhere could become a place of safety for a ship in distress,” says Middleton. “This follows directly Lord Donaldson’s recommendation that the SOSREP, in order to intervene in a casualty situation with full freedom, would have to have the option of choosing any place along the coast as a place of refuge.”

Having the authority to choose a place of refuge is only half the solution. The other half is having accurate information about the choices, for which the MCA is currently amassing a database describing the entire UK coast. There is already a database of the over 760 ports in the UK. Middleton has but to enter the ship details and location and the system provides data on the closest, most appropriate places.

Whether generic, converted or newbuild, the FPSO has become the favored workhorse for offshore production.

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ith its ship-shaped hull and onboard processing, the floating production, storage and offloading unit (FPSO) is a hybrid link between the offshore energy and conventional shipping worlds.

When the first FPSO took station offshore Spain in 1977, it was viewed as an interesting if odd solution whose potential was limited to developing remote or marginal oilfields.

Though the storage tanker or floating, storage and offtake (FSO) unit had been introduced a few years earlier, industry acceptance of the new and more complex concept came slowly.

In the first 15 years just 28 FPSOs had been deployed. As offshore sources became a bigger part of world oil production over the following 15 years, however, nearly three times that

number were put to work. Today, as its 30th anniversary approaches, the onetime technology outsider is the king of floating production, with more FPSOs on station than all other floating production systems combined.

Latest figures indicate 111 units in operation, including the ABS classed Sanha LPG FPSO, the first such unit to have been built, with an additional 36 units on order or at an advanced planning stage.

As the technology matured, its applications grew in scope and complexity. Today, in addition to bringing marginal, remote fields on stream, FPSOs can be found at the heart of many major development projects. For example, the Agbami FPSO, currently underconstruction in Korea to ABS class and destined for offshore Nigeria, will have processing Fall 2006

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capacity of 250,000 b/d of oil and 450m ft3 of gas per day. On the other end of the spectrum are two small fields offshore New Zealand contracted last year, Maari, calling for an FPSO with 40,000 barrels/day processing, and Tui, calling for 50,000 barrels/day.

There is a wide range of contracted and proposed projects in-between these endpoints, involving some novel concepts and technologies, among them the ‘generic FPSO’. In a sector where the installed unit has to satisfy unique mooring requirements of the site and chemical characteristics of the oil reservoir, the word ‘generic’ appears to be a misnomer. And different definitions of a generic FPSO have already arisen, ranging from the benefits of series production to scalable base designs and commonality in equipment suppliers.

THE GENERIC CONCEPT ExxonMobil was first to advance the concept of generic FPSOs in 2001, contracting three units with Single Buoy Moorings (SBM) for three different fields offshore West Africa: Falcon for Nigeria, Serpentina for Equatorial Guinea, and Xikomba for Angola (all ABS classed). Though differing in storage capacity, output and even topside details, they follow what SBM President Francis Blanchelande refers to as “operational synergies derived from series production.

“The interest in a generic FPSO is to have a close timing between projects that allows you to transfer the engineering team from one project to another, to do them with continuity,” says Blanchelande. “By using similar equipment and systems, when the FPSOs start production you have synergies between their operations in terms of spare parts and common operating and maintenance teams. Higher systems availability and oil production levels are thus achieved” The key industry abbreviation attached to generic FPSOs is EPICO, which stands for the stages of an FPSO project: engineering, purchasing, installation, commissioning and operation. Generic FPSO concepts vary according to which EPICO aspects they seek to maximize. The three original generic FPSOs operated by SBM share, for example, a common stock of spares and suppliers who visit the vessels in a coordinated fashion to perform similar work on all three.

ExxonMobil has contracted with SBM for two more FPSOs for Angola, putting three similar units in one block and bringing such operational advantages to the development project as common maintenance personnel and even common technical specialists.

“This to me is a real generic concept, in the sense that we will add two new FPSOs to one that was designed some years ago and be able to have common operational teams between all three,” says Blanchelande. “We will have common spares, common suppliers…so there is, at the end, a significant savings on the EPICO, which applies to the cost of the project from start of engineering to end of operations. The suppliers are becoming interested in supplying equipment and service in bulk, and eventually having what we call a

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‘health care contract’ for maintenance. For units that are very close to one another, this results in a better price than when you have a unique contractor coming to repair unique equipment on board a unique FPSO.” Another view is that the generic FPSO is a kind of conceptual template that an experienced contractor develops after completing a number of projects. “While you can’t take a design for one field and transpose it to another, you do formulate concepts and approaches that you think are best,” says Alan Hooper, Technical Director of Singapore-based FPSO contractors Prosafe Production. “Over the years, then, you tend to build up what you could call your own ‘company generic concept’, a preferred design philosophy and approach to equipment, codes and standards that you modify according to the needs of each project.”

The generic FPSO concept also incorporates physical elements for which a base design is fully engineered and which then only needs be scaled up or down with the size of each project. A practical example of such a scalable design is Prosafe’s generic turret and swivel, which is the centerpiece of projects in Brazil and New Zealand.

CONVERSION VS. NEWBUILD At the time of writing there were 111 FPSOs (and 81 FSOs) on station throughout the world, with a further 30 expected to be in service by 2008. Some analysts have predicted that by 2010 there will be 180 FPSOs in service, accounting for some 60 percent of a projected 150 new floating production solutions valued at over $32 billion. The optimists among them have predicted that the number will be closer to 200.

About 60 percent of the FPSOs built in the past decade have been converted from existing tankers. Of the units on order, it is about an even split between conversions and newbuilds.

Most of the FPSO conversions in service have hulls built before 1982. The heavy, mild steel scantlings of first-generation supertankers are particularly attractive for FPSOs, which typically have to stay on station for more than ten years – a reality made more attractive by the impact on project economics of purchasing a relatively low-cost asset nearing the end of its useful trading life, plus the shortened project timeline granted by having a ready-made hull in hand.

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Photo Courtesy of Petrobras

“There is a lot of suitable tonnage built after 1980,” says Alan Hooper whose company Prosafe has operated FSOs since 1985 and FPSOs since 1994. “Though the use of high-tensile steel increased during the later 1980s, everything didn’t change in one shot,” he explains. “When tankers started changing to hightensile steel, some, for example, used it in just part of the deck and part of the bottom; then later, all the deck and all the bottom; then a bit later still, all the deck, the bottom and the stiffeners; and later yet, the deck, bottom, stiffeners, and the bulkheads. So, there’s a wide variety of ships out there and a case-by-case analysis is very much called for.”

In the maritime community, the growing FPSO business and its wide-open possibilities for vessel conversions are attracting the ambitions of tanker owners and speculators looking to maximize the value of aging tonnage. One of the newer entries into the FPSO market is a veteran tankship owner, Singaporebased Tanker Pacific. Tanker Pacific is well known as both an independent tanker owner and an operator of FSOs. The company converted its first tanker into an FSO ten years ago, and now runs a fleet of ten units.

The dwindling number of 1970s-built mild steel tankers and its effect on the future of the FPSO has been the subject of some public discussion lately. The thrust of the argument is that the 1980s brought a tanker building slump that lasted nearly a decade and coincided with the rise of the so-called ‘short-life’ or light scantling ships that used a high proportion of high tensile steel. While there has been a broad view that many of this generation of tankers are not suitable for FPSO conversion, advanced structural analysis techniques that allow for a clearer understanding of the residual, site specific fatigue life of the hull structure have encouraged veteran FPSO contractors to caution that these generalizations should not become fixations and that every candidate vessel should be assessed on its merits. The most recent conversion projects have targeted early 1990’s built tankers.

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Having built its FSO experience stepwise, the company has now secured its first FPSO contract, for the Maari field offshore New Zealand. To handle the topside production facilities, Tanker Pacific will farm in the assistance of an experienced offshore operator.

One aspect of the FPSO business that makes things interesting for a shipowner, says Tanker Pacific’s Executive Director Alastair McGregor, is that in the FPSO sector trend analysis has very little to do with the way projects turn out. For example, even though FPSO conversions have quite naturally focused on aging tankers, there is no reason to believe that converting bulk carriers or OBOs is out of the question.

“Whether a project decides to convert an aging tanker, an existing FSO, to purchase a

newbuild hull or a five-year-old doublehull tanker for that matter, is determined by project particulars rather than any trend,” he says.

“The oil price is up now, which makes marginal fields look better than ever before, but the pricing we are seeing is not likely to last,” he adds. “China has been a huge influence on the oil price, of course, but that doesn’t account for the jump that we have seen. Oil is a commodity and paper is traded multiple times,” he explains, “so speculation may be driving and sustaining the high prices we see at present and affecting some of the floating production solutions we see being chosen.”

continue because using an existing hull saves about a year over a newbuild FPSO,” he says. “There are many tankers built after 1995 that are suitable for conversion and we are seeing some new vessels purchased for that purpose. We are also seeing contractors pre-booking building slots at shipyards so that they can offer a competitive timeline for a newbuild hull. In the end, it is very difficult to generalize about FPSOs; all you can really say is that there is a suitable vessel for every tender.”

Where the price of oil finally stabilizes will have an impact on the types of floating production systems that finally make it to the field. Meanwhile, growing confidence in the FPSO solution, the shrinking number of 30-year-old mild steel tonnage and the rising value of oil have opened the door for offshore production solutions based around the FPSO conversion of much newer tonnage than previously seen. A number of recently completed and announced projects have used vessels ranging from late 1980sbuilt double-side vessels to early 1990s shuttle tankers, and double-hull VLCCs less than ten years old.

Whether newbuild, conversion or some other solution, the answer is in the project economics, with the final decision often exposing exceptions rather than rules, says Francis Blanchelande. “Though we are running out of the old tankers, conversions will Fall 2006

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amsung Heavy Industries (SHI) is well known for discipline and a detailed control of the shipbuilding process. Less well known is that its analytical approach extends beyond production to workplace safety. In its Health, Safety, & Environmental Training Center that offers special safety management courses for new hires as well as refresher courses for all staff, Samsung offers proof that enhancing safety also enhances productivity.

tion, and some atypical ones, it is full of tricks and traps designed to ingrain into the trainees a basic safety mindset in which it becomes second nature to check safety belt security, test the fastening of the plank on which they are about to step and be aware of other workers and one’s position within the structure.

The HSE Training Center, which covers an area of 2,300 m² on a hillside overlooking the shipyard, is far more than a classroom and a display. Representing a substantial commitment from SHI management, it offers hands-on courses designed to give employees a safe way to personally confront the dangers of their work in an environment identical to their workplace.

There are also extensive classroom courses to back up all of the physical training. In June, for example, SHI introduced a special three-month safety management course for new hires in which employees will work alongside experienced personnel and managers at all stages of the ship construction process. It is the start of a nine-month program involving a month of basic training by the Samsung Group, one month of training at SHI, three more months of safety training and four months of on-the-job training in their departments. A comprehensive program covering safety basics to advanced problem solving, it is expected to be the start of a program to produce a new generation of workers better informed about safe work practices from the start of their careers, with a strong base for developing higher level skills like risk management.

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‘Safety First’ is the motto at SHI’s HSE Training Center.

They have built a sample hull block, complete with cut-outs, passageways, simulated dangers and safety equipment in place.

Particularly clever is the way employees are reminded to always look out for holes in the deck.

Inside the block are imitation holes – spring-loaded, holesized plates attached to loud buzzers. If the buzzer goes off, a trainee knows he or she just stepped onto a potentially lethal spot. There are also small objects hanging overhead and a recording of construction sounds to reinforce the importance of alertness in the face of distraction.

Outside the block is a large structure made of scaffolding. Containing at least one example of every typical scaffolding condi-

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Other areas of the training center are a test course for drivers of cherry pickers, a large machine to test the skills of the operators of lifting devices and a series of displays showing the warning signs of various kinds of equipment failure.

SHI has made successful use of a native safety R&D resource: its workers. Few have better opportunity to develop insights into improving workplace or process safety than the people on the shop floor. A visit to almost any factory in the world will reveal homemade jigs and tools, often made from scrap that workers have assembled to make their jobs easier. But to turn the fleeting thoughts of an individual into a

safety enhancing reality for all workers takes a special effort from the employer.

SHI mines this valuable resource by tapping into the human being’s desire for recognition and reward.

Once a year SHI holds a company-wide safety competition that gives workers in each department an opportunity to show off their creativity in the form of new tools and safety devices. Like an internal trade fair, the competition displays inventions made to save time, increase productivity or improve safety. Yard management selects items of interest which it will manufacture, recognizing and rewarding the inventors with a percentage of the money saved by their invention.

Some of the best inventions from SHI staff are on display outside the HSE Training Center. One particularly interesting item is a platform extender. Looking somewhat like a manhole cover with clamps welded on, the device attaches to a block’s deck plating so that workers and inspectors can move between adjacent blocks that do not share scaffolding, without having to climb down and up again. It not only saves work time during construction, but also reduces

accident risk by limiting the amount of climbing.

GS Park, safety instructor at SHI’s Training Center, demonstrates safety

Another standout device is a mushroomshaped grate on a hinged clamp that covers, identifies and protects spaces where large pipes pass through the deck. Another is a portable gate that attaches to scaffold or handrails to guard ladder and stair entrances. One item resembling a ladder is actually an alignment aid for assembling scaffolding, while another clamps onto the rim of a deck opening to identify the hole and to aid workers passing through it.

There is a tong-type affair that helps set up the top portion of a scaffold and does double duty as a safety support for welders and assemblers. Other assembly aids include a piece that resembles a long handled wrench that is used to secure handrails.

inventions by SHI staff to ABS Koje Principal Surveyor In-Yong Jeong.

It is often said that money spent on safety produces an intangible benefit. But when Surveyor visited SHI the yard had just unfurled banners celebrating one very tangible bit of proof: five million man-hours without a lost-time accident.

Employee inventions that have made work easier and improved shipyard safety, on display at SHI’s training center.

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Viewpoint: The ‘Can Do’ Formula Choo Chiau Beng Chief Executive Officer, Keppel Offshore & Marine Ltd.

t Keppel we say with great pride that we have a ‘Can Do’ spirit. ‘Can Do’, because we really do believe in taking on challenges with enthusiasm and a positive attitude. You know where we learned this phrase? From the Americans.

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The Americans have a very good attitude and work ethic which is why America has always been a fermenter of innovation. Great things like Google and Microsoft® come from there because the people dare to dream and that means better things can be done; it means that quantum leaps forward are possible. This kind of attitude is very important to progress, and to building a winning company. If you want to progress, you must first believe that progress is possible.

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The first time I heard the expression ‘Can Do’ I was listening to Cor Langewis, who was the Vice President of Conoco when they were building the Jolliet tension-leg platform at FELS in 1987. It was our first TLP – the second one ever built – and we delivered it on time in 14 months from contract to delivery. In his speech, Mr. Langewis praised our work and cooperation and talked about this ‘Can Do’ attitude. And I thought to myself, this phrase nicely describes the kind of culture we want to have at Keppel.

‘Can Do’ is an expression of a positive approach to things – positive expectations of oneself, of one’s co-workers, and of the company. You must have a positive culture if

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you want to get things done. To have this positive attitude in a company, the employees must see that their futures and that of the company are very much tied together. It is difficult to achieve this alignment of the company’s interests and the individual’s interests but it can be done. It is what we try to do.

We expect our employees will work hard and go the extra mile for the customer, and in return we try to be the best employer we can be, based on the fact that our business is very cyclical.

There is a profit-sharing plan. We sponsor people in management courses and graduate programs. We provide good training and experience. We reward innovation. And it is all driven by the belief that we must give our people the possibility to develop to the best of their abilities. People naturally want to improve, they want challenge so we challenge them and help them grow – because, in the end, the company is the better for it.

We focus on all this because we cannot afford to be laid-back. ‘Can Do’ is essential to us because, in our competitive world, we cannot succeed without a high-performance culture. And we can’t get that unless our people want to be the best they can be. In getting to that point we find a truth worth repeating: for people to want to be the best that they can be, they have to first believe that ‘better’ is possible.

Fact is stranger than fiction….

“Japanese Coast Guard officials plan to question a Japanese seafarer who plunged into the sea from the 5,243 dwt product tanker Hosei Maru wearing a life jacket, holding a suitcase and clutching three bottles of dishwashing detergent. They said he fell overboard about 7:10 p.m. on Tuesday local time and alerted the Shigama Coast Guard on his mobile phone about an hour after plunging into the sea.”

From a news report dated 10 August 2006

TX 08/06 12000 6182