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FORUM

DECEMBER 03 2015

A MAGAZINE FROM DNV GL

EVERY SECOND COUNTS

EMERGENCY PREPAREDNESS KEY TO HANDLING COMPLEX MARITIME ACCIDENTS

CONOCOPHILLIPS: STRIPPING COST OUT OF ­AUSTRALIAN GAS

MAERSK LINE: ADVANCING TRANSPARENCY AND EFFICIENCY IN SHIP MANAGEMENT

WORLD BANK: MAPPING WIND ENERGY POTENTIAL IN AFRICA

BG GROUP: IMPROVING SAFETY ­BARRIER MANAGEMENT


CONTENT 03 Editorial: CEO Remi Eriksen on building trust and confidence 04 News 08 Accidents at sea – every second counts 14 Teekay’s production-centric offshore strategy delivers in a tough market 18 ConocoPhillips stripping cost out of Australian gas 22 ADMA-OPCO rises to age challenges 24 World Bank-backed project mapping wind energy potential in Africa 26 Smart Cable Guard: Managing power outages in cities 28 Maersk Line advancing transparency and efficiency in ship management 32 BG Group improving safety barrier management 36 Championing Vanguard Leadership 38 Sustainability raising Orkla’s competitiveness 42 Last Word: Big numbers still add up for Brazil

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EDITORIAL CONTRIBUTORS Etienne te Brake, Robert Coveney, Astrid Folkvord Janbu, Sarah Lewis, Kristian Lindøe, Kaia Means, Alexandra Jane Oliver, Nikos Späth, Robert Stokes, Andreas Thue, Joacim Vestvik-Lunde, Alexander Wardwell, Emily Woodgate

FORUM 03.2015 Published by DNV GL AS NO-1322 Høvik, Norway Tel: +47 6757 9900 Fax: +47 6757 9160

EDITOR Stuart D. Brewer Tel: +47 91522360 Stuart.D.Brewer@ dnvgl.com DNV GL Group Communications

DESIGN AND LAYOUT Coor Media coormedia.com mail@coormedia. com

COVER PHOTO © Getty Images

© DNV GL AS 2015


BUILDING TRUST AND CONFIDENCE Staying relevant and competitive in a rapidly changing business environment is a tough challenge for any company. Creating new growth opportunities has to happen at an accelerated pace, as does enhancing cost efficiency and dealing with new and ever stricter regulations.

Also, we explore how applying big data to risk management can enhance safety while containing costs and maintaining efficient production. The BG Group believes this could become the norm. We also feature an article about a World Bank-backed project to study wind energy potential in African countries.

Society is placing new expectations on companies and demanding a response, and businesses can no longer afford to think only about business, but need to adapt to broader economic, environmental and societal concerns.

As a standard-setter, certifier, assurance provider and technical advisor for businesses worldwide, DNV GL continues to play a vital role in helping customers and other stakeholders to build trust and confidence in their projects, assets and operations in a world where ever-faster change is the only certainty.

Over the years, I have learned that an effective approach to staying ahead of the game is to combine expertise and knowledge from different industries. The challenges we face cannot be solved by the knowledge within one industry alone. As a company that works across the maritime, oil & gas, and energy sectors, DNV GL will continue to use its cross-disciplinary expertise to drive innovation in the industries it supports.

We will continue to support, innovate and collaborate with our customers in adapting to change and realizing cost efficiencies, while improving safety and reliability in operations. I hope this issue of FORUM makes for stimulating and enjoyable reading, and that you can draw inspiration from the achievements we highlight in various industries.

“Let’s not waste a good crisis. We should see this as an opportunity to get inefficiencies out of value chains and, by doing so, create simpler ecosystems. In the current business environment, the purpose of innovation becomes even clearer – it’s all about bringing on smarter and more efficient solutions, not bigger and more complex ones.” In responding to the changing needs and demands of the customers and industries it serves, DNV GL is innovating to develop new services and enhance existing ones, some of which are covered in this issue of FORUM. In addition to our lead story on DNV GL’s Emergency Response Service and the grounding of the Höegh Osaka on Bramble Bank in the Solent earlier this year, we report on Teekay’s global offshore strategy. We delve into ConocoPhillips’ long-term thinking and sustainable operations at the Curtis Island coal-seamgas to LNG facility, and we present how ADMA-OPCO is keeping offshore assets in the Middle East operating safely and efficiently beyond original design life.

Remi Eriksen DNV GL Group President & CEO

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DNV GL

News

NEW CLASSIFICATION RULES The new DNV GL rules for classification of ships are publicly available online. After an unprecedented development and review process, involving 250 internal experts and more than 800 customers and maritime stakeholders, the rules set a new benchmark. The result of the combined experience and expertise of two leading classification societies, the new rules are modern, easy to work with, industry-driven, efficient, and ready for the future.

“I’m proud we took advantage of the unique opportunity to have a fresh look at our rules and have created a new industry benchmark,” says Knut Ørbeck-Nilssen, CEO DNV GL – Maritime. “The dedication of our customers has been outstanding. Together with them we have truly taken up the challenge of taking classification into the future. I believe this new rule set gives us an even better basis to deliver the safety, efficiency and quality our customers expect.”

“This is an historic moment,” says Remi Eriksen, DNV GL Group President and CEO. “After such a thorough process it is very exciting to launch the new DNV GL classification rules. The engagement of our customers and industry stakeholders has been overwhelming. From our initial discussions, through the review and external hearing process we have received invaluable input and we are deeply grateful for the consideration and enthusiasm of all involved. I look forward to following the many joint development projects using the new classification rules already underway,” Eriksen says.

The reworking of the rules has allowed DNV GL to incorporate and integrate more modern tools and software, making them responsive to future developments. The rules also support the application of the latest technologies including battery installations and hybrid propulsion concepts, gas-fuelled readiness and LNG bunkering vessels through additional class notations. The new DNV GL rules will enter into force on 1 January 2016. For more information, please log onto: https://www.dnvgl.com/maritime/index.html

IN-SERVICE CONTRACT FOR ICHTHYS LNG MEGA PROJECT DNV GL has secured a contract to provide in-service verification and classification services to a range of facilities at the Ichthys LNG project in Australia.

This latest contract will see DNV GL continue its expert support to the project as it transitions into operation in 2017. The primary scope of work includes in-service verification of the Ichthys facilities; the central processing facility (CPF), floating, production, storage and offloading (FPSO), subsea production system, gas export pipeline, onshore combined cycle power plant and onshore LNG plant. DNV GL will also provide in-service classification of the CPF and the FPSO hulls. Located 220 kilometres offshore Western Australia, the Ichthys field is situated on block WA-285-P in the Browse Basin, Timor Sea. This gas and condensate field lies at a water depth of 250m, and represents the largest discovery of hydrocarbon

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© DNV GL/Nina E. Rangøy

The contract marks INPEX’s commitment to continue working with DNV GL as it prepares to transition from the project execution phase to the operational phase of the mega project. DNV GL has, since 2012, provided vendor inspection, verification and offshore classification support to the USD 34 billion venture.

liquids in Australia in 40 years. The Ichthys LNG project is ranked among the most significant oil and gas projects in the world. It involves some of the largest offshore facilities in the industry, a state-of-the-art onshore processing facility and an 889 km pipeline that will unite them for an operational life of at least 40 years.


ISSUE NUMBER 03.2015

FRAME AGREEMENT WITH CLP HONG KONG

© CLP Hong Kong

DNV GL has confirmed a frame agreement for risk management advisory services with CLP Hong Kong, one of Asia’s leading power companies. The agreement, initially for two years, covers all CLP operations across Asia Pacific. CLP provides electricity to 80% of Hong Kong’s population through its three local power stations. It plans to increase its reliance on natural gas in line with a Hong Kong government environmental target to double the percentage of electricity generated from this fuel source to 50% by 2020. DNV GL’s Beijing office is coordinating the frame agreement; two projects are already underway. “We are committed to supporting customers in all aspects of risk management in this new era of natural gas,” said Wolfgang Wu, regional manager, Greater China for DNV GL – Oil & Gas. “Our integrated solutions and advanced risk management concepts and tools will enhance both operational and safety performance.”

GENERAL ELECTRIC CONTRACT DNV GL is to perform a third-party inspection and certification for GE Oil & Gas UK of a high integrity pressure protection system (HIPPS), designed to prevent over-pressurization of subsea process pipelines. The project award follows successful collaboration with GE on the functional safety aspects of its new completion and workover riser system. On completion of its work on the project, DNV GL will provide a certificate of conformity and a certification report. DNV GL has been active for many years in the field of functional safety, commonly known as safety integrity level (SIL). The company’s new service specification for functional safety certification can be applied to all electronic or programmable systems with safety functions. It is a flexible tool that allows appraisal and certification of entire systems, subsystems, development tools and management systems in order to meet legal, contractual or company internal requirements. The service specification will also be used in ongoing projects involving blowout preventers for other customers. Documentation needs to be provided only once, and design information can be kept confidential. Campbell Sims, leader for functional safety at the subsea and drilling business of GE Oil & Gas said: “Receiving type approval for our systems and subsystems is very beneficial to us, as this service specification ensures that we can deliver the best to our end customers to reduce both cost and time to market, while maintaining the highest industry standards."

JOINING FORCES World-leading energy and technology companies have come together with the support of World Business Council of Sustainable Development (WBCSD) to enable near doubling of renewable energy capacity by 2025. Business-led solutions are aimed at supporting the deployment of an additional 1.5TW worth of renewable energy capacity. Co-leads of the Renewables program Acciona, DNV GL, Statkraft and Welspun Energy are joined by ABB, CLP, EDF, EDP, ENGIE, Eskom, First Solar, Iberdrola, NRG Energy, Schneider Electric, State Grid Corporation of China and Vestas to deliver this ambition. The program is part of WBCSD’s Low Carbon Technology Partnerships initiative (LCTPi) which gathers over 140 businesses and 50 partners to accelerate the development, deployment and scale-up of game-changing low carbon technologies for ambitious emission reductions and accelerated technology deployment. The co-leads of the Renewables program believe that the doubling of renewable energy capacity required by 2025 to stay below 2°C is achievable. They will address barriers preventing the necessary widespread uptake of renewable energy.

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DNV GL

News

CUSTOMIZED APPLICATION ENABLES SMART FUEL OPERATIONS The DNV GL Fuel Change-Over (FCO) Calculator has already been ordered for more than 350 ships worldwide. Over 300 calculators have been delivered to ship management companies. The introduction of stricter emission limits in Sulphur Emission Control Areas (SECAs) effective from 1 January 2015 is a challenge for vessels operating within these areas. The majority of ships switch from heavy fuel oil (HFO) to marine gas oil (MGO) to make sure the sulphur content of their fuel does not exceed 0.1 per cent by mass. However, this switchover can put equipment at risk and increase operational costs unless it is performed skilfully and carefully.

SOFTWARE TOOL SPEEDS WIND TURBINE DESIGN AND DEVELOPMENT DNV GL has launched a software tool to enable turbine engineers and component developers to quickly calculate the impact of their technology on Levelised Cost of Energy (LCoE). The software tool, Turbine Architect, uses algorithms, based on decades of design and bladed experience. It quantifies the technical impact of design and component technology on both the turbine system as well as the entire wind farm, from the foundation to the electrical infrastructure. It then computes realistic values for the capital costs of turbine, balance of plant components, farm operational costs, availability and farm annual energy production.

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© DNV GL/Bente Vestergaard

The DNV GL FCO Calculator helps identify the ideal parameters for the changeover procedures. It uses a complex numerical simulation of the fuel changeover procedure that allows for a very accurate changeover calculation and additional cost savings compared to a linear model. Input fields for all relevant influencing factors are provided. The critical value for the changeover procedure outlines the volume to be exchanged in the service system. The application minimizes the risk of mistakes by providing customization features for the individual ship. Comprehensive documentation for port authorities completes the attractive package.

DNV GL head of section Engineering Ben Hendriks said: “Turbine Architect has been created by our experts to reduce the risk when designing wind turbines. Not only does it save a great deal of time, producing a concept design in a matter of minutes rather than days, it also offers a means for those without the time or necessary expertise to still forge ahead in the industry. By offering LCoE-driven design support, we are able to guarantee customers an improved final result to their project: a faster timeto-market with a more competitive product.”


ISSUE NUMBER 03.2015

TEST CENTRE IN SINGAPORE TO ENHANCE GRID SECURITY AND RELIABILITY DNV GL’s independent test centre is the first of its kind providing IEC 61850 and other related testing services to electricity utilities, large generation plants and grid-tied distributed energy resources in the Asia Pacific region.

© Jaap Bunschoten

Electric utilities are under increasing pressure to ensure their power grids remain reliable over a wide range of operating conditions, to cater for more distributed energy resources and to extend the operating life of key assets. Smart grid and smart metering technologies are being introduced into the power grids with increasing customers’ demands for better reliability and cost-effective electricity supply as well as the needs for close-toreal-time data exchanges/transfers from various components in the power grid. The centre will provide independent profile and compliance testing of communication components to enhance security and reliability of the grid. Certification of communication components for central and distributed control systems in the electricity supply network enhances the reliability of the grid and is necessary to secure the future of the smart grid development in the region.

INFORMATION SECURITY ON THE AGENDA In collaboration with the research institute GFK Eurisko, DNV GL conducted in July 2015 an information-security survey amongst nearly 1,200 professionals from businesses in different sectors in Europe, the Americas and Asia. The survey shows that companies are investing significantly in information security. Some of the key findings: 65% have invested in information security over the past three years, focusing on assets and equipment, having the right personnel and defining and implementing controls ■■ 43.1% expect to increase their investments ■■ 80.9% think that information security is relevant for business strategies ■■ 58% have an information-security strategy, while only 27% have set formal goals ■■

The full report is available at https://www.dnvgl.com/viewpoint

BUSINESS ASSURANCE

VIEWPOINT REPORT

Is your company’s data secure? OCTOBER 2015

SAFER, SMARTER, GREENER

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DNV GL TEXT ALEXANDER WARDWELL PHOTO GENI, CC BY-SA 4.0, 3.0, 2.5, 2.0,1.0 / WIKIMEDIA COMMONS GOODLUZ – FOTOLIA, HÖEGH AUTOLINERS, NIGE BROWN CC BY 2.0/WIKIMEDIA COMMONS

EVERY SECOND COUNTS While accidents at sea have declined over the past decade and shipping remains the safest form of transport, accidents do happen. And when they do, a growing number of owners turn to the DNV GL Emergency Response Service (ERS) to obtain immediate support during the first critical hours

The grounding of the Höegh Osaka on Bramble Bank in the Solent.

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ISSUE NUMBER 03.2015

On the evening of 3 January 2015, Höegh Osaka, a 16,886 dwt pure car and truck carrier (PCTC) with a cargo capacity of 5,400 car equivalent units (CEU), experienced a severe list when it left Southampton port. The vessel was subsequently grounded on Bramble Bank in the Solent. The master informed the relevant local authorities and arranged for the rescue of the crew. Höegh Autoliners’ Emergency Response team assembled at the company’s headquarters in Oslo and worked with Wallem, the ship manager, to verify the safety of the crew. Höegh also moved quickly to reach an agreement with Svitzer, a leading salvage company,

to secure the vessel. One of their first calls was to DNV GL’s ERS team.

ERS team on duty The four-person DNV GL ERS team was activated at 23.46 p.m. and gathered in the ERS Situation Room at DNV GL’s headquarters. Equipped with banks of computers, monitors and drawing boards, the room serves as a crisis management centre where the experienced team members perform calculations to determine damage stability and residual strength to support the master of the vessel and shore-based personnel in

“The fact that the grounding had no serious environmental consequences and resulted in only minor damage to the vessel speaks to the strength of Höegh’s organization and their emergency planning and execution.” Rossen Panev, DNV GL’s acting head of section Emergency Response Service (ERS)

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DNV GL

Höegh Osaka safely moored alongside in Southampton on 25 January 2015, after running aground in the Solent.

“Our goal is to support crews and shipowners to find the safest and most cost-efficient way to manage emergencies.” Kai Ahlers, DNV GL’s deputy head of section Emergency Response/Damage & Repair Management

developing an action plan. The team was briefed and immediately got to work gathering information on every­thing from Höegh Osaka’s disposition on the Bramble Bank to local weather, tidal and sea conditions.

“We often work against the clock so we must not waste time speculating what might have caused the event,” he says. “Our primary goal is to assess the situation and support the client as best we can to minimize potential risks to personnel, property and the environment.”

Making an action plan DNV GL has access to vessel drawings and computerized models of all of the 3,725 vessels registered with the ERS. This information is critical to performing load, stability and strength calculations. “Different vessel types have different designs and carry different cargoes,” Panev explains. “By analysing a vessel’s damage condition we can identify critical stability and hull stress points and recommend cargo discharge or re-stowing and ballast water or fuel transfer to increase its odds of surviving a refloat.”

Panev says that the three most common accidents at sea are groundings, collisions and fire. “For a grounded vessel, our first priority is to see if we can safely get the vessel refloated on the next tide,” he says. “To do that, we need to collect information and come up with a good plan as fast as possible. The more time a vessel spends aground in a location with significant tidal differences, the greater the potential for hull damage and

One issue for the ERS team in the case of the Höegh Osaka was recreating the loading pattern and condition of the ship. “Because the crew had been evacuated, we did not have any reliable information on the condition of the cargo on the decks or the precise location of vehicles or heavy machinery in the vessel, which made calculating the actual stability challenging,” he explains. “However, by cooperating closely

According to Rossen Panev, acting head of section ERS, the team is trained to focus on providing owners and managers with important information and advice within two to six hours of the first call.

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progressive flooding. This may eventually compromise the vessel’s strength, residual buoyancy and ability to float safely. This is why we always calculate ‘worst case’ scenarios and help shipowners be prepared.”


ISSUE NUMBER 03.2015

“We would like to thank everyone who has been involved in this challenging rescue operation, with a special thanks to the Maritime & Coastguard Agency, the RNLI, DNV GL, Gard and Southampton’s Port Authorities.” Ingar Skiaker, CEO Höegh Autoliners

with Wallem we got the master of a sister vessel of Höegh Osaka to advise us on common loading practices. Based on that information and other data from Wallem and the Southampton port captain, we were able to determine that the vessel would not capsize and could be refloated.“

Proactive response Meanwhile, Höegh liaised with the UK Secretary of State’s Representative for Maritime Salvage and Intervention (SOSREP), local port authorities, the insurer (Gard) and other officials. The next day Höegh Auto­ liners’ CEO Ingar Skiaker flew to Southampton to meet with the press. In a statement, Skiaker expressed his relief that no one was hurt. “The crew is currently being offered all possible support and assistance to help them cope with the ordeal they have been through,” he said. “We would like to thank everyone who has been involved in this challenging rescue operation, with special thanks to the Maritime & Coastguard Agency, the RNLI, DNV GL, Gard and Southampton’s port authorities.” For Panev, who has supported more than 85 emergencies in his eleven years with the ERS, Höegh’s response

to the event was exemplary. “My hat is off to Höegh for how they handled the situation,” says Panev. “They were proactive, cooperative and did a great job in sharing information with all the stakeholders, including the public. Sometimes accidents cause more damage to a company’s brand than to the cargo or tonnage. The fact that the grounding had no serious consequences and resulted in only minor damage to the vessel speaks to the strength of Höegh’s organization and their emergency planning and execution.” As predicted by the ERS team, the Höegh Osaka was successfully refloated on 7 January and towed to safety. With the crisis over and Svitzer in charge of the salvage operation, the ERS team, which had worked around the clock for four days, was able to stand down.

Busy year It is unlikely they will be idle for long. Last year, the DNV GL ERS team supported owners on 33 occasions, and this year the team has been activated on 13 occasions to date. In two separate grounding events in 2015, the advice provided by the ERS team enabled the vessels to be refloated by their own crews without significant damage to the ships or the environment.

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DNV GL

The DNV GL ERS team was alerted immediately following the first explosion on board the MSC Flaminia in July 2012.

The bulk carrier Adfines North, owned by ABC Maritime, was refloated south of Lima (Peru) on 12 February, while the Geden Lines bulk carrier Sharp was refloated without salvage and with minimal assistance on 18 February. The DNV GL ERS crisis centre works from both the Høvik and Hamburg offices. “We manage cases for all vessel types from both locations,” says Kai Ahlers, who is heading the Hamburg-based part of the ERS team. “We have been providing emergency response services since 1993, so we have plenty of experience managing issues related to the size and complexity of these vessels.” Ahlers himself has been involved in more than 100 emergency cases since he joined the team in 2001. He explains that for grounded containerships, the ERS team provides crews and shipowners with stability and strength calculations and recommendations for refloating the vessel. “In some cases it is necessary to discharge containers, but that requires detailed unloading plans to avoid additional damage and costly specialized equipment,” he says.

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One of the most complex and longest-running cases managed by the ERS team in Hamburg was MSC Flaminia. On 14 July 2012, the 6,750 TEU containership had caught fire in the Atlantic Ocean, more than 1,000 nautical miles away from the closest port of refuge. Due to the critical situation on board, the crew was evacuated. The DNV GL experts in Hamburg based their initial evaluations on loading data and rough information from photos. After fighting the fire successfully and obtaining more detailed on-site information from Smit Salvage, the ERS team verified the calculations and prepared detailed recommendations on how to stabilize the vessel for towage to the appointed port of refuge. After arrival in Wilhelmshaven, Germany, the ERS experts assisted the shipowner with advice on the unloading procedures and the required loading condition details for safe transfer to a repair yard. “In such cases we work closely with the on-site crews, shipowners and other stakeholders such as salvage companies and authorities to bring the vessel safely to the closest port of refuge,” Ahlers says. “We can’t avoid emergencies, but with our knowledge, experience and


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ERS: GOOD ADVICE WHEN YOU NEED IT With over 3,700 vessels registered, the DNV GL Emergency Response Service (ERS) is the largest service of its kind in the industry, covering: ■■ Detailed and verified advice on how to improve a ship’s or MOU’s condition in a distressed situation, with a plan for the fastest return to operation. ■■ 24/7 access to damage stability and residual strength experts for immediate support to vessels in distress, from the incident up until the vessel is safely in repair or back in operation. ■■ Communication checks and realistic scenario exercises for effective and reliable crew training. ■■ Evaluation of an existing emergency response plan against reference best practices. ■■ Compliance with relevant international regulations and requirements. ■■ The DNV GL ERS is available for all ship types, offshore units and inland vessels, independent of class.

fast response on permanent call we can certainly support decisions on how to minimize the impact of the incident on the ship, the crew and the environment.”

Promoting preparedness DNV GL also offers an Emergency Preparedness Service (EPS) developed to help clients improve emergency response plans and increase their ability to handle complex maritime emergencies. Last year DNV GL launched a special ERS ICE module for owners of vessels operating in harsh environments.

For both Panev and Ahlers, it is the technical and engineering competence and experience of DNV GL that makes the ERS organization such a valuable resource to the industry. “The mission of DNV GL is to safeguard life, property and the environment, so the entire organization is working hard towards the day when the ERS will no longer be necessary,” says Panev. “Until that day we are standing by 24/7, always ready to serve.“

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DNV GL TEXT KRISTIAN LINDØE PHOTO TEEKAY

TEEKAY’S PRODUCTION – CENTRIC OFFSHORE STRATEGY DELIVERS IN A TOUGH MARKET Teekay’s market value rose by USD 500 million on 15 September 2014, the day after an investor meeting in New York. Included in that event was a presentation of Teekay’s offshore strategy by the company’s then chief strategy officer Kenneth Hvid. It was full of renewed vigour and focus. Since then, of course, the word ‘offshore’ has become synonymous with doom and gloom

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ISSUE NUMBER 03.2015

X

However, in an interview with DNV GL, Teekay CEO Peter Evensen and Kenneth Hvid, who is now leading Teekay’s Offshore arm, are happy to report that the new strategy is being validated – almost a year into the toughest offshore market for many years. “In offshore, there is an exploration and a production side. Exploration is cyclical, with higher highs and lower lows. Investment levels are currently down, and we see that, but there is a silver lining – existing assets still need to produce oil. Our strategy is to be in niche segments on the production side,” says Hvid. “Over the last decade, Teekay has diversified. Oil is still flowing and the tanker market is strong, so we have an upside there. Cancelled drilling rigs have to be moved around, so we are getting an upside there too. We have learned to adapt to the paradigm shift in energy.” While Teekay is, of course, looking at all available economic indicators as well as the oil price, they feel

their close tracking of regional demands and projects that are going ahead supplements a reliance on macro indicators. “In our LNG and offshore businesses, we are looking at projects 3–8 years out, with our business development teams working with our customers on their needs. There, everyone has an investment mindset. Conversely, the tanker business is driven by a trading mindset, which is more short term. Here, we can adjust our outlook within a 1–3-year timeframe,” explains Hvid. Teekay’s global reach allows it to flexibly adapt to changes in regional energy supply and demand patterns. The impending build-out of the Arctic as a logistics hub and trade route is one such example: “Our skillset is well-suited to the Arctic, as we can project manage large-scale logistics challenges. We are engaged in the Yamal LNG project, moving LNG in a sensitive region using six ice-class LNG tankers. This is a USD 2bn project for us,” explains Evensen.

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DNV GL

“Teekay’s global reach allows it to flexibly adapt to changes in regional energy supply and demand patterns" Peter Evensen, president and chief executive officer of Teekay

Peter Evensen, president and chief executive officer of Teekay

“However, on the whole, the rate of investment in the Arctic will be much less than anticipated due to the industry’s recent CAPEX downscaling. Looking at the Arctic as a source of hydrocarbons is more for the 2020s,” continues Evensen. In the Gulf of Mexico, Teekay is not bidding for any projects – not that there are many to choose from – but is keeping an eye on Mexico, where energy reform is opening up opportunities for international oil and gas majors. “If these opportunities materialize, they will be in the medium to long term,” says Evensen. Brazil, on the other hand, is much more suited to Teekay’s production-centric service offerings. In the midst of corruption allegations, Petrobras kept setting production records that attracted far less attention than the investigations.

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“Petrobras emphasizes production in its current fiveyear plan. It has proven that the build-out of the Brazilian continental shelf was possible, but the accelerated cost was too high and we now see it slowing down to a more a sustainable pace. For our part, we are looking forward to decades of business with Petrobras in a Brazil that is still developing. In addition, there are also big reserves owned by international oil majors. Our FPSOs are important assets for us in Brazil,” comments Evensen. Teekay’s latest work for Petrobras includes a Sevan DP3 safety and maintenance rig. “We invested in Sevan in 2011 and saw lots of ways to use its technology. We’re excited about the opportunity to use the Sevan cylindrical design and now have three Sevan FPSOs. Of course, we’re also following the more recent Goliat project. It will be important to prove this technology in


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the High North and validate the Sevan concept there,” says Hvid. In a fashion similar to its offshore approach, Teekay has carved out a profitable niche within LNG despite the never-ending uncertainty surrounding all things related to this. Today, a decade and USD 10bn in investments since it started its LNG operations, Teekay has a fleet of 50 vessels in operation or on order, making it the third-largest in the world. Peter Evensen explains how they gained the confidence to go after the fledgling LNG market back then: “It’s really a simple story: based on our safe tanker operations, we were encouraged by our customers to enter the LNG market, including by Exxon in Qatar, who basically said ‘we love your tankers and want you in LNG’. We have really smart BD people who actually listen to their customers, allowing us to employ one of our hallmarks, a partnership mentality. This has materialized in many joint ventures, for example in Qatar and the Yamal project in Russia. This always works better than an attitude of ‘let’s do it ourselves’. “It’s also a question of technology that has moved forward,” Evensen continues. “Back then, we were offering next-generation technology and size. And we still are today. We constantly look for the next demand and adopt the next wave of technology. We were the first to apply the ME-GI engine technology in the LNG field. This is now becoming an industry standard.” Teekay now has 21 LNG tankers under construction, demonstrating their belief in LNG. But Evensen does not entirely share the optimism of US Coast Guard Commander Paul Zukunft, who predicted a need for many more LNG carriers in the world: “Based on our project tracking, we think the need is about 110 LNG carriers for new volumes. While we believe that converted import-to-export terminals will eventually add new volumes in the US, we are not that optimistic about greenfield sites.” Regarding Teekay’s plans for the ocean-going tug fleet through the acquisition of ALP, Kenneth Hvid calls it “another niche segment, very interesting. We’re building four new large vessels for big tows across regions. We have also had six other vessels delivered recently. We believe that this is a space where we can add a lot of value through our focus on safety and logistics. Many of our vessels have DP2, but are specifically designed for long-haul tows, including having larger fuel tanks and the ability to burn HFO, which makes them

Kenneth Hvid, executive vice president and head of Teekay Offshore

more cost-effective that the geared-out ones in the North Sea. We need them to do big tows, with steady positioning over a long period. I am actually sitting in the ALP office in Rotterdam today, where they are currently planning for 2018–2019 projects. “By the way, down in Australia, we also have three in-field service tug vessels that we will deploy in 2016 on the Shell Prelude FLNG project through our 50/50 joint venture with Kotug, so this is a niche industry, but a really interesting one for us.” And finally, how does DNV GL fit into the Teekay story? “I think it fits perfectly,” notes Evensen. “Our partnership with DNV GL, as our go-to class society, has been extremely valuable, particularly when we go into new areas, like accommodation. DNV GL stands out in that it has invested in expert advisory services and is able to validate the technology we use. We have also enjoyed the broader strategic discussions with your top management about what directions we should be headed in. DNV GL plays an important part in these industry-wide dialogues.”

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DNV GL TEXT ROBERT STOKES PHOTOS DNV GL/ CONOCOPHILLIPS

STRIPPING COST OUT OF AUSTRALIAN GAS Continuous improvement can contribute to the success of Australia Pacific LNG, says Warwick King of ConocoPhillips The commercial start-up of Train 1, scheduled for Q4 2015 at Australia Pacific LNG’s (APLNG) Curtis Island facility, will have been yet another important milestone for the country’s gas export ambitions. The multi-billion dollar plant in Queensland produces LNG from coal seam gas (CSG). LNG’s environmental advantages over coal are additional selling points in markets that see natural gas as a transition fuel while they wind down coal use and ramp up renewables (see “Gas versus coal” on page 21). “We knew there would be demand from countries within Asia Pacific with insufficient domestic gas supplies,” said Warwick King, president, C ­ onocoPhillips Australia East. The US oil and gas company is a foundation shareholder of APLNG, and responsible for operating and maintaining the LNG facility on behalf of the joint venture. “As people develop greener perspectives and switch fuels, LNG will be seen as a cleaner preferred option, particularly where emissions are a major concern,” he added.

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The two-train facility is supplied entirely from APLNG’s equity gas resources, which are transported via a 530kilometre pipeline from the Surat and Bowen Basins. The two trains will have a name-plate capacity of nine million tonnes per annum (mtpa) with take-or-pay contracts with Sinopec and Japan’s Kansai Electric Power Company. Shipments are by LNG tanker from Curtis Island. Work on the LNG facility started in 2011. King expects Train 2 to be operating commercially by late Q2 2016. Bechtel, the engineering, procurement and construction contractor for both trains, is expected to be off-site in late 2016.

Technical improvements ConocoPhillips’ proprietary Optimized Cascade® process for LNG production was utilized. The technology has a 40-year record of success and continuous improvement worldwide, and presented few technical challenges on Curtis Island, King said.


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“As people develop greener perspectives and switch fuels, LNG will be seen as a cleaner preferred option, particularly where emissions are a major concern” Warwick King, president, ConocoPhillips Australia East

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Logistics have been the biggest challenge in developing APLNG’s facility on Curtis Island near Gladstone, Queensland

Lessons learned from ConocoPhillips’ LNG plant at Darwin, Northern Territory, Australia, have been applied at Curtis Island. These include installing reversing gears in cooling-system fans to prevent them spinning the wrong way in high winds. The Darwin facility was one of the first LNG plants to operate in Australia and also uses the Optimized Cascade® process as the basis for its liquefaction technology. It has a design capacity of 3.7mtpa and was commissioned in January 2006, so has generated nearly a decade of lessons for the wider group. King hopes that APLNG will become the company’s most efficient LNG facility. “We can apply latest technologies and learn from earlier plants. With this head start, we should be able to send learnings back to ConocoPhillips’ other facilities.”

The greatest challenge Logistics have been the biggest challenge. Every component is shipped to the island. “We have had to transport rock, cement, piping, equipment and people across to the island,” King said. “Contractors had to ensure everything turned up on time.” On APLNG’s site alone, there were 3,300 people during peak construction. “The three facilities on Curtis Island have slightly different designs but they are fairly similar. As a result,

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we often have to use the same vendors for the same work due to its specialized nature. When projects overlap, d ­ emands on people, time and equipment are significant.” Bechtel, which ConocoPhillips licenses to install Optimized Cascade® process systems, is the main contractor on all three plants. “That was an advantage logistically,” King emphasized. “There has been cooperation with the other LNG proponents in some areas as the projects progressed.” For example, APLNG links to the same sewerage and freshwater systems as the other two facilities. The proponents are also looking to collaborate over a future operator trainee programme, and to share some emergency response arrangements. King commented: “We have been liaising with the regulator regarding the possibility of collaborating in the context of shutdown scheduling to maintain safety and improve efficiency. “As the three projects all move into production phase, there is a real understanding that there are areas where working together can be good for everyone – operators, contractors and local communities.”

A long-term perspective This long-term view is evident from many of King’s remarks. While Sinopec and Kansai Electric have 20year take-or-pay agreements, he expects the Curtis


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GAS VERSUS COAL Natural gas is a dependable baseload fuel source for homes, businesses and power generation. It is in rising demand in growth economies switching energy dependence toward renewables such as wind, whose output is intermittent. The relative cleanliness of natural gas is another selling point. Burning LNG from coal seam gas (CSG), for example, emits 50% fewer greenhouse gases than coal. Experts at engineering consultants WorleyParsons estimate that for every tonne of carbon emitted in Australia from LNG production, 4.3 tonnes are avoided globally when China uses LNG instead of coal to generate power. CSG is abundant onshore eastern Australia, providing part of the country’s natural gas supply, and offering a substantial export opportunity. APLNG has Australia’s largest CSG resource, some of which will be sold domestically. Its Curtis Island facility will export LNG to the global market. Australia is set to become both the biggest producer and exporter of LNG in 2018.¹ 1

‘Australia’s gas industry: when markets collide’, ANZ, July 2015

Island plant to operate for 10 to 20 years beyond that. Long-term relationships with suppliers are core thinking for ConocoPhillips. “We want suppliers who share our values, are strongly committed to safety, and who are driven to find win-win solutions with us in both good and bad times.” The operator values local content and engagement with indigenous communities in its contracting relationships.

Data prepared and collected by Bechtel will eventually be delivered to ConocoPhillips. “There is a phenomenal amount,” said King. “It is drawings, specifications, equipment and procedures, and we will add data gathered day-to-day. We have a group looking at data management and intend to, and need to, become very good at it.”

Expansion in Australia Looking to the future, he said: “The current situation in oil and gas markets has to be considered in the context of timescales of an LNG project. Our LNG plant is due to operate for 30 to 40 years.”

“Near-term, most contracts for Curtis Island are awarded. However, I see long-term opportunities for companies with a heritage of working with C ­ onocoPhillips and with which we have global agreements.”

ConocoPhillips is expected to invest in Australia for “years to come”, he stressed. “I would clearly like to see us expand further here.”

This approach also drives ConocoPhillips’ human resources strategy for its LNG plants in Australia. To help attract and retain skills, it introduced a programme to recruit and train people in the company’s values and ways of working. King feels this initiative gives the ConocoPhillips facility a competitive advantage on Curtis Island.

The Curtis Island operation has a number of environmental approvals for four liquefaction trains. “A third could be added potentially without the need for a third storage tank,” King said. “If a large increase in gas resources became available to the east coast, LNG plants here could be interested in leveraging their existing infrastructure.”

Even during the capital expenditure phase, the company was mindful of how design would later impact upon operating expenditure for the facility. It built into the Curtis Island LNG plant’s infrastructure many access points for easy, non-intrusive inspection.

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DNV GL TEXT ROBERT STOKES PHOTO ADMA-OPCO

MIDDLE EAST RISES TO AGE CHALLENGE Operators are seizing the opportunity to keep offshore structures in the region operating beyond the end of original design life

The Middle East faces a substantial challenge to keep hundreds of ageing offshore oil and gas structures operating safely and legally beyond original design life. “There are at least 700 to 800 fixed platforms and bridges in the region,” said Anupam Ghosal, regional manager for Middle East and India, DNV GL – Oil & Gas. “More than 70% are older than 25 years; some exceed 40 years. United Arab Emirates (UAE) alone has about 450.” Life extension of ageing structures ensures continued operation within regulatory requirements, and helps limit future operational expenditure (opex). “Constraining opex is vital to economically viable but safe operations,” he added. Operators in the Middle East are at different stages of implementing controlled approaches to asset integrity management (AIM) and structural integrity management (SIM) systems. Ghosal observed: “Several are in the planning stage. DNV GL is engaged in the process with quite a few customers in the region.” The Abu Dhabi Marine Operating Company (ADMAOPCO), a major producer of oil and gas from offshore Abu Dhabi, is in the vanguard of Middle East operators addressing life extension opportunities; some of its earliest structures are more than 50 years old. “We have an extensive fleet of structures undergoing

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continuous brownfield project developments to ensure sustainable oil production over the extended field-life,” explained Dr Tarek Omar, civil/structural engineering team leader, ADMA-OPCO. “Of these assets, 70% have already reached design life, and ADMA has taken a strategic decision to lead in the area of managing their integrity.”

Case study: ADMA-OPCO ADMA-OPCO has developed a comprehensive structural management system (SMS) framework based on a fully quantitative approach. All changes are monitored and managed through an in-house developed management of change (MOC) system for structures which meets all the company’s requirements. ADMA’s SMS uses a fleet management system (FMS) to manage the quantification and risk ranking of its fleet. “This SMS works with different database systems,” said Ebrahim Saleh AL-Shehhi, ADMA-OPCO’s project manager for the integrated database management system, which covers asset integrity for structures, pipelines and critical safety equipment. “DNV GL’s Synergi™ Structure software is used for storing all structural characteristics data, inspection findings and reports, and risk ranking information. The Synergi dashboard presents results interactively showing main highlights across all assets.”


© ADMA-OPCO

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Continuous improvement is important, Ghosal agreed: “Technological advances provide opportunities to produce more hydrocarbons economically from existing structures. Low oil prices create the need to extract best value from current facilities. Other drivers include improved data on reservoirs, heightened regulation, updated design standards and knowledge, advances in risk management, and enhanced focus on safe operations.” ADMA-OPCO plans to further increase effectiveness of SIM by: mandating use of the management of change system company-wide; continuously updating structural assessment methods; and continuous interaction and joint innovation with industry partners.

Greater activity around asset and structural integrity will generate substantial know-how for the Middle East and elsewhere. ADMA-OPCO’s structures, for example, are forecast to be among the industry’s longest lasting, Omar said. The company is actively taking key initiatives in joint industry R&D projects, and in adopting international standards for structural management. One key learning from ADMA-OPCO’s SMS is the importance of an effective MOC process and sophisticated inspection in capturing the risks, Omar said. “This earned continuous support from company management to make it a company-wide culture.”

One solution does not fit all Another lesson is that one-size does not fit all when developing an SMS, he added. “Each company and region has its own special requirements and a structural management system needs to cater for these.” Ghosal commented: “Operators here face challenges encountered elsewhere in the world, but also ones that are specific to, or more pronounced, in this region, such as sour gas. DNV GL has had a presence here for more than 30 years and understands local needs.” DNV GL’s software, database, quantitative and qualitative approaches, and other expertise in capturing, analysing and managing information for SIM assists customers to scope, design and implement life extension strategies. The company’s ‘missing data methodology’ addresses the absence of historic documentation, a common challenge for operators in the region.

KEY STRUCTURAL INTEGRITY GOALS Engineering experts at oil and gas companies operating in the Middle East see ageing effects in grouted piles as one of the top structural integrity management (SIM) challenges. This emerged from interviews by DNV GL, and in a survey at its annual Ageing Structures Day in September 2015. Some operators also expressed a desire to see regional acceptance criteria formulated for SIM of existing fixed structures, but with operators having flexibility to respond to local circumstances. For offshore Abu Dhabi, they wanted to know: how lateral pile capacity might be enhanced in carbonaceous rocks; more about the seismic vulnerability of platforms; and, how a spectrum of site-specific responses might be formulated. Others were interested in the implementation of online health-monitoring. Respondents saw a need for engineering studies to verify requirements for replacement of degraded appurtenances such as riser- and conductor-protectors.

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DNV GL TEXT ETIENNE TE BRAKE PHOTO DNV GL

MAPPING WIND ENERGY POTENTIAL A global program backed by the World Bank, aimed at studying and determining renewable energy potential across the world, will now focus on three African countries DNV GL has created preliminary wind atlases for Zambia, Tanzania and the Maldives, as part of phase 1 of the Energy Sector Management Assessment Program (ESMAP) project funded by the World Bank. The project aims to reveal the true extent of wind energy production potential in each of the three energychallenged countries. DNV GL’s early test results have already revealed huge opportunities, with extensive wind flow modelling indicating great wind energy production potential. Each of these countries has its own energy challenges. Africa’s economy is now the second fastest growing in the world after China, and it has the youngest population on Earth with over 50 per cent below the age of 19.

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However, it is home to many countries that either completely lack any kind of electrical infrastructure, or what they do have is seriously out-dated and in bad repair. In Zambia, the government estimates that, outside of one major city, only 1–3% of the population has access to electricity. The Maldives is entirely reliant upon imported energy with large distances between the inhabited islands and the mainland, making energy transport costs very high. Additionally, the Maldives imports all its fuels in refined form and in very small quantities, which makes this form of fuel even more expensive. Costs for electricity in the country often exceed $1 USD per kWh, which is substantially higher than energy costs in developed countries.


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Global atlas for renewable energy Daran Rife, DNV GL’s global head of mesoscale modelling, commented: “The potential of renewable resources in these regions is not yet well understood, and they currently don’t have the means or expertise to get better insight. The idea behind these projects is to discover the potential of renewables in these countries, with all key outputs and datasets being made publicly available through the Global Atlas for Renewable Energy that is being developed by the International Renewable Energy Agency (IRENA).

to be able to build and maintain these masts in the future. The final stage involves creating a redefined and validated meso-micro wind atlas for each country, combining both the DNV GL models and the real-life measurements.

He continues, “The governments of these countries will be able to use our maps to develop policies and strategies for wind energy. The maps are also an important tool for attracting investors and developers, who have thus far been reluctant to invest in the region. By creating these maps, we have removed a major risk obstacle for them.”

David Walker, CEO, DNV GL – Energy said: “As the largest independent global energy expert, DNV GL is uniquely placed to help solve the energy trilemma and help accelerate the world’s transition to a safer, smarter and greener energy future against the backdrop of conflicting technical, regulatory, economical and societal interests. For developing countries like Zambia, Tanzania and the Maldives, mapping potential wind energy resources is an important step towards a better access to renewable energy. The shared vision and groundbreaking work that DNV GL and the World Bank are demonstrating with these projects will help governmental stakeholders and developers understand the true renewable energy resources and help drive vital overseas investment in the region.”

Phase 1 of the project began in June 2014 and is set to run until 2018. The first phase, completed in May 2015, saw DNV GL carry out wind flow modelling to create a preliminary atlas of wind energy production potential. DNV GL was also responsible for conducting intensive workshops for key governmental stakeholders and decision makers in each country, delivering training on interpretation of wind atlases, wind resource assessments, energy policy essentials, and bankable measurement campaigns. Collecting real data The next phase of the project will involve the installation of met masts at various locations in each country to allow experts to collect real data for a period of two years. DNV GL will also train local companies

DNV GL’s unique breadth and depth of wind energy knowledge meant that it could utilise an interdisciplinary and multinational team of experts from the US, UK, Canada, Australia and South Africa to work on the project.

The global ESMAP is designed to support renewable energy resource assessment and mapping for biomass, small hydro, solar and wind. Several regional and national projects have been implemented in developing and least developed countries around the world, yielding encouraging results. The ESMAP is set to run until 2018.

THE GLOBAL ATLAS FOR RENEWABLE ENERGY The Global Atlas for Renewable Energy is an initiative that is coordinated by IRENA, the International Renewable Energy Agency. Its aim is to close the gap between nations with access to the means needed to evaluate their national renewable energy potential, and those countries lacking such a capability. To date, 67 countries and more than 50 institutes and partners have contributed to the initiative.

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DNV GL TEXT ETIENNE TE BRAKE PHOTO DNV GL

Smart Cable Guard:

MANAGING POWER OUTAGES IN CITIES With customers facing a power downtime of less than 20 minutes on average each year, the Dutch electricity grid is one of the most reliable in the world. However, power outages do happen, so a consortium of partners have developed the Smart Cable Guard system that can diminish the number of power outages in cities

About 70% of all power outages in the Netherlands are caused by short circuits in underground cable connections. Smart Cable Guard – developed by DNV GL in cooperation with distribution system operators Alliander, Enexis and substation automation provider Locamation – can predict the location of weak spots that can cause future failures, so they can be repaired before a power failure occurs. In the event of a short circuit, the system can pinpoint the exact location of the fault, so that repair time is minimized. Underground medium-voltage cable networks carry increasing amounts of electricity each year, especially

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in urban areas. It’s vital to monitor their condition and respond to faults quickly. This helps minimise the frequency and duration of outages, and enables system operators to deliver a reliable electricity distribution network. Smart Cable Guard has already been used successfully for a couple of years to detect and locate weak spots. But innovation never stops. Recently a new feature was added: the fault locator. Within minutes after a breakdown, the network owner is informed about its precise location. Denny Harmsen, senior innovation consultant at Alliander says: “Smart Cable Guard has


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proved to be a very attractive solution for accurate and quick online detection of faults in our network. With the new fault locator feature, we’re able to detect and precisely locate faults in any network to within 1% of the cable length.” Data-driven network management “Through smart technology, like Smart Cable Guard, we are able to truly perform data-driven network management. Because of closer monitoring we’re able to lower the number of power failures and reduce downtime. Next to that we get a better understanding on how to allocate our network investments in the most efficient way”, says Harmsen. “Although there are fewer power failures in the Netherlands and downtime has dropped to under 20 minutes per customer on average per year, we are committed to a further reduction. Smart Cable Guard can diminish the number of power outages up to 35 percent. At a time when we have to deal with strong ageing of our network and

© Alain Baars

© Smart Cable Guard

Denny Harmsen, senior innovation consultant at Alliander

greater fluctuations in grid load due to the rise of local generation of renewable energy, Smart Cable Guard offers a tremendous asset.” Invaluable partnerships According to Harmsen, the recipe for successful development and implementation of Smart Cable Guard in the Netherlands is partnership. “The consortium partners, including DNV GL, Alliander, Enexis and Locamation, were able to combine theoretical knowledge and expertise of the electricity grid with the practical knowledge grid operations. At the moment, nowhere in the world there’s a system, except for Smart Cable Guard, to measure the condition of medium voltage cables while they are in operation and no system can pinpoint the location where possible partial discharge and failures occur. By working together, we managed to develop a unique and amazing system.”

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DNV GL TEXT ALEXANDRA JANE OLIVER PHOTO MAERSK LINE

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TOWARDS GREATER TRANSPARENCY AND EFFICIENCY IN SHIP MANAGEMENT Maersk Line has placed the largest ever order for the DNV GL ShipManager software and is implementing it at a very ambitious rate

Maersk Line, the world’s largest container shipping company, has chosen to implement DNV GL’s maritime software solution ShipManager on its owned fleet of 275 vessels. By April 2017, nine legacy applications will be replaced by one and 8,000 Maersk employees will be using ShipManager around the world. At a DNV GL seminar held in Hamburg recently, Sebastiaan Van den Wijngaert, senior project manager at Maersk Line IT, spoke to FORUM about why Maersk Line chose the DNV GL software and what challenges the company has faced during the implementation phase. Choosing ShipManager Recent and upcoming regulations were a key motivation for choosing a new Ship Management system, Van den Wijngaert explains. “We chose an off-theshelf solution, because we wanted to move away from too much customization and ensure that our application lives up to the industry standard and benefits from regular updates.” Maersk Line will be using five integrated ShipManager modules: Technical, Procurement, Project (dry docking), QHSE, and Analyzer. An additional factor was that ShipManager packaged all necessary processes into one system. “Our seafarers really appreciate this, as it simplifies their work and it makes on-boarding people easier,” he says. Previously Maersk Line used nine applications to manage core ship management processes. “Our old legacy

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Sebastiaan Van den Wijngaert, senior project manager at Maersk Line IT

applications were not fully integrated, required a high degree of manual data transfer between applications, and there were divergences between what ship crews and on-shore staff would see on their screens. That needed to change,” he adds. The Analyzer module will improve reporting on factors such as compliance, safety, maintenance, and spend per vessel. “The module uses data collected by the ship owner, such as information about technical maintenance, procurement, and QHSE (quality, health, safety, and environment) and enables the customer to benchmark a vessel against others in their fleet, in order to make more informed business decisions,” explains Rune Lyngaas, head of Product Management Maritime Software at DNV GL - Software. “The Analyzer holds great potential for our business, as it will give our fleet managers a level of transparency they never had before,” Van den Wijngaert adds. A solid roll-out process The roll-out for the project is ambitious. After starting with an implementation quota of ten vessels per month, Maersk Line decided to speed up the process even further as the designed roll-out process proved to

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be working very well. 42 ships have been completed so far, 15 of those in October alone. With a target of equipping 65 vessels by the end of the year, the members of the Maersk Line roll-out team really have their work cut out for them. The Maersk Line project team includes 30 specially trained seafarers, who travel from ship to ship, staying for three weeks to install the software correctly, check for synchronization issues, and train the vessel crew in using ShipManager. To ensure it all runs smoothly, Maersk Line is also carrying out quality assurance checks throughout the implementation phase. “We are very happy with our current progress. We are constantly optimizing our data extraction, adaption and migration, and updating our installation package as we go along,” Van den Wijngaert says. The greatest challenge he is facing in the project is managing the data migration. The data volumes are immense. The entire Maersk Line fleet represents more than 1.8 million components of technical management data that need to be extracted from the Maersk Line system and imported into ShipManager. “We carry out a complex analysis for


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every single vessel, as no two ships in the Maersk Line owned fleet are exactly the same. Even sister ships only have about 90 per cent of elements in common due to replaced equipment of a different type or changes to the vessel design,” Van den Wijngaert explains. Every nut and bolt, piece of equipment, and each repair or paint job needs to be considered to get a full picture of a vessel – that amounts to about 100,000 elements per ship. “Previously, this data was stored in an older application, where the data structure was not kept fixed over time, resulting in a complex and inconsistent structure. Thankfully we have found a way of unravelling it,” he adds. “The so called ‘Master Vessel’ concept is a way for us to make sure that we can introduce each of the vessel’s elements into the fleet equipment register,” Van den Wijngaert explains. The master vessel is a virtual twin of all ships within a vessel class that feeds all elements and equipment into the data migration tool. This tool contains essential information for the construction of the final ShipManager vessel kit installed on board. Maersk Line is close to automating Master Vessel creation – this will enable them to considerably speed up the process for creating vessel kits (ship-specific instal-

lation DVD or USB-stick, containing the ShipManager application and database). Cooperation on improvements “DNV GL has been very cooperative and proactive in developing a number of enhancements to close functional gaps that still exist in areas such as procurement and technical management,” Van den Wijngaert states. “We have learned a lot from each other during the course of this project and will continue to do so as we go ahead,” he adds. Maersk Line and other key customers teamed up with DNV GL to develop a new risk management module for ShipManager, which was released this summer. “The new Risk Management tool helps ship owners to manage and reduce the risks the crew are exposed to every day, by sharing best practices across the fleet,” explains Lyngaas. For Maersk Line, the implementation of the new Risk Management module on their vessels is another step toward completing the replacement of their legacy applications with ShipManager.

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DNV GL TEXT ROBERT STOKES INFOGRAPHIC THE BIG PARTNERSHIP PHOTO DNV GL

A SMARTER WAY TO AVOID INCIDENTS AND SAVE COSTS Dynamic barrier management can help to sustain safe, cost-efficient oil and gas operations

Big Data is changing how the industry understands projects and operations. By collecting a greater variety of data, more frequently, in greater volumes and at higher velocity, companies can realize remote operations, optimize production and shape business strategies.¹ Real-time or near-real-time information from many sources can also enable a step-change improvement to safety barrier management, which commonly involves risk-based inspection (RBI) and traditional maintenance and testing regimes.

“Faced by low oil prices, companies want lower costs and improved operational efficiency. In this respect, safety levels are challenged. Smarter barrier management is key to obtaining a desired safety level at the right cost.”

“I expect this approach to safety management to become the industry norm within five to ten years”

The sector is warming to that message. “My sense is that the oil and gas industry’s level of interest in DBM is very high indeed,” said Mark Nishapati, general manager for health, safety, security and asset integrity at BG Group. “A wealth of analysis is largely locked away in electronic data or logs, registers and books that are not referenced as much as most of us would like. DBM is a key tool for making that information available in a digestible format.”

Dynamic barrier management (DBM) — using such data to gain Mark Nishapati, general manager better understanding of barrier sta– health, safety, security and asset tus so risk can be restored to target integrity, BG Group — is that step-change, according to Elisabeth Tørstad, CEO, DNV GL – Oil & Gas. “It can reduce operational expenditure while Barrier management evolves creating opportunities to enhance health, safety and Barrier failures tend to be primarily human, technologienvironmental (HSE) performance,” she explained. cal, organizational or a combination. At the Chernobyl

1 ‘Tackling the big data bottleneck’, DNV GL PERSPECTIVES, 2014 issue 2, October 2014

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power plant, Ukraine, unauthorized tests led to loss of nuclear containment in 1986. A software design flaw caused a drilling rig under construction in Singapore to fail in one leg in 2012. The immediate causes of the 2005 Texas City Refinery were human and technical faults, but the root cause was organizational: a poor safety culture.² Safety barrier management is well established in the industry. A succession of barriers can be applied to contain the risk of each foreseeable load or threat below a target level (figure 1, page 33). Barrier status is monitored by audits and inspections whose frequency is determined, in the RBI approach, by the additional risk that would be created if a particular barrier failed. Barriers degrade if not actively managed. Different barriers also provide different risk reduction and degrade at different rates, so standard practice is to measure them at different intervals. If barrier failure or weakening goes undetected, unreported or unresolved, overall risk may exceed target (figure 2, page 33). It is therefore important to: know the actual status of barriers; easily monitor and analyse barrier performance; ensure that degradations are managed efficiently; and optimize operational risk levels while accounting for degraded barriers. DBM meets these challenges by continuously assessing barrier status so maintenance, repair or replacement can restore risk to target levels (figures 3 and 4, page 33). It allows avoidance of activities that might require a failed barrier to function. Frequency and thoroughness of assessment remain risk-based, and occur at different levels of the organization.

The company’s local assets make their own risk management decisions. Barrier management processes vary in the degree to which they can be described as dynamic. Some are web-enabled and can provide a semi-live picture, Nishapati said. “We are on a journey and nowhere near the end of it, but the benefits of DBM that I have described are already clear,” he stressed. DBM also adds to BG Group’s understanding of the potential of Big Data management, he added. “It combines a lot of different data in a format that facilitates decision makers being able to digest it and extract pertinent correlations that help to keep operations safe in the field.” While the industry measures barriers, it does so suboptimally, and status updates and decisions are not always based on risk contribution, Tørstad observed. “We need the equivalent of RBI for barriers: a risk-based barrier management approach. DBM meets that need.”

Implementing DBM Designing a DBM approach involves specifying an appropriate number of barriers of suitable reliability to meet the risk target. Information is visualized and accessible to relevant stakeholders through decision support tools (page 35).

The case for DBM becoming the prevailing model of barrier management is strong, Tørstad added. It reduces ignorance through more frequent sampling of barriers and smarter use of more relevant, richer and up-to-date monitoring data. It increases and improves decision support for prioritizing critical maintenance, implementing compensating measures, and for dayto-day risk analysis.

BG Group is similar to many operators in that its barrier management approach has evolved, and continues to, through its people’s experience and insights into risk management. The legacy is a mix of manual, semiautomated and automated tools and processes to help monitor and manage barriers.

By ensuring more regularity in operations, DBM supports both asset safety and operational efficiency by avoiding process upsets. Early indications of barrier degradation provide flexibility for the scheduling of small, multiple corrective actions rather than intrusive and large ones.

2 ‘Investigation report no. 005-04-I-TX: refinery explosion and fire’, US Chemical Safety and Hazard Investigation Board, March 2007

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“DBM reduces the cost of barrier management as prevention is cheaper than correction,” Tørstad concluded. “It can provide a better balance between safety and cost.”

Human and organizational benefits Even if data sources for DBM are initially manual and based on engineering judgement, the value is in the process of evaluating barriers, say weekly, then planning prompt action, where needed, to restore risk to target levels, Nishapati added. Experienced operational managers do this anyhow, he noted. “People can do it differently or reach different conclusions. Everyone in BG Group now works to the same process, asks the same questions, and hopefully holds, as much as possible, the same world view from which to make their particular decisions.”

Consistency and a common approach across assets allows within-plant and wider-resource prioritization, not just benchmarking, he added. BG Group’s experience underlines how others can begin the journey towards implementing DBM without needing vast amounts of data or a full array of realtime monitoring and response solutions. “One big learning for us is that there is huge value in the process and discipline of people bringing the intellectual rigour of barrier management to looking at the entirety of their barrier models,” Nishapati emphasized. “I expect this [DBM] approach to safety management to become the industry norm within five to ten years. A lot of other industries are ahead of us or are at least on the same journey, and we can learn from each other. The technical issues are not insurmountable.”

BETTER DECISION SUPPORT FOR DBM Potential challenges in designing, implementing and maintaining DBM include knowing the continuous status of human, technology and organizational barriers, and may involve analysis of large volumes of data. A DNV GL-led joint industry project (JIP) on decision support tools (DSTs) for DBM will address a lack of common terms and language for communication in risk management.¹ This will enable improvement of practical, real-time DSTs and risk management and deliver continuous knowledge of barrier status. Participants will test and develop best practices, data sources, and tools for standardized bow-tie diagrams, response trees, decision protocols and pilot-scale decision support systems. Bill Nelson, principal consultant with DNV GL – Oil & Gas said: “We believe that decision support tools for DBM will help the industry move toward the long-range vision to reduce operational costs and decrease downtime while increasing safety for offshore operations.” 1

For more information, visit: dnvgl.com/dbmjip

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DNV GL TEXT SARAH LEWIS PHOTO PHILIP DURRANT

CHAMPIONING VANGUARD LEADERSHIP We all recognise that no organisation, industry, or sector can operate in a vacuum. Significant advancements in digital technology, a rise in global mobility, and the increasing complexity of a business landscape affected by systemic challenges, such as climate change and security concerns, have changed the game

Policymakers, civil society – and an increasingly wellinformed, discerning, customer base – are setting new expectations and demanding a response. Business can no longer afford to be inward-looking, but must instead build a greater degree of awareness around – and ability to respond to – broader economic, environmental and societal concerns. This has significant implications for leadership; and DNV GL has risen to this challenge through its participation in Xyntéo’s Leadership Vanguard programme. The programme is helping DNV GL respond to the needs and demands of its customers and beyond by tapping into networks that allow them to register weak signals of relevance to customers, as well as supporting emerging leaders (or ‘catalysts’) in working shoulder-to-shoulder with peers from client (and prospective client) organisations. Cross-company catalysts Recently, in New York City, six catalysts from DNV GL joined peers from organisations such as MasterCard, Unilever and Woodside, as well as client organisation, Atlantic Lloyd Shipping, to complete the final phase of the Vanguard programme. These catalysts have undertaken a unique learning journey, which has focused on the development of five key capabilities (contextual acuity, systems range, collaborative competence, bias

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for movement and future-fit mind-set), with the ongoing support of a high-profile group of mentors including Per Heggenes, CEO, IKEA Foundation; Paul Polman, CEO, Unilever; and Dr Beh Swan Gin, Chairman of the Economic Development Board of Singapore. These mentors, alongside a variety of beacons, pathfinders – and, of course, the fellow catalysts – have provided invaluable insights into prevailing global trends, the demands on emergent leaders, and the ways in which successful organisations across industries and sectors are responding to the demands of key stakeholders. DNV GL catalyst, Tok Kian Seng, commented: “I have benefited hugely from my conversations with my Vanguard mentor – Dr Beh Swan Gin. He has helped me develop a perspective on leadership I did not have before, urging me to identify more clearly how I myself want to be as a future leader.” Collaborative projects During their final exchange in New York, the catalysts also had the opportunity to present the collaborative project pilots that they have been developing together over the past year, to a high level cross-sector audience, hosted at the Columbia School of International and Public Affairs (SIPA). In the company of leading


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During the recent exchange in New York, the catalysts also had the opportunity to present the collaborative projects that they have been developing together over the past year, to a high level cross-sector audience.

academics such as Jeffrey Sachs and Joseph Stiglitz; business leaders including Lisa Jackson from Apple and Jeremy Bentham of Royal Dutch Shell; and policy­ makers such as Mari Pangestu, Indonesia’s former Minister of Trade, the catalysts pitched their big ideas.

significant. As the founding partner of the Leadership Vanguard, DNV GL has not only made an important investment in its own people, but it has also helped mobilise a new cross-sector cadre of global leaders who are equipped to excel in a new business reality.

The projects, developed by cross-company groups of catalysts, aimed at transformative action, rather than incremental change. Ranging from a new coalition for inclusive growth in Myanmar, to improving water access in the Ganges river basin, and from new metrics for recognising corporate success, to a fresh digital platform for shaping future-fit consumer decisions, these were exceptionally ambitious. The hope is that the projects will live on, through support for funding and scalability from the leaders the teams have engaged with over the course of their year with the programme.

Paul Polman, CEO, Unilever, told the graduating cohort: “As leaders we must not underestimate how many people are looking to us to find ways to overcome the most pressing challenges of our time. In my career, I have found that, to equip myself to meet these expectations, I have to be deliberate in exposing myself to new people, new ideas, and new ways of working; to be open to what’s new and be willing to change; and to constantly challenge myself to speak and act with integrity.”

Remi Eriksen, Group President and Chief Executive Officer of DNV GL, addressed the Vanguard: “This year we started small, but going forward, now you’ll be managing managers, leading leaders. That gives you incredible power for change.” Future-fit leadership It is clear that this imperative for future-fit leadership is not just a nice-to-do. The pressures on business have fundamentally changed and the need to respond is

Starting in New York, a new cohort of ‘catalysts’ from DNV GL have just embarked on their Leadership Vanguard journey, joined by representatives from new partner organisations including the International Committee of the Red Cross and Ericsson. Our hope is that, like the catalysts before them, they will rise to the challenge of Vanguard leadership, and respond effectively to the needs and demands of the customers they serve.  

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DNV GL TEXT ANDREAS THUE PHOTO ORKLA

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ISSUE NUMBER 03.2015

SUSTAINABILITY ­RAISING ORKLA’S COMPETITIVENESS Norwegian brand giant Orkla regards sustainability as a competitive edge that will determine tomorrow’s winners. Håkon Mageli, Orkla’s Group Director, Corporate Communications and Corporate Affairs, tells us how the company is implementing an ambitious strategy to promote a healthy lifestyle, food safety, responsible sourcing and environmental best practice

Håkon Mageli, Orkla’s Group Director, Corporate Communications and Corporate Affairs

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DNV GL

“Corporations need to understand the role they play in shaping societies. It’s impossible to achieve a sustainable future without the continuous efforts of companies like Orkla” Håkon Lindahl, a senior advisor with Norwegian NGO Future in our Hands

Orkla is a leading supplier of branded consumer goods and concept solutions to the grocery sector, out-of-home sector and bakeries, and its main markets are in the Nordics and Baltics. As a brand conglomerate with the consumer market as its biggest revenue source, corporate social responsibility is more than a fancy word in the annual report. Since 80 per cent of all revenues come from demanding Nordic consumers, products must be safe to eat and produced in the most responsible fashion. “Sustainable business performance is a term that affects all parts of our operations,” says Håkon Mageli, Orkla’s Group Director, Corporate Communications and Corporate Affairs. Ahead of megatrends in society In 2014, the company crafted a strategy for sustainability that specified targets and actions plans in order to make extraordinary efforts to innovate and improve by 2020. Mageli and the Director of Corporate Communication in Orkla Health, Inger Marie Ingdahl, explain why brand trust is imperative to the company. “We want to deliver above expectations in terms of ensuring healthier and better lifestyles. We live in a time when we are closely scrutinized on all our efforts around sustainability, and therefore invest to be as socially responsible as possible,” says Ingdahl. “We want to be a part of the solution,” Mageli adds. Such ventures often prove to be profitable, i.e. through the cost-efficient use of resources such as energy, water and waste, innovations that are exciting and disruptive in the eyes of the consumer, and where stable operations and risk management help remove unwelcome surprises. Trust equals goodwill and value for shareholders. Hence, trustworthiness is integrated in all aspects of the business.

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Food safety and healthier choices Orkla’s ambitions towards 2020 include contributing to a healthy lifestyle and ensuring food safety throughout the value chain. “We are constantly striving to improve our food safety operations. The Orkla food safety standard is based on a global quality system developed by the British Retail Consortium (BRC). We have dedicated teams that carry out systematic and regular audits of all our production sites to ensure that all standards and requirements are met and suggest areas of improvement,” says Mageli. When it comes to nutrition and health, Orkla’s focus areas span from healthier innovations and responsible marketing to clear product labelling and the encouragement of physical activity. Orkla strives to manufacture products with less sugar, salt and saturated fat and to launch innovations that promote healthier lifestyles. “We want to make it easier to choose healthy products, engage consumers in healthy lifestyle activities and help increase the consumption of fish,” Ingdahl adds. So far, this focus has resulted in 500 tonnes less salt, 7500 tonnes less saturated fat and 14,000 tonnes less consumed sugar used in their products. Sustainable supply chains Håkon Lindahl is a senior advisor with Norwegian NGO Future in our Hands. In collaboration with another Norwegian NGO, The Rainforest Foundation, it has led a campaign to influence corporations to remove palm oil from products sold in Norway and he has met with Orkla on several occasions. He is positive to what he has seen and is eager to see even further improvements.


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“We’re pleased that Orkla has committed to a zero deforestation policy and has removed palm oil from a substantial amount of its products,” says Lindahl. “Corporations need to understand the role they play in shaping societies. It’s impossible to achieve a sustainable future without the continuous efforts of companies like Orkla. Although they, like many others, can still improve, we acknowledge their efforts.” Collaboration and partnerships with external experts like DNV GL can be important to meet complex challenges, like those encountered in many supply chains. “In complex supply chains, external certifications may be a valuable tool for achieving improvement and ensuring that the quality and production processes meet our requirements,” says Mageli. Orkla collaborates with a number of different certification bodies to reach its target that all important food raw materials should be sustainably produced by 2020. In Norway, it appointed DNV GL - Business Assurance to develop a new quality standard for fish oil, focusing on its brand of cod liver oil: Möllers tran.

“For this product segment, there have not been any relevant quality standards helping consumers make educated product choices. That’s why we challenged DNV GL to come up with a standard for certifying fish oil capsules,” says Mageli. A certification mark on the products reassures consumers that the fish oil is of high quality and free from environmental toxins. Orkla is open to competitors using the quality seal of approval if they comply with the same strict guidelines. “The audit has looked at the entire product chain, from the raw goods entering the factory to the product’s safe arrival on the shop shelves. DNV GL has audited all factories and quality checked each of our systems. All this has been important to ensure that we meet all the requirements,” says Ingdahl. “It’s important for us to underscore that we always try to improve,” says Mageli. CEO Peter A. Ruzicka concludes in the company’s sustainability report: “Those who succeed in reconciling the dual objectives of global sustainability and profitable growth are tomorrow’s winners.”

ORKLA’S 2020 SUSTAINABILITY STRATEGY The company’s sustainability pledge consists of four pillars that managers are measured on: ■■ Nutrition and health: promote better public health by developing healthier products, providing good consumer guidance, having responsible marketing and partnering with others ■■ Food safety: ensure food safety throughout the value chain, with the highest standards of quality and safety regardless of country ■■ Responsible sourcing: sustainable value chains where all procurement takes place in accordance with strict guidelines ■■ Environment: minimize the environmental footprint as much as possible

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DNV GL

Last word

BIG NUMBERS STILL ADD UP FOR BRAZIL The country has huge untapped oil and gas potential offshore, says Alex Imperial

Despite tough conditions in Brazil’s offshore oil and gas industry, recent developments could pave the way for a new wave of investment.

individuals within the company has hit the industry hard, alongside lower oil prices and a weaker economy and currency.

The country has huge long-term appeal to sustain investor interest beyond the industry’s short-term struggle with low oil prices and other factors. Brazil had 16.2 billion (bn) barrels of proved oil reserves by 2015, 1% of the world total, and 0.5 trillion cubic metres of proved natural gas reserves, 0.2% of the global figure.¹ It has more than 7.5 million (m) square kilometres (km²) of on- and offshore reserves, but just 4.2% is under contract for exploration and production activities. Offshore basins with potential for hydrocarbons cover 2.5m km², with only 313,000km² (12.5%) under contract.

Asset write-downs and cash flow problems have reduced Petrobras’ capacity to invest its own or borrowed money on field development. It has reduced its five-year investment plan, causing project delays and cancellations.

National oil company Petroleo Brasileiro SA (Petrobras) states that the average daily production per well in the Santos Basin pre-salt area is 67% greater than in the North Sea and 150% higher than in the Gulf of Mexico. Number one for offshore capex International oil companies understand the potential. Brazil attracts the world’s highest offshore capital expenditure (capex) on oil and gas developments, especially for deepwater. Investors include BG Group, BHP Billiton, BP, Chevron, ­ExxonMobil, Repsol Sinopec, Shell, Statoil and Total.

“The Brazilian offshore industry will re-emerge with more robust governance practices and a huge appetite for investment”

However, Petrobras is by far the biggest spender. Corruption by

Alex Imperial, regional manager, South America, DNV GL – Oil & Gas

1 ‘Statistical Review of World Energy 2015’, BP, June 2015

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The industry is cyclical and will rebound. The untapped potential means local players should invest through the downturn, while Petrobras and the government take steps to revive investment. Petrobras’ USD15.1bn divestment plan 2015–2016 to reduce debt, boost cash and focus on priorities may unlock commercially attractive assets for investors. For example, there was unconfirmed expectation in spring and summer 2015 that Petrobras would farm out some interests in highly productive pre-salt deepwater areas. Discussions have been taking place over a potential revision of production sharing agreements and local content regulations. This could lead to greater foreign participation and trigger moves away from Petrobras’ current position as sole operator in the pre-salt basin and other strategic areas, where it must have a minimum 30% stake in each field. The 13th licensing round, launched in October 2015, included 84 offshore and 182 onshore blocks.


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It triggered good advance interest, according to Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP) – the national petroleum agency and regulator for onshore and offshore safety. Dozens of companies registered initial interest and paid the participation fee; a few could be considered large players capable of operating in ultra-deepwater, confirming Brazil’s long-term potential, ANP added. Technical challenges Offshore Brazil faces technical challenges too. Drilling beyond 2,500-metre water depth requires heavier riser systems and drill strings. Pre-salt reservoirs need special gear such as managed pressure drilling. New technologies deployed now and likely in the future include: new flexible riser technologies and integrity management including life extension; qualification of new materials such as linepipe clad and corrosion resistant alloys; and CO2 separation and injection equipment at the process plant.

Brazilian fiscal policy stimulates the R&D needed to exploit resources economically and safely. At least 1% of concessionaries’ gross revenues from large fields must fund in-country R&D under a levy imposed by ANP. In 2014, for example, operators generated BRL1.4bn (USD600m) for R&D, according to ANP. Recognising this level of commitment, DNV GL’s R&D Centre in Rio de Janeiro opened in 2014 to support companies’ innovation activities. DNV GL recently assisted ANP in developing new legislation on offshore pipelines and well-integrity management. The company has sound experience in these areas, acquired through support to operators and regulators worldwide. DNV GL has been present in Brazil since the early 1970s, and is sure that Petrobras and the Brazilian offshore industry will re-emerge with more robust governance practices and a huge appetite for continued and additional investment. These are reasons for the industry to be resilient and aim at long-term opportunities.

RESEARCH IS TAILORED TO LOCAL NEEDS DNV GL’s dedicated research centre in Brazil marked its first anniversary in September 2015. The Rio de Janeiro based unit not only caters for local needs but also supports global technology developments and innovation that will enhance the country’s growing production and resource base. The centre is already involved in a number of joint industry projects (JIPs) relevant to Brazil’s ultra-deepwater sector. These include an assessment of the thickness of offshore pipelines, a methodology for life extension and reuse of flexible pipes, and a state-of-the-art tool for the management of blowout preventer reliability. The centre also seeks external projects that operators can fund in compliance with the country’s research levy of 1% on gross revenues from large fields. DNV GL advises local operators to maintain investment in R&D throughout the current low oil price climate, so that new technologies will be ready to trial or deploy when activity rebounds in Brazil.

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