DNV GL: The Arctic - The Next Risk Frontier

A BROADER VIEW

THE ARCTIC – the next risk frontier

SAFER, SMARTER, GREENER

ACKNOWLEDGEMENTS Project directors Knut Ørbeck-Nilssen, Per Olav Moslet Editor Damien Devlin, Blue-C Lead authors Børre Johan Paaske, Peter Nyegaard Hoffmann, Hans Petter Dahlslett Contributors Svein Inge Leirgulen, Elinor Turander, Anne Wenke, Camilla Spansvoll, Rune Pedersen, Vivian Jakobsen, Delphine Øye, Anders Ruberg, Gjermund Gravir, Marte Rusten, Sandra Hogenboom, Øyvin Aarnes, Espen Funnemark, Håvard Abusdal, Ann Christin Hovland, Atle Ellefsen, Janne Valkonen, Karl John Pedersen, Sondre Henningsgård This initiative is a collaboration between DNV GL and Xyntéo, an advisory firm that works with global companies on projects that enable businesses to grow in a new way, fit for the climate, resource and demographic realities of the 21st century. www.xynteo.com Suggested reference: DNV GL: The Arctic - The next risk frontier, 2014 Photography: Istockphoto.com, DNV GL

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Foreword from Henrik O. Madsen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A broader View – Themes for the future. . . . . . . . . . . . . . . . . . . . 6 Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

A BROADER VIEW ON THE ARCTIC. . . . . . . . . . . . .

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A diverse region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Environmental risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Indigenous people .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Arctic myth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulatory overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE RISK PICTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 14 17 19 20

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SHIPPING: ADDRESSING THE ARCTIC REALITIES. . . . . . . .

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Arctic shipping risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 The current risk picture .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Cruising the Arctic.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Bulk trade along the NSR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Concepts for Arctic shipping in 2030.. . . . . . . . . . . . . . . . . . . . 53 The cruise ship of the future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 The bulk carrier of the future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

OIL SPILL PREPAREDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Mapping risk .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Understanding risks to safety and operability. . . . . . . 32 Environmental vulnerability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

A nightmare scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Arctic complications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 The techniques. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 The response gap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Perception is reality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Oil spill response: recommendations. . . . . . . . . . . . . . . . . . . . 84

A CONSIDERED APPROACH. . . . . . . . . . . . . . . . . . . . . . . . .

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Reducing risk to an acceptable level. . . . . . . . . . . . . . . . . . . . . 88 Shedding light on arctic risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

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MANAGING RISK, FOREWORD FROM BUILDING TRUST HENRIK O. MADSEN DNV GL’S PAST, PRESENT AND FUTURE One hundred and fifty years ago, the world was in the midst of a profound transition.

New technologies such as steam power, electricity and the telegraph led to an explosion in productivity and connectivity, reshaping the global economy in just a few short decades. Yet these shifts also introduced new risks to life, property and the environment and transformed the relationship between technology, business and society.

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It was this context into which Det Norske Veritas and Germanischer Lloyd were born. These companies, which have now merged into DNV GL, took on the role of verifying that vessels were seaworthy during a time when the convergence of new technology and business models caused an unacceptable number of ship accidents. By managing the increasingly complex risks associated with the rapidly evolving maritime sector, classification societies built trust among shipping stakeholders, contributing to the birth of a new era in international trade.

Today, as DNV GL celebrates our 150th anniversary and our first year as a united company, the world is at another inflection point. The technologies, systems and institutions that have driven the most prolonged period of growth in our civilisation’s history are being tested by the new demands of the 21st century. And once again, our ability to manage risk and build trust will help us enable the changes the world needs.

In order to rise to this challenge, we have been exploring six themes of strategic relevance to our new organisation. Some of the themes, such as climate change adaptation, have taken us into newer territory; others, such as the future of shipping, have seen us re-evaluate more familiar ground. I believe that all of them, however, are absolutely central to our efforts to empower our customers and society to become safer, smarter and greener.

I hope that we can use the themes’ findings, as well as the momentum of 2014, to engage a wide range of stakeholders in a forward-leaning discussion about how to achieve our vision – global impact for a safe and sustainable future.

I look forward to the journey ahead.

Henrik O. Madsen President and CEO, DNV GL Group

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A BROADER VIEW

THEMES FOR THE FUTURE

As DNV GL turns 150, we are exploring six ‘themes for the future’ – areas where we can leverage our history and expertise to translate our vision into impact. We selected these themes as part of our efforts to take a broader view of the relationship between technology, business and society. On these pages you will find short introductions to each theme. To find out more, join us at: dnvgl.com/vision-to-impact

A SAFE AND SUSTAINABLE FUTURE

FROM TECHNOLOGY TO TRANSFORMATION

A BROADER VIEW – THEMES FOR THE FUTURE The future is not what it used to be. Rising global temperatures, diminishing natural resources and deepening inequality threaten everyone’s prospects, including those yet to be born. Yet alongside these new global challenges are new innovations, solutions and opportunities that make a safe and sustainable future possible: a world where nine billion people can thrive while living within the environmental limits of the planet. In this theme, we set a vision towards this future. We analyse the barriers to change and detail the concrete actions that governments, business and civil society must take together if the obstacles are to be overcome and the opportunities for safer, smarter and greener growth are to be seized.

Technology has always been an enabler of societal change and we can expect that it will play a pivotal role in our transition to a safe and sustainable future.

Indeed, existing technology is already unlocking safer, smarter, greener solutions for powering our economy, transporting our goods, caring for our sick and feeding our growing population. But history shows that transformative technologies – from the automobile to the internet – can take decades to reach scale. And time is one resource we do not have. How can we accelerate the deployment and commercialisation of sustainable technologies while ensuring that they are introduced safely into society? In this theme, we investigate this question, analysing the barriers to technological uptake and providing insights from past and present technologies.

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THE FUTURE OF SHIPPING Shipping is the lifeblood of our economy and the lowest-carbon mode of transport available to a world with ever-rising consumption. It therefore has a crucial part to play in a safe and sustainable future. But the industry faces a challenging climate: more intense public scrutiny of safety and security, tightening restrictions on environmental impacts and a revolution in digital technology.

To meet these challenges, we have analysed six technology pathways that can help us achieve three ambitions for 2050: reduce the sector’s fatality rates 90 per cent and reduce fleet-wide CO2 emissions 60 per cent, all without increasing the costs of shipping.

ELECTRIFYING THE FUTURE Electricity has already revolutionised the way we power our operations, fuel our vehicles, and light and heat our buildings - and it will have an even bigger role to play in the decades to come.

Many emerging technologies can provide cleaner, smarter, affordable and reliable energy.

Floating offshore wind can provide emissions-free power at scale by 2050. And a suite of smart grid technologies will provide households and communities with leaner, more local power. In this theme, we take a closer look at these technologies, and examine the contributions they can make to providing low-carbon power to future generations.

ARCTIC: THE NEXT RISK FRONTIER The Arctic offers a preview of a new paradigm for business: harsher environments, higher public scrutiny and a greater need to engage with stakeholders. As industries enter the Arctic, understanding, communicating and managing risks will be essential both to earning social licence to operate and minimising the impacts of their activities. With such high stakes, the Arctic will be a defining frontier – not just of operations, but of safer, smarter, greener technologies and standards.

The Arctic is rich with resources and dilemmas. And while there are no easy answers to these dilemmas, we must tackle questions about its development step by step, based on a common understanding of the risks. In this theme, we examine the complex Arctic risk picture and explore its implications for shipping, oil and gas, and oil spill response.

ADAPTATION TO A CHANGING CLIMATE Climate change mitigation remains essential for our work to build a safe and sustainable future.

But the greenhouse gases that have accumulated in the atmosphere over the past century and a half have already set changes in motion. Infrastructure and communities around the world urgently need to adapt to a climate characterised by more frequent and more severe storms, droughts and floods. And given the interdependence between business and society, business has a strong interest and critical role to play in these efforts. In this theme we have been developing tools to help both businesses and communities adapt to this new risk reality: a web-based platform for sharing information and best practices; a risk-based framework to help decision-makers prioritise their adaptation investments; and a new protocol to equip leaders to measure and manage community resilience to climate change.

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EXECUTIVE SUMMARY As interest in the Arctic gathers pace, DNV GL is endeavouring to use all of its 150 years of experience in harsh climates to provide a fact-based approach to development in this frontier region.

Why the Arctic, and why now?

Melting ice has created new business opportunities.

Some regard the Arctic as a new commercial hotspot, but in fact this is not the first ‘Arctic rush’. Political will and high prices have created demand in the past, but neither has lasted long enough for development to be sustained. This time, however, things could play out differently, as geographic and other factors are changing the game.

Recent estimates promise the same enormous riches that drove the previous rushes. The most authoritative of these is the much-cited assessment of Arctic mineral resources from the US Geological Survey (USGS), which states that the Arctic may contain 13 percent of the world’s undiscovered oil, and 30 percent of its undiscovered gas. Although it is important to note that these numbers are highly speculative.

Furthermore, the end of the Cold War has resulted in less military tension in the High North, paving the way for civilian cooperation and economic development.

There is also strong political support for industrial activity, largely due to the Arctic states’ dependence on resource extraction. This, combined with higher commodity prices and increased trade between East and West, has drawn attention to the Arctic’s transport corridors and its energy and mineral supplies.

No easy task

Wherever there is industrial activity, there is risk – and nowhere more so than in the Arctic. In some parts, the harsh environment increases the likelihood of accidents and, given the pristine state of many of the region’s ecosystems, the consequences could be significant. There are also ethical dilemmas to consider. These include the need to mitigate climate change versus the need for energy, environmental risk versus business risk, and the needs of the Arctic’s inhabitants versus those of the rest of the world.

Better access to information has increased the public’s interest in industrial activity. Given that the Arctic is perceived (rightly or wrongly) as the last untouched wilderness on earth, today’s industrial players and authorities are likely to face more public scrutiny than those in the past.

A fact-based approach

DNV GL believes that society, industry and authorities must gain a better understanding of risk in the Arctic in order to make better decisions about future development. As the number of operations increases, each industry will need to understand, communicate and manage the risks it poses in order to minimise its impact and earn a social licence to operate.

Based on this need, we have put guesswork aside and carried out extensive research and analysis to clarify risk levels in the Arctic. In doing so, we employed typical DNV GL methods: we have identified the risks, and propose recommendations to help stakeholders mitigate potential problems. The results are outlined in this report.

The diversity of the Arctic is astounding and risk varies drastically depending on the local environment and seasonal conditions. The aim of this report is to help clarify current speculation about operational risks and provide some insight into the complexity of this vast and often misunderstood region.

We hope this report will encourage all stakeholders to properly consider the risks and implications of Arctic development. The decision as to whether or not to push ahead with industrial activity in the Arctic is not ours to make. However, if it does go ahead, DNV GL will work to make it as safe and environmentallyfriendly as possible.

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This report includes: A description of the Arctic environment, including its politics, development opportunities and the risks associated with industrial activity.

An explanation and visualisation of the main environmental and safety concerns using DNV GL’s Arctic Risk Map. This includes insight into public perceptions of oil and gas development in the Arctic.

Identification of the risks that Arctic conditions pose to commercial shipping vessels using two case studies: a cruise ship and a bulk carrier. A concept vessel is presented for each segment to show the design features required to reduce risk levels to those experienced in typical conditions around the world.

An assessment of oil spill response in the Arctic and the challenges and limitations of current measures, including recommendations for improving recovery rates. Oil spills are the biggest risk to the environment and an operator’s social licence, and it is therefore a critical topic in any discussion about industrial activity in the Arctic.

Recommendations for safer and more environmentally-friendly operations. Due to the complexity, risks and high costs of Arctic development, we recommend strong regional and commercial cooperation. Industries must take a gradual approach and master areas with lower risk before venturing into more difficult parts of the Arctic. Risk management, research, continuous learning and new technologies are critical.

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A BROADER VIEW ON THE ARCTIC

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A DIVERSE REGION With its harsh climate, remote nature and diverse ecosystems, the Arctic is a notoriously difficult environment to operate in. Seasonal variations, industrial development and local politics mean that what works in one area, may not work elsewhere. To be commercially successful, an organisation must understand the Arctic’s many subtleties.

The Arctic, as it is defined by the Arctic Monitoring Assessment Programme, covers an incredible 33.4 million square kilometres. It is nearly twice the size of Russia and accounts for nearly 13 percent of the earth’s surface, yet it is typically thought of as a single, uniform environment.

In fact, seasonal changes in the Arctic are more dramatic than anywhere else in the world. In some places, the temperature varies by up to 50 °C during the year. In summer, about 70 percent of the sea ice melts and the land, which is covered in snow during winter, is covered with rich vegetation. The far north goes for months at a time without sun, whereas in the Arctic Circle winter darkness and the midnight sun last for just a single day.

The region’s flora and fauna have adapted to the seasons but not necessarily to long-term climate change – nor the rate at which this change is occurring – which has had an unprecedented effect on the Arctic’s ecosystem.

Of course, seasonal changes also affect how and when industrial activities can be carried out.

Operational windows tend to be short but this isn’t true of all areas. The Southern Barents Sea, for example, remains ice-free year-round and bears more similarities to the North Sea than to other Arctic regions. At the same time, ice coverage in the Bering Sea, which lies between Alaska and Russia, has set record highs in recent years.

Development factors are another important consideration. Some areas are poorly charted, while others, like the north coast of Russia, are well mapped. Oil and gas infrastructure is ample in Prudhoe Bay but it is non-existent on the Chukchi coast. There are also vast cultural and political differences between Arctic regions.

Taking all of this into consideration, DNV GL believes that local conditions, including resources, risks, politics, technology and the environment, will ultimately determine the viability of each activity in the Arctic.

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ENVIRONMENTAL RISKS As with other industrial activity, operating in the Arctic is not without risk, particularly with regard to its potential impact upon the area’s delicate ecosystems.

The average temperature in the Arctic is increasing twice as fast as elsewhere in the world. The minimum area of sea ice, reached in September 2013, has been shrinking by about 10 percent per decade over the past 30 years (note there are large annual variations within this rate). That this is in line with scientific modelling is not reassuring.

If melting continues at this rate, within the next few decades the Arctic Ocean could be ice-free at the end of each summer. In winter, ice will be thinner and more fragile, causing it to melt even faster. All living things in the Arctic, from polar bears to plankton, depend on this ice and many are now under threat, with some facing extinction.

The melting ice has also led to rising levels of ocean acidification in the Arctic, which decreases calcification rates in many calcifying organisms, reducing their ability to build shells or skeletons.

These changes, in species such as corals and shrimp, have the potential to impact species up and down the food chain.

A warming Arctic may improve access to some offshore and onshore sites, but it is also likely

to create operational challenges, such as less predictable weather, higher mobility of sea ice and increased calving from glaciers.

Global concerns Even more worrying than melting sea ice is the thawing of glaciers, which impacts upon global sea levels. Greenland's ice loss is one of the main contributors and, like most ice-covered areas, it is speeding up. Between 1992 and 2001 the Greenland ice sheet lost 34 billion tonnes of ice per year, but between 2002–2011 that increased six-fold to 215 billion tonnes per year.

According to the recent report from the Intergovernmental Panel on Climate Change, the highestemissions scenario would see a 59-centimetre rise in ocean levels by 2100 – with Greenland's shrinking ice cap alone contributing 12 centimetres.

Both shipping and oil and gas production emit methane, tropospheric ozone and black carbon (the main component of soot), which can have a severe, though short-lived, impacts on the environment.

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Because of their albedo-reducing effect, these emissions boost heat absorption and have been blamed for the region’s sharply rising temperatures, which have both regional and global consequences.

Oil spills The greatest environmental risk of expanding petroleum activity in the Arctic is the possibility of major oil spills. The extent of the damage would greatly depend on where and when a spill occurred in relation to patterns of breeding, spawning and congregation of marine resources. Unfortunately, the Arctic’s climate and geographic spread presents real challenges for emergency response activity.

Current oil-spill recovery technologies perform poorly in high waves and rough weather, and they are completely ineffective when oil is caught in and under ice. The natural breakdown of pollutants happens slowly in the Arctic due to the cold and darkness in winter and, as a result, hazardous compounds can linger and spread, increasing environmental damage. See section 4 for more on oil spill preparedness in the Arctic.

Short-term hazards In general, the direct environmental effects of petroleum activity are limited and localised. If properly controlled, discharges from offshore operations have no significant impact. However, noise caused by operations – particularly seismology – can disturb fisheries so it may be necessary to plan activity times to avoid conflict. In the case of onshore activity, the most serious environmental impact is physical disturbance, including habitat damage, which can occur with the installation of infrastructure such as pipelines and roads.

Greater shipping activity in the region increases the risk of spills, with the Arctic’s harsh weather, pervasive ice, limited hydrographical and bathymetrical charting, and the distance between emergency response centres, all contributory factors. In addition, more intensive shipping could introduce invasive species through ballast water or vessel hulls, disrupt the migratory patterns of marine mammals and release hazardous contaminants into the air and water.

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INDIGENOUS PEOPLE The Arctic supports a number of traditional lifestyles, and in some areas the interests of its indigenous people may rule out industrial development.

Around four million people live in the Arctic (about half of them in Russia) and some 320,000 are indigenous. The ratio of indigenous to nonindigenous people varies greatly among the Arctic states: in Iceland, for example, there are no indigenous people, but in Greenland they make up the vast majority. The indigenous population is minimal in Sweden, Finland and Russia, and is somewhat higher in Norway and the US. In Canada, about half of the Arctic population is indigenous.

These populations have been subjected to severe injustices, a reality addressed by several Arctic states, notably in Alaska, where about 10 percent of land has been returned to indigenous people, and a compensation fund has been established.

Recognition of their land and water rights has increased in recent decades, in line with the UN Declaration on the Rights of Indigenous Peoples.

While many indigenous people recognise the benefits of industrial development, expanding activities in a developed area is less likely to cause conflict than starting a new project in a region where traditional lifestyles dominate. As it is, the

commercial activities of some non-indigenous Arctic populations threaten the livelihoods of indigenous groups. However, geography tends to diminish conflict; most non-indigenous people live in cities and settlements, while the indigenous population is spread out over vast areas.

Careful consideration of indigenous interests may increase the cost of a project and even prevent development in an area, but DNV GL believes it must be considered a prerequisite to any operation.

The following indigenous groups are Permanent Participants in the Arctic Council: ■■ the Aleut International Association ■■ the Arctic Athabaskan Council ■■ Gwich’in Council International ■■ the Inuit Circumpolar Council ■■ the Russian Association of Indigenous Peoples of the North ■■ the Saami Council

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THE ARCTIC MYTH Talk of tension in the Arctic ignores the obvious – that is, that its five nation states have every reason to avoid conflict.

The presence of significant resources – in particular hydrocarbons and important minerals – in the scarcely developed Arctic has led some commentators to talk of a race for resources. Many focus on jurisdictional disputes in the region, failing to mention the fact that the region’s resources are primarily located within national boundaries.

That said, the delimitation of continental shelves is a complicated issue, but even if disputes were to become heated, the chance of them leading to all-out conflict is very low. For a start, four of the countries concerned are allied. The odd one out, Russia, has shown where it stands on Arctic cooperation by signing an agreement on the Barents Sea with Norway, and in its conciliatory approach towards the US regarding another deposit.

Four disputes remain but none are likely to escalate.

Each of the nations has an interest in preserving the 1982 UN Convention on the Law of the Sea (UNCLOS) but even if this were not the case, conflict would be irrational on purely economic grounds. The contested resources are in deep waters and drilling won’t be economically viable for some time. According to the US Geological Survey (USGS), most of the Arctic’s energy resources are likely to be found in more shallow waters that lie within national jurisdictions. These waters are virtually unexplored and it seems unlikely that the states would fight over deposits that are expensive to source when more accessible resources lie within their reach.

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REGULATORY OVERVIEW Under global ocean law, coastal states are relatively free to regulate activities on their continental shelves. But in the Arctic they are also bound by a range of institutions that govern oil and gas activities, especially those related to shipping.

Law of the sea UNCLOS influences legal systems throughout the Arctic, stating how affairs are to be managed and the roles and authority of coastal, flag and port states. Its stipulations are specific to each sector and vary based on distance from the coast. The allocation of roles and authority – in particular the relationship between sub-regional, regional and global institutions – influences the effectiveness of international cooperation in solving trans-boundary disputes in the Arctic.

insignificant for current and planned oil and gas activities, since the accessible resources believed to be in the Arctic are primarily located within EEZs.

Coastal states Under UNCLOS, coastal states have exclusive authority over resources on their continental shelves if those shelves extend beyond the 200-mile Exclusive Economic Zone (EEZ). Due to the broad continental shelves in the Arctic, only a small part of the Central Arctic Ocean sea floor lies outside national jurisdiction. However, uncertainty over the exact boundaries of these international waters is

Shipping laws The petroleum industry depends on shipping activities, which are subject to flag-state laws. Effective regulation therefore requires the cooperation of the International Maritime Organization (IMO), which oversees platform-related provisions of the MARPOL (short for marine pollution) Convention and is developing a mandatory Polar Code for vessels operating in ice-covered waters.

Obviously, Arctic coastal states have no interest in allowing other countries to get in on the action when it comes to Arctic oil and gas resources (as demonstrated in 2008 when the states rejected a new regime to govern the Arctic Ocean) but there are other regulatory factors that influence potential development.

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ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN DENMARK

Each of the Arctic states is party to MARPOL, which places legally binding restrictions on emissions and discharges (these can be less stringent for ships than for offshore platforms). The IMO is currently deliberating as to whether stricter environmental requirements for vessels operating in the Arctic will be included in the Polar Code.

Soft power The Arctic’s coastal states have committed to several more regulatory and soft-law institutions, among them the Arctic Council and the OSPAR Convention on Marine Pollution in the North East Atlantic.

Norway and Denmark are bound by the latter, which prohibits the disposal and abandonment of offshore installations at sea. A formal German proposal to the EU to prohibit all deep-water drilling in the Arctic after the 2010 Macondo accident in the Gulf of Mexico was narrowly defeated by adamant protests from Greenland and the UK.

The Arctic Council cannot create compulsory regulation, but it is gaining prominence as a forum for dealing with Arctic issues such as sustainable development and environmental protection. It is the only international forum where all Arctic coastal states agree to discuss Arctic affairs. In recent years the council has been used to negotiate legally binding agreements – to co-ordinate search-andrescue and oil-spill response efforts – which indicates policy-shaping ambitions. However, it remains to be seen how these agreements will be practically implemented in national laws.

In addition to these governmental and nongovernmental institutions, there is a move towards industry-based private governance. For example, the Barents 2020 initiative, which was managed

by DNV GL, set out to harmonise the standards for oil and gas activity in the Barents Sea and was the starting point for the ISO/TC 67/SC 8 Arctic operations committee for developing new standards for the Arctic.

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REGULATORY OVERVIEW

ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN

UNITED STATES

DENMARK

DEVELOPMENT POTENTIAL

Alaska’s Outer Continental Shelf (OCS) may be one of the world’s largest untapped oil basins. Despite a long history of onshore activities, there is little offshore activity and new operations would face serious challenges, including harsh weather conditions, a short drilling season, environmental risks and an evolving regulatory framework.

The USGS estimates that the North American Arctic holds about 65 percent of the Arctic’s undiscovered oil and 26 percent of its undiscovered natural gas, the bulk of which is thought to be in Alaska. Offshore Arctic Alaska is made up of two areas: the Beaufort OCS and Chukchi OCS. The US government began encouraging exploratory offshore drilling in these areas in the 1970s and continued to do so until the early 1990s.

A lease sale in 2008 was the most profitable ever conducted in Alaska, with investment led by Shell. However, successful appeals from lobby groups and a moratorium on new offshore drilling in US waters after the Macondo incident prevented Shell from drilling until 2012.

Operational incidents in that same year caused Shell to further delay the project, however the company intends to recommence drilling in summer 2014. ConocoPhillips and Statoil have also postponed their plans to drill in offshore Alaska.

Oil currently accounts for about 90 percent of Alaska’s revenue and, although the state’s oil and gas production is declining, it still makes up about 13 percent of US oil production and new deposits are likely to be found. The industry has driven much of Alaska’s growth over the last 40 years and it pays for nearly all state services (education, transport infrastructure, public health etc.). Alaska is the only US state that does not levy income or sales taxes and therefore there is a strong regional interest in resource development.

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ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN

CANADA

DENMARK

DEVELOPMENT POTENTIAL

Already the world’s fifth largest energy producer, Canada hasn’t shown as much interest as other nations in exploiting its Arctic hydrocarbon resources. The region has good potential but there are several challenges, including poor infrastructure, price sensitivity, regulatory uncertainties and indifference on the part of local and regional bodies.

Environmental issues are high on the political agenda and this, combined with the need to address indigenous concerns, are integral considerations for any new development.

Despite the challenges, Canada’s north has several highpotential sub-regions, both onshore and offshore. It is estimated that the region holds about 37 percent of the country’s remaining recoverable crude oil and 35 percent of its remaining natural gas. There are also suggestions that significant natural gas reserves exist in the high Arctic, although much uncertainty remains.

Towards the end of 2013, Imperial, Exxon Mobil Corp. and BP PLC applied to drill in the Beaufort Sea, targeting an area that could require operations in the deepest water yet for the industry in the Canadian Arctic. But while several companies hold exploration licences, there is currently no offshore activity in the region and drilling is unlikely to begin until later this decade.

The Beaufort Sea is considered the most promising offshore area. Drilling began in the early 1970s and continued until the mid-1980s when falling oil prices, the cessation of government exploration incentives and a lack of infrastructure put an end to operations. Since 1991, only one offshore well has been drilled and it has since been abandoned.

In 2007, Imperial Oil won a bid for a large offshore area in the Beaufort Sea. BP followed suit in 2008 and Chevron in 2010, but after the Macondo accident Canadian authorities imposed a moratorium on all Arctic drilling.

Resources are increasingly governed by Canada’s territories. In some areas mining – not petroleum – is seen as the future economic driver of Canada’s north. Indeed, the downward pressure on gas prices in North America due to shale production would seriously affect the viability of any new offshore gas development, which can be witnessed in the delay of the McKenzie gas project. Prospects would change, however, with the discovery of a large oil or gas field as this could lead to the development of infrastructure that would also serve smaller fields.

24 THE ARCTIC – THE NEXT RISK FRONTIER

REGULATORY OVERVIEW

ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN

GREENLAND

DENMARK

DEVELOPMENT POTENTIAL

Although it potentially has significant oil and gas deposits and a location that offers easy access to North American and European markets, Greenland’s high operation costs and dearth of infrastructure mean that any investment would be a long-term one. As such, there are no plans for production in the near future.

Estimates vary greatly but the USGS believes the Greenland basin holds about 17 billion barrels of oil and 138,000 billion cubic feet of natural gas in deposits off its east and west coasts. Oil and gas activities in Greenland date back to the 1970s, when test drilling of five wells showed up dry.

In 2000, Statoil drilled a sixth dry well. It’s hardly surprising, then, that when parts of the basin were opened up to exploration in 2002 and 2004, there was little interest.

But in 2006, licences were awarded to major players such as Chevron, ExxonMobil, Cairn Energy and Statoil. More licensing rounds followed and in the summers of 2010 and 2011 Cairn Energy found the country’s first deposits.

Despite the fact these deposits proved discouraging, seismic activity continues today with major companies such as Shell and Statoil showing renewed interest in the region.

Resource development would help Greenland gain independence from Denmark. The former Danish province secured greater self-governance – including the right

to manage its natural resources – in a 2008 referendum.

However, it still depends on grants from Denmark and the EU. Its government has long promoted resource development as a means to self-sufficiency, but in response to public concern about foreign investors dictating the country’s future, the current government is less enthusiastic about offshore exploration.

Instead, they are turning to mining and in October 2013 lifted a 25-year ban on the mining of radioactive materials.

The move will not only allow the mining of uranium deposits, but also of rare earth elements, minerals used in 21st century products from wind turbines to hybrid cars and smart phones, of which Greenland is thought to have significant deposits. The development of these reserves could have a major impact on its economy and make full independence from Denmark a more realistic prospect.

SECTION 1: A BROADER VIEW ON THE ARCTIC 25

26 THE ARCTIC – THE NEXT RISK FRONTIER

REGULATORY OVERVIEW

ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN

NORWAY

DENMARK

DEVELOPMENT POTENTIAL

Norwegian oil and gas production is centred on the Norwegian Continental Shelf (NCS) with the Barents Sea being Norway’s only petroleum producing area in the Arctic.

The High North is often portrayed as Norway’s principal foreign policy concern and authorities are looking to the Barents Sea to counteract slowing production on the NCS. The part of the Norwegian Barents Sea that is open for commercial activity is ice free, which is unusual in the Arctic, and is one of the reasons it has seen more development than any other Arctic region. Despite this, development in the Barents Sea is still challenging. Projects are costly, and profits are currently being squeezed by low gas prices, due to booming global supply.

2014. Johan Castberg, which is estimated to contain 400600 million barrels of recoverable oil equivalent, was to be developed by Statoil, EniNorge and Petoro. There is much interest in the Norwegian Barents Sea and development is likely to grow within this and coming decades. High taxes are alleviated by deductions and the perception of Norway being a stable place to invest.

Undiscovered resources in the Barents Sea are estimated at 960 million standard cubic meters of oil equivalent, the vast majority of which is gas.

Norway is highly dependent on the petroleum industry.

It accounts for 250,000 jobs and makes up just over 50 percent of total exports. This means future development is critical for the Norwegian economy. At the same time, there is strong political opposition to further development in areas such as the northern Barents Sea due to potential environmental consequences. Climate change is at the top of the political agenda, as is the potential environmental damage caused by an oil spill in the Arctic.

Statoil discovered the Snøhvit (“Snow White”) field in 1984, four years after the Barents Sea was opened for exploration.

Located 140 kilometres from shore, it was the first Arctic offshore field in production when it came on stream in 2007. Three other major fields are currently in the planning phase. Eni-operated Goliat is slated to start production in

SECTION 1: A BROADER VIEW ON THE ARCTIC 27

ALASKA

CANADA

NORTH

RUSSIA

POLE

GREENLAND

FINLAND

ICELAND

NORWAY SWEDEN

RUSSIA

DENMARK

DEVELOPMENT POTENTIAL

With the largest continental shelf of all the Arctic states, Russia considers its Arctic territory to be the nation’s chief resource base for the 21st century. As such, the exploitation of resources, including the Northern Sea Route (NSR) shipping lane, is a major priority and there is little opposition to drilling on environmental grounds.

Russian estimates put initial resources at 13.5 billion tons of oil and 73 trillion cubic metres of natural gas, the latter making up 80 percent of reserves. The most promising areas – the Barents and Kara seas – are thought to hold 53 million tonnes of oil equivalent. As of 2012 only 10 percent of Russia’s total offshore resources had actually been discovered. Huge areas remain unexplored.

There were numerous discoveries in the 1970s and 1980s but only one offshore field has ever been developed in the Russian Arctic, due mostly to the abundance of onshore opportunities. That field – Prirazlomnoye – took 20 years to develop but is now in production. Plans by Gazprom, Total and Statoil to develop the giant Shtokman field were abandoned in 2012 largely because of market conditions.

Drilling is also expected to begin in the Kara Sea in 2014.

Although Russia depends on its Arctic deposits, foreign operators face significant political resistance. Attempts by the government, particularly the Ministry of Natural Resources, to liberalise access to the continental shelf have been vetoed by the President.

Other deterrents include taxation on the petroleum sector and local content stipulations that require the involvement of Rosneft or Gazprom in any engagement on the country’s Arctic continental shelf.

28 THE ARCTIC – THE NEXT RISK FRONTIER

THE RISK PICTURE

SECTION 2: THE RISK PICTURE 29

30 THE ARCTIC – THE NEXT RISK FRONTIER

Even in February, the southern part of the Barents Sea – rated as the lowest overall risk area – has safety and operability conditions comparable to the Norwegian Sea.

SECTION 2: THE RISK PICTURE 31

MAPPING RISK Risk is inherently difficult to understand and explain, and the complexity of risk in the Arctic compounds the issue. However, DNV GL has developed a tool that makes forecasting potential hazards easier.

In order to assess the viability of an activity in the Arctic, it is necessary to know the risk factors and how they change depending on a variety of parameters, such as location and season. For this reason, DNV GL has used data from its Arctic projects and other sources to visualise risk in the Arctic, making it easier to understand. The result is the Arctic Risk Map. The map is an interactive, web-based application that displays the level of risk in specific areas for each month of the year. It takes into account seasonal distribution of ice and metocean (physical environment) conditions, biological assets, shipping traffic, oil and gas resources and accident history. It also contains indexes for risk levels that affect safety, operability and environmental vulnerability.

As this report has explained, risk in the Arctic is highly variable, greatly depending on the type of activity and the location and time of year it is performed in. The Arctic Risk Map presents this complex information in an accessible format.

It is a transparent resource that can be used in discussions between authorities, industry, the public and other stakeholders. DNV GL believes that, if used correctly, the Arctic Risk Map will improve communication between these groups by making risk more tangible and better understood.

The Arctic risk map can be found at http://dnvgl.com/arctic

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MAPPING RISK

UNDERSTANDING RISKS TO SAFETY AND OPERABILITY

UNDERSTANDING RISKS TO SAFETY AND OPERABILITY DNV GL has developed the Safety and Operability Index to provide a better view of the ever-changing levels of risk in the Arctic. The index shows, for example, that even in summer, the risk is higher off the north-west and north-east of Greenland than it is in the Barents Sea in winter.

The Safety and Operability Index gives a rating to risk factors relevant to Arctic operations and compares this rating to productive offshore fields in the Norwegian Sea. These fields were chosen as the benchmark because they lie in a harsh but well-known environment where there is nearly two decades of operational experience.

A high rating indicates extreme Arctic conditions that are likely to challenge the safety and operability of offshore and maritime activities. Sensitivity assessments can also be run to assess the risk drivers once a particular factor has been mitigated.

COMPARING SAFETY IN JULY AND JANUARY The Arctic Risk Maps show variations in risks to safety and operability in the same location in different seasons. In July, large parts of the Barents Sea, Kara Sea, Laptev Sea, Chukchi Sea, Beaufort Sea and the seas south-west of Greenland experience similar operating conditions to the rating benchmark (fields in the Norwegian Sea). The Barents Sea has the lowest safety and operability index. As the January map shows, even in winter the southern part of the Barents Sea rates as the lowest overall risk area, with conditions comparable to the Norwegian Sea. On the other hand, areas around the Central Arctic Ocean and north-west and north-east of Greenland present severe operational challenges, even in summer. These areas, as well as the northern part of Baffin Bay, have the highest risk rating.

Safety and operability index - July

The Kara, Chukchi and Beaufort seas are most likely to hold significant oil deposits, however they also have a safety and operability index of “Severe Arctic Conditions� for several months of the year.

The scale: Extreme Arctic Conditions Severe Arctic Conditions

Benchmark level/Norwegian Sea

Safety and operability index - January

Sources: Esri, GEBCO, NOAA, National Geographic, DeLorme, NAVTEQ, Geonames.org, and other contributors

34 THE ARCTIC – THE NEXT RISK FRONTIER

SECTION 2: THE RISK PICTURE 35

ENVIRONMENTAL VULNERABILITY Large variations in climate, species distribution, and human activity influence the environmental risk picture in the Arctic. DNV GL’s analysis shows that the region is at its most vulnerable during summer – a time when industrial activity collides with important life stages for the Arctic’s inhabitants.

DNV GL’s Environmental Vulnerability Index required a careful assessment of Arctic species and their vulnerability to an oil spill. The index shows that the environment is generally at its most vulnerable during summer, due to the combination of species experiencing sensitive life stages at the same times as industrial activity. This risk tapers off during autumn and is at its lowest in winter. However, this differs greatly between regions.

Some areas, for example, are particularly vulnerable in winter, when they are used by birds for wintering or as spawning grounds for fish.

The methodology used to create the Environmental Vulnerability Index can be adapted to study the impact of other environmental stressors such as disturbance.

36 THE ARCTIC – THE NEXT RISK FRONTIER

MAPPING RISK

CASE:

HEAVY FUEL OIL IN VULNERABLE AREAS The Arctic Risk Maps to the right shows a high level of environmental vulnerability combined with the movement of shipping vessels that use heavy fuel oil (HFO). HFO spills are one of the main risks to the Arctic environment. Since ice coverage dictates both shipping lanes and biological activity, it has also been included in the maps.

Environmental vulnerability in January Although January sees less shipping activity than the summer months, traffic at this time passes through environmentally vulnerable areas of the Davis Strait (south-west of Greenland), the Hudson Strait and part of the south-east Barents Sea (the Pechora Sea).

Of these, the Davis Strait is the most vulnerable due to its winter bird population, however the eastern and western Hudson Strait are also concerns as they are wintering areas for bowhead and beluga whales, walruses and feeding areas for ivory gulls in these months. Also vulnerable is the Pechora, home to walruses and beluga whales in the winter.

Environmental vulnerability in July The Northern Sea Route opens in July, bringing a drastic rise in shipping traffic between the Barents Sea and the Bering Strait, an ecologically significant Arctic region. The Bering Strait is of particular concern, as is the Great Siberian Polynya system, an important feeding ground for walruses and a breeding and staging area for seabirds and waterfowl.

The Barents Sea experiences increased traffic in sensitive areas at this time, as does Baffin Bay, where melting ice has allowed traffic into the northern parts.

This is a highly vulnerable environment, particularly the North Water Polynya (NOW), where a great number of beluga, bowhead and narwhales feed in the summer. The NOW is inhabited year-round by walrus, polar bears and seals. In summer, the ivory gull, classified as a near-threatened species, also tends to congregate there.

The map also shows an increase in shipping traffic in the Hudson Bay during July, which has the potential to damage seabird breeding colonies and the feeding areas of marine mammals, including bowhead and beluga whales, narwhals and polar bears.

SECTION 2: THE RISK PICTURE 37

MAPPING THE TWO INDICES

Map of vulnerable environmental resources, HFO traffic and ice coverage – January

For a more complete risk picture, the two indices – the environmental and safety index plus the operability index – can be mapped together using the Arctic Risk Map. Doing this shows that Baffin Bay, east and west Greenland, the Canadian Archipelago and the seas bordering the Laptev and Siberian Seas are the most environmentally vulnerable Arctic regions and pose the greatest risk to safety and operability. The Chukchi Sea is also considered high risk, but it is not in the same category as the aforementioned areas.

Mapping the two indices together shows (yet again) that the Barents Sea has the lowest risk. In the Norwegian part of the Barents Sea, the bulk of industry activity currently occurs in summer, and although the environment is vulnerable in this period, this is offset by lower risk for safety and operability (represented by the safety and operability index being closer to the benchmark level). However, operators are now planning year-round drilling in the Barents Sea and, with new fields entering into the production phase, this will have an effect on the risk picture.

Map of vulnerable environmental resources, HFO-traffic and ice coverage – July

38 THE ARCTIC – THE NEXT RISK FRONTIER

PERCEPTION IS REALITY The previous pages in this section present the facts about risk drivers located in the Arctic. But another potential risk exists both inside and outside the Arctic which can be even more unpredictable. It’s called public opinion. New research from DNV GL shows that when it comes to the risk and reward of industrial activity in the region, the public and industry think very differently and that culture also influences these opinions. With so much at stake, industry would do well to understand and address society’s concerns and improve the way it explains risk.

While industrial activity is already underway in the Arctic, the public can withdraw its support (known as a social licence to operate) at any time. The impact this could have on actual licences was clearly demonstrated in the Obama administration’s six-month moratorium on new deepwater oil drilling permits post-Macondo.

The perception of a pristine Arctic would likely see operations banned for much less. For the industry, such a ban could prove disastrous.

This means that in addition to the complex technical and operational challenges the industry faces in the Arctic, it also needs to invest resources in securing and maintaining an on-going social licence to operate.

Diverse perspectives Viewpoints on industrial development in the Arctic are as diverse as the Arctic itself. For the industry, the Arctic represents an enormous new area of potentially hydrocarbon-rich acreage, on which it is understandably keen to capitalise. Some environmental organisations, however, are opposed to any development whatsoever.

With the media fanning the flames on both sides, this has led to a polarised and, at times, emotional debate.

New research conducted by DNV GL shows a divergence not only between industry stakeholders and the public, but also between cultures. DNV GL

carried out two surveys: a questionnaire for members of the public and a series of interviews with industry stakeholders. Both surveys used people from Alaska and Norway as samples.

The method The survey tested the idea that obtaining a social licence – essentially establishing broad-based community support and consent – constitutes something greater than receiving an official permit for activities. This social licence would imply that honest, clear and transparent communication should be established between the relevant industries and the public.

Gap between industry and public Unsurprisingly, the direct stakeholders in Arctic oil and gas are more conscious of the benefits than the public.

Whereas environmental issues were the number one issue among the public, the stakeholders did not see climate change as a major concern. One contradictory finding was that in Alaska, despite the public being receptive to oil and gas operations in the Arctic, industry stakeholders felt as though they did not yet have public support to operate in the Arctic.

SECTION 2: THE RISK PICTURE 39

Obtaining a social licence to operate DNV GL’s model for a social licence to operate incorporates three key elements:

Public outreach – public trust can be significantly improved, but only if stakeholders reach out.

The building of trust – a social licence to operate requires trust, which is based on a perception that the industry takes concerns seriously.

Inclusion of all stakeholders in the process – the oil and gas industry will have to demonstrate that it engages with both key stakeholders and the public.

A demonstration that benefits outweigh risks and concerns – this will require the oil and gas industry to transparently address the specific concerns of both the local population and the wider public.

A trusted regulatory and permitting process – a thorough, independent and predictable regulatory process of permitting is fundamental.

To establish those key elements, the oil and gas industry will need to develop inclusive and transparent risk communication policies, including the following five strategies:

Listen and address the concerns of the public – the aim should be to establish a dialogue.

Currently, too much of the communication from the industry appears to be one-way and not reflective of public concerns.

Open and transparent communications – trust is generated by showing both the pros and the cons of new activities.

Early involvement of stakeholders – this will improve the process of risk communication and give stakeholders greater responsibility for that process.

40 THE ARCTIC – THE NEXT RISK FRONTIER

PERCEPTION IS REALITY

Cultural differences The environment, it was revealed, should be a focal point when communicating risk to the general public, particularly in Norway. In Alaska, wealth and job creation were also dominant themes, as was concern about the possible disturbance of the native population.

Key differences between survey findings in Alaska and Norway are summarised below in the box 'Public perceptions: Norway and Alaska.'

Conclusions As hypothesised, all groups surveyed largely agreed with the premise that obtaining a social licence constitutes something greater than receiving an official

?

permit for activities. During the interviews, industry stakeholders indicated that a social licence to operate is important in order to both avoid litigation and to have access to local knowledge regarding local conditions.

The study concluded that in order to obtain, and maintain, a social licence to operate, the industry must alter the way it currently communicates risk. It needs to demonstrate active listening, engage in real dialogue, address the concerns of the public, act responsibly and provide benefits for all stakeholders. The findings showed that the granting of a social licence to operate is highly dependent on trust and credibility, and that stakeholders should be engaged in the early stages of projects.

If you have to choose only one activity, which one of the following activities worries you the most when it comes to the Arctic?

(Percentage answering to a large or very large degree)

14%

None of these

Research Shipping (maritime transport)

9% 2% 3% 5% 7% 31%

Oil & gas

58% 11%

Fishing Mining

Tourism

9% 30% 8% 7%

NORWAY ALASKA

7%

Public perceptions: Norway and Alaska 01

There is anxiety among Norwegians and Alaskans about the risks of Arctic oil and gas development, but for differing reasons.

02

The current mood, especially in Norway, is against an increase in oil and gas activities.

03

For Norwegians, it is oil and gas activity, of all industry activities in the Arctic, that is most concerning.

Alaskans have equal concerns about mining and oil and gas activity.

SECTION 2: THE RISK PICTURE 41

?

To what degree are you worried about the following issues when it comes to increased petroleum activity in the Arctic?

(Percentage answering to a large or very large degree) FIGURE 1: To what degree are you worried about the following issues when it comes to increased petroleum activity in the Arctic?

(Percentage that answered to a large or very large degree).

Harm to the environment (pollution, oil spill etc.)

Climate change

Safety for those who work in the Arctic

Underdeveloped technology Lacking knowledge about the Arctic

63% 48% 47% 33% 23% 34% 25% 25% 38% 39%

Negative interference with other activities in the area Disturbance of natives

36% 32%

The purpose of this study was to reveal opinions about activity in the Arctic and perception of risk related to these activities. This study was conducted as a web survey in Norway and Alaska, targeting a general public audience. In Norway 779 online interviews were conducted, and 521 in Alaska, during late September 2013.

26% 35%

Conflicts between countries

Lack of regulations

High investment costs

Other

04

24% 18% 32% 35% 33% 34% 17%

NORWAY ALASKA

10%

The strong potential for benefits from oil and gas development is recognised, but there is uncertainty among the public, especially in Norway, as to whether these benefits will be realised.

05

In Norway, respondents showed more trust in authorities, whereas in Alaska there was more trust in the industry.

This has implications for who should provide information to the public in each country.

42 THE ARCTIC – THE NEXT RISK FRONTIER

SHIPPING:

ADDRESSING THE ARCTIC REALITIES

SECTION 3: SHIPPING – ADDRESSING THE ARCTIC REALITIES 43

44 THE ARCTIC – THE NEXT RISK FRONTIER

ARCTIC SHIPPING RISK Navigating ships in cold climates and icy waters presents additional challenges to those generally encountered by the shipping industry. While centuries of experience have resulted in a good understanding of the risks involved in shipping around the world, knowledge of Arctic shipping is limited. Most of what is known about shipping in the Arctic comes from winter navigations of the Baltic, the Northern Sea Route and around North America, as well as operations in the Arctic with purpose-built vessels.

SECTION 3: SHIPPING – ADDRESSING THE ARCTIC REALITIES 45

New challenges The anticipated increase in Arctic shipping poses new risks and challenges according to the type of operation being embarked on, the size and make of the ship and the experience of its crew.

The most obvious threat is ice loads, which add to existing loads on the ship’s hull and the machinery system. These additional requirements make it necessary to modify the vessel. In addition, the low temperatures require that the hull be made of quality materials and that all components, systems and onboard equipment are suited to the freezing climes.

As well as the unique risks posed by the Arctic conditions, ships in the region face many of the same hazards encountered by ships all over the world. But there are some reprieves. The risk of collision, for example, is lower due to there being less traffic than in other parts of the world.

The changing risk picture In the coming years, shipping traffic in the Arctic will increase, with most activity likely to occur in summer in areas with open water and limited ice.

Relatively few vessels will operate in heavy ice in the far north during winter, however a reduction in ice coverage will change the risk picture as vessels with

no ice class (or limited ice class) will be able to sail in areas where only ships with ice strengthening were previously capable of operating. Some owners who choose to operate in these parts of the Arctic will not be sufficiently experienced in cold-climate shipping and will therefore require guidance in order to conduct safe operations.

Main hazards Ships operating in cold conditions may encounter a variety of hazards, including the icing of systems and equipment, liquids in tanks and pipes freezing, large loads and impacts from heavy ice conditions and drifting icebergs and growlers (small, barely visible icebergs).

Correctly identifying prevailing ice conditions will help protect a vessel from significant ice damage.

Appropriate dimensioning methods are also needed to ensure the vessel has the necessary structural integrity, as is winterization, which prepares the ship for extreme icing, freezing systems and wind chill.

Ships do, of course, have a natural advantage over offshore infrastructure in that they are able to move; with careful navigation and operation they can usually avoid ice.

FACTORS AT PLAY Main risk-shaping factors based on DNV GL research and experience working with clients: OPERATIONAL

ENVIRONMENTAL

INFRASTRUCTURE

HUMAN RELATED

■■ Traffic density

■■ Current

■■ Local experience

■■ Convoy

■■ Wind

■■ Emergency evacuation and rescue capabilities

■■ Waves ■■ Visibility due to snow, fog, storm etc.

■■ Daylight ■■ Air temperatures ■■ Marine and atmospheric icing ■■ Drifting ice (e.g. icebergs, bergy bits, growlers, large floes)

■■ Communication capabilities ■■ Navigational aids

■■ Cold-climate operation competence ■■ Ice-navigation competence ■■ Crew fatigue

46 THE ARCTIC – THE NEXT RISK FRONTIER

ARCTIC SHIPPING RISK

THE CURRENT RISK PICTURE

THE CURRENT RISK PICTURE Arctic tourism and raw-material exports are set to rise in coming years. To understand the risks these expanding industries face, DNV GL examined two hypothetical cases: The first, a cruise ship travelling off the west coast of Greenland; the second a bulk carrier transiting through the Northern Sea Route.

Calculating Arctic risk DNV GL’s research aimed to identify the risk level for each of the vessels in order to create a recommendation of risk-control options, as outlined in the concept vessels, featuring later in this chapter.

The following scale indicates how Arctic shipping compares to the benchmark:

Risk was gauged by first modelling the risk these vessels would encounter in typical trade conditions, then adding risks typically encountered by Arctic operations that travel through ice. The model was then implemented for selected routes with actual Arctic conditions and then compared to a benchmark with worldwide conditions. This methodology helped determine the difference between the risk of Arctic shipping compared with the risk of worldwide operations. Transit to and from the route was not included in the analysis.

Equal risk: Difference is within the range of -5% to 5%

Higher risk: Difference is larger than 5%

Lower risk: Difference is more than 5% below the benchmark

SECTION 3: SHIPPING – ADDRESSING THE ARCTIC REALITIES 47

THE HUMAN ELEMENT While human error has a considerable impact on the total risk of shipping, it is difficult to quantify and therefore was not included in the model used in the case studies. Personnelrelated risk-shaping factors include safety culture, competence and training.

48 THE ARCTIC – THE NEXT RISK FRONTIER

ARCTIC SHIPPING RISK

THE CURRENT RISK PICTURE

CASE:

CRUISING THE ARCTIC Demand for Arctic cruises is on the up. Annual passenger numbers have grown steadily over the past decade and as a result operators have augmented their Arctic itineraries.

The increasing choice of destinations, departures and journey times is transforming the industry’s risk picture. It is worth remembering that a significant accident in the Arctic could have catastrophic consequences, including a major search and rescue challenge for coastal states.

The models The route used for the study was a summer sailing trip off the west coast of Greenland, as shown in the map to the right. This is a typical route for Arctic cruise ships and is therefore well mapped. The most commonly visited harbours – Qaqortoq, Nuuk, Sisimiut and Ilulissat – were included in the journey.

DNV GL analysed three trips along the Greenlandic coast: the benchmark case with a standard cruise ship; the same ship travelling in actual Arctic conditions in July; and a concept cruise ship equipped with several risk-control options created specifically for Arctic operations. The latter is discussed in detail later in this chapter.

A standard vessel using standard practices The dimensions of the study’s fictional ship were based on the average size of cruise ships worldwide, therefore the results are applicable to all cruise vessels. Because the study focused on summer travel, researchers assumed the vessel was designed for temperatures above 0 °C and was not icestrengthened.

They also assumed the ship met all relevant regulations and that its crew employed standard practices (i.e. they had adequate training and experience in Arctic conditions, made reasonable navigation and operational decisions, a pilot was on board at all times and the ship only sailed within mapped areas).

SECTION 3: SHIPPING – ADDRESSING THE ARCTIC REALITIES 49

20 knots

1700

2350

Speed

Passengers

Total number of persons on board

650 Crew

No

7m

Ice class

Draught

55,000 GRT Gross tonnes

30m Breadth

USD 235,000,000 Newbuilding price

2000 tonnes Total fuel capacity

The standard cruise ship

The result: increased risk The study shows that the overall risk in the Arctic is nearly 30 percent higher than the benchmark, mainly due to the increased consequences for people on board in the case of an accident; their chance of survival is considerably lower due to the temperature of the air and water. In addition, the risk of a shipto-iceberg collision does not exist in the benchmark scenario and therefore the overall likelihood of an accident is also increased.

Higher risk Equal risk Lower risk The overall risk to human safety for a standard cruise ship on this route is nearly 30 percent higher than a cruise ship in typical conditions.

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ARCTIC SHIPPING RISK

THE CURRENT RISK PICTURE

CASE:

BULK TRADE ALONG THE NSR By travelling along the NSR, a ship trading between Europe and Asia can cut its travel distance by between 20 and 50 percent (depending on its destination). The fuel savings are a strong commercial driver but the route’s drawbacks – namely the challenging environmental conditions and cost of using icebreakers – have led many industry experts to argue that it will be decades before the NSR sees significant shipping traffic.

In any case, traffic has increased markedly over the last five years and the trend is likely to continue. It is therefore essential to gain a better understanding of the risks it poses.

The NSR stretches from Novaya Zemlya in the west to the Bering Strait in the east and covers some 2,200 to 2,900 nautical miles of icy waters. It consists of a series of sailing lanes with different draft limitations and ice conditions. Navigators choose which lane to take depending on factors such as fast ice, leads, wind direction, current, visibility, summer ice massifs and the depth of the water.

A standard vessel using standard practices The dimensions of the vessel were based on the average size of bulk carriers currently operating worldwide: between 60,000 and 80,000 deadweight tonnes. As with the cruise case, it was assumed the ship met all relevant requirements and that its crew employed standard practices (i.e. they had adequate training and experience in Arctic conditions, made reasonable navigation and operational decisions, a pilot was on board at all times and the ship only sailed within mapped areas).

Commercial operations are generally restricted to the summer season, which has traditionally been defined as June to October, but melting ice and new technologies are gradually extending this window.

Navigation along the NSR is challenging and it is important for operators to have an understanding of its unique risks and the measures they can take to mitigate them.

The result: increased risk As the image shows, risk levels vary along the route; some parts are considered ‘Equal risk’, others are ‘Lower risk’ and the largest portion is ‘Higher risk’ – that is, a level at least five percent greater than the benchmark. Overall, Arctic risk is about 14 percent higher than the average worldwide risk, mainly due to ice-related events, including collision in ice, impact on the hull and grounding by ice. For this reason, choosing a suitable ice class is extremely important.

The models The bulk carrier route used in the study was similar to that taken by actual bulk-carrier traffic in 2012. Three cases were tested: the benchmark worldwide case with a standard bulk carrier, the same ship travelling in July in actual Arctic conditions and a concept bulk carrier equipped with risk-control options specific to Arctic operations. The concept ship is discussed in detail later in this chapter.

On the other hand, as long as a vessel is operating in open water, its risk of ship-to-ship collision is significantly lower than the worldwide average (due to there being less traffic). Summer shipping along the NSR occurs during the open-water season, but it’s important to note that in the Arctic ‘open water’ typically means that ice concentration (that is, the relative area covered by ice) is less than 10 percent – it does not mean waters are ice-free.

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Higher risk Equal risk Lower risk Standard Bulk Carrier in the Arctic July 2012 compared to typical trade conditions.

The NSR

Traditional route

Shortcut: The Northern Sea Route cuts the travel distance by between 20 and 50 percent between Europe and Asia.

Bulk carrier traffic has increased markedly over the last five years; an upward trend that is likely to continue.

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

CONCEPTS FOR ARCTIC SHIPPING IN 2030 Having assessed the risk level for cruise vessels and bulk carriers operating in the Arctic, DNV GL, in cooperation with Aker Arctic, developed two concept ships. These ships are their take on which features are needed in order to realise the benefits of shipping in the Arctic, while reducing the associated dangers.

Some of these technologies are already proven and others are expected to be available by 2030. As part of the study, projections showed that both concept vessels were capable of reducing risk to an acceptable level.

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

THE CRUISE SHIP OF THE FUTURE

THE CRUISE SHIP OF THE FUTURE The complexity of carrying people in high-risk areas makes an Arctic cruise ship a fascinating concept case. A vast majority of the Arctic cruise vessels currently in operation were originally designed for warm climates, so there is a need for purposebuilt vessels. After considerable research, DNV GL designed a cruise ship that would not only be safer and more ecologically sustainable, but could plausibly be in operation by 2030.

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Safer In the future, cruise passengers will expect to sail among Arctic icebergs in complete safety – a considerable challenge to tourism operators given the region’s vast distances, unpredictable weather, low temperatures and hazardous ice. The following pages detail safety measures that could significantly reduce the risk to passengers, including improved ice-detection technology, better vessel design and lifeboats suited to the unique conditions.

Ice detection Early and reliable ice detection is important for the safety of a cruise ship in Arctic waters. Modern equipment such as drones, thermal cameras, sonars, satellites and other smart technologies help crews spot ice in advance and safely manoeuvre around it. As these technologies improve, so too will the safety of Arctic cruising.

Sea ice ranges from large, easily detectable icebergs to small, thin floes that do not pose any risk (not even to lightly reinforced ships). Between these two extremes are smaller icebergs called ‘bergy bits’ and ‘growlers’, which are between three and 15 metres long and 10 and 3,500 tonnes in mass. These are hard to detect between waves, yet are large enough to cause serious damage to a vessel.

Independent drones flying around 500-2,000 metres ahead of a ship can provide its crew with an early warning. Today’s technology has its limits but by 2030 it is expected drones will be able to operate independently and will be strong enough to fly in the harshest Arctic conditions.

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

THE CRUISE SHIP OF THE FUTURE

The concept ship is equipped with two drones – allowing one to be on duty while the other undergoes refuelling or maintenance. Each drone carries a highresolution camera, low-light cameras, radar sensors and, most importantly, a thermal camera. Even in high seas, they are believed to be capable of locating bergy bits and growlers, and they would allow a better view of the ship’s surroundings in poor visibility conditions, such as fog, darkness and snow, than the human eye.

Another important piece of equipment is the forwardlooking sonar, which provides the concept ship’s crew with an underwater picture unaffected by darkness or weather conditions. As most of an iceberg lies underwater, the sonar is an invaluable ice-detection tool, plus it can also warn of shallow areas and rocks.

This sort of technology is not beyond reach; tests have shown that icebergs provide very good sonar targets.

Information from these sources and others will be handled by a smart system that automatically detects icebergs and alerts the crew, enabling safer navigation than is currently possible.

Enhanced ice-resistant hull The Arctic’s cold waters dramatically reduce the likelihood of surviving an accident; for this reason it is critical that, should trouble occur, the vessel stays afloat.

Advanced surveillance equipment can reduce the risk of colliding with an iceberg, but total protection is hard to achieve. If a ship is to operate safely in the Arctic, its hull must be designed to withstand such loads.

Heavily reinforcing the bow is an option, however it would be more practical to install a deformable collision-resistant zone in the bow area. This would reduce damage to the vessel so that even if it were to collide with a reasonably large iceberg, it would not only stay afloat but could return to port without endangering its passengers. Introducing a double ship side, designed to absorb energy and thus prevent leakage, would enable the vessel to withstand a collision with a reasonably-sized iceberg without endangering those onboard.

Arctic lifeboats Lifeboats must be adapted to the Arctic’s harsh, cold and desolate conditions. They are currently hung outside the hull, not far from the water, which leaves them vulnerable to icing. Instead, these embarkation stations should be stored in a sealed enclosure, which would function as a sort of climate-controlled room.

To ensure a reliable power supply, lifeboats should be equipped with preheated engines that burn fuel suited to low temperatures and have freeze-proof cooling systems. Other safety recommendations include thermal insulation; a fully enclosed, icerepellent superstructure (no canvas); increased space for each person; survival equipment including polar sleeping bags and the means to prepare hot food; and, finally, emergency bunks.

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Greener Due to the scale of potential fuel savings and the need for greener branding, the cruise industry is at the forefront of energy-saving efforts. Green technologies that eliminate smoke, embrace solar power and lessen noise emissions could make a big impact.

Waste heat recovery (WHR) WHR promises big benefits to Arctic cruise ships.

In the vessels of the future, waste heat will be recovered in two ways: WHR from the power plant’s engine-cooling water, to be used for general heating purposes WHR from the power plant’s engine exhaust gas, to be processed by an Organic Rankine Cycle plant and used as electrical energy In the former instance, utilising engine-cooling water could raise a power plant’s efficiency by as much as 10-15 percent

Trimaran Arctic LNG cruise ship concept

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

THE CRUISE SHIP OF THE FUTURE

Printed photovoltaic cells on cruise ship superstructure.

Solar power Imagine the entire exterior of a cruise ship functioning as a giant solar cell, one that can generate enough electricity to power the whole ship.

This is no fantasy; in fact, it is conceivable – even likely – that this will occur by 2030, as the technology already exists in the form of printable solar cells.

These can be produced for a fifth of the cost of traditional solar panels and can be fitted over large, uneven surfaces. A cruise ship operating in Arctic areas during summer would have the advantage of a sun that never sets, enabling it to fully utilise the potential of these solar cells. It is foreseeable that, in the future, a ship could operate with zero emissions, relying entirely on renewable energy, with a significant portion coming from solar panels.

Silent sailing Low frequency noise emissions are proven to have an effect on marine life by disrupting communication frequencies and directional senses. Curtailing noise would alleviate this disturbance and give passengers a more comfortable journey by reducing vibrations.

As the biggest contributor to both underwater noise and hull vibrations, the propulsion system is a prime target for innovation. Solutions are already under development, so it is reasonable to assume that in 2030 these technologies will be capable of operating in the Arctic regions.

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Standard cruise ship risk level in the Arctic.

Higher risk Equal risk Lower risk The concept ship achieved a risk level 29 percent lower than the standard cruise ship in the Arctic.

PUTTING IT TO THE TEST In order to allow for a direct comparison, the concept ship was risk-assessed using the same route and method as for the standard cruise ship on page 49.

The above map shows the overall risk of the concept ship in Arctic conditions as compared with a standard cruise ship in typical worldwide conditions.

The added safety features on board the concept vessel contributed to a 29 percent risk reduction to a standard cruise ship in the Arctic. Furthermore, it was also proved to be three percent safer than a standard cruise ship in typical conditions.

The reduction is mainly due to increased hull strength, the introduction of drones and increased damage stability, all of which reduce the consequence of a potential event in the Arctic environment.

This shows that through innovation, cruise companies can develop fit-for-purpose vessels that offer a significantly safer holiday for people wanting to experience the Arctic region. It also proves that, with the right vessel, the Arctic is not necessarily as high-risk a region as it is often thought to be.

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

THE BULK CARRIER OF THE FUTURE

THE BULK CARRIER OF THE FUTURE New Arctic sea lanes have the potential to revolutionise the bulk-carrier segment.

Ships transporting commodities could slash travel times and fuel costs by taking Arctic routes instead of going through the Suez or Panama canals. Already, bulkers with full ice-breaking capabilities are sailing on routes through the Canadian and Russian Arctic. Here, DNV GL in cooperation with Aker Arctic, presents a concept ship for operation in 2030 that is safer, greener and more practical than the carriers currrently in use.

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Safer Protecting crews from hazards in the Arctic’s toughest environments will still be challenging in 2030. This study identified three technologies that could significantly reduce the risks to personnel: icephobic materials, hovercraft escape vessels and virtual bridges.

Findings on ‘icephobic materials’ (that is, fabrications on which ice and water will not stick) are promising, but the materials themselves have proven difficult to create. Nanotechnology may hold the key.

Icephobic materials Icing occurs when water droplets from sea spray, heavy fog or supercooled rain freeze on contact with the surface of a ship. It can affect the vessel’s weight and stability, causing serious safety concerns.

Because of these (and the fact that ice removal is time-consuming and can be dangerous), icing has been the subject of extensive research.

Icephobic materials are fabrications on which ice and water will not stick.

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THE BULK CARRIER OF THE FUTURE

The hovercraft escape vessel Freefall lifeboats are the main means of evacuation for commercial cargo vessels, however they are problematic in icy waters due to the risk of landing on ice, which would harm the people they were designed to save.

Hovercrafts are a far superior option. Not only do they have excellent mobility and speed in both ice and open water, they are enclosed so those on board are sheltered from the weather. In an emergency, a hovercraft could be driven to a safe location, such as a large ice floe or beach, where passengers could wait for rescue vessels.

There are models available today that could cater for the typically small crews that staff a bulk carrier (usually around 10 people). A hovercraft takes longer to man and launch than lifeboats do, but this could be addressed by installing ramps to help deploy the craft directly onto ice or the water’s surface.

Hovercraft lifecraft concept

The virtual bridge Double acting ships (DAS) appear to be the favoured vessel design for use in the Arctic. For these models, there are clear benefits to having the bridge at the front of the ship, namely that ice can be spotted earlier and cargo is protected against icing. However, both of these advantages are lost when the vessel is moving backwards and breaking ice – as is a clear line of vision.

For flexible and safe DAS operations in the Arctic, there is a need for both fore and aft steering positions. Although there could be a physical main bridge in the front and a secondary bridge in the aft of the ship, it may also be possible to create a virtual steering position that allows seamless access to the aft from the main bridge.

By removing the need to move back and forth the ship to alternative bridges, crew safety would be enhanced and efficiency increased. The solution enables the crew to be where the action is at all times, without physically being there.

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Safe return to port The principle of safe return to port is based on the idea that the ship is its own best lifeboat - capable of returning to port under its own power. The lack of rescue infrastructure in the Arctic makes this capability critical.

Key operational systems – such as propulsion and steering – are essential for safe return to port. Having a steering position at both ends, or the 2030 Virtual Bridge concept described above, is a boon in this respect because it adds to the redundancy of the vessel – so if one bridge were damaged, for example, the ship could still be operated from the other.

DOUBLE ACTING SHIPS (DAS) CONCEPT

In addition to having a double bridge system, a double acting ship also requires some form of pods when moving backwards and a larger optimised propeller for open water transit in order to optimise the efficiency of the propulsion system.

Increased redundancy and safer, optimised operations bolster the likelihood of adhering to the ‘safe return to port’ principle.

■■ Electric azimuth thrusters with large open propellers (diameter 7m) for better efficiency ■■ Open hatch design, containers as secondary cargo

■■ LNG vent mast

■■ Icing resistant mast

■■ Bow designed for open water ■■ Economy speed ≈ 13kn ■■ Lower speed loss due to head-on waves ■■ No shipping of green water ■■ Stern designed for ice-breaking (1.5m level ice) ■■ Covered walkways protect against icing

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CONCEPTS FOR ARCTIC SHIPPING IN 2030

THE BULK CARRIER OF THE FUTURE

Trapezoid midship section can eliminate need for ballast

Greener Arctic trade will require sophisticated and specialised bulk carrier ships. These will prompt higher capital expenditure costs, with owners investing heavily in ship design. This new breed of vessels offers a fresh chance to implement significant fuel-saving measures.

Ballast-free or minimum ballast ships Out of the nine billion tonnes of goods transported by sea per year, four are seawater ballast. Moving seawater around the world costs USD 470 billion in fuel and creates one percent of the world’s humanmade carbon dioxide (CO2) emissions. It also represents a key biodiversity threat by introducing invasive marine species into new environments via ballast water discharge. All of this creates a clear incentive to design ballast-free or minimum ballast ships.

cargo or ballast condition, ice tends to accumulate along the bottom of a traditional bulk carrier.

The ice remains under the ship and builds due to its buoyancy and the relatively slow water flow.

However, a trapezoidal ballast-free design, with a more inclined ship bottom, allows the ice to flow up along the sides instead of remaining trapped under the ship. The inclined hull of this model improves the ship’s manoeuvrability, ice-breaking capability, and keeps the propellers away from ice.

Considering the requirements for ballast water treatment and emissions to air, in addition to the huge cost of carrying this ‘worthless cargo’ through sensitive Arctic areas, the ballast-free ship looks like the shape of things to come.

There are no technological barriers to constructing ballast-free ships, which require design features such as stepped hulls, increased breadth, reduced vertical centre of gravity, multi-hulls, lightweight materials, smaller propeller diameter, multiple screw or deployable thrusters, sharper hull lines, special bow designs and intelligent cargo loading.

Concept bow design for a ballast free tanker

As well as the fuel and environmental benefits, a ballast-free design would have several other advantages in the Arctic. When operating in a light

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LNG LNG improves local and global emissions. Fuelling vessels with LNG will reduce nearly all particulate matter and SOx, at least 80 percent of NOx and around 20 percent of CO2. However, there are a number of potential challenges. These are largely economic, relating to higher system costs, larger fuel tanks, infrastructure development, operation and emergency preparedness. In addition, bunkering and emergency guidelines must be established to ensure LNG-fuelled ships can refuel in any port with LNG fuel supply facilities.

The technology for using LNG as a marine fuel is safe and well established, having been used since 2000.

In terms of operation in the fragile Arctic ecosystem, there are additional benefits; if a ship runs aground carrying LNG, the gas would simply evaporate, whereas the environment can take decades to recover from an oil spill.

Improved propeller shaft torque Ships operating in difficult ice conditions are bound to experience some ice contact with their propellers.

In worst-case scenarios, large ice floes wedged between the propeller and the hull may cause the propeller to grind to a halt and the main engine to stall. This can damage the propeller blades and the

The ECORE bulk carrier with LNG tanks

vessel may become beset in ice, risking collisions with other ships in its convoy (when travelling behind an ice breaker).

But there are technologies available to counter this threat. One method is to add a large flywheel on the propeller shaft to increase the rotational mass and inertia of the propulsion system. This offers a number of advantages for operations in ice conditions at relatively low cost and without additional maintenance requirements. In addition, the flywheel helps protect the main engine from potential damage during operations in ice, as well as delivering fast thrust reversal in ships fitted with controllable pitch propellers.

Return cargo In addition to taking shorter routes through the Arctic, like the NSR, energy consumption can be reduced by carrying cargo on the return voyage.

Bulk carriers often carry cargo in one direction and return empty (with ballast) in the other. Such a trade pattern reduces the total utilisation of the vessel by half, thereby hitting profitability and increasing emissions per tonne-mile. A balanced trade where ballast voyages are avoided has both environmental and economic benefits.

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THE BULK CARRIER OF THE FUTURE

PUTTING IT TO THE TEST Higher risk Equal risk Lower risk

SCENARIO:

JULY 2012 In order to allow for a direct comparison, the concept ship was risk-assessed using the same route and method as for the standard bulk carrier on page 51. The map shows the overall risk of the concept ship in Arctic conditions in 2012, as compared with a standard bulk carrier in typical trade conditions.

The concept vessel is shown to reduce risk by 20 percent compared to the standard bulk carrier (as described on page 51) in the Arctic. Furthermore it reduces risk by five percent compared to a standard bulk carrier in typical trade conditions. This was mainly due to increased hull strength, improved escape and evacuation and rescue capabilities, of which reduce both the frequency and the consequence of a potential event in the Arctic environment.

This assessment shows that the risk of operating this vessel in the Arctic is actually lower than the existing risk of standard bulk carriers in operation around the world today, proving that the Arctic is not necessarily the high-risk environment it is generally assumed to be.

The concept vessel reduces risk by 20 percent compared with the standard bulk carrier assessed on page 51.

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Higher risk Equal risk Lower risk

SCENARIO:

SEPTEMBER 2030 Since this study revolved around a concept ship for theoretical use in 2030, it was appropriate to assess its risk based on projected conditions in September 2030.

These projections showed that an even shorter route (nearly cutting through the North Pole) would be possible by 2030.

Perhaps counterintuitively, the concept vessel in September 2030 was shown to drastically reduce risk by 28 percent compared with the benchmark level of standard bulk carriers in carriers in current typical trade conditions. This was mainly because the vessel would be travelling away from the coastline, lowering the chance of grounding. The risk of shipto-ship collision was also lower than the benchmark, due to lower numbers of vessels in this area.

The concept vessel taking the route shown in September 2030 reduces risk by 28 percent compared with the standard bulk carrier in current typical conditions.

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OIL SPILL PREPAREDNESS

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A NIGHTMARE SCENARIO Although the likelihood of a major oil spill in the Arctic is low, the consequences could be devastating for the environment, and would erode trust in the industry. On top of the vast environmental and technical difficulties of an oil clean-up in the Arctic, the public’s lofty expectations as to the effectiveness of oil spill recovery compound this complex issue. DNV GL, in cooperation with SINTEF, assessed the challenges and the best practices and their limitations for oil spill recovery in the Arctic.

The reality is that even in favourable conditions there are fundamental technical difficulties involved in cleaning up oil spills and, in the Arctic, additional challenges like ice complicate recovery further.

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Great expectations Large oil spills live long in the collective memory, and the possibility of such a catastrophe in the Arctic is of great public concern. This apprehension stems from a mix of environmental concerns, scepticism towards response effectiveness and a lack of trust and knowledge. The reality is that even in favourable conditions there are fundamental technical difficulties involved in cleaning up oil spills and, in the Arctic, additional challenges like ice complicate recovery further. Due to unrealistic public expectations regarding success rates, further efforts should be made to inform the public debate, which is generally polarised.

Expectation, response and knowledge gaps There are three main concerns regarding oil spill response:

Expectation gaps: A mismatch between expectations and reality as to the effectiveness of oil spill preparedness Response gaps: Difficult environmental conditions in the Arctic (ice, cold temperatures, reduced visibility) impose additional challenges to oil spill response, but actual magnitude is unknown and often disputed.

Knowledge gaps: There is an actual or perceived lack of knowledge about the consequences of oil spills in the Arctic as there has never been a major spill in Arctic waters.

These conflicts make the public perception of oil spill response complex and diverse. There is a mix of emotions, facts and economical and political interests.

There is no obvious way of defining “satisfactory” preparedness and response to oil spills because the actual and perceived risks and consequences involved differ between the various stakeholders.

WHAT’S AT STAKE? A large oil spill in the Arctic could disrupt ecosystems, reduce genetic diversity and destroy fragile habitats. The natural dispersion of oil takes longer due to cold temperatures and the oil can remain in the environment for a long time, especially if it becomes trapped in ice. This results in oil being released when the ice melts in spring, which is the most vulnerable period for the Arctic ecosystem.

An oil spill near the ice edge at certain times of the year could therefore have major consequences.

Oil can affect wildlife in three major ways: An inability to keep warm if oil on feathers or fur reduces thermal properties.

Toxic contamination from ingesting, inhaling or absorbing toxins found in oil.

Reduction in food if prey or other resources become unavailable or

inaccessible.

However, studies indicate that the Arctic ecosystem is not more vulnerable to exploration and production drilling than ecosystems in more temperate waters.

What makes the Arctic ecosystem stand out, and also gives caution, is the system's slow reproduction rate. In the case of a larger spill, an Arctic ecosystem is expected to need a long period of time to recover.

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ARCTIC COMPLICATIONS

ARCTIC COMPLICATIONS In the Arctic, ice coverage, wind and sea conditions, logistics and safety issues all add to the already challenging task of oil spill recovery. Several incidents in Arctic-like conditions demonstrate the difficulties involved.

Ice coverage Ice can aid in containing the spreading of oil, depending on the ice concentration. But the presence of ice will typically also complicate the response effort by limiting detection and accessibility, which may counteract these benefits. This has been observed in both research programmes as well as in real life experiences. An example of an oil spill in icy waters was the grounding of the Icelandic containership “Godafoss” near Hvaler, Norway, in February 2011.

The incident occurred during winter, so ice and low temperatures created problems for the rescue of the vessel and the combating of leaked heavy bunker oil.

Oil mixed with ice and snow, and the clean-up crew was under pressure to perform effectively during the few hours of daylight.

In general, mechanical recovery of oil in ice and snow is more time-consuming than recovery in open water. Low temperatures and ice also cause challenges such as hypothermia, slippery rocky shores, ice wearing on equipment, materials becoming porous, increased fuel consumption and shorter battery life-span.

Other environmental conditions Apart from ice coverage, environmental challenges in the Arctic originate mainly from cold temperatures, seasonal presence of sea ice and weather/ season-related reductions in visibility. Wind and

sea state may also impose limitations, although these are not Arctic-specific challenges. Severe sea states beyond the limit of response can also be considered beneficial as they enhance natural mechanical dispersing, thus reducing the potential environmental impact by oil on the sea surface.

An accident involving the Malaysian freighter Selendang Ayu, which ran aground north of Skan Bay on Unalaska Island in 2004, is an example of the adverse weather conditions that operators and vessels have to be ready for when entering the Arctic. In addition to around 150 cubic metres of fuel spilled into the ocean, a rescue helicopter crashed and six members of the vessel's crew perished.

Logistics The remoteness and lack of local infrastructure in the Arctic poses many challenges for offshore operators, with logistics chief amongst them. Resource-intensive and potentially vulnerable supply chains are needed to transport everything into the region, entailing both great cost and planning capacity. The importance of these is brought into sharp focus by oil spill response, which involves the rapid mobilisation of multiple types and quantities of resources, including ships, aircrafts, oil spill equipment and personnel.

To counter Arctic-specific challenges, such as limited operational windows (due to ice/weather and vulnerable species) and the potentially huge

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Photo: Jon Terje Hellgren Hansen / Greenpeace.

Ice and low temperatures created problems for the rescue of "Godafoss" and the related oil clean-up.

"If you need it in the Arctic, you better bring it with you" – Oil spill community representative.

distances from existing infrastructure and response bases, operations require a more or less self-sustained logistical concept. This will help enable an organised, rather than ad hoc, response in times of necessity.

The Exxon-Valdez oil spill in the Gulf of Alaska in 1989 provides a case study for the logistical challenges facing Arctic operators. A huge coastline and remote areas were affected, posing major logistical challenges in the oil spill response such as: providing offshore housing; replenishing food, water, and fuel for the offshore operations; establishing a large aircraft operation; installing a telecommunications network that was essentially built from scratch; providing onshore support; handling and disposing of more than 25,000 tonnes

of oily solid waste and several hundred thousand barrels of oily liquid waste; and safely demobilising the operation. The environmental cost of the spill was vast, including the perishing of hundreds of thousands of seabirds and marine mammals.

Health, safety and environment (HSE) HSE is perhaps the other main consideration, as the Arctic environment causes specific risks that must be prevented or mitigated – mainly originating from the cold climate. Working in low temperatures is challenging, with the cold Arctic air combining with wind chill to impact upon exposed skin. This is an issue that should be, to a large extent, solvable.

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THE TECHNIQUES

THE TECHNIQUES Due to the diversity of the Arctic environment, there is no single best method of attack for cleaning up oil spills. Rather, a response should employ the four techniques that are proven in ice and cold climates – remote sensing, mechanical recovery, in-situ burning and dispersion.

REMOTE SENSING

Remote sensing – including detection, monitoring and tracking of oil spills – is fundamental for effective oil spill response. Information about the oil’s location and how it has spread is invaluable when making tactical decisions, as is the ability to predict in which direction the oil will move.

IN ARCTIC CONDITIONS Remote sensing is even more important in the Arctic due to its remoteness, limited access and restricted visibility.

The presence of ice also affects remote sensing, and may both facilitate and complicate the monitoring, detecting, and tracking of oil.

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MECHANICAL RECOVERY Mechanical recovery refers to a number of response techniques that aim to physically collect and remove spilled oil. Before the oil can be removed from the water surface, it must first be collected and concentrated. In open water, this is usually done using containment booms. The recovered oil is then stored in a tank, barge or towable bladder and transported for waste management.

A mechanical recovery operation typically includes one to three vessels, a containment boom, an oil skimmer and a storage tank or device. This technique is often considered the best response option because if it is successful it will remove the spilled oil from the environment. However, the main problem for mechanical recovery – in both ice and open water – is that the oil often spreads so quickly that it escapes any recovery effort. Weather and sea conditions can also make mechanical recovery very difficult as they impact on the equipment, particularly the booms and vessels. But while cold temperatures can present challenges for the crew and some equipment, they also slow down the weathering process of the oil, increasing the window of opportunity for it to be recovered.

IN ARCTIC CONDITIONS Mechanical recovery’s major shortcoming in the Arctic is that it depends on a large logistical operation.

It requires vast amounts of equipment and the recovered oil requires both on-site storage and separate capacities for transport out of the area.

As previously mentioned, this is potentially problematic in remote arctic areas. In addition, the presence of sea ice is a major challenge for mechanical recovery.

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THE TECHNIQUES

IN-SITU BURNING In-situ burning (ISB) is the term used for controlled burning of oil. Spilled oil is ignited and burned directly on the water surface or broken ice.

ISB requires three elements: fuel, oxygen and a source of ignition.

The effectiveness of ISB depends on the oil characteristics (oil type, film thickness) and the weathering state of the oil. As with mechanical recovery, ISB requires booms to first capture the oil in large enough pools, making the technique susceptible to sea and weather conditions.

IN ARCTIC CONDITIONS Tests have shown ISB to be very effective at removing oil spills in Arctic conditions, especially in snow and dense ice. It also requires less logistical support than other techniques, which is a huge advantage in the Arctic.

Ignition is ISB’s achilles heel. Lighting the oil can be difficult in wind and in cold temperatures, which can also cause the oil to burn more slowly or less completely. However, new ignition methods are currently the subject of research.

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DISPERSANTS Removing the oil is not the only means of cleaning up an oil spill. Diluting the oil is also highly effective. Oil naturally dilutes in water and this process can be enhanced by spraying artificial dispersants onto the slick. However, if they are to have an effect, dispersants need to be applied quickly as they do not work on weathered oil. Recent testing and research shows potential for the use of dispersants and have also provided more understanding of its environmental effects.

High wind and sea states can limit vessel-based application of dispersants. However, they can also be beneficial by increasing the mixing energy for the oil and the dispersant. Performing a NEBA (net environmental benefit analysis) can be an important tool for decision-making as to when dispersants should be used.

IN ARCTIC CONDITIONS The increased viscosity of oil at low temperatures reduces the effect of dispersants. On the other hand, low weathering rates increase the window of opportunity for dispersants to be used.

Dispersants are also the subject of ongoing research into their toxicity and their effect on the ecosystem, which is very relevant for those parts of the Arctic with vulnerable ecosystems.

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A NIGHTMARE SCENARIO

THE RESPONSE GAP

THE RESPONSE GAP A study of the oil spill response gap in the Barents Sea showed that ice coverage is the biggest environmental challenge to effective oil spill response in the Arctic.

A response gap occurs when environmental conditions exceed the operating limits of existing oil spill clean-up technology. If there were an oil spill during a response gap, it would not be possible to contain or recover the spilled oil.

Oil spill response is and will be a challenging task.

By applying a response gap analysis the picture becomes much clearer and allows an assessment of which tools and tactics currently available can give the best available solutions.

DNV GL carried out a response gap analysis that quantifies the oil spill response gap caused by environmental factors such as wind, sea state, ice, temperature and visibility. The techniques taken into account were mechanical recovery, dispersant application and in-situ burning techniques.

INPUT

Calculating the response gap The analysis reveals the percentage of time certain areas undergo a response gap. For example, a response gap of 40 percent means that, due to environmental conditions, it would not be possible to conduct a response operation for 40 days out of 100. It follows that on the other 60 days it would be possible to carry out an oil spill response.

A map-based approach with a grid size of 10x10 kilometres was chosen to display the results, using 10 years of environmental data to eliminate yearly variations of the datasets (e.g. ice concentrations) and to get the best possible statistical picture of the response gap.

ANALYSIS

OUTPUT RESPONSE GAPS

■■ Operating limits of oil spill response techniques ■■ Environmental datasets

Response gap analysis method

ENVIRONMENTAL DATASETS MATCHED TO OPERATING LIMITS

■■ "What is the current situation?"

■■ "Which environmental factors are causing the gap?"

■■ "Which tactic is the least influenced?"

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50°0'0"W

40°0'0"W

THE RESPONSE GAP

20°0'0"W

0°0'0" 20°0'0"E

50°0'0"E

70°0'0"E

80°0'0"E

90°0'0"E

Studyarea

60°0'0"N

60°0'0"N

Area of response gap analysis 10°0'0"W

0°0'0"

10°0'0"E

20°0'0"E

Mapping the gap The study visualises the response gap in the Barents Sea and the Norwegian Sea. This area was selected due to its political and industrial importance, and because it represents relevant seasonal changes over time and location. The results allow the visualisation for each response technique, or the combined techniques, and the percentage of time when the response conditions are favourable, impaired or ineffective on a monthly basis.

Operational limitations were set for each tactic.

Conditions were classified into the following categories:

30°0'0"E

40°0'0"E

50°0'0"E

Favourable: Oil spill response can be performed without limitations due to weather, ice or sea conditions.

Impaired: Response operations can be performed, but the response will require special considerations and precautions due to weather, ice or sea conditions that will impede the performance of the response.

Ineffective: Response operations cannot be performed, due to safety reasons, or the inability to deploy equipment, or that the measures/ equipment will not function – for example, ignition of oil due to high winds, skimmer uptake due to rough sea state.

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OIL SPILL RESPONSE GAP IN THE BARENTS SEA The maps on the next spread show the percentage of time that oil spill response conditions are ineffective during January, April, July and October. The darkest shade means that oil spill response is ineffective 80–100 percent of the time during that month. The lightest shade means that conditions that make oil spill response ineffective prevail only up to 20 percent of the time. When the response gap is less than 50 percent, the dominating condition can be either impaired or favourable, although this is not shown directly in the map.

Results The results showed that the Barents Sea mainly experiences impaired response conditions throughout the year except during summer, when conditions are favourable most of the time.

Measures were generally ineffective in ice-covered areas, proving that ice coverage is the biggest environmental challenge to effective oil spill response in the Arctic.

Winter brought the greatest response gap, with the icy northern areas of the Barents Sea making it impossible to conduct a response operation 80 to 100 percent of the time. In the more temperate southern areas, however, the response gap was around 10 percent. The window of opportunity for mechanical recovery was down to 0–20 percent for all regions in winter time but increased up to 80–100 percent in summertime.

The analysis also showed that effective ice management could lower the response gap in ice covered areas by around 20 percent. When it came to the methods, the use of dispersants has a greater window of opportunity than mechanical recovery and in-situ burning.

In-situ burning is the response option which is most affected by environmental conditions, although its lower logistical requirements still make it a very good option in the Arctic. Furthermore, the response gap analysis showed that wave height and wind are the most limiting environmental factors regardless of the techniques employed. Wind chill and superstructure icing can also play an important role.

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THE RESPONSE GAP

Ineffective response conditions (% of time) in the Barents Sea

JANUARY

Oil spill response gap showing ineffective response conditions in January. The techniques used in this model were mechanical recovery, in-situ burning and dispersants application by vessel and aircraft.

The response gap can be reduced when including ice management (small picture).

Ineffective (% of time) 0–20 % 20–40 % 40–60 % 60–80 % 80–100 %

Ineffective response conditions (% of time) in the Barents Sea

APRIL

During spring, ineffective response conditions prevail only in icecovered areas, whereas impaired response conditions dominate most areas. In small parts of the south-east, conditions allow for effective response up to 60 percent of the time.

Ineffective (% of time) 0–20 % 20–40 % 40–60 % 60–80 % 80–100 %

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Ineffective response conditions (% of time) in the Barents Sea

JULY

During summer, the absence of dense sea ice means that ineffective response conditions are isolated to the far northwest part of the Greenland Sea. This means that conditions in other parts of the Barents Sea are suitable for cleaning up oil spills, particularly if all response options are on the table. Aerial dispersant application, for example, is effective 80-100% of the time.

Ineffective (% of time) 0–20 % 20–40 % 40–60 % 60–80 % 80–100 %

Ineffective response conditions (% of time) in the Barents Sea

OCTOBER

In October ineffective conditions remain low, however dropping temperatures, rougher seas and diminishing daylight mean that the favourable summer response conditions are replaced by impaired conditions.

Ineffective (% of time) 0–20 % 20–40 % 40–60 % 60–80 % 80–100 %

Sources: Esri, GEBCO, NOAA, National Geographic, DeLorme, NAVTEQ, Geonames.org, and other contributors

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OIL SPILL RESPONSE: RECOMMENDATIONS Oil spill response must keep up with rapid resource development in the Arctic.

Until new technologies emerge, the industry must push forward with sound risk management, better implementation of existing technologies and the establishment of robust logistical concepts.

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Playing the hand you’re dealt The current best practice techniques for oil spill recovery are fundamentally limited by environmental factors that are hard to overcome. Research into finding new techniques is critical, but until they emerge the industry should focus on better implementation of existing techniques – even though the recovery rates they can achieve may seem low. This means that all of the main options in the response toolbox – including mechanical recovery, dispersion application, in-situ burning and remote sensing – should be considered as potentially suited for oil spill response in the Arctic, and assessed in an objective manner.

Because access to infrastructure and logistics will most likely be limited in the Arctic, the least logisticintensive response measures, like in-situ burning and dispersant application, should be closely assessed.

Tackling the logistics conundrum All logistics problems and solutions are site-specific, so there is no single blueprint. That said, the following principles, functions and elements of the logistic process represent a universal approach, and should be considered.

Responsiveness - Providing the right support at the right time, at the right place; Simplicity - Avoiding unnecessary complexity in preparing, planning and conducting logistic operations;

Prevention better than cure Low recovery rates mean that oil spill response should primarily be considered as a damage control measure, rather than a sole premise for risk acceptance. Prevention of accidental oil spills by active risk management must be emphasised for all activities, including shipping. DNV GL recommends that capping and containment systems and source control systems adapted for Arctic conditions should be available when conducting Arctic drilling.

Capping and containment includes systems that capture oil at the wellhead and flow it to the surface for processing, storage and recovery. This enables source control and containment during a subsea blowout. Since the Deepwater Horizon spill, the petroleum industry has obtained several such systems. Operators in the Arctic should be required to own, or have on contract, a system that meets Arctic engineering standards and includes a wellcapping stack, containment dome and surface processing vessels to control a blowout.

Systematic testing and verification Fortunately, large oil spills are rare in any part of the world. Despite this, the significant potential impact an oil spill can cause means they are regarded as a major environmental risk in the Arctic. The rarity of oil spills is of course a good thing, but it also means that effectiveness of oil spill response is rarely systematically tested or verified. DNV GL recommends an increased emphasis on realistic Arctic testing and verification of oil spill response concepts and technologies.

Flexibility - Adapting logistic support to changing conditions; Economy - Employing logistic support assets effectively; Attainability - Acquiring the minimum essential logistic support to begin mitigating/recovery operations; Sustainability - Providing logistic support for the duration of the operation; and Robustness - Ensuring that the logistic infrastructure prevails.

Cooperation and regional planning Finally, a common theme emerging from all DNV GL research on the Arctic is the need for greater cooperation and regional planning. Cooperation on oil spill prevention and response within the Arctic region must be deepened at all levels. More emphasis should be put on regional risk assessments and cross-boundary response planning. The project recommends using the response gap methodology employed in this study as a starting point for such regional planning purposes.

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SECTION 5: A CONSIDERED APPROACH 87

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REDUCING RISK TO AN ACCEPTABLE LEVEL Operating in the Arctic does not have to be high risk. By combining effective risk management with research, continuous learning, cooperation and new technologies, a business can reduce the risk of its Arctic operations to an acceptable level.

The risks maritime and petroleum operators face in the Arctic are as diverse and dynamic as the ice sheets that sculpt the face of this unique region. In addition to wide variations in geography and seasonality, they must deal with extreme conditions and a lack of social infrastructure. But, as is the case elsewhere, operational risk can be mitigated through a structured approach. Defining that structure is the key to success.

Getting the priorities right Although there is no rule of thumb to ensure successful risk management in the Arctic, measures can be taken to help steer judicious decision-making.

These can be grouped into four key areas (listed in order of preference): Measures that facilitate safe practices by removing a hazard or an unwanted effect (such as restricting operations in certain areas altogether) Preventive measures that reduce the likelihood of problems occurring Consequence-reducing measures that control the effects of an accident Measures that require external assistance (these should be secondary to measures based on selfsupport and robust operations)

Technical measures should always be guided by clear operating principles. With good management, all petroleum and maritime operations should be able to attain a reasonable level of safety. However, determining whether a risky operation should proceed is often a values-based judgement and decision-makers (such as authorities or members of the public) may decide that the benefits do not justify the risk, as has been the case with drilling in Norway’s Lofoten islands and the moratorium on Arctic drilling after the Macondo accident in the US.

Map reading To develop a better understanding of the potential and limitations of future activities in the region, DNV GL created an Arctic Risk Map (see Section 2) with two indices: one for safety and operability and another for environmental vulnerability. The map has led to a number of key safety recommendations for maritime and offshore operations, as well as maritime and petroleum activities, that will be discussed in the following pages.

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STEP-BY-STEP

NO SEA ICE

SEASONAL ICE OR CLOSE TO ICE EDGE

AREAS WITH HEAVY ICE CONDITIONS

In Arctic areas with no ice, the main focus should be on adequate winterization of assets and search and rescue capacity.

When moving into Arctic areas with seasonal ice or areas close to the ice edge, oil spill response capability in ice should be ensured.

Before operating in wintertime in areas with heavy ice conditions there should be public awareness of the risks and benefits.

The industry must adopt an attitude of transparency regarding risk, and share information with the public.

Protected areas and seasonal limitations on activities need to be considered and should be expected.

In addition, an adequate icebreaker fleet and new drilling and production concepts are required, including developing the possibility to evacuate personnel on ice.

Development in the Arctic Ensuring a safe and sustainable Arctic requires a measured and cooperative approach. Operating in new environments always requires meticulous planning. But in the Arctic, there are many unknowns and exceptionally careful planning is required.

DNV GL believes it requires a “stepwise” approach. This means operators must master the least challenging regions of the Arctic before contemplating developments in the high-risk areas.

Based on the environmental and safety risk assessments described earlier, DNV GL proposes

that regions of the Arctic should be developed in relation to their concentration of ice. It is also recommended that each of the three environments – no sea ice, seasonal ice or close to ice edge, and continuous sea ice or heavy ice conditions – needs to be successfully overcome before the industry can move on to the next stage and operate with an acceptable level of risk.

It is important to note that in the Arctic ‘open water’ and 'no sea ice' are different. Open water typically refers to ice concentration (that is, the relative area covered by ice) of less than 10 percent – it does not mean that waters are ice-free.

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RESEARCH AND KNOWLEDGE

MEASURES

Research is key to safety in the Arctic. In such a pristine environment where there is little commercial activity to learn from, gathering information is central to any future development. The Arctic Risk Map highlights the need for more baseline environmental data, as well as research on biological cycles and improved environmental forecast models. In addition, full-scale field ice experiments would improve our knowledge of ice interactions and could be used to inform measures to safeguard offshore petroleum operations in severe ice conditions.

The Arctic’s varied seasonality also makes planning essential. We need to clarify when operations can occur and what measures must be taken to mitigate environmental damage, taking into account seasonal and geographic factors that affect the region’s vulnerable species.

Although operational experience in the Arctic is limited, maritime and offshore works exist in similarly hostile environments, including areas with Arctic-like conditions.

Knowledge transfer is essential, as is training and qualifications specific to work in the Arctic.

Equipment design and operational procedures must take into account the area and season that the work will occur in, thus a vessel may require ice strengthening, winterization and an ice management support fleet (a prerequisite for safe operation).

The harsh nature of Arctic conditions creates obvious risks for personnel. It is therefore essential to devise evacuation and rescue procedures that are suitable for sea-ice conditions, ensuring the crew’s survival until external assistance arrives. To further improve security, development of emergency-response infrastructure and resources should be a coordinated effort.

DNV GL is preparing its employees for the operational realities in the Arctic. The ACE initiative, a joint project between Statoil and DNV GL, is an example of this approach. The programme aims to enhance the expertise of the companies’ specialists and to share and improve solutions for issues specific to the Arctic.

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COOPERATION AND HARMONISATION

MEASURES

Due to the high cost of developing this region, cooperation on technology development, operational know-how and emergency response capability is essential. The Arctic countries have realised this and the Arctic Council provides a basis for cooperation at other levels.

Many companies are also coming to terms with the level of collaboration required in the Arctic and realise the need for standardisation. DNV GL has long extolled the benefits of such collaboration and leads, or is a member of, several Arctic Joint Industry Projects (JIPs).

JIPs provide effective working platforms that facilitate speedy innovations and the development of products, practices and standards that, through their collaborative inception, emerge as ‘world bests’ in their arenas. DNV believes the JIP model is an effective way of tackling the

challenges that are inherent in the most complex projects facing the industry, such as undertaking successful Arctic operations.

When it comes to classification in Arctic areas, harmonised rules are under discussion in the International Association of Classification Societies (IACS).

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OFFSHORE PETROLEUM

MEASURES

The potentially enormous hydrocarbon reserves that lie within the Arctic are obviously attractive to countries with territorial claims to the area, as well as global energy giants with the means to exploit them. To reduce the risks inherent in extraction, all players must adopt a common risk-management strategy.

A risk-based approach is required to comply with guidelines and standards relating to offshore petroleum operations and should be reflected in regulatory regimes.

The Barents 2020 project, which saw Arctic nations synchronise their offshore health, safety and environment standards, should inform such developments. Failure to adopt a universal mind-set would not augur well for the responsible development of resources in an environment that is extremely challenging and uniquely delicate.

The operational and technological challenges it poses are daunting, particularly in areas where sea ice is prevalent.

The industry requires more high-capacity icebreakers, plus ice-detection and weather-forecasting systems based on real-time monitoring, which can be used in areas where satellite communication is difficult and the capacity for data

transfer is limited. There needs to be more direction in regards to ice management, including training guidelines, recommended procedures, official requirements and emergency measures.

Oil-spill response measures are also critical, as are winterized solutions for offshore safety barrier functions, including strict requirements for mobile offshore drilling units. In addition, the industry requires a system to collect incident and accident data and share operational experiences.

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MARITIME

MEASURES

Developed by the International Maritime Organization (IMO), the Polar Code will define future operations in the Arctic. It aims to reduce environmental risk by stipulating mandatory requirements for ship design, construction and operation, as well as on-board equipment and crew training. Search-and-rescue measures are also covered.

By reducing the likelihood and consequences of accidents, the Polar Code will also protect personnel and property.

One of its chief goals is to ensure operators are prepared for polar conditions – and to exclude those that are not.

These measures may include recommended routes that direct traffic away from areas of high risk, as well as reporting systems that reduce the risks associated with acute oil pollution, including bunker and heavy fuel oil spills.

In the past, there has been no regulation of activity in the Arctic seas, other than national requirements within the economic zones. This new code is vital to increasing maritime safety and it would be most disappointing to see its stipulations weakened in the struggle to gain consensus among the stakeholders.

If maritime activity is to blossom in the Arctic, the ground needs to be thoroughly prepared. We require detailed mapping of the seabed and coastlines to create reliable navigational charts that will enable effective ship routing and reduce environmental risk. Areas expecting high levels of activity and those characterised by vulnerable environmental resources and risk drivers must take priority.

The IMO is also likely to develop separate measures for Particularly Sensitive Sea Areas. These are areas of great ecological significance – which, in many cases, are also high risk – and therefore they require additional Associated Protective Measures.

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SHEDDING LIGHT ON ARCTIC RISK DNV GL believes that society, the industry and the authorities must gain a better understanding of risk in the Arctic in order to make better decisions on future development. With this in mind, the organisation has run several research projects under three main banners: Arctic risk picture, Arctic shipping risk and Oil spill response in the Arctic. These research projects aim to shed light on the risk associated with industrial activity in the Arctic.

Arctic risk picture This project explains the complex risk picture related to offshore petroleum activities and maritime transport in different areas of the Arctic. It provides authorities, industry and the public with a tool for making risk-informed decisions.

The project consists of several elements: a risk map, which shows how risk influencing factors that affect industrial activity vary between seasons and regions, and how the vulnerability of the environment to an oil spill also varies in the same manner; public surveys and stakeholder interviews on attitudes towards activities in the Arctic; and the quantifying of risk of major accidents and occupational accidents.

It concludes with recommendations on measures for reducing risk and how a gradual and cautious approach is necessary for safely operating in the Arctic. DNV GL refers to a "stepwise approach", whereby technology is proven and experience is gained in the “easier” areas before moving into more technically demanding parts of the Arctic.

Arctic shipping risk This study assessed shipping risk in the Arctic by examining two case studies; a cruise ship operating in ice-infested waters off the west coast of Greenland, and a bulk carrier transiting through the Northern Sea Route. These cases were chosen due to an expected rise in this type of traffic in the Arctic driven by increased tourism and export of raw materials in the region. In addition, DNV GL, in cooperation with Aker Arctic, developed two concept ships, which included features to make the fit for Arctic operations. The study showed that both concept vessels were capable of reducing risk to an acceptable level.

Oil spill response in the Arctic This study evaluated the current strategies for oil response in the Arctic. It looked at how these strategies could be improved and the challenges and limitations of such an operation in the Arctic.

The project was conducted with the cooperation of SINTEF, a Norwegian research organisation, and other prominent organisations within the field of oil spill response.

SAFER, SMARTER, GREENER

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