insight Inside • COP 17 outcomes • New fuels, new engines and new designs • Engineering the Olympics • ISO 9001 evolution • Focus on Brazil • Hong Kong MTR The Lloyd’s Register Group magazine Issue 4 March 2012 asset management Arctic challenge: maintaining the balance
Insight March 2012 1 Welcome To our latest issue of Insight. Richard Sadler, Chief ExecutiveOnce again I am proud to introduce our latest edition of Insight, develop innovative environmental projects and businesses. Wea title that is becoming increasingly respected among politicians, update our readers on the latest developments from COP 17 andindustrialists and business leaders for its coverage of global issues. the climate change agenda. We look at the continuing evolution of the international quality standard, ISO 9001. The challenge ofThis edition covers a wide range of subjects that focus engineering the Olympics and creating a transport system to copeon the critical infrastructure that society relies on to sustain life, with its demands is examined. We also chart the rapid growthand quality of life. It has contributions from people with a unique and transformation of Brazil and China’s leisure ship market.view and huge depth of expertise in the issues that will be the From food safety to future fuels – we examine the issues thatmeasure of our collective success in meeting these challenges. affect our daily lives.We look at the challenge of protecting our Arctic and Antarctic The solutions to these challenges require teamwork fromregions, examining the balance between developing the Arctic’s everybody involved – transcending geographical and politicalresources and trade routes and protecting our planet’s last great borders – because, as always, teams make better decisions.wilderness for future generations. Koji Sekimizu, Secretary-Generalof the International Maritime Organization discusses his priorities We need to be well informed for the best collective outcome.for the protection and regulation of seaborne trade. E-idea is We hope that Insight will help you be better informed andprofiled, a new initiative to help young eco-entrepreneurs to make better decisions.
2 March 2012 Insight TheArctic challengeCan we develop the region’s resourcesand maintain the environmental balance? The Arctic • orth of the Arctic Circle (66° 33’N). Region includes N the Arctic Ocean and parts of Canada, Russia, Greenland, USA, Norway, Sweden, Finland and Iceland. • rctic Ocean has a 45,000-kilometre shoreline with A a 14,000-kilometre2 surface; 1.5 x area of USA. • he Arctic states – members of the Arctic Council – T are Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russian Federation, Sweden and the USA.
Insight March 2012 3 Recognising the potential for increased marine activity, the Arctic Council called for an examination of the issues and in 2009 approved the Arctic Marine Shipping Assessment (AMSA) 2009 Report includingThe Arctic is opening up. its recommendations on enhancing marineWith Arctic sea ice reducing safety, protecting Arctic people and theby about 10% per decade environment, and building an Arctic marine infrastructure.and high commodity pricesmaking the vast hydrocarbon The region’s extreme and unique environmental and operational challengesreserves more economically had put the exploitation of the hydrocarbonattractive, global interest in reserves, estimated at 22% of the world’sthis region is growing. recoverable reserves, beyond viable reach. But high commodity prices and growingIt is a unique area and the indigenous global demand mean that energy explorationpeoples, flora and fauna have adapted and production is moving further northto its cold and extreme conditions. into these harsh and challenging conditions.As demands on the region increase, the ModuSpec, a leading provider of technicalneed for co-operation and negotiation services to the offshore drilling sector, talkswill grow. But who looks after the Arctic? about operating safely and effectively inOn page 10 Professor Klaus Dodds talks the Arctic on page 8.about the geopolitics of the region and The Arctic is especially vulnerable to theargues that the Arctic Council will have effects of global warming and concernsa key role to play in developments. are mounting about the increasing levelsThe Arctic Council, set up in 1996, is a of mercury and other pollutant fallouthigh-level intergovernmental forum to in the region. The Arctic Council urged allpromote co-operation, co-ordination and countries at COP 17 to take decisive actioninteraction among the eight Arctic states, to hold the increase in global averageinvolving the indigenous communities and temperature below 2C above pre-industrialother Arctic inhabitants on common issues, levels. We look at some of the outcomesin particular sustainable development and of COP 17 on pages 22 to 28.environmental protection in the Arctic. And what about the Antarctic? PolarThe increasing economic activity and explorer and environmental leader Robertretreating sea ice has encouraged interest Swan is focusing his attention on savingin the Arctic seaways, most notably the the world’s last great wilderness as weNorthern Sea Route, as examined on page 4. report on page 12.
4 March 2012 Insight Arctic transit: Northern Sea Route The potential for commercial shipping The appeal of a regular trade route from Europe to Asia crossing the Arctic Ocean has been recognised since the fifteenth century. But it is only in the past few decades that this tantalising prospect has become realistic.T he last two years have seen moves to explore the In 2009, with near record low levels of sea ice in the Arctic, two potential of the Northern Sea Route (NSR) as a German vessels were the first foreign flagged ships to sail the NSR summer season trade lane to and from the booming from east to west. The voyage sparked renewed international Asia markets. Russia’s NSR is a set of sea routes from interest in the route.the Kara Gate to the Bering Strait. The NSR is navigable along its In 2010, Russian nuclear-powered icebreakers enabled four transitentire length during the summer and early autumn, depending on voyages, moving 111,000 tonnes of goods to the Asia-Pacificthe ice conditions. As the sailing distance from a north European region. And 2011 saw a huge rise in transit traffic. Some 34 vesselsport to the Far East using the NSR is approximately 40% shorter and 820,000 tonnes of cargo travelled the route as the furtherthan using the Suez Canal, it is no surprise that the commercial retreat of sea ice doubled the summer transit period to a recordpotential for this route is in the spotlight. 20 weeks, compared to 2009.Open to foreign shipping Demonstrating the advantagesDuring the Soviet Union era the NSR was a very important national “Various shipping and charter companies are pushing thewaterway and powerful icebreakers were built to assist merchant boundaries on the NSR to achieve faster transit times with largerships to reach the various ports in the region. The Russian vessels, demonstrating the potential of using the route,” says Borisgovernment opened the route to foreign vessels in 1991 Ozerov, Lloyd’s Register’s Russia Marine Manager. “One driver isand the first non-Russian flagged vessel used it that summer. the future development of Russia’s Arctic hydrocarbon resourcesHowever, after 1993, volumes of domestic and transit traffic that will need transport to global markets.”plummeted, partly because government subsidies dried up. In 2010, the Norwegian company Tschudi Shipping and Denmark’sBy 1998, transit traffic had stopped altogether. It was not Nordic Bulk Carriers transported 41,000 tonnes of iron orecommercially viable under the economic and climatic conditions concentrate from northern Norway to China on the MV Nordicof the time according to a joint Russian-Norwegian-Japanese Barents. Based on this, Tschudi Arctic Transit publicised possibleresearch report (INSROP) in 1999. savings of 20.5 days to Yokohama, Japan and 16 days to Shanghai,
Insight March 2012 5 MV Nordic Barents and icebreaker, 50 Years of Victory, in 2010.China using the NSR compared to the Suez Canal, for a vessel doubt in our minds that the opening of the NSR has greatsailing from Kirkenes in Norway or the Russian port of Murmansk. commercial potential for both cargo and shipowners.”“The 2011 transit season began unusually early,” says Desmond Cost benefit calculationUpcraft, Ice Cold Operations Manager, Lloyd’s Register. “In late A lot has changed since the INSROP study in the 1990s. ReductionsJune Russia’s largest independent gas producer, Novatek, chartered in voyage times and some dues – let alone in greenhouse gasthe ice-classed panamax tanker Perseverance to carry 60,000 emissions – have shifted the economics of the NSR, though thetonnes of gas condensate from northwest Russia to China. equation is still finely balanced.Conditions allowed the tanker to sail north “You will need a transit permit,” saysof the New Siberian Islands. This route is Upcraft, “and pay qualified ice pilots,deeper which allows larger ships to use the “This historic sea route additional insurance premiums and RussianNSR. Two months later, using this deepernorthern route, Sovcomflot’s suezmax has got it all; it is safer, icebreaker fees. Some of these direct costs could be offset, as if the voyage was via thetanker Vladimir Tikhonov became the shorter and thereby Suez Canal, there would be canal transitlargest vessel to complete the NSR, taking120,000 tonnes of gas condensate from more eco-friendly” fees, piracy insurance and possibly the cost of installing anti-piracy equipment.”northern Norway to Thailand.” But there are indirect costs too. “VesselsNordic Bulk Carriers used the NSR again operating on the NSR during the summer season need to have anin 2011, when it chartered the bulk carrier Sanko Odyssey to take ice class acceptable to Russia’s Administration of the NSR (ANSR)the largest iron ore shipment yet, some 72,000 tonnes from Russia and meet other Russian regulatory requirements,” says Ozerov.to China. At the time the company proclaimed: “This historic ”The issue of a permit is not routine – in practice a survey maysea route has got it all; it is safer, shorter and thereby more need to be carried out by an ANSR inspector.”eco-friendly. Said in another way – it is good business. The fuelsavings alone add up to approximately 750 tons. There is no
6 March 2012 Insight What about the Alaska (USA) No rt he rn Russia Northwest Passage? Se a Ro ut e Arctic Circle Canada The Northwest Passage (NWP) has not seen the same development as the NSR. There is seasonal traffic on the NWP; one operator is Northern Transportation Company Limited (NTCL) and a reduction in ice conditions would no doubt lengthen its operating season. For transit traffic, although the route has been opened up by the retreat of the sea ice, the conditions are different. Large areas of the NSR had no, or very little sea ice, in the summer of 2011. But hazardous multi-year ge Greenland ice‚ 3–6 metres thick, was still found in the NWP. sa as (DK) tP es The contested sovereignty claims over the waters complicates W Russia n er transit shipping through the NWP and the considerable rth No investment needed in escort vessels and infrastructure needs Iceland to make economic sense for government. Interest is growing however. Quebec’s government in particular, is looking to Norway exploit mineral resources in Northern Quebec. Under its Plan Nord programme it is investigating transhipment, ice-classed UK vessels, and icebreaking capacities.The type of cargo shipped will also have a bearing on the transit in 2012 on four new icebreakers, worth €1.8 billion, and twoviability of the route. Only 22 of the 34 vessels that transited in others are planned. Three of the six will be nuclear powered.2011 carried cargo and 15 of these transported liquid cargo, Key global transport route of the future?mainly gas condensate. A 2005 study funded by the Institute of One key influence on the future transit use of the NSR is thethe North concluded it is technically possible for container traffic perceived hurdle of complying with Russian requirements andto use the NSR but did not look at the economic feasibility of the uncertainty on icebreaker fees and other dues. Companies willconcept. If Russia continues to develop its Arctic hydrocarbon want assurance on these before they invest in the route. Theresources, we may see liquefied natural gas (LNG) being shipped demands faced by the maritime shipping industry to reduce carbonalong the NSR. To achieve this, the industry will need to develop emissions may yet emerge as one of the drivers for developing thededicated high-tech Arctic LNG carriers. route: but the environmental consequences of increased shippingThe Arctic Marine Shipping Assessment (AMSA) 2009 Report in the region also need to be considered.highlighted the need for comprehensive economic studies of The AMSA 2009 Report concluded that “the uncertainties andthe Arctic sea routes, including the NSR, and this is still the case. complex interactions of many driving forces of trans-Arctic navigationRussia’s plans require significant research. While it may be technically feasible toThe Russian government has announced its intention to transform cross the Arctic Ocean today … the operational, environmentalthe NSR into a commercially viable route from Europe to Asia. It is and economic implications and challenges for routine trans-Arcticimproving safety and communication by building 10 new bases for voyages are not yet fully understood”.search, rescue and communication along the route. A new law on The competitiveness of the NSR will increase as the Arctic icethe NSR is in the pipeline, part of which will clarify tariffs for recedes and the summer transit period lengthens – and forecastsicebreaker assistance and other services. for this retreat are constantly being revised. But its future as aInvestment is also needed in the ageing nuclear icebreaker fleet. viable transit route is less clear cut.In October 2011, it was reported that construction would begin E firstname.lastname@example.org
Insight March 2012 7 Fram: polar voyager Expeditions to the South and North Poles began as early as the 1500s and reached fever pitch in the late 1800s and early 1900s. TodayMarch 1895 T he theory of a trans-polar current in the Arctic Ocean was put forward in 1884. Norwegian explorer Fridtjof northern latitude of 86° 14’ they were The Fram later sailed on two more Nansen reckoned a strengthened ship forced to turn back and eventually important expeditions; to western could use the current to get close to the returned to Norway in August 1896. Greenland and to Antarctica for Roald North Pole. The Fram was the result. Amundsen’s South Pole expedition. The The Fram, with the rest of her crew, ship is now in the Fram Museum at Oslo. Forcing ships through the Arctic ice had continued to drift westwards and in failed many times before. But the Fram was February 1896 the current turned her Today there is a new Fram in polar waters; designed to be lifted up and move with the southwards. She finally emerged from the the MS Fram is a 500-passenger capacity ice, with a hull strong enough to withstand ice and in September returned in triumph cruise ship, owned by expedition cruise the crushing pressure of the pack ice. To to her port of departure, Oslo, with a specialist Hurtigruten. Built in 2007, this provide some comfort for the crew, the ship’s significant amount of valuable scientific Lloyd’s Register ice classed ship has a living quarters were insulated with layers of data – and a healthy crew, unusual for reinforced hull for cruising polar waters wood, felt, linoleum and reindeer hair. such an expedition at this time. in the summer months. In June 1893 Nansen set out on the courageous first Fram expedition. The ship “With MS Fram we wanted to honour Fridjof Nansen’s great efforts, as a became locked in the pack ice near the New Siberian Islands in September. She humanitarian, researcher and polar explorer. We built a ship with qualities was carried for hundreds of miles but did for exploring polar waters, sailing in the wake of Nansen. The ship is small not get as close to the Pole as Nansen had enough to bring guests close to nature and big enough for comfort. From day hoped. Realising this, Nansen and Hjalmar one she has fulfilled her task, sailing both in Antarctic and Arctic waters.” Johansen took to the ice in March 1895 by dog-pulled sled. After reaching a record Dag-Arne Wensel, Director of Technical Maritime Operations, Hurtigruten.
8 March 2012 InsightWhile activity remains speculative, interest in effectiveness of plant, equipment and processes; and safeguarding the environment. But the Arctic conditions bring additionalexploiting the Arctic’s hydrocarbon reserves challenges. The remoteness, limited hours of daylight and freezinggrows at a rapid pace. Further steps in that weather hinder search and rescue operations. Long periods in suchdirection will mean grappling with the region’s harsh conditions with extreme periods of day and night can take aextreme and unique environmental and psychological toll and increase the risk of human error. The heavy icing of exposed equipment impacts on safety of people and theoperational challenges. The very worst plant. Other risks to personnel are freezing and non-freezing coldconditions demand the very best practices. injuries, high levels of ultraviolet light, slippery surfaces, falling ice, impaired visibility and immersion in the Arctic waters.ModuSpec, the number one provider of offshoredrilling rig pre-charter surveys and assessments, ModuSpec has a seven-step approach in response to these challenges. This begins before the operation even starts, withand member of the Lloyd’s Register Group, design and installation. The other steps are establishing a plannedtalks to Jason Knights. maintenance system, winterisation, contingency planning, putting in place management plans and systems, ice protection andIt is -10C and summer in the Arctic; winter temperatures drop to removal, and regular in-service inspection.around -40C. Given the severe cold operators drilling in the regionface a number of specific issues. “There must be a full understanding Oil development in sensitive areas, such as the Arctic, is unlikely toof the environmental conditions in which people, plant and processes be compatible with the view of conservationists. If development isare working – the three Ps – given the temperature levels, as well as to take place, steps need to be taken to help reduce the risks andthe hydro-meteorological, bathymetric, seismic and ice conditions,” impact at the installation and operational phases. Industry alsosays Andrew Calderwood, Senior Project Manager at ModuSpec’s has to appreciate that sourcing energy is rarely totally benign.Netherlands office. This understanding has led to a heightened As valuable as energy has become, some things are worth more.awareness that winterisation, preparing for the conditions, is essentialfor safe, effective Arctic operations, Calderwood explains.The operational landscape is as harsh as the region’s treeless Jason Knights is Global Communications Managerpermafrost vista. A number of best practices are critical and the for Lloyd’s Register’s Energy business.three Ps need to be treated as part of the whole ‘system’. E email@example.comAs with the operation of any high-risk capital-intensive assets, the Tweet me @saferenergythree areas of main concern are the safety of personnel; safety andTackling thecold, hard factsOperating safely and effectively in the Arctic
Insight March 2012 9The seven-step solution:1 Forward-thinking design and installation To help mitigate risks, the ModuSpec team considers itimperative to assess a drilling unit during its design. This exercise 5 Putting in place management plans and systems “The first thing we ask is, ‘What can go wrong?’” says Meindert Sturm, Business Development Manager, ModuSpec.can be divided into three distinct areas: hazard identification; “This could be anything from loads falling and harminglikelihood and consequences; and mitigation steps. Factors personnel, to a vessel colliding with an offshore structureinclude the need to protect equipment though encasing and and blow-outs.”appropriate positioning of deck equipment to reduce the To help prevent disasters, management systems should dictatelikelihood of human error in the harsh conditions. working methods, in combination with systems that identifyThe bottom line is that there needs to be a rigorous, possible threats. For example, an ice management plan willforward-thinking design and installation process, with clear give the operating crew a series of step-by-step instructions.communication between the developer, operator and local In extreme weather situations, the rig operators will havecommunities who occupy the area potentially affected by a sufficient time to disconnect from the well before an ice floeproposed project. strikes the rig. Management systems can also incorporate the use of marine radar or more sophisticated equipment,2 Establishing a planned maintenance system An important step is to introduce an enhanced plannedmaintenance system that will address substantial risks before such as radar early warning systems to help prevent collisions. An oil-spill contingency plan is also vital, considering the limited time available for a clean-up operation and the environmentallyentering cold climate regions. The system should specifically sensitive area. To this add a couple of facts: “Oil persists forfocus on elements that become safety and operation critical longer in Arctic conditions because it evaporates more slowly,when drilling in Arctic conditions, such as heat tracing on fire and can be trapped under ice, making it less accessible tofighting lines and drain lines. bacterial degradation,” says Sturm. It’s essential to fully consider human factors when devising3 Winterisation “The main challenge is making the environment safeand more comfortable for personnel,” says Calderwood. management plans and systems. Where neglected, this has often led to the energy industry having to change the way it operates. In addition, communities are becoming more“This requires a deep understanding of the physiological powerful stakeholders, with clear ideas on how asseteffects of working in isolation.” Given the extreme owners and operators should prepare, monitor andconditions, the human factor should not be overlooked. manage their activities.“Thorough assessment is required of crew safety andoperations, onboard equipment and fittings, and constructionmaterials,” explains Ad Tange, Global Commissioning Managerfor ModuSpec. “The first step must ensure all aspects of drilling 6 Removal of and protection from ice Breaking up ice with mallets, by hand, is still the main solution. Steam lances and hot water jets are also employed,unit winterisation meet with the required operating procedures but the use of electrical equipment remains a moot pointfor Arctic conditions, including an ice management programme. (while reducing the amount of manual labour required, thereCrew need to be trained and provided with appropriate are question marks over maintenance costs). “Care must beequipment to work in cold climates, work routines should be taken to prevent damage to equipment,” adds Calderwood.altered to reduce the time that personnel are exposed to low “Controls, in particular, can suffer mechanical damage, andtemperatures, and sheltered and heated locations must be electrical equipment can be damaged through the ingressprovided for personnel working for extended periods on of water and steam.”the open deck.” Mooring equipment on mobile offshore drilling units are also susceptible to a build-up of ice caused by spray rain, hail and4 Contingency planning The various types of evacuation and rescue optionsavailable should be considered in light of the extreme conditions, snow, especially the forward moorings of floating storage units. It is not uncommon for machinery to be placed in an enclosed forecastle. It is also important that the mooringwhich often restrict activity. These include the use of offshore drums are covered so that icing can easily be removed.standby vessels, helicopters or a Seascape system of evacuation,and lifeboats designed to operate on ice. “When there is an icebuild-up, unlike in warmer open-water operations, the offshorestandby vessel may have a higher power requirement than a 7 Regular in-service inspection Adhering to a careful inspection regime and regular inspection plan is critical.supply vessel,” emphasises Desmond Upcraft, Ice ColdOperations Manager, Lloyd’s Register.
10 March 2012 InsightGoverning the ‘po A s the sea ice thins and the Arctic Ocean opens states can acquire wider rights by providing scientific evidence to up, the subject of geopolitics rises to the surface. the Commission on the Limits of the Continental Shelf (CLCS). In Professor Klaus Dodds from Royal Holloway, turn, this UN body issues technical recommendations for debate University of London, talks to Jason Knights and negotiation among the relevant coastal parties. “All five statesabout some key issues and their potential impact on plans have embarked on mapping projects designed to demarcate theirto exploit the region’s natural resources. extended continental shelves.”In August 2007, as part of the privately funded Arktika The Arktika expedition is a case in point. To date, only Norway’sexpedition, a Russian flag was deposited on the Arctic Ocean’s maximum sovereign rights have been pinned down, elsewhere,seabed, provoking headlines and warming the collar of the then “a submission deadline in 2009 for materials to be sent to theCanadian foreign minister. Symbolic posturing aside, the notion of CLCS encouraged febrile reporting, so if there was ‘a race toa scramble to lay claim to the region is not just outdated but also the Pole’ it was related to this submission deadline.”wholly misplaced, explains Professor Klaus Dodds. “Under widely With the CLCS inundated with enough work to last for 40 to 50recognised international rules, the entitlements of the five coastal years, settling shelf sovereignty among the remaining coastalstates [Canada, Denmark/Greenland, Norway, Russia and the states may be some way off. Awaiting technical recommendations,United States] are well established over a large portion of the in fact, is likely to be the tip of the iceberg. “Negotiations will notArctic Ocean. There is no need for these five states to scramble.” be simple when it comes to a region of such strategic and symbolicLocation is clearly everything. “Geographical proximity is key in importance.” Canada and Russia believe that their sovereignrelation to ownership of the Arctic Ocean.” rights extend all the way to the central Arctic Ocean.Cloudier waters A clear way forwardWhere the waters of sovereignty get cloudier is the point at which “The good news is there are rules and the coastal states seem toan extended continental shelf ends. On this matter, the United be following these.” Dodds points to the Ilulissat Declaration asNations’ Law of the Sea Convention (LOSC) sets out how coastal one of the most important regional developments so far in settling overlapping extended continental shelves peacefully. “In May 2008, representatives of the five coastal states declared that they were committed to resolving any overlapping claims in the Arctic Region and that the ‘law of the sea’ provided a legal framework for such resolution. Critically, the reference here is to the ‘law of the sea’ and not the LOSC, in recognition of the fact that the United States is not party to the LOSC. The ‘law of sea’ refers to customary international law, which applies to all states.” In addition to this consensus, there is another positive factor for those looking to exploit the region’s oil and gas reserves. “The identified hydrocarbon resources seem to fall within the clear and exclusive economic zones of the five coastal states.” However there are other natural resources that may hinder negotiations between the coastal states, emphasises Dodds. These include fishing potential and a deep seabed which might be rich in manganese nodules and minerals known as ‘The Area’, an area of the Arctic that is not part Klaus Dodds is Professor of Geopolitics at Royal Holloway, of the extended continental shelf. University of London. He is the editor of The Geographical Journal and his next book will be The Antarctic: A Very How inviting is the Arctic? Short Introduction (Oxford University Press 2012) followed “A resource-rich, accessible Arctic is an image peddled by journalists by A Scramble for the Poles? Contemporary Geopolitics and sometimes politicians, but does it pass muster politically and of the Arctic and Antarctic (Polity 2013). economically?” asks Dodds. Is it yet the ‘polar Mediterranean’ predicted by the Canadian geographer, Viljamur Stefansson?
Insight March 2012 11 lar Mediterranean’ “One can’t view the Arctic as a blank space on a map, emptied 200 kilometres from the Sakhalin coast in the Sea of Okhotsk of people.” The region is a mosaic of different places. “In the (Russian Far East), is “a timely reminder, albeit in the sub-Arctic, Canadian Arctic, oil and gas companies have found it challenging of the extraordinary operating conditions and challenges faced.” to operate, with an indigenous population that holds clear rights, All at a time when “reputations travel fast” and companies is pressing on outstanding land claims and holds diverse views on cannot afford to make mistakes in the Arctic or elsewhere. the exploitation of natural resources. One of the common pitfalls Later rather than sooner is the erroneous assumption that all indigenous people think the “Exploitation of the Arctic’s natural resources may take longer same. This must be avoided. The people want their respective than expected if the recent past proves enlightening,” says Dodds. views to be heard and to be treated seriously. While many in the He highlights two projects severely delayed by politics and local communities welcome the benefits that industry brings in economics. Plans to develop the Shtokman (Stockman) field in terms of new jobs and revenue streams, others see the downsides the Russian sector of the Barents Sea, one of the world’s largest and are weary of being short-changed by the ‘South’ once again.” natural gas fields, began in the early 1990s and was “postponed by stockholders a few years ago because of the sudden over- “Exploitation of the Arctic’s supply of gas on the market and then hindered by the economic weakness of Russia.” The MacKenzie Valley Natural Gas Project in natural resources may take longer Canada’s Northwest Territories (connecting northern onshore gas than expected if the recent past fields with North American markets) also has a long history, dating back some 40 years. “The project has been subject to lengthy proves enlightening” negotiations with indigenous communities.” What next? The key players in the Arctic do not want a treaty, as exists in the Then there is the wider political debate of whether we should be Antarctic, says Dodds, so “the Arctic Council will play a key role looking for more sustainable energy sources. “As the Norwegian and must to be seen to be effective.” The Council is the most foreign minister [Jonas Gahr Støre] pointed out, this is a global significant soft-law intergovernmental forum for the promotion paradox, not just an issue for the Arctic states.” While Dodds of co-operation in the Arctic. Members comprise the five coastal privately hopes that we will have largely ‘de‑carbonised’ by the states, along with Finland, Iceland and Sweden. “The Arctic time anyone gets around to exploiting the Arctic’s most inaccessible Council faces a difficult job ahead. It will need to be more than resources, he acknowledges that we all want to heat our homes, advisory in the longer term. A legally binding search and rescue drive cars and board planes. And “for the indigenous Northern agreement and a proposed oil-spill response plan are promising communities, hydrocarbon and mineral resources could prove signs, and it must also be seen to be meaningfully championing valuable revenue streams.” the rights of indigenous and First Nations communities.” It also What of the broader economics? “Financially, one can’t put a value needs to be careful that environmental stewardship is not merely on 22% of the world’s untapped hydrocarbon resources that the regarded as self-interest, cloaked in virtuousness. “Wider interest geology of the region suggests. We need to be quite cautious as in the Arctic will only increase, especially with regard to ‘The Area’ to how much will be discovered, let alone extracted. Recent Cairn and general navigation and access rights. The Council will need to Energy results for exploration wells offshore of Greenland were a be comfortable with that notion. Being graceful with observers, bit disappointing.” Uncertainty in the riches may well be reflected such as the European Union and China, a major coastal state with in the political wavering of Greenland’s prime minister, Kuupik a keen sense of its rights of innocent and transit passage, may be Kleist, in the push for autonomy from Denmark, points out Dodds. the price to be paid to avoid tensions. The list of Arctic Ocean To an unknown total hydrocarbon value, add unpredictable stakeholders will surely only get longer – the geopolitics of the long-term markets, with ever-fluctuating oil and gas prices. Arctic region will stretch rather than remain fixed.” “Does diminishing sea ice even open up the region, operationally speaking?” questions Dodds. Ice remains a problem and it is still Jason Knights is Global Communications an inhospitable region in terms of tsunami-like waves, high winds Manager for Lloyd’s Register’s Energy business. and heavy winter storms. The upturned Russian oil rig, Kolskoye, E firstname.lastname@example.org Tweet me @saferenergy
12 March 2012 Insight On a deadline to 2041 Saving Antarctica: The last great wilderness Robert Swan, OBE, polar explorer and environmental leader is on a mission to protect Antarctica, reports Richard Cook.
Insight March 2012 13Robert Swan is, as ever,in full ‘attack’ mode.“The world is stuck on words,” he says,“and we need to move on from that. Weneed to act not just speak. We need to beintelligent with technology. And we needto be positive. If I get sent another gloomyemail or video about how the world is goingto end, I am going to…” Swan pauses andseems uncharacteristically lost for words.“I am going to…” he pauses again, laughsand shouts in mock horror, “… I am goingto shout at someone.”This is classic Swan: serious, passionate,a little scary but also always very quick toturn to humour to drive his point home.He is straight talking to the point of beingbrusque and he peppers his proclamationswith the word ‘attack’, which sums him upwell, as Swan’s life can be seen as a seriesof interconnected attacks – be it whenhe is running fund-raising marathons ordelivering clever, high-tempo motivationallectures to corporations, students andpoliticians or speaking about his life’s “We must be positive and we must act,” The ship they chose to carry them fromwork, Antarctica. says Swan. “Once you move from words the UK round the Cape of Good Hope to action, then you start to build the and through the notorious southernThe greatest challenge knowledge that can bring about real oceans was the Southern Quest. Swan’sSwan is the first person in history to have change. Then change can become a team found the vessel in Tyneside, UK,walked to both the North and South Poles business opportunity and that is when it where she had been working as a trawler.but while he is justifiably proud of these actually becomes powerful. Technology “We didn’t completely know what weincredible achievements, today he quickly and safety is what will save us,” he says. were doing,” says Swan with a self-dismisses the term ‘polar explorer’. “I don’t deprecating grin. “A lot of people laughedreally know what that means anymore. The A young explorer when we said we were going to take theonly exploration that really matters now is Swan grew up obsessed with the ship to Antarctica but someone said youworking out this planet’s survival. That’s early 20th century heroes of Antarctic need to talk to Lloyd’s Register, they’ll tellthe greatest challenge.” exploration. In the early 1980s, aged you what you need to do and that’s exactly just 21, he started to assemble the firstSpend about a minute with this enigmatic what they did. And they were fantastic.” non-government expedition to Antarcticaman and you will quickly find the real and the South Pole and started to try to Lloyd’s Register ship surveyors gave SwanRobert Swan. Today he is an inspirational raise the not inconsiderable amount of advice and certified the ice strengtheningenvironmental leader, a renewable energy US$5 million to fund the expedition. Swan work that was carried out on the Southernchampion and, above all, a passionate, thought he would do it in a ‘few weeks’ Quest. Brian Purtle, now Lloyd’s Register’sengaged, energetic protector of his but it actually took him more than seven Technical Performance Group Manager,beloved Antarctica. years. His drive brought him in front of was one of those surveyors and recalls:Swan firmly believes that if we can the father of the conservation movement, “We had started to do a lot of conversionseducate and inspire tomorrow’s leaders French marine biologist Jacques Cousteau, in the early 1980s in the North East as theinto protecting Antarctica through the who said he could help Swan raise the offshore business was booming – trawlers,better use of renewable energy and waste funds if they would leave not a trace of supply boats, that type of thing – but therereduction systems, these lessons and waste, “just their footsteps in the snow”. were not many clients like Mr Swan andactions can be carried back into mainstream Swan agreed – and is still very much driven his team. They were an eccentric groupcommunities across the planet. by this solemn promise today. And as funds of people and to tell the truth, we did began to slowly trickle in, Swan started not think they would make it. I remember to build a team and purchase equipment. several issues related to the ship being
14 March 2012 Insightfit to undertake the journey and the crew This almost killed him, then deeply Cleaner Energy’ that has, to date, connectedcertainly made the most of the time in dock. depressed him and finally galvanized him. with 500,000 students from across theOne thing that sticks out is they strapped a world. Swan has just cycled across India 2041 missionbeer barrel to the mast… something to do to work with India’s youth who, he says In 1992 and 2002, he gave keynotewith a sponsorship by a local brewery and “have to be part of the solution rather speeches at the World Summit formaybe some free beer! It was all very novel than the problem.” He currently serves Sustainable Development and wasbut they were a good bunch.” as an UNESCO Goodwill Ambassador with charged by global leaders to undertake special responsibility for youth, acting as aSwan’s ‘good bunch’ made it to the environmental missions with industry, special envoy for the UN Director-General.South Pole on 11 January 1986. The wholly business and students. He has called his And he is now, once again, working closelyunassisted expedition (without even radios) organisation 2041 because his overriding with Lloyd’s Register.comprised three people, each pulling a life mission has a hard and fast deadline.160-kilo sled laden with food, fuel, supplies In less than 30 years’ time, in 2041, there Lloyd’s Register is sending two employeesand shelter, for 70 days across 1,400 will be a renegotiation on the United and one E-idealist (see page 20) on Swan’skilometres. Swan’s team took everything Nations moratorium on mining in next annual Antarctic expedition to workback with them afterwards and repeated Antarctica. The continent’s designation on renewable energy and environmentalthis after they reached the North Pole as ‘a natural reserve, devoted to peace and projects. Initially these projects will havein 1989. science’ could be rolled back and Swan’s application in Antarctica but, over time, singular aim is to stop should have resonance across the globe.It was on these this happening.journeys that Swan “Lloyd’s Register understands modernsaw the effects Swan’s overriding Everything he technology and checks that it worksof environmental does is aimed at which means they are an important partdegradation first mission, to continue working towards the of moving things forward” concludes Swan.hand. In Antarctica,the governmental the protection of continuing protection of the Antarctic “It’s fantastic that they care enough about their people to invest in their involvementexpeditions left Antarctica, has a Treaty so that the with 2041. I have had a long and goodthousands of tonnesof rubbish strewn 2041 deadline. last great wilderness on earth is never relationship with Lloyd’s Register and am glad that it is re-kindled and is as strong asacross the ice. On a exploited in the same ever. We will do very good work together.”more personal level, way that the Norththe team was affected by the then little Pole has been and continues to be. For more details of 2041 and Lloyd’sknown effects caused by the hole in the His strategy is simple – to generate Register’s work on the next Antarcticaozone layer. Swan’s eyes first blistered, awareness but, more importantly, action expedition go to www.lr.org/2041then turned him temporarily blind and then among tomorrow’s thought leaders whochanged colour permanently, from dark to will be in positions of real responsibility Richard Cook is Lloyd’s Register Asia’slight blue. On the way to the North Pole, when the critical decisions are being Communications Manager.Swan and his comrades found the solid ice made in three decades’ time.that should have been there had melted E email@example.com He is relentless in his work. His yacht 2041and the team had to hop from ice floe has sails made of recycled plastic bottlesto ice floe to complete their journey. and travel the oceans on her ‘Voyage for
Insight March 2012 15 The shipping industry is under pressure to comply with ever stricter environmental regulations and, with oil more expensive than ever, to reduce fuel costs. Nick Brown talks to Bergen-based Gearbulk Norway about the future of shipping.Gearbulk is the world’s largest operator of open hatch, Fuel type is another area of attention. With conventional heavygantry craned ships – general cargo ships primarily designed for fuel oil so expensive and an increasingly high focus on emissions,transporting forestry products. And it has led the way in evolving alternatives are being sought.the designs of its ships. The ships’ large cargo holds allow for an Gjerde thinks that it’s only a matter of time before we see anefficient stowage and flexibility of cargo type. Gearbulk seeks to increasing use of LNG in the deep sea. “It’s obviously attractivemaximise cargo opportunities. It has invested in the capability to in Norway where there is a ready supply. The likely middle groundsupport other niche trades such as liquid pitch and orange juice. for some time is dual fuel engines.The company is always discussing the next generation of Gearbulk “Shipping has been hopelessly conservative. We need fresh views.ships. “Right now, for example, we are looking at different engine We probably need to take a fresh approach to recruitment as weand hull performance monitoring systems on our newer vessels,” need to find the right balance between practical engineeringsays Sjur Gjerde, Managing Director of Gearbulk Norway. experience and commercial requirements.“There are huge savings to be made, better hull forms, better “We have to sort out the technical issues – and we always canengines – but we need to be able to measure performance – – but it’s the human issues that are the most challenging. As anso many claims are being made about performance by suppliers. industrial player with a long-term approach, intending to operateWe want to tie yards and suppliers to the mast on their claims our specialist ships for 35 years or more, we are very interested infor efficiency gains. Half of the salesmen walk away when finding the right solutions – it’s a constant process of innovation.”we say this – but we can work with the others.”But things are moving in the right direction. “Over recent years the A longer version of this interview will appear in the next editionindustry had to face a ‘take it or leave it’ situation when ordering of Lloyd’s Register’s Shipping the Environment. Nick Brown isnew vessels in terms of accepting yard standard volume design. Lloyd’s Register’s Marine Communications Manager.Now we are seeing yards trying to grab competitive advantage byoffering more fuel-efficient ships – especially in Japan – and we are E firstname.lastname@example.org the potential for soft funding for environmentally efficientships, those with a low Energy Efficiency Design Index.”
16 March 2012 InsightNew fuels, new engines new designsFuture technology and innovation is neededin shipping as emission regulations and fuelprices drive change, says Tom Boardley,Lloyd’s Register’s Marine Director. A vision for a sustainable shipping industry in 2040 In November 2011, the heads of some of the most significant players in world shipping put their names to a commitment to make shipping more sustainable. The Sustainable Shipping Initiative (SSI) brings together leading companies from across the industry and around the world, to plan how shipping can contribute to – and thrive in – a sustainable future. Representing Lloyd’s Register as one of the signatories was Marine Director, Tom Boardley. He said “The SSI is an important initiative. At a time when many are struggling to stay in business, investing in a cleaner future is perhaps not everybody’s favourite subject. But what makes a business sustainable is changing. At Lloyd’s Register we are putting ever more resources into helping owners, builders and all marine stakeholders better understand the implications of new regulation and technology in our more complex world.”
Insight March 2012 17One hundred years ago a Lloyd’s Register New technologies and innovation The result is that the shipping world is fast becoming a moresurveyor attended the sea trials of the first complex place. New technologies and innovation will play aseagoing diesel-powered merchant ship, vital role in the immediate and long-term future of shipping.the East Asiatic Company’s innovative Selandia. Lloyd’s Register has talked about this as a ‘new paradigm’. AnyThe propulsion technology on trial a century evolution will be gradual but already we can see changes happening.ago now dominates the industry and, for New fuels, new engines and new designs are becoming available.most merchant ships in the last 50 years, there The difficulty for shipowners, builders, equipment makers and, dohas been a clear orthodoxy in engine room not forget, financiers, is not only what technology to support butarrangements and the type of fuel used. when to invest. The future is further clouded by the weak market outlook and the hangover of the biggest boom in new orderingNearly all ships now use marine heavy in history – the new ships still being built are, in the main, littlefuel oil in diesel engines. different to the ships in demand a decade or more ago.Today we stand on the brink of a new era. Most new technology being brought into operation now has beenEmissions regulation and higher fuel oil prices are driving change developed for relatively small or niche markets such as ferries andin shipping today. Future fuels, the future for marine engines and inland waterways – sectors where exposure to new regulation istomorrow’s ship designs are key areas that Lloyd’s Register is most concentrated and where local emissions and other factorsworking on to help the marine industry to reduce emissions are felt most keenly.and find greater efficiencies. More clarity needs to be brought to the differences betweenRegulations requiring ships to produce less locally harmful pollutants, local air emission benefits and the GHG impacts of shippingsuch as sulphur oxide (SOx) and nitrogen oxide (NOx), in emission and the technologies required. At present the real driver is localcontrol areas (ECAs) such as the Baltic and North Sea are due to be air emissions. But, for example, we really need more data on themade stricter from 2015. Ships will need either to switch to different, total energy lifecycle impact of fuels such as LNG. There is plentycleaner, fuels or install abatement systems – ‘scrubbers’ – to extract of work to be done here.harmful emissions. Approximately 80–90% of merchant vessels will At Lloyd’s Register we constantly strive to provide impartialenter an ECA during their lifetimes and more ECAs are expected – technical guidance. And as well as guidance, verification is crucial.particularly in the Mediterranean and the Far East – in the future. Many claims are being made about performance, about GHGIn terms of greenhouse gases (GHG), the International Maritime emissions and about safety of new arrangements. Owners andOrganization (IMO) has developed global energy design and operators need data and they need it verified – what you cannotenergy management regulations that will help reduce the measure, you cannot manage.tonne mile GHG impact of shipping. The Ship Energy EfficiencyManagement Plan (SEEMP) and, for new ships, the Energy Tom Boardley is Lloyd’s Register Marine Director.Efficiency Design Index (EEDI) will come in to force in 2013.These are the first such global regulations to mitigate GHG E email@example.com made by any United Nations agency.But with the consequences for shipping of the UNFCCC processstill not clear after COP 17, a global GHG regime seems as remoteas ever. The agreement to the second Kyoto Protocol commitmentperiod, covering mainly EU member states, makes it more likelythat the European Union will take action on shipping – indeedit is starting the process of investigating how a regional GHGscheme could work for shipping. As a global industry requiresglobal regulation it is far from clear what the impact ofregional imperatives will be.At the same time the price of fuel oil has been rising dramatically. Our recent special Horizons supplement looks in more depth atExisting ships were developed to operate in a world where ships’ the future challenges for shipping; go to www.lr.org/marine.bunkers were available at US$150 a tonne. Bunker oil is now in Our next issue of Shipping the Environment, due out inthe US$700-800 range. So, the economics of ship operations March, will look further into the environmental issues, whathave changed. operators and shipyards are doing, as well as at specific regulatory compliance requirements and tools to help the industry in reducing environmental impact and capturing efficiency gains.
18 March 2012 InsightNewsteerageat the IMOKoji Sekimizu talked toChristopher Browne aboutthe role of the IMO andhis key aims.Koji Sekimizu of Japan was elected inJune 2011 as the Secretary-General ofthe IMO with effect from 1 January2012, for an initial term of four years.
Insight March 2012 19The International Maritime Organization (IMO) Role of the IMOshould lead the global fight against piracy, says We asked Koji Sekimizu whatKoji Sekimizu, IMO’s new Secretary-General. in his view is the IMO’s most important role.“There needs to be a formal mechanism to A passionate advocate of sustainability, “IMO is a specialised agency of thediscuss and tackle piracy and there should one of Sekimizu’s first tasks will be to United Nations and, as such, it is thebe one organisation to govern the problem. co-ordinate IMO’s presence at the UN global standard-setting authority forIMO, as the UN agency responsible for Conference on Sustainable Development the safety, security and environmentalregulating various aspects of international – known as Rio+20 to mark its 20-year performance of international shipping.shipping, is competent and has the relevant history – in Rio de Janeiro on 20–22 June. Its main role is to create a regulatoryexpertise to address this,” said Sekimizu, On the agenda are the future of the green framework for the shipping industrywho recently signed an agreement for economy and ways to develop a new that is fair and effective, universallyIMO to fund an anti-piracy training centre framework for sustainable shipping. adopted and universally implemented.in Djibouti, on the border of Somalia. “Although sustainability of shipping has To create, in other words, a level been widely discussed in the context of playing field so that operators cannot“IMO, in co-operation with the UN, address their financial issues by simply sustainable development over the lastneeds to deal with pirates and criminals cutting corners and compromising on two decades, we have not yet developedin Somalia, as well as helping the Somali safety, security and environmental a common concept for the sustainabilitypeople to deal with pirates internally, performance. This encourages of the maritime industries and in particularin order to ensure their eradication, innovation and efficiency. the shipping industry,” he said.for without addressing these issueswe cannot eradicate them,” he said. Sekimizu wants IMO to play a more “Such a performance-based approach proactive, policy-driven role. “The role was taken by IMO, for example, withThe 59-year-old, who was Director of regard to climate change and air of IMO is very important and it is up toIMO’s Maritime Safety Division until his pollution. Mandatory measures us to make sure there is more co-operationrecent promotion, is something of an adopted by IMO will require the between individual governments, so theexpert on piracy. He has represented IMO energy efficiency of new ships to world economy can enjoy a continuouson the Contact Group on Piracy Off the improve incrementally, but leave it environment-friendly and low-cost supplyCoast of Somalia and was actively involved to the industry to determine exactly of goods,” he said.in the 2009 Seoul high-level meeting on how the targets will be met.piracy in the region. His other goals for the UN agency are to help develop new global goal-based “IMO also works hard to help buildShortly after he took office on 1 January the capacity of its Member States standards for ships; various safety-related2012, Sekimizu appointed Captain Harmut to address issues within its purview, issues, including the safety of passengerHesse, Senior Deputy Director in the and this is a central theme in our ships; ensuring that the education, trainingMaritime Safety Division, to the position of continuing work to combat piracy, and recruitment of seafarers provides aspecial representative for maritime security for example. continuous supply of quality mariners;and anti-piracy programmes. Hesse will drafting new maritime security and “I feel very strongly that IMO needsalso co-ordinate the Djibouti Code of anti-piracy legislation; and maritime traffic to act in the interests of all thoseConduct and act as IMO’s representative at management in straits and key sea areas. who rely on shipping as the deliveryconferences and meetings on piracy issues. mechanism of global trade – andHowever, as IMO Secretary-General, Christopher Browne is Lloyd’s Register’s that means the vast majority ofSekimizu’s brief is obviously far wider than Marine News Editor. the world’s population. We allpiracy. He is known as a highly creative need a shipping industry that isproblem-solver and, in his 22-year IMO E firstname.lastname@example.org safe, secure, environment-friendlycareer, has had extensive experience of and efficient, and it is IMO’s job,handling and helping to draft safety, as the industry’s regulator, to makeenvironmental protection and anti- sure that is the case.”emissions legislation. As Director ofIMO’s Environment Division he oversawthe phasing out of single-hull tankersafter the Erika and Prestige disastersin 1999 and 2002 respectively.
20 March 2012 Insight Empowering eco visions A new initiative called E-idea is helping young eco-entrepreneurs to develop innovative environmental projects and businesses to benefit communities in the Asia-Pacific region. Graham Meller reports.