Shipping across the Arctic OceanA feasible option in 2030-2050 as a result of global warming?Research and Innovation, Posi...
This isDNVDNV is a global provider of services                                                                 Research an...
SummaryArctic sea ice is in rapid decline, and this may open up new opportunitiesfor economic activity. This paper describ...
IntroductionDuring the last decades of the 20th century and the first       how the changing climate of the Arctic may aff...
comparison is made for routes originating in several Asianports. If the Arctic route from a given port is favourablein eco...
Present ice and metocean conditions    and challenges connected to operating    in the ArcticThe physical parameters that ...
Shipping activities in the ArcticThe seaborne cargo transport in Arctic waters has                 2000). In 2009, the Bre...
A possible future ice    scenarioAll climate models show that Arctic ice cover is expected         Some consequences may b...
MARCH                       SepteMbeR                                    MARCH                       SepteMbeRFigure 3a. S...
Scenario for transit     shipping in the ArcticCompared with the traditional sea routes, transiting the       SeleCting An...
Route 3 is designed to lead vessels mostly outside the                    study has settled on Route 3 for comparison of c...
SCenARio            DeSCRiption oF SCenARio              ASSuMptionS     Baseline scenario   Regular Suez trade, 6500 TEU ...
YeAR                  SCenARio                               CoMpetitiVeneSS FoR Route 3                        S1        ...
in 2030 and 120 days 2050. These parameters are used            of global ship emissions in 2050 (Buhaug et al., 2009;to e...
fuel prices on the Arctic routes than for the Suez route.        which is less than the estimate of 1.78 Mt presented in t...
Shipping related to oil and     gas activitiesA quarter of the world’s total undiscovered petroleum            As indicate...
Challenges from increased shipping in the Arctic regionsThe study presented herein, based on one possible scenario      of...
A short overview of shortcomings of current standards             conventions that are legally binding for all Arctic stat...
ConclusionsIce cover in Arctic is expected to continue diminishing        The environment and safety particular to Arctic ...
RecommendationsImproved model and input data will be needed to providea more complete picture of possible scenarios for sh...
ReferencesReferences are available uponrequest.                                21
www.dnv.com                                                                                      Det Norske Veritas       ...
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Shipping Across The Arctic Ocean Position Paper

  1. 1. Shipping across the Arctic OceanA feasible option in 2030-2050 as a result of global warming?Research and Innovation, Position Paper 04 - 2010
  2. 2. This isDNVDNV is a global provider of services Research and Innovation in DNVfor managing risk. Establishedin 1864, DNV is an independentfoundation with the purpose ofsafeguarding life, property and theenvironment. DNV comprises 300offices in 100 countries with 9,000employees. Our vision is global The objective of strategic researchimpact for a safe and sustainable is through new knowledge andfuture. services to enable long term innovation and business growth in support of the overall strategy of DNV. Such research is carried out in selected areas that are believed to be particular significant for DNV in the future. A Position Paper from DNV Research and Innovation is intended to highlight findings from our research programmes. Contact details: Lars Ingolf Eide: lars.ingolf.eide@dnv.com Magnus Eide: magnus.strandmyr.eide@dnv.com Øyvind Endresen: Oyvind.Endresen@dnv.com
  3. 3. SummaryArctic sea ice is in rapid decline, and this may open up new opportunitiesfor economic activity. This paper describes a scenario for future shippingactivity and emissions in the Arctic, specifically related to transpolarcontainer shipping and petroleum extraction. The future Arctic transitshipping activity level and the resulting emissions have been modelled byjointly assessing the volume of global seaborne trade and the attractivenessof selecting the Arctic transit route rather than traditional sea routes (e.g.via Suez). Future shipping activity and emissions related to petroleumextraction have been estimated based on projected production data.The results show that part-year arctic transit may be economically attractivefor container traffic from North Asia between 2030 and 2050. With aprojected Arctic trade potential of 1.4 million TEU in 2030, this amountsto a total of about 480 transit voyages across the Arctic in the summer of2030. For 2050, the Arctic trade potential rises to 2.5 million TEU and thetotal number of Arctic transit passages (one-way) in the summer of 2050is about 850.Due to shorter travel time and the need for a smaller fleet to carry thesame amount of cargo between Asia and Europe by going across the Arcticcompared with the route via the Suez Canal, CO2 emissions are reducedby 1.2 Mt annually in 2030 and by 2.9 Mt annually in 2050.
  4. 4. IntroductionDuring the last decades of the 20th century and the first how the changing climate of the Arctic may affect shippingdecade of the 21st century, the Arctic has experienced and petroleum-related activities. Recently, DNVR&I hassome of the most rapid temperature increases on Earth. contributed to several papers and reports related to theseOn average, the mean annual air temperature has topics (Bitner-Gregersen & Eide 2010; Dalsøren et al.,increased at approximately twice the rate of the rest 2007; Mejlænder-Larsen, 2009; Peters et al., in preparation.of the world. Reductions in sea ice extent, particularly Nilssen et al., 2010; Eide et al., 2010a).in summer, decreased ice thickness, melting glaciers,thawing permafrost, and rising sea levels are all indications This paper gives a short overview of past and presentof warming in the region over the last three decades. development of shipping activities in the Arctic, andAcceleration in these climate trends is projected for develops future scenarios for shipping activity and CO2the next decades of the 21st century (ACIA, 2005; IPCC, emissions towards 2050. The paper separately addresses2007a). the future transit traffic and the ship traffic connected to future oil and gas activities. Other types of ship activities,Seaborne cargo transport in Arctic waters has previously such as tourism, fisheries, and national shipping, are notbeen limited (PAME, 2000; Corbett et al., 1999; Endresen considered. Projections for ice conditions towards 2050 areet al., 2003). Increased melting of Arctic sea ice may lead also given, as these will significantly influence the futureto a longer navigation season, improved accessibility for development of ship activity and petroleum activities inshipping, and extended use of the shipping routes along Arctic.the margins of the Arctic basin (the Northern Sea Route,NSR, and the Northwest Passage, NWP). Travel distance The future Asia-Europe Arctic transit shipping activity andbetween Europe and the North Pacific Region can be the resulting emissions in 2030 and 2050 are estimatedreduced by more than 40% compared with current sea using a new model developed by DNVR&I (Nilssenroutes by using the NSR, and by even more if sailing et al. 2010; Nilssen et al., in preparation) as part of thedirectly across the North Pole becomes possible. Norwegian Research Council project, ArcAct (Unlocking the Arctic Ocean: The Climate Impact of IncreasedFurthermore, with the expected increase in demand for Shipping and Petroleum Activities) 1. The model is usedenergy, combined with a decrease in production in mature to compare costs for a selected Arctic sea route with thepetroleum provinces, in the period 2010-2020, there may traditional Suez Canal route, by applying projected icebe an increasing pressure to develop oil and gas resources data, modelled speed and fuel consumption of ships inin the Arctic region. Continued melting of Arctic sea ice ice, and by adding costs of building and operating shipswill result in easier access to these resources and may open capable of Arctic operation (e.g. ice class). The costup for more exploration and production activity, as well asincreased ship transport of hydrocarbons. 1 The principal objective of ArcAct is to quantify the climate impacts, in terms of radiative forcing, from potentially increased oil/gas and shipping activities in the Arctic regions due to diminishing ice cover. TheDNVR&I has been involved in several research projects consortium consists of CICERO (responsible), the University of Oslo, thethat aim to establish knowledge and understanding on Norwegian Institute for Air Research, and DNV.4
  5. 5. comparison is made for routes originating in several Asianports. If the Arctic route from a given port is favourablein economic terms, the model determines the number ofpassages and resulting emissions based on the projectedcargo volume to be transported and the selected shipconcept (i.e. cargo capacity and sailing season).Future shipping activity and emissions related to petroleumextraction have been estimated based on projectedproduction data provided by ArcAct project partners.The emissions from tanker vessels have been modelled byconstructing shipping routes and locating transhipmentports based on the production data. For supply vessels,a simplified statistical approach is used to correlate theamount of fuel consumed with the amount of petroleumextracted.This paper is divided into nine sections. Section 2discusses the challenges associated with operations in theArctic under the current ice and metocean conditions,Section 3 reviews shipping activities in the Arctic,and Section 4 outlines a future ice scenario. Section 5presents the model, with assumptions and input data, andcompares the results for the most economically favourableshipping scenario with other studies. Section 6 indicatespossible future shipping activity associated with oil andgas activities. Challenges associated with the expectedincrease of activity in the Arctic regions are summarisedin Section 7. Conclusions are provided in Section 8 andrecommendations in Section 9. 5
  6. 6. Present ice and metocean conditions and challenges connected to operating in the ArcticThe physical parameters that pose challenges to operations Despite the challenges listed, the dramatic changes in seain the Arctic are mainly related to the high latitudes and ice conditions over the last three decades, particularly inlow air and sea temperatures. These were reviewed in the summer, have spurred speculations that the Arctic OceanBarents 2020 project (Eide, 2008) and include: may become an alternative sea route between Asia and• Sea ice and icebergs that represent hazards to Europe and North America. the integrity of ship hulls and platforms.• Icing from sea spray, precipitation, and fog, which raise both stability problems and other safety issues.• Polar lows (small storms that are difficult to detect and predict).• Wind chill, i.e. combinations of low temperatures and strong winds, which is a safety and health issue.• Remoteness, with implications for rescue, emergency operations, and communications.• Darkness in winter.• Reduced visibility from fog and precipitation.• Less reliable weather forecasts than in e.g. the North Sea.In general, information on the the meteorological and Figure 1. Summer and winter development of sea ice extent in the Arcticoceanographic conditions, like winds and waves, in the 1979-2010, deviations from mean values for the years 1979-2000.parts of the Arctic with seasonal or all-year ice cover is poor. (Perovich et al. (2009) with March 2010 added)Sea ice in the Arctic has shown dramatic changes overthe last 30 years, (see Figure 1; updated from Perovichet. al., 2009). The extent of summer ice (September) has,on average, declined by roughly 9 % per decade between1979 and 2009, and the extent of winter ice (March) by 2.5% per decade. September 2007 had the smallest ice extenton record. Ice thickness has also decreased considerablyin the last three to four decades. Based on sonar data fromsubmarines for 1975 – 2000 and satellite data from 2004– 2008, Perovich et al. (2009) estimated a reduction ofmean winter sea ice thickness from 3.4 m in 1975 to 1.9m in 2008 (via a maximum of 3.6 m in 1980), caused bydecreasing amounts of old and thick ice.6
  7. 7. Shipping activities in the ArcticThe seaborne cargo transport in Arctic waters has 2000). In 2009, the Bremen-based Beluga Group becamepreviously been limited (PAME, 2000; Corbett et al., 1999; the first Western company since the war to transit the NSR,Endresen et al., 2003). An extensive study of present ship cutting 4000 nautical miles (7400 km) off the journeyactivity in the Arctic was undertaken by PAME (2009). between Ulsan, Korea and Rotterdam (Beluga Group,The study used 2004 as the base year, and concluded that 2010).shipping activity was dominated by community re-supply,fishing, and tourism. There is also export from a few largemining operations in Alaska (zinc) and Russia (mainlynickel but also other minerals), according to Glomsrødand Aslaksen (2006, 2009) and Ocean Futures (OF, 2010).Figure 2, from PAME (2000), shows the main traffic routesused by commercial ships in the Arctic. Note that someicebreakers and submarines have also visited the NorthPole.Community re-supply is taking place along the NSR andNWP. Fishing mainly takes place in the ice-free watersaround Iceland and in the Bering, Barents, and NorwegianSeas, and tourism is at its greatest intensity along the coastsof Northern Norway, Southwest Greenland, and Svalbard(PAME, 2009).Presently there is limited transport of oil and gas by shipsfrom the Arctic, and most of it takes place on the Eurasian Figure 2. Major ports and navigation routes in the Arctic,side. The part of the oil export from Russia that passed reported by PAME (2000)the Norwegian coast increased from around 4 Mt (milliontonnes) in 2002 to 16.5 Mt in 2009 (The Norwegian CoastalAdministration, 2010).Commercial transit traffic, except tourism, has taken placeonly along the NSR, which was opened to foreign ships in1991. The transit traffic peaked in 1993, when, accordingto Ragner (2000) and Brigham and Ellis (2004), morethan 200 000 tonnes of cargo were carried by Russian shipsbetween Asia and Europe. This fell to zero in 1997, andremained at that level for the rest of the century (Ragner, 7
  8. 8. A possible future ice scenarioAll climate models show that Arctic ice cover is expected Some consequences may be:to continue diminishing through the 21st century • Changing physical and mechanical properties(Overland and Wang, 2007; Stroeve et al., 2007; Wang and of sea ice.Overland, 2009). Eide et al. (2010a) extracted future ice • Changes in frequency and size of ridgesconcentration and thickness for the years 2007-2100 for the and hummocks.A2 emission scenario (IPCC, 2007b) from the Community • More calving, leading to more, but smaller, icebergs.Climate System Model (CCSM3) developed by National • Higher waves and more sea spray icing in ocean areasCenter for Atmospheric Research (NCAR) (Collins, 2006). that will become ice free.This model was found to be close to observations between • More polar lows where the ice disappears.1972 and 2007 (Overland and Wang, 2007; Stroeve et al., • More summer fog.2007; Wang and Overland, 2009). The A2 scenario is one • Changed tracks of cyclones and anticycloneswith modest reductions in CO2 emissions compared with in the Arctic.“business as usual”. Presently, the impacts on the factors listed above fromFigure 3 shows the estimated ice concentration and the reduced ice cover as well as from other effects of globalice thickness for March and September 2030 (Figure 3a) warming have not been sufficiently investigated. There isand 2050 (Figure 3b), as derived with CCSM3 for the a need to obtain better understanding of how the windA2 emission scenario. It indicates that ice extent can be and wave conditions experienced along an Arctic routeexpected to continue decreasing into the 21st century, between Asia and Europe will change as a result of globaland that the changes in winter ice extent (March) will warming, with emphasis on the extremes.still be less than the changes in summer (September).The decrease in ice thickness is expected to continue insummer as well as in winter, due to reduced amounts ofmulti-year ice.In addition to the modelled changes in ice cover and icethickness, it is believed that the actual ice properties, alongwith iceberg occurrence rates and metocean conditions,could change in the Arctic as consequences of globalwarming.8
  9. 9. MARCH SepteMbeR MARCH SepteMbeRFigure 3a. Sea ice concentration (upper) and sea ice thickness (lower) Figure 3b. Sea ice concentration (upper) and sea ice thickness (lower)for March (left) and September (right) 2030 as derived from the CCSM3 for March (left) and September (right) 2050 as derived from the CCSM3model with IPCC emission scenario A2. model with IPCC emission scenario A2.Data downloaded from http://www.natice.noaa.gov. Data downloaded from http://www.natice.noaa.gov. 9
  10. 10. Scenario for transit shipping in the ArcticCompared with the traditional sea routes, transiting the SeleCting An ARCtiC RouteArctic will always be associated with higher hazard levels Prior to comparing the economics of Arctic transit vs. Suez(e.g. sea ice and harsh weather), a higher risk of reduced transit, the optimal route across the Arctic Ocean shouldservice reliability, and higher costs per unit of distance be determined, considering transit distance and icetravelled (ice strengthening, ice breaker support etc). For conditions. Four alternative routes have been considered,shippers to choose the Arctic route, the benefits must be as shown in Figure 4.substantial and clearly outweigh the disadvantages. Thesebenefits may be found in less travel distance, which can Route 1 is close to the traditional NSR, passing largelysubstantially reduce fuel cost, and shorter travel time, within Russian territorial waters. Route 2 is a modifiedwhich may translate into higher income due to lower version of the first but avoids some of the shallow areas,inventory-holding costs and increased productivity. and is thus more appropriate for larger ships.Emission reductions may also result in reduced costs,assuming that future external damage costs caused byship emissions are internalized (e.g. by introduction of taxregime or quota market).In the following section, the developed model (Nilssenet al., in preparation) is outlined, along with the inputdata applied, and the assumptions made to estimate thefuture Asia-Europe Arctic transit shipping activity and theresulting emissions in 2030 and 2050.The model calculates the costs of a selected Arctic searoute versus the Suez Canal route, enabling a comparisonof the alternatives. Costs are calculated by utilizingdetailed projected ice data, by modelling speed and fuelconsumption of ships in ice, and by adding additionalcosts from building and operating ships suitable for Arcticoperation (e.g. ice class). The comparison is made forroutes originating in different Asian ports. If the Arcticroute from a given port is favourable in economic terms,the model estimates the number of passages and emissionsbased on the projected amount of cargo to be transported Figure 4. Arctic transit routes used in the Arctic transit shipping analysis. The Exclusive Economic Zone of the Russian Federation is shown withand the selected ship concept (i.e. cargo capacity and diagonal hatching. The orange line marks the Arctic according to thesailing season). definition of the Arctic Council (http://arctic-council.org/filearchive/ AHDRmap_gen.ai10
  11. 11. Route 3 is designed to lead vessels mostly outside the study has settled on Route 3 for comparison of costs. NoteRussian Exclusive Economic Zone (EEZ), whereas Route that the difference in summer ice thickness between route4 goes directly across the North Pole. 2 and route 3 is not very large (Figure 3), and that route 3 is shorter than route 2. Due to the currently untenable andFigure 5 gives an example of vessel speed due to ice future uncertain fee level associated with route 2, routeresistance for a 6500 Twenty-foot Equivalent Unit (TEU) 3 has been selected for both 2030 and 2050 in this study.container ship with bulbous bow in summer 2030, using Route 4 is not much shorter than Route 3 and has worse icethe ice conditions in Figure 3a. These speeds are used to conditions (Figure 3)., and is, therefore, not considered acalculate transit times. After evaluating the combined effect viable option.of fuel consumption, transit time, future ice conditions,and uncertainties in fee and tax regimes, this Furthermore, it is noted that despite the successful transit of the Manhattan through the NWP in 1969 (e.g. Gedney and Helfferich, 1983), traffic through NWP is not considered plausible. This is because the navigation channels suitable for large ships are likely to continue to have difficult ice conditions for many years ahead (Transport Canada, 2005; Wilson et al., 2004), making the route unreliable with respect to transit time, and therefore less attractive to the shipping industry than the eastern alternatives. ASSeSSing CoMpetitiVeneSS oF ARCtiC RouteS The dominant seaborne trade volume between Asia and Europe is containerised cargo (UNCTAD, 2009). Thus, the analysis is concentrated on this segment. Future Asia-Europe cargo volumes are estimated by translating the IPCC A2 scenario projections for global economic development into global seaborne trade volumes using the strong historical correlation between Gross Domestic Product (GDP) and seaborne trade, as reported by the EU project Quantify (Endresen et al. 2008). In the ArcAct project, these global projections were modified for use on theFigure 5. Vessel speed of a 6500 TEU container ship as functions of ice Asia-Europe trade. Considering that the Asian economies areconditions in summer 2030 as projected in Figure 3a. likely to increase more than the European economies, and that both Asian and European trade with current 3rd world countries may be expected to grow disproportionately, the 11
  12. 12. SCenARio DeSCRiption oF SCenARio ASSuMptionS Baseline scenario Regular Suez trade, 6500 TEU • All year operation Suez trade conventional container vessels. S1, Arctic All-year Arctic operation of 5000 • All-year Arctic operation along route 3 Scenario 1 TEU double-acting container • The double-acting vessels are assumed to have 120% higher building cost and 50% vessels (bulbous bow and ice- higher operational cost than their conventional counterparts. breaking aft, a new concept • Ice data based on IPCC scenario A2 described in Arpiainen and Kiili • The speed of the double-acting vessels decreases almost linearly with ice thickness, from (2006)) operating a liner service. 19 knots in open water to zero knots in 2.5 m ice. S2, Arctic Part-year Arctic operation of a • Part-year Arctic operation along route 3. The sailing season in 2030, is assumed to be Scenario 2 fleet of identical 6500 TEU PC4 100 days, and in 2050, 120 days. Shorter and longer seasons are also consider, in order ice-classed container vessels to investigate the sensitivity. (bulbous bow). The container • The vessels with ice class are assumed to have 30% higher building cost and 50% vessels with reinforced hulls and higher operational cost than their conventional counterparts. bulbous bow operating a liner • Ice data based on IPCC scenario A2 service that transits the Arctic • The speed of the ice-classed vessels decreases from 24 knots in open water to zero during the summer, when the knots in 1.5 m thick ice. ice cover is at its minimum, and • The hulls are reinforced according to the requirements of ice class PC4 (International uses the Suez Canal the rest of Maritime Organization, IMO, 2002, 2009; International Association of Classification the year. Societies, IACS, 2007), which is deemed sufficient to handle Arctic sea ice conditions during the summer.Table 1: Summary of the the baseline and two Arctic scenarios used in the fleet-level economic analysisAsia-Europe trade increase was assumed to be lower than Tokyo (T), Hong Kong (HK), and Singapore (S). Eachthat of global trade. Thus, in this study the Asia – Europe port is a representation of a wider geographical area, andtrade volume was assumed to grow by 40 % from 2006 to is designated as a Hub to reflect this (e.g. Tokyo hub).2030, and by 100 % from 2006 to 2050. This gives a totaltrade potential between the Tokyo hub and Europe of 3.9 It is realised that although specific ports are selected formillion TEU in 2030, and 5.6 million TEU in 2050. practical implementation in the model, in reality the trade volumes will be distributed more evenly between multipleFor the modelling purposes of this study, all future Asia- ports in the selected regions.Europe traffic is represented by trade between oneEuropean port, Rotterdam (R), and three Asian ports;12
  13. 13. YeAR SCenARio CoMpetitiVeneSS FoR Route 3 S1 • Not competitive for any of the hubs. 2030 S2 • Competitive for the Northern (Tokyo) hub. S1 • Not competitive for any of the hubs, unless bunker price above $900/tonne 2050 S2 • The Northern (Tokyo) hub will be competitive. • The Hong Kong hub will be competitive for optimistic estimates (i.e. large values) of bunker price and length of summer season, but the probability of encountering these parameter values for which this hub is competitive is deemed lowTable 2. The competitiveness for future transit traffic along route 3The Asia – Europe cargo volumes are assumed to be split in Table 1. The voyage cost calculations for each scenarioequally between the three hubs in 2030 and 2050. For each include fuel costs, explicit modelling of the effect ofport pair (R-T, R-HK and R-S) and for each reference year transiting through ice, and additional investments for(2030 and 2050) the future voyage costs for arctic transit is ice strengthening (e.g. reinforced hull and propulsioncompared against voyage cost for Suez transit. The baseline systems). For each port pair, future cargo volumes are thenscenario is a fleet of identical 6500 TEU container ships in assigned to the most competitive alternative, which givesa liner service via the Suez Canal. This baseline scenario is the number of transits in 2030 and 2050.compared with two different scenarios for shipping via theArctic: S1) All-year Arctic operation of 5000 TEU double- Table 2 summarizes some results from the analysis. Foracting2 container vessels; and S2) Part-year (summer) each particular hub, for a given bunker price (and in theoperation of 6500 TEU PC4 ice-classed3 container vessels. case of scenario 2, for a given length of the summer season),The baseline and the two Arctic scenarios are summarized the model yields a difference in cost between the Arctic scenarios and the baseline scenario. In the scenarios, the2 Double-acting vessels have a regular bulbous bow in front and an most likely future bunker prices are assumed to be $600/ice-breaking stern. The vessel is propelled by pod thrusters that enable tonne in 2030 and $750/tonne in 2050.4 In scenario 2,the vessel to move efficiently both ahead and astern. In open water, the the most likely sailing seasons are assumed to be 100 daysvessel moves as normal, but in ice the vessel turns around, using the sternfor ice-breaking (see also Table 1). Note that, to date, only smaller vesselshave been built using this concept, although designs exist for vessels of 4 According to the OECD ENV-Linkages model the oil price will bethe size used in this study. about 20 % higher in 2030 compared with the 2010 level, and about 50 % higher in 2050. With a current bunker price at about $500/tonne,3 PC4 is a notation used for vessels that should be able to handle and assuming that the oil price development is a reliable proxy for bunker“Year-round operation in thick first-year ice which may include old ice price development, the 2030 bunker price is estimated to $600/tonneinclusions” (see also Table 1). and the 2050 price to $750/tonne. 13
  14. 14. in 2030 and 120 days 2050. These parameters are used of global ship emissions in 2050 (Buhaug et al., 2009;to evaluate the economic attractiveness of Arctic route 3 Endresen et al., 2010).relative to the baseline. For sensitivity considerations, awider range of values for bunker price and sailing season The model has been tested against variations in fuelhave also been investigated. The effect of this is also price and length of sailing season, and the conclusionscommented upon in Table 2. presented are robust with regard to these factors. Future work with the model should be extended to includeThe results show that Arctic transit will be economically variations in other input factors, such aschoice of IPCCattractive for part-year container traffic from the Tokyo hub emission scenario, future ice scenario, ship size and shipin 2030 and 2050. Of the projected total trade potential of concept, performance of the vessels in ice, cost of building3.9 million TEU from the Tokyo hub in 2030, 1.4 million and operating ice class vessels, as well as possible stricterTEU is estimated to be transported across the Arctic in the requirements on fuel quality and, therefore, highersailing season. This amounts to a total of about 480 transitvoyages across the Arctic in the summer of 2030. For 2050,the total trade potential rises to 5.6 million TEU for theTokyo hub, with 2.5 million TEU estimated for the Arctic,giving about 850 Arctic transit passages (one-way) in thesummer of 2050. The predicted amount of containersthat will be transported through the Arctic corresponds toabout 8 % of the total container trade between Asia andEurope in 2030, and about 10 % in 2050. The numbersof passages were then used to calculate fuel consumptionand ship emissions.Figure 6 shows the estimated annual fuel consumption bythe fleet of container ships along Route 3 in 2030. Thefuel consumption is converted to emissions using emissionfactors. For CO2 this gives emissions in the Arctic of 3.7 Mtin 2030 and 5.6 Mt in 2050.Due to shorter travel time, fewer ships are needed to carrythe same amount of cargo between Asia and Europe bygoing across the Arctic compared with the route via theSuez Canal, and the global emissions are reduced by 1.2 Mt Figure 6. Aggregated fuel consumption for the needed fleet of containerin 2030 and by 2.9 Mt in 2050, respectively. These numbers ships crossing the Arctic Ocean in 2030. The high fuel consumptionrepresent reductions of roughly 0.1 % in 2030 and 0.15 % coincides with heavy ice conditions14
  15. 15. fuel prices on the Arctic routes than for the Suez route. which is less than the estimate of 1.78 Mt presented in thisRegularity issues should also be considered, as well as study, but of the same order of magnitude. However, theirlogistic issues like use of surplus vessels during the Arctic study is not limited to container ships and considers onlysailing season. It is also noted that only cost reductions fuel consumption along the NSR, whereas this study alsoare considered in this study; no allowance for potentially includes the parts of the journey that lie outside NSR.higher incomes, due to lower inventory-holding costs andincreased productivity, has been made. The estimated CO2 emissions calculated by Corbett et al. (2010) appear to be significantly higher than presentedThe two Arctic scenarios used in this study are relatively in this study. They give total emissions from all shipstraightforward, and are believed to represent viable traffic in 2030 and 2050, but they have also estimated thealternatives. Other scenarios or concepts are conceivable. proportion that container ships represent of the totalOne option is to deploy ice strengthened vessels only on traffic. Their estimates of the CO2 emissions from Arcticthe Arctic Ocean, and to transfer cargo to ordinary vessels container traffic in 2030 are 4.8 and 7.7 million tonnes for aat purpose-built transhipment ports on the edge of the “business as usual” and high growth scenario, respectively.North Pacific and North Atlantic oceans. For the 2050 the numbers are 12 and 26 million tonnes CO2. These numbers are higher than presented in thisFor this option, reduced investment in ice strengthened study by a factor 1.3 – 2 in 2030 and 2 – 4.6 in 2050. Thevessels would be countered by substantial investments in reason seems to be that Corbett et al. (2010) assume thatport infrastructure. All such scenarios will illustrate ways as much as 2 % and 5 % of global seaborne trade will beto balance parameters such as infrastructure costs, ship shifted to the Arctic in 2030 and 2050, respectively.investment, sailing season, and ice conditions.CoMpARiSon to otHeR StuDieSSeveral studies have tried to predict future transit shippingactivities and their emissions in Arctic waters (Ragner,2000; PAME, 2000; Brunstad et al., 2004; Dalsøren et al.,2007; PAME, 2009; Corbett et al., 2010; Khon et al., 2010;Liu and Kronbak, 2010; Paxian et al., 2010), consideringdifferent climate scenarios, regional developments,geo¬political issues, ship types, reference year, and outputparameters.Corbett et al. (2010) and Paxian et al. (2010) are the studiesmost relevant for comparison with the results presentedabove. Paxian et al. (2010) give a range of 0.73 – 1.28 Mtfor fuel consumption in the North-East passage in 2050, 15
  16. 16. Shipping related to oil and gas activitiesA quarter of the world’s total undiscovered petroleum As indicated in Figure 7, oil and gas produced in theresources may lie in the Arctic (USGS, 2008; Gautier et Arctic parts of North America is assumed to be exportedal, 2009). As part of the ArcAct Project, Peters et al. (in by pipeline. This is very likely for fields in Alaska and thepreparation) used estimates of unproven resources Canadian provinces Yukon, Northwest Territories, andpublished by USGS (2008) to estimate production profiles Nunavut, but may be questionable for potential productionuntil 2050, distributed between the hydrocarbon provinces in the Canadian Arctic islands.of the Arctic. They also distributed the oil and gas exportfrom the different Arctic regions between pipeline and If all the oil and gas developments assumed by Peters etship transport. The future hydrocarbon production al.(in preparation) actually take place, total CO2 emissionswas estimated using the FRISBEE model (Framework from ship transport of oil and gas production and serviceof International Strategic Behaviour in Energy and vessels in the Arctic will be 40 % higher than from theEnvironment, see Aune et al., 2005). Arctic transit traffic in 2030 and about twice that from transit traffic in 2050. The results presented are sensitive toDNVR&I used the geographically distributed oil and change in input variables such as the estimate of unprovengas production locations and export modes established resources, oil price, transportation mode, and fluctuatingby Peters et al. (in preparation) to estimate the ship oil and gas markets. About 50 % of the projectedmovements and the resulting fuel consumption and hydrocarbon production in 2030 and 2050 will be gas,emissions to air. For supply vessels, a simplified statistical according to the results of Peters et al. (in preparation).approach is used to correlate the amount of fuel consumed The gas production will depend on the gas price, which iswith the amount of petroleum extracted. A moderate oil influenced by many factors. The recent prospect of shaleprice was assumed ($80/barrel of oil equivalent (boe)). gas development exemplifies a possible influences on gasIncreasing the oil price would increase production, while price.lowering it would reduce production (Glomsrød andAslaksen, 2009). Figure 7 shows transhipment ports andpossible transhipment routes of oil and liquefied naturalgas (LNG) in 2050 as used by DNVR&I.The results indicate that 89 Mt of oil and natural gaswill be transported along the northern coast of Norwayin 2030 and 211 Mt in 2050. Of this, 87 Mt in 2030 and199 Mt in 2050 will originate in Russia. These numbersconcur well with those reported by the Norwegian CoastalAdministration (2008) and PAME (2009). In contrast,Bambulyak and Frantzen (2007, 2009) cite projections of Figure 7. Transhipment ports (green asterisks) and transhipment routes50–150 Mt oil per year for the next decade (i.e. before (black solid lines) in 2050. The orange line marks the Arctic according to2020). the definition of the Arctic Council (http://arctic-council.org/filearchive/ AHDRmap_gen.ai)16
  17. 17. Challenges from increased shipping in the Arctic regionsThe study presented herein, based on one possible scenario of the blowout in the Gulf of Mexico in April 2010,for the ice conditions between 2010 and 2050, indicates but oil spills, resulting from shipping accidents, occurthat Arctic transit traffic and increased shipping related to regularly worldwide (e.g. Prestige, Heibei Spirit, Full City).oil and gas production may occur by 2030, and continue Considering the added challenges of Arctic operations, theto increase towards 2050. Other studies state that reduced risk of accidents may increase in these waters. Presently,ice cover and easier export possibilities may, in addition, there are very few ways for recovering spilled oil from ice-elevate production of other minerals and resources in covered waters. These factors need to be addressed in orderthe area (OF, 2010; ACIA, 2004, 2005), increase tourism, to avoid severe ecological and economic consequences.alter fishing patterns, and change community re-supplyoptions. This raises the need to discuss the adequacy ofcurrent regulatory and governance regimes for the Arctic. SHip DeSign AnD opeRAtion FoR tHe ARCtiCBelow, some concerns are described that may arise from There are no internationally legally binding requirementsincreased shipping and petroleum related activities in the for ship design or ice class specific for ships traversingArctic regions. the Arctic Ocean. IMO plans to issue updated voluntary Guidelines for Ships Operating in Polar Waters (IMO,enViRonMentAl ASpeCtS 2009) that address construction provisions, as well asThe shift in ship traffic implies that significant parts recommendations for equipment, operational guidelinesof emissions to air may be diverted to the Arctic from including crew training, and environmental protectionmore southerly latitudes, with potential consequences and damage control. These guidelines are updates of anfor the climate, e.g. through deposition of black carbon earlier version (IMO, 2002), taking into account technical(soot) on snow and ice, as well as local pollution, such developments since 2002 and including provisions for theas increased acidification and enhanced surface ozone Antarctic region. They also take account of the Unifiedformation. However, air pollution and climate impacts Requirements for Polar Ships of IACS (2007), which addressfrom shipping are not limited to the Arctic, and efforts aspects of construction for ships of Polar Class. The updatedto address global emissions will also benefit the Arctic. A IMO guidelines are intended to be applicable to new shipsrange of emission reduction measures, such as using LNG with a keel-laying date on or after January 1, 2011.as fuel, are available (DNV, 2009; Eide et al., 2010b). Wastehandling could be an issue in the Arctic due to inadequate SAFetY ASpeCtSport facilities. Most discharges to sea and emissions to air Sailing across the Arctic Ocean will require improvements inare regulated by IMO or regional conventions in the form a suite of safety issues, including charting and monitoring,of upper limits. Noise from ships and other disturbances and control of ship movements in the Arctic (PAME, 2009).are generally not regulated, but are appearing on the IMO Radio and satellite communications and emergency response,agenda. including search and rescue, are currently not satisfactory. Additionally, observational networks and forecasts for weather,A main concern regarding increased shipping activities icing, waves, and sea ice are presently insufficient. Presentin the Arctic is the accidental spill of oil and chemicals. standards for Escape, Evacuation and Rescue (EER) will needThe level of concern has been elevated as a direct result to be changed in order to be appropriate for the Arctic. 17
  18. 18. A short overview of shortcomings of current standards conventions that are legally binding for all Arctic statesis presented by the Barents 2020 Project (2010). They on other areas. Bilateral, regional and sectoral regulationsinclude evacuation to the ice, safe havens, reduced survival address fishing and offshore hydrocarbon activities, as welltime, limited possibilities for using helicopters and aircraft, as impact assessments (Koivurova and Molenaar, 2010). butneed for icebreaker assistance to reach muster points in there is no competent body that administers such topicsthe ice, and search being hampered by darkness during for the Arctic as a whole. The Arctic Council (http://part of the sailing season. The safety aspects must be solved www.arctic¬council.org), is basically a consensus-basedin cooperation across national borders. and project-driven organization, and does not possess any legally binding obligations. Participation in the ArcticAn important contribution to risk reduction in the Council is limited to the eight Arctic states5 .Arctic may be achieved through development and use ofdecision support systems. Risk-based onboard guidance Global or regional regulations that apply in the Arcticto the master (Navigational Decision Assistant) to avoid include the United Nations Convention on the Law of theexcessive hull stress, collision and grounding has recently Sea (UNCLOS, United Nations, 1994), the legally bindingbeen developed (e.g. Bitner-Gregersen and Skjong, instruments SOLAS and MARPOL73/78 (IMO, 2010a), the2008; Spanos et al., 2008). These concepts should also London Convention on the Prevention of Marine Pollutioninclude ice conditions. Utilization of AIS (Automatic by Dumping of Wastes and Other Matter from ships (IMO,Identification System) for ship traffic monitoring could 2010b), and the OSPAR convention that covers only thealso be considered to be used by Coastal authorities in the Atlantic part of the Arctic (OSPAR Commission, 1998).Arctic region to reduce risk. To enhance the effects of suchshore-based ship monitoring, systems applying methods Thus, although the legally binding regulations and afor risk-based ship traffic prioritisation can be used (Eide competent body that administers these for the Arctic areet al., 2006; Eide et al., 2007). missing, a framework to build on when developing the instruments already exists. Some coastal Arctic states haveSoCietAl ASpeCtS submitted claims to the Commission on the Limits of theIncreased shipping and hydrocarbon activities in the Continental Shelf (CLCS) for areas beyond the 200-nauticalArctic may impact on the indigenous peoples in several mile limit (opened for in UNCLOS Article 76) that may, ifways. There may be some positive economic impacts from all are accepted, leave only a small triangle on the Alaskanincreased shipping, but Arctic residents have expressed side of the North Pole unclaimed (VanderZwaag et al.,concerns regarding the social, cultural, and environmental 2008). Non-Arctic states have started to show interest ineffects of such expansion (PAME, 2009). The potential the Arctic, in particular China (Jakobson, 2010) and theimpacts should be possible to mitigate through careful European Commission (OF, 2010).planning and effective regulation in areas with high risk. 5 Eight countries are regarded as Arctic countries: Canada, Denmark (through Greenland), Finland, Iceland, Norway, Russia, Sweden, andgoVeRnAnCe the United States of America (USA). Of these, five countries, Canada,IMO regulations are binding for the Arctic states, Denmark, Norway, Russia, and the USA, are regarded as Arctic coastalbut presently there appears to be no regulations or nations.18
  19. 19. ConclusionsIce cover in Arctic is expected to continue diminishing The environment and safety particular to Arctic operationsthrough the 21st century. This trend may lead to a longer have been identified that are associated with the expectednavigation season, improved accessibility by ships, and increase of activity.increasing pressure to develop oil and gas resources inthe Arctic region. DNVR&I has used a scenario based It is acknowledged that in the 20-50 year perspectiveapproach to consider the expanded ship traffic, as well addressed in this paper, uncertainty occurs in a numberas hydrocarbon exploration and production in the Arctic of factors (if not all) influencing the estimates derived. ItOcean, as a result of continued global warming. is therefore suggested that multiple scenarios might be applied, thereby providing upper and lower bounds forThe results show that in 2030 only part-year (scenario 2) estimates.traffic from the northern ports in Asia (Tokyo hub) willbe competitive. In 2050, a Tokyo hub will be profitablefor part-year operation (scenario 2) and may becomeprofitable also with year-round sailing (scenario 1) forbunker prices above $900/tonne. Trans-polar shippingfrom central ports in Asia (Hong Kong hub) is likely tobecome marginally profitable only with high bunker pricesand a long summer sailing season in 2050. Traffic acrossthe Arctic from the southern ports in Asia (Singaporehub) will not be profitable due to a longer sailing routethan via Suez. Using a trans-polar route may reduce globalCO2 emissions from ships by roughly 0.1 % in 2030 and0.15 % in 2030 and 2050, respectively.Based on certain assumptions about hydrocarbon reservesin the Arctic and their development and an oil price of$80/boe, CO2 emissions from shipping related to oil andgas production (tankers and service vessels) in the Arcticwas estimated to be 40 % higher than the CO2 emissionsfrom Arctic transit traffic in 2030 and about twice thatfrom transit traffic in 2050.In addition to transit shipping and shipping related tooil and gas production, increased tourism, alterations infishing patterns, and changes in community re-supply mayfurther raise activity levels. Certain challenges related to 19
  20. 20. RecommendationsImproved model and input data will be needed to providea more complete picture of possible scenarios for shippingand oil and gas activities in the Arctic. Examples aremodels that consider the whole logistics chain, includingice management, as well as weather and ice routing, andbetter and more detailed regional data on sea ice andmetocean parameters.It has been argued that increased activity in the Arcticwill result in challenges related to the environment andsafety that will need to be addressed. These challengesappear solvable, provided that the regulators take actionand implement the necessary safeguards, making Arcticshipping not only economically sound, but also sociallyand environmentally acceptable, and hence a viableoption for the future.As part of such action, work on Arctic impact and riskassessments should be strengthened and intensified. Theassessments should not be limited to shipping and oil andgas developments, but could also include fisheries, tourism,and extraction of other natural resources. They mustinclude design and operational requirements with respectto safety and environment for all future activities in theArctic, ways to reduce impacts from the various activitiesand improve their sustainability, as well as infrastructureaspects like satellite communication, search and rescue,weather forecasts, and spill prevention and contingencyapproaches.There appears to be a need for more binding regulatoryand governance regimes in the Arctic. Some of theframework already exits. Making the IMO guidelines forships operating in polar waters mandatory could be a goodstart.20
  21. 21. ReferencesReferences are available uponrequest. 21
  22. 22. www.dnv.com Det Norske Veritas Tel: +47 67 57 99 00 NO-1322 Høvik, NorwayDesign, layout and print production: Erik Tanche Nilssen AS, 04/2010 Printed on environmentally friendly paper.

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