UACC CEO, Jens Grønning

UACC’s CEO, Jens Grønning, wants a balanced approach to risk. “Managing risk is one of the most important tasks we face,” he said. “We need to deal with various risk factors on a daily basis. We have always minimised risk as much as we feel is possible, and we try hard to manage the fine balance between what is theoretically possible and what is feasible when running international shipping operations.”

Mr Grønning continued: “In many ways the chemical sector is more ‘industrialised’, and therefore more steady than other more volatile shipping segments such as the products market. From a risk point-of-view, we believe our presence in both the chemical and products markets balance each other out, at least to a certain extent. In addition, we operate in pools because we like the scale it creates and the partnership between owners.”

UACC vessels frequently sail through piracy-affected areas in the Indian Ocean. Regarding this matter, Mr Grønning commented:

“To deal with the risk of attacks by pirates we use armed guards, and we follow the guidance established under Best Management Practice 4 (BMP4). Our ships have been attacked twice, but each time they have been deterred because we were prepared, well trained, and use armed guards to defend the crew, ship and cargo.”

Mewis Duct, courtesy Becker Marine Systems

Reducing emissions is a growing priority for many owners, including UACC, and in the area of environmental risk and how to find efficiency gains, Mr Grønning has clear views. UACC has tested new silicon hull paint available in the market, and the four ships on order will all have Mewis ducts installed. Mr Grønning said: “I am a believer in the Mewis duct, but we have only done model tests so far and I am looking forward to seeing the results of the sea trials. The important thing to remember is that if we can grab 1, 2, 3, 4% savings here and there, they all add up. If we get to 5% fuel savings, it will easily represent a saving of $1,000 a day at sea.”

Mr Grønning pointed out that UACC do slow steam on ballast passages and that its vessels occasionally go down to ultra-slow speed, and especially on ships which are equipped with slide fuel valves and blowers.

Referring to alternative fuels, Mr Grønning believes that LNG is credible, but that it is not a viable solution for the tanker sector any time soon, especially with the current highly diversified trading pattern which includes both remote and under-developed ports. However, Mr Grønning said that he believes LNG is an interesting option for ships plying a regular trade, such as ferries, container
ships and the like.

Mr Grønning believes UACC’s future prospects are bright. “We have faced many challenges already. We were launched during the sub-prime crisis, and that affected things.

The growth in the petrochemical and refinery sectors is very strong and intact, and with refining and production capacity declining in the west, the tonne/mile ratio is going to be favourably affected by sourcing cargoes from farther afield, such as the Arabian Gulf and India,” he said.

Danish-born Jens Grønning joined UACC in October 2008 and is its President and CEO. He was previously COO of Eitzen Chemical ASA, one of the world’s largest chemical transportation companies.  He has more than 20 years’ experience in the shipping industry, with extensive experience of shipping and finance.

He graduated with a higher commercial examination from Copenhagen Business School and took an extensive management course at IMD Business School, Lausanne, Switzerland.

t Mr Ali Obaid Al-Yabhouni, CEO of ADNATCO and NGSCO, image: Lloyd's Register

What do you think are the most important changes your company and the industry can make to meet the challenges of new regulations, high-energy prices and the need for more efficient ships?

In the short term, our aim is full compliance with the MARPOL Convention, particularly Chapter 4 of Annex VI. We aim to have a Ship Energy Efficiency Management Plan (SEEMP) implemented in all the vessels in our fleet by the beginning of next year.

In the longer term, there is a clear need to invest in new energy efficient ships. Current designs can lead to a sharp decrease in energy consumption and, as fuel prices rise, this makes increasing commercial sense. Of course, charter rates are currently at a very low level, but shipowners need the vision and courage to invest in new vessels that are both energy efficient and have lower emissions. Inversely, new building costs have also come down, so there is an incentive for forward looking companies such as ADNATCO to invest in new tonnage, and the ADNOC Group of Companies has plans to continue ordering new vessels.

We feel that the time is right to continue expanding our fleet with a long-term eye to the future market in which energy efficient facilities, bunkering barges, storage tanks onboard and ashore etc. vessels are valued by charterers.

Will most deep sea ships still be burning HFO in 2020? And, if not, what fuel will they be using – for instance, will low sulphur MDO be available in sufficient quantities?

Fuel choice is clearly a major challenge facing the global shipping industry in terms of cost, efficiency and emissions. Whereas the burning of LNG as fuel is a practical and clean solution for LNG tankers, such as our own LNG tanker fleet, it is unlikely to be an option for other vessels. Burning LNG for propulsion power onboard ships other than LNG carriers will require massive investments in bunkering facilities, bunkering barges, storage tanks onboard and ashore etc.

The reality is that there is at present no readily available substitute for HFO. Low sulphur MDO represents an interesting alternative but, for the time being, is not available in sufficient quantities due to insufficient refining capacity. However, as a shipping company owned by a national oil company with significant refining capacity, I would point out that the refining industry has historically shown itself ready to invest in supplying changing demand patterns. Reconfiguring refineries and installing new units takes time, but if the global shipping industry decides to go down the MDO route, the refining industry will respond accordingly. However, this is not something that can be done unilaterally by any single company. There has to be consensus in the industry and a decision that this is the best way forward.

How can other stakeholders in the shipping industry – class, shipbuilders, charterers, insurers and banks – best help operators to manage the challenges of the future?

Shipbuilders and class have a greater role to play in this regard, because of the vast resources and experience they have in designing the new ships with more efficient and environment friendly engines.  The shipowners are ready to spend extra provided the technology is available.

The class in collaboration with shipbuilders could focus on increased research related to energy efficient ship designs, including using low sulphur and alternative fuels, installing fuel efficient and emission compliant engines, integrated power plants, and the use of exhaust-after-treatment devices.

In an ideal world, charterers would reward energy efficient ships with increased rates, while insurers would reduce their premium rates for new energy efficient ships. We need market-based mechanisms to ensure that this happens.

About Abu Dhabi National Tanker Co…

(ADNATCO) was established in 1975 for the transportation of petroleum products. It is a wholly-owned subsidiary of Abu Dhabi National Oil Company (ADNOC).

ADNATCO owns and operates a fleet of oil tankers, a molten sulphur carrier and two ro-ro vessels and is involved in the marine
transportation of petroleum products and the bulk carrying of sulphur.  National Gas Shipping Company (NGSCO) was formed in December, 1993 to transport liquefied natural gas (LNG) on behalf of Abu Dhabi Gas Liquefaction Company (ADGAS). 

NGSCO operates a fleet of eight LNG carriers, each with a capacity for 137,000 m3 of LNG. NGSCO took deliver y of it s first vessel Al Khaznah in July 1994, followed by a further seven vessels, the last of which was delivered in June 1997. The first four ships were built in Japan and the other four in Finland. Both the Japanese and Finnish built vessels are Moss Rosenberg designs and, when built, were the largest LNG carriers in the world.

The company’s LNG fleet was initially managed by third parties but since the end of 2007 all vessels are fully managed by NGSCO.

What have been your experiences of maritime crime in West Africa?
We had not been victim to any incidents until the end of last year. Since then we have had two further petty opportunistic thieving incidents with menaces onboard. These involved the same ship and the same crew.

We operate seagoing survey ships, so are low and slow, which is what you want when conducting seismic surveys. The average speed of our vessels when working is 4 to 5 knots and they lack maneuverability when they have all survey equipment deployed. Therefore, without high levels of protection they are really easy to board.

Two of the three incidents occurred at Point Noire and the other one happened off Ghana, which was more surprising.  They all happened around the same time in the morning, at about 3am, with the same crew on. You have to question the quality of the look out – to get three mooring ropes off the boats would have had to be there for some time. These incidents were not even discovered until about an hour afterwards.

What would you say is your biggest challenge when operating in this region?

The big problem is crew motivation from the Captain and officers. The threat of incidents has always been there, but the crew didn’t help themselves by mitigation, and guidance given in the Ship Security Plan, M Notices and other publications held on board was ignored. I as CSO also arranged for daily bulletins concerning security to be emailed to the vessel. It comes down to a complacency issue. The crew does tend to get lax during long periods between projects and ship’s employment. As a CSO I have had to tell them what to do, which is surprising, as both the Master and Chief Officer hold Ship Security Officer Certificates. The Master is the appointed SSO, and should have been aware of the risks and the steps to take to mitigate these risks. The crew is well trained, and it is within our training matrix that the crew have to conduct security exercises on board, and also hold exercises between the ship and our Emergency Response Team ashore.

We operate our ships differently to most Merchant Shipping companies, in that we are not carrying cargoes from A to B, rather than we’re
conducting surveys. Therefore, we are in a particular area all of the time, rather than coming in and out. I think that once a ship has been sat at anchor for a couple of weeks, the locals get to know about it and will be watching. Bear in mind it tends to be local fisherman who commit these opportunistic crimes. If they can observe the ship and get to know the routine including how many people are on watch and deck patrol, then they can use this information to their advantage. They are not stupid. So routine can be dangerous.

It goes back to onboard crew management. There were 12 onboard marine crew and they said it wasn’t enough people. However, many ships operate with this number of crew members.

Would you consider employing additional security personnel?

It is difficult for us to employ additional security. We tend not to put our ships in to dangerous areas. So we don’t bid for jobs in Nigeria as it’s too dangerous. But when the ships are working and we have the survey crew onboard, there just isn’t enough room to have additional security personnel onboard. It is bad enough trying to appoint cadets and trainees to a vessel and trying to find them accommodation whilst staying within the ship’s LSA numbers.

What recent trends have you noticed?

I have received reports of increasing levels of violence, which is concerning. There is also a fear of this type of criminal activity spreading
from Nigeria to other parts of West Africa. This is something we are looking at and monitoring closely.

How easy to identify and mitigate risks to your supply chain?

We try to limit our exposure to risk. We don’t bid for jobs in Nigeria and certainly not off East Africa. We turned down three jobs in East Africa last year. That’s the main way we mitigate risks – we don’t put our ships in that position. When we are operating in high risk areas we just have to make sure we have high levels of security at all times.

We haven’t had any problems whilst vessels have been alongside in port. The security at some of these West African ports is quite good. The berths we tend to use are often operated by oil companies and are privately run, including their own security. When we did have operations in Nigeria we did have some problems there in the municipal ports, but as stated, the ports we tend to use tend to be heavily compounded with their own security.

How will next 6 months evolve?

Extrapolating from what we have experienced this year, I expect a steady increase in maritime crime in West Africa. We, as a company, will carry on as we are and monitor the situation. It is a lot easier when the ships are working rather than sat at anchor where they
are a sitting target. When the survey crew is onboard this heightens security as it doubles the number of people onboard who can help keep watch and such.

For 18 years Tony Foster was in command of company vessels and rose to Senior Master.  In 2008 he came ashore as Marine Safety Superintendent, and also took the dual role of DPA and CSO at Gardline Marine Sciences, where he currently works.

To hear more about the issues discussed here, join the Combating Piracy community at the 2nd Annual Combating Piracy: West African Maritime Security conference, taking place on the 10th & 11th July 2012 in Ghana.

One might look at these numbers and say, “well, they’re both huge global brands with hundreds of thousands of employees worldwide.  Getting a huge followership on Facebook should be a simple task.”

Not true at all.  In fact Shell only has 1,000 followers in the Netherlands, which is home to 10,000 Shell employees.

Using social media outlets like Facebook to your advantage takes a lot of effort and investment.  People don’t just “Like” you on Facebook because of your name.  They like you because you’ve figured out a way to engage with them, or allowed engagement, in a way that is personally meaningful.

The Wall Street Journal’s Ben Rooney recently interviewed Herbert Heitmann, EVP for External Communications at Royal Dutch Shell.  Here’s some insight into why Shell decided to make the leap into social media, and what they found in the process.

What’s the approach right now with Fairstar?  Are things getting sorted out with the Fairstar-Dockwise deal?  The last I heard things were “heating up” a bit between the two companies.

Not as far as we’re concerned.  We look at our control to be at over 54 percent, we still have of course a couple of formal position points ahead of us, like our AGM, but we’re confident we are able to explain the business case to our shareholders.

We have put our price forward, and there is a lot of speculation about the remaining 46 percent.

We’ve said we find the 22 percent premium on the value of the stock prior to our offer, to be a decent proposal, and that’s where we are. 

What does Fairstar think they are worth?

I have no idea, you’ll have to ask Fairstar.

Fair enough. 

Moving on… the Dockwise Vanguard was a bit of a feature for you this year at OTC Houston, and your company is planning to do some remarkable things once she’s delivered, such as dry-docking an FPSO while still attached to the buoy. 

A conceptual image showing the Dockwise Vanguard drydocking an FPSO while still connected to the production buoy, image courtesy Dockwise

How long has that concept been considered?

Really, we’ve been looking at this idea ever since we made the decision to build the Vanguard.  The idea behind this vessel is that it serves a couple of market segments.

First of all, we’re looking at the new, big production semis for deep water, because everything is getting bigger, and we’re looking at the potential to transport a fully integrated semi, so it’s not a separate hull, but a hull including the topside.

On Jack & St. Malo, they were just a little bit ahead of us, but if you look at Goliat, which is a fully integrated semi headed to northern Norway, that’s the idea we had when we decided to build it.

Is that one of those cylindrical FPSOs by Sevan Marine?

Yes, that is correct. Recently we have transported the Sevan Brasil, which is a drilling rig of a similar cylindrical shape as the Goliat.

Our next target market are spar buoys.

I think Statoil awarded Dockwise a contract for such a project recently isn’t that correct?

Yes, Aasta Hansteen.  It’s a long spar, and wider than the others we’ve transported in the past. Of the 17 spar buoys that are now installed in the Gulf of Mexico, we’ve transported 15 of them.

Perdido and Tahiti were the last two, but the Aasta Hansteen spar will be of a new generation of spars and a step up. We see new spar buoys targeted for the deepwater projects in the Gulf of Mexico and that’s a major segment we see as an ideal fit for the Dockwise Vanguard.

Our third targeted segment for the Dockwise Vanguard is transporting new builds from the Far East that do not have their own propulsion to either Brazil or West Africa. Then we would look at the transportation, or lifting, of the converted FPSOs.  Considering that there have been about 80 FPSOs in operation over the past 10 years, there is a particular need for this as many are now seeing maintenance issues that will require dry-docking.

Gradually, we have a lot of discussions ongoing with the FPSO owners and the oil companies about new builds and I expect that not too long from now, we’re probably going to sign another deal for the Dockwise Vanguard with one of the FPSOs.

How many contracts do you have signed for the Vanguard already?

We have three contracts at the moment for around $100 million, and the vessel is still under construction.

That’s fairly unique in an industry where everyone is fairly traditional from the beginning.

Well, the Dockwise Vanguard is certainly not a traditional vessel.

Nothing traditional about it indeed.

Recently, we’ve also decided to convert the Black Marlin and make it as big as the Blue Marlin for the near top end of the market, right under the Dockwise Vanguard cargo size.

The Blue Marlin and the Black Marlin were sister ships weren’t they?

We are going to make them sister ships again.

So, maybe I’m missing something, but as sister ships, I would think that both ships would have the same capacity when they were originally built?

They were exactly the same.

So what happened with the Blue Marlin?

We converted the Blue Marlin in 2004 when we signed the Thunderhorse contract with BP, then we converted her to a capacity of 75 thousand tons. Since then, she has been carrying around all these 6th Generation semis, big production units, and that part of the market is going to be so crowded in the next couple years that we decided to upgrade her sister ship.

Going back to the Fairstar deal, because we have decided to convert the Black Marlin, we need another vessel like her to fill in that segment of the market.

The Fairstar deal is significant for us because it is fully complementary to everything else that we do. In the fact that they have the converted barges, FORTE and FJELL, and for our offshore work, those vessels are pretty interesting. The other two vessels are a good addition to the rest of the fleet looking at their size.

What is Dockwise’s role in the Australian Ichthys project? 

The Ichthys project has a couple of components. There is an LNG project, which consists of modules, which is something that Fairstar is partly working on, but before that, the big production unit, which still needs to be built, that’s the unit which will be the largest floating production unit ever built.

The Prelude?

No, no, this will be the integrated semisubmersible that will be built and will be close to 100 thousand tons in weight.  This is something that we are looking at for the Dockwise Vanguard.  Then, there is an FPSO as part of this project, and the LNG systems. All of these projects have a significant magnitude, and most of it is pretty interesting for the Dockwise Vanguard.

Do you foresee building any more of these ships once this one is launched?

Well we take the position that we want to see this one done first. I would certainly like to have the first  three years under contract and then looking at the market, I think there might be a chance that we look at another one.

When will the Dockwise Vanguard be delivered?

Mid-December she’ll be delivered, but she will be in the water by August.

Who is classing this ship?

It’s DNV.

Was there a particular reason you chose DNV over any of the other classification societies?

We have a very strong relationship with DNV for all our vessels, so for a vessel with as much novelty and technology as the Dockwise Vanguard, we find DNV to be the most qualified.

Was this an in-house design?

We came up with the concept, because we knew pretty well what we wanted, essentially a semisubmersible aircraft carrier, and we figured out the basic conceptual design in-house, and then went to Deltamarin in Finland and they worked on it to see if it would work.  A few months later they came back and say we have something you need to see, and we think it’s doable. Here it is.

And how long have you been with Dockwise Andre?

I’ve been CEO since 2003, so almost 10 years now.

What has been the biggest challenge for you as CEO?

The biggest challenge was in 2006 when our parent company, Heerema sold us and we went through full control auction where we had a lot of bidders for our company.  That was 8 to 10 months of very complex negotiations, and the company was finally sold to a private equity firm.

All in all, it has been a really good situation for us ever since and has left us in the position to make a lot of investments and grow the company which has accelerated us in the right direction.

16 April 2012

Jay McFadyen, President, Rolls-Royce Naval Marine

RA:  Jay, Rolls-Royce has a significant presence in a number of different sectors can you give us an overview of Rolls-Royce’s global business?

JM:  We work across four segments, Civil Aero, Defense Aero, Energy and Marine.  As part of that, the Marine Sector has been the fastest growing over the past decade. It’s roughly the second biggest piece of the company behind the civil aerospace sector.

Rolls-Royce has the biggest portfolio of marine equipment on board ships in the world, found on 30,000 vessels.  We have 70 navies around the world that operate Rolls-Royce equipment, including most of the US Navy fleet operating at least some element of Rolls-Royce equipment on board, particularly controllable pitch propellers.

Within the marine business, which is headquartered in Singapore, we have over 7,000 employees around the world. Our three customer facing business units include Offshore, Merchant, and Naval. We also have a Services business supporting customers in all three.

Naval is the piece that I work in and I have the North American piece of Naval, but we operate globally.  Within Naval we have around 800 people supporting our products and our customers around the world, predominantly based in the US and UK, although we have picked up some folks as part of our recent acquisition of ODIM and that’s given us two offices in Canada, one in Peterborough, Ontario, and one in Dartmouth, Nova Scotia.

RA:  What is ODIM?

JM: ODIM is a subsea and seismic technology company.  The part that falls into our Naval business is specialty handling equipment, such as winches, winch systems for sonar and launch and recovery frames.

RA:  Why did Rolls-Royce pursue that?

JM:  It was predominantly a strategic acquisition for seismic and subsea and they have some specialty equipment that extends into our offshore supply and support vessel business unit.

RA:  I’ve noticed that a lot of the work that Rolls-Royce has been doing in that sector has been full scope.  That is, the complete ship design, integrated bridge, as well as providing the engines as well.

JM:  Exactly right. Around 60% of the value of the ship is found in the high value parts of the ship, such as the engines and propulsors. We design the ships and provide complete integrated power and propulsion systems, and equipment.

We’re looking at how do we mimic that sort of design and systems integration approach within naval, and we’re doing it with a tug and salvage vessel design which is in service with a number of navies, where we’re providing a vessel that is based on an offshore UT design as well as providing the handling and propulsion systems.  The Rolls-Royce UT design is the benchmark for the offshore industry.

Going into the Naval side of the business, we have about 500 of the 800 people worldwide working with the US Navy.  The way we like to differentiate ourselves is that we have 500 people that work in North America who wake up every day with their primary goal being to service the US Navy.  We have a really dedicated team with a specific target customer and we’re working to solve problems for them.

We have a number of different products, but one of the key ones within Naval is the gas turbine.  These include the prime movers found on the Freedom-class Littoral Combat Ship and on the DDG 1000 class destroyers, as well as generator sets found on the DDG 51 class destroyer.

RA:  Which gensets are on the DDG 51?

JM:  The 501 gensets, AG 9140s.

RA:  They used to be called something else in the past, weren’t they Allisons?

JM:  They were. Rolls Royce purchased Allison back in 1995 and now it’s become a Rolls Royce-branded engine.

Ship-to-Shore Connector, image: NAVSEA

We have a gas turbine which we’ve offered as part of a proposal for the Ship-to-Shore Connector, which if successful, would be a new power size for the surface navy. What we’re doing though is taking the AE1107 engine, which powers the V-22 Osprey, and “marinizing” that for surface vessel use.

RA:  What kind of changes are needed to “marinize” an engine?

JM:  In this case, it’s truly a unique opportunity for us because in the application, it had to be designed to survive in the marine environment so basically from the inlet flange to the exhaust, there are really no changes.  The changes are all external to the engine such as the power take-off shaft, the control system, the starter, and the interface to the fuel system.  Other than that, it’s identical to the engine that’s on the V-22.

This is a terrific opportunity to the Navy because the Ship-to-Shore Connector and the V-22 would both be operating off the same platforms.  So all the LPDs and LHAs, would all have V-22s on the deck, and Ship-to-Shore Connectors in the well deck.  The Rolls-Royce engine is serviced through a thru-life support agreement where we have service reps that ride the ships, we have parts that are stocked in the Aviation area, and those assets can be deployed to the Ship-to-Shore Connector, so it makes a ton of sense from a logistics and maintenance perspective that those engines would work together on those platforms.

We’re very optimistic that the Navy will see the benefits there.

RA:  Which kind of engines are found on the LPD 17-class ships?

JM:  Those ships are diesel powered, but we will be able to take the aviation element of that and apply it to the Ship-to-Shore connector.

One of the other things that we see as part of a global company is that we have a service network that is distributed around the globe.  As I mentioned, our Marine headquarters is located in Singapore, we have a Marine service shop in Singapore, and we also have relationships on the Air side with joint ventures around service that can be put to use with the Navy.

This comes into play with the potential forward basing of a handful of Littoral Combat Ships in Singapore, and we have the infrastructure in-country to provide repair and overhaul services there, so that you don’t have to take the MT30s and move them back and forth between there and the US if you need service.  We also have trained service reps who can leave our service shop next to the Navy base and provide maintenance support.  With the minimal manning structure of the LCS, there just aren’t the people or expertise on board to maintain the MT 30 engines, this work needs to be contracted out.  Our assets in Singapore are ideally positioned to provide this service.

MT30 Engine Test, © Rolls-Royce plc, click for larger

RA:  So the Navy doesn’t do any sort of maintenance on these engines?

JM:  They do MINIMAL work.  It’s the day to day checking of filters, fluid levels, but once you get beyond that, they have to contract in a specialist.  Considering it’s only 40 sailors on board, and the broad range of equipment found on the LCS, it’s really the only practical option.

RA:  Historically, since the LCS program has been around, has the Rolls-Royce MT 30 engine worked out well?

JM:  It’s really a relatively low maintenance engine, and very little intervention required to keep it up and running.  You do have to perform the standard preventative maintenance activity though, and for that, you do need to bring on contract work to make that happen.

RA:  And it hasn’t been a problem getting contract help in from Singapore to get this work done?

JM:  Right now, the ship has moved from Milwaukee, to Norfolk, and now it’s home-based in San Diego.

RA:  Ok, so it hasn’t deployed yet?

JM:  It’s deployed, but it has deployed out of San Diego at this point.  The plan is, next year, she’ll go over to Singapore for an eight-month deployment, and that’ll be the first test of whether the vessel can be supported abroad.  We’re looking forward to doing what we can to make that successful.

Rolls Royce MT30

RA:  You touched on Rolls-Royce doing full scope work in the offshore community, how much work is being done by Rolls-Royce within the Naval community outside of engines?

JM:  Quite a bit.  Most US Navy ships have Rolls-Royce propulsion equipment, the old Bird-Johnson propellers, are part of Rolls-Royce, and with the LCS-5, we’ll be introducing a new axial-flow Rolls Royce water jet.  So all the LPDs, LHAs, Cruisers, Frigates, DDGs, DDG 1000s, CVNs, they all have Rolls-Royce propellers.  We’re doing the bulk of the service work for all the hub internals; the minor blade repair work is handled on-site by the Navy, and some of their contractors, but when it gets more complex, and they have to go into the internals of the propeller, all that work gets done at our factory in Walpole, Massachusetts.

Northrop Grumman Newport News shipyard employees reattach a propeller to the Number 3 shaft of the aircraft carrier USS George Washington (CVN 73) at Newport News, Va., on July 23, 2005. The ship has four brass propellers that are 22 feet in diameter and weigh 66,200 pounds. DoD photo by Petty Officer 2nd Class Glen M. Dennis, U.S. Navy. (Released)

RA:  And these are Controllable Pitch Propellers (CPP)?

JM:  For the most part.  The DDG 1000 and the CVNs are fixed pitch.

RA:  The DDG 1000s are fixed pitch?

JM:  Because it’s electric-drive, you don’t need CPP.  The same goes for the CVNs as they are reactor steam driven.

RA:  And from what I hear, DDG 1000 will not have shrouded, nozzle-type propellers?

JM:  Right, exactly.  Although useful at slower speeds, the shroud increases the vessel drag at high speed.

RA:  It’s a quite a different mindset than the commercial industry.  It’s all about speed in the Navy, full go all the time.

JM:  There’s a growing concern in the Navy about not operating at full speed all the time and trying to conserve energy.  More and more, we’re trying to offer energy efficient solutions.  The DDG 1000 is a great example of an integrated electric power system because we have two large, 36 megawatt MT 30 engines, and two smaller, MT 5s that are 4 megawatts each, and so all of that actually goes into a single power island.  So you run the engines based on the most efficient way to provide the required power.  Gas turbines are most efficiently operated at full power, so you basically turn the engines on sequentially so that you’re able to operate most efficiently based on your operational profile.  Within that electrical power grid, you’ll pull off what you need for hotel load, combat systems, auxiliary, propulsion etc.

RA:  How fast can the ship go with both main engines down and using only the 4 MW auxiliary engines?

JM:  To be honest, that’s classified by the Navy but yes, the idea is that you can propel the ship using the smaller engines in a loiter-type scenario.

RA:  The cruise industry, and a number of other industries are looking at using DC power as a major onboard system.  I know that ABB has been pushing this idea fairly aggressively lately making points on how it would increase power efficiency and reduce the cabling which would both reduce weight and cost.  I was wondering if the Naval industry was looking at this?

JM:  Let me turn that over to my electrical expert here, Ryan Frommelt

RF:  So the Navy has what they call, the next generation, integrated propulsion system road map, and on that road map, DC is on there.  DC power is used on the Virginia-class submarine, and they have a very smart system with how they used their steam-turbine derived power.

The surface navy is trying to integrate some of that, and progress along the path to get there, and I think DC is on the path, high frequency AC is on the path, and it’s just a matter of how much they are willing to invest to get there, and what they will be able to do with it.

From a Navy perspective, I think a lot of the things they are faced with is that there are no new ships coming on line.  They have to work within DDG 51 and since DDG 51 uses a 450V 60Hz AC system, in order for a big step change into DC, you’re really looking at a new ship.

Since there are no new ships on the books, it’s kind of tough to push through those leapfrog technologies when you’re using that same platform.  There’s the Flight III platform, but it’s still a DDG 51-based design.

DC is on roadmap, and how quickly you can get to that checkpoint is a function of how much the Navy is willing to put forth, as well as the new platforms that may or may not be moved forward.

JM:  The last thing I really wanted to highlight was our recent joint venture with Daimler, where we’ve joined together to purchase Tognum, which is the parent company of MTU.  One of things that was missing from Rolls-Royce’s marine portfolio was a high speed diesel, and this will now give us access to the high speed diesel marketplace.  MTU also has a tremendous system integration capability that we think we can leverage to pull together the rest of the Rolls-Royce suite of products that can be put to effective use in naval applications.

RA:  Very nice meeting you today Jay, thanks for the opportunity to chat.

Tim Protheroe, President, Lloyd’s Register Americas

I met up with Tim Protheroe, President, Lloyd’s Register North America, for a chat at this year’s Connecticut Maritime Association (CMA) conference, here’s what he had to say:

21 March 2012

RA: Tim, I understand you spoke to an audience this morning at the CMA, what did you speak about?

TP:  The panel topic this morning was: “Are We Too Regulated”. There has been quite the onslaught of regulations for bulk carrier operators, tanker operators and general cargo, and I think it has distilled into two areas:

The impact of regulation on seafarers and their ability to cope with and accommodate it; there is a vast amount of regulation that is now becoming more of a distraction onboard in terms of the new administrative demands, which are difficult and challenging.

And the other is: ‘who pays for it’.

Regulation requires a lot of capital expenditure for things such as ballast water abatement technology, emission scrubbers and that sort of thing.

One presenter at the conference this afternoon said: “we’re dying under a mountain of regulation”.

Classification societies regularly update their rules and apply and distribute them via new construction standards which are guided by what we learn from in-service activity, casualties, technology, material updates and changes in mechanical systems.

On a statutory level, we act as recognized organizations on behalf of flag administrations, which have the responsibility to ensure that the vessels that fly their flags comply with the IMO Conventions.  So, new regulation often comes from IMO resolutions and conventions (such as SOLAS, MARPOL, STCW, Load Line), which cascade down into national legislation and is enacted for vessels carrying that flag.

A lot of flags delegate the responsibility for verifying compliance with regulations to classification societies, principally because there are overlaps with class requirements and elite class societies typically have global networks of technical experts at their disposal.

For the seafarers, there are challenges associated with bringing them up to speed with the required surveying work. Because of our role in the industry, Lloyd’s Register reinvests a lot our annual capital back into research and development to provide the innovation the industry requires, to keep owners and operators abreast of the latest available technology and to remain a credible technical advisor to the IMO. The IMO doesn’t really have a dedicated technical arm; it relies in part on the International Association of Classification Societies (IACS) to provide advice.

One of the biggest challenges we face at Lloyd’s Register is maintaining a consistent interpretation of the regulations across our 2,000 or so technical experts across 250 offices in 80-odd countries. So when our clients’ ships go from one location to another, their onboard and shore staff know what to expect.

Keeping everyone on the same page with a practical approach to the interpretation of the statutory and classification requirements takes a lot of internal effort in the face of this never-ending cycle of changing legislation.

RA:  One of the things about regulation that Graham Westgarth from Teekay mentioned this morning is managing the regional differences.

TP:  He was eluding to the port state control regime, where you are likely to get different interpretations because that lacks the consistency of a global approach like class. We train our people using the same methodology to ensure the same approach to regulation whether you’re Japanese, South African, or whatever.

Under the present Port State Control regime, ships and their crews can often find themselves at the mercy of local or individual interpretations, which can be disruptive.

Part of the value that class can bring is independent technical advice and interpretation. A Port State inspector can come onboard and say: “this is wrong, this is wrong and this is wrong, and you need to get class to verify this before we issue a release”.

It can be our role to say, “hang on a minute guys”, and support a consistent interpretation of the regulation, pointing out things such as the fact the owners or operators’ approach is within the interpretations in their safety management system. It may not be black and white, but they are compliant.

Or we may have to explain why the port state inspector’s interpretation is completely justified and we then help all parties to find a solution that will get things fixed ASAP, and get that ship back on its way.

It’s very much a facilitation role, being solution-oriented because surveyors using our depth of knowledge and diverse technical expertise. Even if a class surveyor is less experienced, there is a deep historic and global experience that they can rely on.

These days it’s all about turnaround times. Good operators like Teekay operate their ships way beyond the bare regulatory minimum. They set their own very high operating standards. Still, it always will be possible to find something that will not line up with an auditor’s thought process or expectation, creating an issue. A class society’s role is often to provide a sanity-check and consistent interpretations.

RA:  How much does Class interface with IMO?

TP:  A lot.  IACS, as a body, has representation as an NGO at the IMO. Also, a US classification society like ABS will accompany the US delegation, we might accompany the Canadian and British, Bureau Veritas will accompany the French, to act as technical advisors.

We are absolutely not there in a decision-making role; we help to give confidence to those who are there to vote that what they are considering is technically sound.

Class collaborates with many industry organizations — INTERTANKO, the MCA, the US Coast Guard, etc., – and, when invited, we provide technical input and validation.

There is the growing perception that some of the regulatory advances are getting out in front of the available technology. So the industry is asking: ‘can we comply with the specific requirements of, say, ballast-water exchanges with the available technology?’ I get a sense from the owners that confidence levels are not where they should that the available systems are robust. So we are engaged with the manufacturers on R&D and type approval. It’s cradle-to-grave technical support that goes beyond the ship to components and sub-parts.

RA:  Is class getting involved in the issue of piracy at all?

TP:  Piracy is a difficult one, because the issue is largely political, not technical.  To deter piracy, you can load a ship up to the gunwales with guns — and that’s a whole debate in itself — but technically, from a structural standards perspective, there isn’t a huge consideration, because people aren’t going to armor plate their ships or anything like that.

The worst thing is that there are hundreds of people right now being held against their will, so there may be a role for us to play in supporting the industry’s political lobbying.

But while some countries such as the US don’t advocate paying ransoms, many governments are turning a blind eye to cash payments because they realize that that appears to be the only way to get your ship back. A military solution has been elusive.

That’s my personal opinion. On a technical level, there doesn’t appear to be a significant role for class to play.

RA: On a lighter topic, what do you like the most about your job at Lloyd’s Register?

TP:  It may sound a bit cliché, but it’s the fact that surveyors can make a real difference to the protection of life and the environment when they go onboard ships. It’s at the core of why we have a low staff turnover. We actually save people’s lives on a regular basis by stopping ships from sailing and insisting on repairs. We come up against a lot of commercial pressure, and we have to find the balance between what are show-stoppers and what are not.

We tell our surveyors that they need to ask themselves whether they would put their children on that ship to sail away. If the answer is no, then they need to write it up and make sure the vessel is fixed, or limits are put to assure its safe operation before it departs.

That’s what really motivates me. That, and the fact that there’s a lot of variety in the work; you’re not endlessly dealing with one type of ship. If you work at a tanker company, you’re working with tankers all day, every day. The tanker business is a great business, but I like the variety of class.

One minute I’ll be talking about the tanker industry, and the next I’m talking about the cruise ship industry, which is completely different business model and regulatory environment. Next I’ll be looking at project cargos or bulk carriers, or offshore. There’s a huge amount of variety.

It’s rewarding to be in charge of a business where you know that you’re really making a difference in terms of saving lives and protecting the environment. I spent 15 years on ships — I was a captain at one point — so I know how important that is.

Image: Lloyd's Register

RA:  Why is being a marine surveyor, or having experience as a marine surveyor such a critical skill set?

TP:  There are a number of kinds of surveyors. There are naval architects who serve their apprenticeships ashore, maybe in a shipyard, or around ships. Others have sailed on ships, such marine engineers.

From a shipboard perspective, it’s very challenging, with an incredible amount of technical and operational requirements to meet. This is why they value a surveyor who can say “here’s what you need to do and how it needs to be done”, providing a solution.

When we train our surveyors as auditors, we don’t encourage the use of checklists, we emphasize the transfer of knowledge. If it is clear that the person you’re speaking to doesn’t understand, we see this as an opportunity to teach and train them. We are looking to see if people understand, not just comply.

There’s a big difference in the mindset and philosophy of an auditor who’s there to verify compliance, rather than someone who is there to verify non-compliance. So we train our people to make sure that they assess understanding; they’re not just there to try and find issues of non-compliance. Anyone can go on board and say, “that’s wrong, that’s wrong, and that’s wrong”; there’s no value in that.

RA:  It sounds like this role provides the perfect knowledge base to go on to other things should they choose.

TP:  Indeed. The guys get a lot of experience. Those that show acumen, interest and the right personality can go into a business development role, or perhaps into a mentoring role. There is a management path, and there is a technical path. We develop senior subject-matter experts who are brilliant in their subject, but they may not be interested in managing people, with all the fun and games that entails. Others, we develop as business leaders. We need both, as one only exists with the support of the other.

There’s a lot of activity in Lloyd’s Register now to define and develop that two-path approach, creating a much clearer road map for the people who come into the organization.

RA:  I was talking with SNAME about this subject today, actually, recalling my experience at Transocean and their efforts to help people understand their strengths via personality profiling.  It was quite a revelation, and from a personal standpoint, it really helped me to understand my own strengths and weaknesses, and from a leadership standpoint, helped me understand the Roughnecks I was working with. Realizing why I’m good at what I’m good at was very helpful to me.

TP: It helps to create mutual understanding. We have a similar thing. It’s called ‘Insights’, effectively, mapping personalities. It is a group exercise that helps everyone to understand why people act the way they do.

Not understanding a person’s personality can create consistent tension. Tension is healthy, but understanding how people operate can really help productivity.

People are the industry’s core assets, not ships. How you develop them in the culture of the organization is very important and, up until 4 or 5 years ago, we hadn’t been paying too much attention to that. Now we’re very active in developing leaders, building roadmaps to those goals. It’s not a perfect exercise, but we’re on the right track.

RA: How does Lloyd’s Register continue to maintain its position as a thought-leader?

TP:  By reinvesting our resources into educational and training institutions – often through our educational trust — research and development, working with manufacturers on technology development, working with industry organizations on joint-industry projects and ventures, and by working with other class societies to stay out in front of regulation and the new technical requirements our industries need.

This requires investing in people who are thought-leaders themselves, who bring experience and knowledge to the organization. And lastly, we maintain our position as though-leaders by engaging in conferences such as CMA, where our people write papers for technical associations and presenting at the right high-profile events.

RA: And by contributing to gCaptain…

TP:  (Laughing) Yes, absolutely.

RA:  I appreciate your time Tim, really great to speak with you today.

Interview conducted 20 March 2012  

Viking Lady, image: DNV

RA:  Thank you all for the opportunity to talk with you today.  CMA is a busy event and I’m sure all of you are being pulled in a hundred different directions.

We published an article recently about an LNG-powered platform supply vessel called the Viking Lady that was experimenting with Fuel Cells, and I know that DNV was heavily involved in this project, what can you tell me about it?

Tor Svensen – President, DNV Maritime, Oil & Gas

T. Svensen: It was an experiment to see if it is possible to use fuel cells in a commercial vessel.  The Viking Lady is already an LNG-powered PSV, so natural gas is available, as one of the fuels that can power fuel cells.

RA: How do they work exactly?

T. Svensen: It’s a direct conversion to electricity through a process using special metals.  Actually, fuel cells have an efficiency of about  75 to 80 percent compared to a reciprocating engine, which works at maybe 50 percent.

The nice thing is that fuel cells can run on different fuels.  If you run on hydrogen, you have zero emissions.  If you run on natural gas, you have maybe 50% reduction in CO2 emissions.  Both of those are huge advantages.

RA: One of the things they mentioned in the EEDI meeting this afternoon was using fuel cell technology on board ships to supplement power plants at sea.

T. Svensen: Yes, that’s exactly right.  If you’re in port, you’ll just run on the fuel cell and you’ll have all the power you need while in port.  In the case of the Viking Lady,  you’ll have part, or perhaps all, of the auxiliary load supplied by the fuel cell.  The fuel cell on Viking Lady was not more than 300KW, so it was not big fuel cell, although it was physically large.

Part of the tests on board the Viking Lady were to see if a fuel cell could fit into the operational profile of the ship.  Then, we wanted to test the interface into the electrical system and see how it would work given the ship’s motion and the marine environment.

RA: From a risk management standpoint, what are some of the issues that you saw with this system?

T. Svensen:  The fuel cell had no risk management issues beyond those of other propulsion or power systems.   With LNG, of course, there are issues with regard to double barriers for safety that are well established already.  Frankly, we were surprised how well everything worked.

Now, Fuel cells need to be developed much further for commercial application, but they look promising.  They are very good for a providing a stable power output at an optimum efficiency point,  perhaps 80-85 percent of maximum power.

RA:  Who is developing them?

T. Svensen:  MTU – Rolls Royce developed the fuel cell for the Viking Lady.

RA:  Are they the only ones working on this right now?

T. Svensen:  No, there are other manufacturers as well.  Unfortunately there are not enough manufacturers or development for fuel cells today.  I would like to see much more development because we need to bring them down in size so that we get more output for their volume, ie. power density needs to increase.

That is one of the biggest challenges.

RA:  The Viking Lady has a few other unique features designed into her, such as a deck-forward design.  Can you explain the rationale behind this feature and perhaps any others?

T. Svensen:  Yes, she looks a bit like a cargo ship.  They decided on that design in order to give better operability and handling.  I talked to the master of that ship and he said that on a traditional, deck aft PSV, you have a forward and aft position while working, however for the Viking Lady, everything is forward which enables the master to keep focused on what is happening on deck, and what is directly in front of the vessel at all times.  It’s a safety issue.

The other is the comfort factor.

Having the bridge and accommodation areas aft makes a huge difference when working in the North Sea.  Crews mention that they sleep better on this sort of vessel because they are not thrown around in their bunks as much.

RA:  Have you seen a lot of interest in this vessel design from other companies operating in the North Sea?

T. Svensen:  Most ship owners are fairly traditional and have not yet bought into this design.

An additional benefit is that with the pilothouse-aft design, the conduit run for the power systems is much shorter as the accommodations, the bridge systems, and the engine room are all arranged vertically.  It’s a simpler design, and thus less costly to build.

Also, with the aft superstructure, less buoyancy is required in the bow, and thus a finer entry can be designed to improve hull efficiency.

T. Svensen:  I think the main hurdle is to get used to handling cargo on the bow, where there are more ship motions than on the stern.

RA:  Besides affecting their bottom line, how do we get these companies on board with these new concepts?

T. Svensen:  I think the main idea is the use of LNG as a plentiful and environmentally friendly fuel.  The secondary idea is to explore the layout and actual design.  As I said, opinions are divided and design is always a tradeoff.  You choose some features that you like, and you compromise on other things.  I continue to think that owners and designers will always explore new options for safety and efficient operations

Elisabeth Torstad – COO, Division Americas

RA:  Elisabeth, tell me a bit about DNV Americas, what’s the strategy for DNV over the next year?

E. Torstad:  We have been in the Americas for over 100 years and have a strong organization.  DNV Americas covers several different areas, not just maritime.  Today, we are growing in pipeline safety, oil and gas, especially offshore, renewable energy and electrical power transmission as well as maritime.  We are very strong in healthcare side and the certification of management systems to quality, environmental and other international standards.  Then, our laboratories for fuel testing, pipeline safety and forensic investigations, as well as a research and innovation unit, round out the broad scope of our activities in the Americas.  Within maritime, which is a very strong area for us in the Americas, though, we are seen as a very capable and highly competent organization.   So we have several strong legs to stand on.

We focus on technology and quality in the Americas, which also differentiates us throughout the world.  We have a strong edge within offshore and we bring a lot of competence here from other places in the world.  Houston is also a hub for development of our other global business units.

Image: DNV

RA:  How are you able to bring in that talent?  Why do people want to work for DNV?

E. Torstad:  Because we focus on competence and technology and we do things such as engage in projects like the Viking Lady, the Quantum, Triality and other concept ships on the shipping side, and we similar innovative design projects on the oil and gas sectors.  Also, we value innovation and creativity – the desire to challenge the norm and we invest in both the technical and managerial competence of our people.

To us, though, competence alone is only valuable if we share it with industry and government – and we do in the delivery of our services and by taking positions on key issues.  For example, we had a position paper for an effective offshore regulatory regime for the U.S. in July 2010, less than 3 months after the Macondo blowout.

RA:  How do you communicate these points to the industry?

E. Torstad:  We communicate in several different ways.  gCaptain is certainly one avenue for us to communicate and we appreciate your interest in all of our  innovative projects, such as the Viking Lady, the X-Stream pipeline and concept ships, LNG fuel for propulsion and offshore solar farms.  Secondly, we have an open and active internal and external communication policy and we are available to the trade and general media to offer our own analysis or share our insights.

Third, we have a number of publications, such as Forum, our corporate magazine, and industry specific publications, such as the Updates for Offshore, Tankers, Container Ships, Cruise Ships, LNG, Wind Energy, etc., which are distributed to our customers, government agencies, and are also available on our website.

Fourth, we take time to listen to our customers and, when it is appropriate, we can point out how some of our innovation products or services may help them.

We do hold press conferences, but many trade and general media journalists now subscribe to the press releases we post on our web site.   Also, we are active in various industry conferences and provide speakers when we feel we have something to add or a unique view.

We also have a very strong tradition for developing new ways of working and new standards or recommended practices together with industry where we invite companies and governmental institutions in to work together with us.  So we both work in the background on our own, as well as in strong partnerships with industry and government

RA:  Tell me a bit about the work that DNV is doing within the arctic?

E. Torstad:  We have been working within the arctic since the early days when Norwegian, Finnish, and Russian bases were established.  This includes everything from ship design, dealing with ice, ice loads, ice management, ice breaking, working in cold/harsh conditions, as well as working with the noise and vibrations emissions into the arctic.  For shipping, we have been very active in the technical aspects as well as the working environment.

As you know, the arctic is not a homogeneous area of ice and harsh weather, but a very diverse range of different environments.

We are currently taking on a large project for the Norwegian and Russian governments called the Barents 2020.  Originally, this project involved figuring out the best way of regulating the arctic for the common needs of both Norway and Russia.  We started out by mapping the Norwegian and Russian regulatory regimes for the arctic and identified the commonalities and gaps.  Those gaps were then individually assessed and standards developed to maintain the same level of safety and reliability that we have in the North Sea for offshore oil and gas operations.

The work is still ongoing in terms of working with the industry to develop those standards and cover those gaps.

As this project has progressed, both Norway and Russia recognized that this work has international applications and it has now been expanded to an international project.  The next part of that work is actually bringing in US and Canadian authorities, who have shown a lot of interest in our work.

RA:  How are the US and Canadian authorities coming along when it comes to managing the offshore arctic E&P landscape?  During the Deepwater Horizon disaster, there appeared to be a bit of a knowledge gap between the MMS and the US Coast Guard, where do you see things now?

E. Torstad:  I think that’s closing in now.  Having Admiral Watson as the new Director for BSEE was a very good appointment and  there have been several other steps taken which have supported more coordinated regulatory efforts across government agencies.

What we see, while working with government agencies, is that they are dealing with increasingly complex regulatory regimes and more demanding public expectations.

You can judge the overall regulatory system by the actual implementation level, however, there are a lot of good thought processes and work processes looking at improving both the regulatory programs and implementation.  I also think I can say that there have been some major steps while working with some of the offshore safety committees.   Some of the permanent committees that have been put into place have been doing a lot of great work.

RA:  Is DNV involved with the Marine Well Containment Company?

E. Torstad:  Yes, we provide services to them and we have been verifying and certifying the equipment and systems.

RA:  How did DNV develop it’s expertise in the subsea world?  Was this developed organically or via acquisition?

E. Torstad:  Our subsea competence has been developed together with the oil companies over time since the first subsea development project.  We’ve done a lot of joint industry projects and launched a lot of research and innovation projects, but I don’t think we’ve made any specific subsea acquisitions.  It’s all been organic.

T. Svensen:  When the offshore industry in the North Sea moved into deep water, or it needed to go beyond the normal areas from a fixed platform, they really had to find new solutions.  It started basically in the late 80s, when the oil companies,  the research communities, and DNV, were heavily involved in some big projects prototyping new technology such as flexible risers, anchoring systems, etc., which lead to floating production and subsea installations.  It’s gradually moved through various stages.  Today, you see a trend that it’s  moving more and more from the sea surface to the seabed.

K. Vareide:  More and more processing facilities, and of course, Statoil’s strong and aggressive presence in the North Sea, led to the deployment of new subsea technologies.  The world’s biggest subsea companies and manufacturers are Norwegian-based.   So, as this cluster of companies and skill sets developed in Norway, so did DNV.

E. Torstad:  I’d like to also mention that DNV has large laboratories which have helped us stay at the forefront of technology.  We’ve been able to work with setting the functionality requirements of subsea technology and then testing it In addition, DNV KEMA has the world’s largest high voltage testing laboratory and our office in Columbus, Ohio, has extensive corrosion testing and analysis capabilities.

Kenneth Vareide, Director of Operations, DNV Maritime, Oil & Gas North America

RA: Floating LNG… Is DNV working with Shell on Prelude?

E. Torstad:  Absolutely.

RA:  It’s a pretty amazing project.

T. Svensen:  The Shell FLNG is first one, however there will be more to come in the future.  It provides lots of flexibility and  advantages, but of course, it’s a huge undertaking, a tremendous development.

E. Torstad:  It’s fascinating… You were asking earlier about oil spills, and I’d like to comment on that because it’s more than just containment, which is an important part in our view.  One of the keys is our use of models to analyze oil spills and predict the effects,  We have a leading position in how to do this, including the use of satellite imagery.  For example, one of the things we can do is to actually look at possible consequences of say a blowout situation, such as what might the spill ratio may be, where will the spill flow, how large will the flow be and what species may be affected.  The whole consequence modeling of an oil spill is one of our strong suits.

You can’t just say you need to avoid oil spills, you need to know what to do if you have one.

RA:  And I would assume that DNV works with the geoscientists to figure out ratios of condensate or gas to oil within these spills as part of your modeling process?

E. Torstad:  Yes, of course.  One of the important inputs is assessing the properties of a specific well to obtain the data to model how much the blowout ratio could be and then we can do the modeling. .

RA:  The Northern Sea Route… Last year it was a fairly popular route to take for gas carriers serving the Yamal Peninsula.  What is DNV doing to support companies like Sovcomflot and others who operate along that route?

Kenneth Vareide, Director of Operations, DNV Maritime, Oil & Gas North America

K. Vareide: I think last year the number of ships transiting that area was maybe 35.  It is picking up though, and right now it’s in the pilot phase to become a regular route.

I think the industry is taking the right steps to learn more about operating in that area.  One of the shipowners who has been operating up there recently said that you really need to have an efficient logistics chain to take that route.  You will save quite a few days along that passage, but you need specifically built ships capable of sailing efficiently from Europe to Shanghai.

RA:  Do you need ships to go all the way to Shanghai, or do you build transshipment areas at each end of the route?

K. Vareide:  Exactly.  If you’re going to make this very effective, that’s probably what you’ll need to do.

E. Torstad:  Yes, there are different logistics solutions for a variety of investment scenarios,

T. Svensen:  You also have to consider shipment between Asia and Europe in the zero-ice season.  Those ships may  not need to be ice-strengthened when standard commercial ships can run on this route.  Then, you have the other part of shipping where you have to go in to where the raw materials are coming from, whether it be from Yamal, or wherever, and those ships will need to be ice classed, specialty ships.  Those ships, however, will  not be as efficient while sailing in other regions.  You don’t design an oil tanker to break ice and then go across the Atlantic to deliver the cargo.    That’s totally inefficient.

Icebreaking, or ice-strengthened vessels will just go to Murmansk for example, offload their cargo, then a normal Suezmax will pick it up.  This is very different from this Northern Sea Route, which is simply an alternative to going through the Suez Canal, or around Africa.

RA:  Considering the diverse business areas, and industries, that DNV works within, I was wondering if there was any sort of collaboration going on between your company and the Carbon War Room.

T. Svensen:  I don’t think that they are very serious in the things that they do, to be quite straightforward.  They are using published data and publishing efficiency figures, but they don’t take consider the technical aspects for someone who may use their data.  That is my main criticism.  They don’t go into the necessary depth and, as a consequence, they create unnecessary tension.

We are very engaged though, and have been doing a lot of very serious studies of abatement potential for shipping.  In fact, we have worked with Lloyd’s Register to generate a serious study and report to the IMO about the effects of introducing the new EEDI regulations.  The IMO does have a  scientific approach, unlike some of the NGO’s, which do not take technical aspects or how things operate on ships, into account.

On the issue of addressing CO2 abatement and bringing down energy consumption on ships, DNV’s approach has been to drive energy efficiency much harder in order to reduce the CO2 footprint.  That results in real reductions in emissions.  Then, in our view, the next step is to talk about creating new schemes for the industry to reduce its overall footprint further, whether it be carbon trading, or another approach..

Our studies show that the potential for CO2 reduction in the shipping industry varies from close to 30 percent using today’s technology, to upwards of 50 percent if we bring in some of the emerging technologies that I think will be available within the next 10 to 20 years.

Click for larger version

E. Torstad:  I think I’d like to point to another difference as well.  We differ significantly from an NGO in the fact we are in business, and we are doing business with customers to address a multitude of different risks that they are facing.  We agree in the direction, we have a policy and a strategy and we want to drive emissions down and achieve  a more sustainable industry.

We think that’s the right direction to go, but we are also working with all the other aspects of doing business in this industry. A key point is that our knowledge, capabilities and overall involvement are much greater than what an NGO can do because they are not involved in the totality.

Graham Westgarth, EVP, Innovation, Technology and Projects – TEEKAY

Amid the hustle and bustle of this year’s Connecticut Maritime Association Conference in Stamford, Connecticut last week, I met with the very modest and mild mannered Chairman of INTERTANKO, and Teekay’s EVP for Innovation, Technology and Projects, Graham Westgarth.

RA: Graham, thanks for taking the time to chat, tell me a little bit about your career and how you found yourself in your present role at Teekay.

GW: I started by going to sea in 1971, about 41 years ago, and spent 18 years going through the ranks.   My last 5 years were as ship’s master working for A.P. Moller/Maersk.  They then brought me ashore as a Superintendent and after several years I ended up as General Manager of their UK fleet.  I worked in shore-based roles for about 12 years until I was approached by Teekay to manage their fleet in 1999.

Shortly after I joined the company we started to expand and are now one of the largest shipping companies in the world, especially in the energy sector.  We’ve diversified from conventional tankers into LNG, FSOs, FPSOs, shuttle tankers.

It’s been an extremely interesting time and around two years ago I became Chairman of INTERTANKO which is an industry organization representing roughly 75 percent of the world’s independent tanker owners.  It has NGO status at IMO and it’s very active in engaging with the regulators and other key stakeholders.

RA: And Teekay is the world’s largest mid-size tanker owner, is that right?

GW: That’s correct.

RA: How many ships do you operate?

GW: It goes up and down due to the fact we charter ships, as well as own them, but at the moment we’re roundabout 150.

RA: Your FPSO fleet, where is that located?

GW: That’s run out of Trondheim, Norway we have a number of assets in the North Sea as well as down in Brazil.  Those are the two areas that we are active in the FPSO business.

RA: Do you see Teekay getting involved in the FSRU business?

GW: We see gas as certainly being an area that is going to grow and become a significant part of the energy chain, and we’re already the largest independent operator of LNG ships, so extending into other areas would just be a natural evolution.

We are looking at a couple projects at the moment, but there’s nothing concrete.

RA:  What kind of companies is Teekay partnering with?  Do you work closely with companies like BG or Excelerate?  I know they have their own fleets of gas ships, but how do you work together with those companies?

GW: BG is active in the gas business, and are a client of ours.  We’re actually building 4 shuttle tankers that will be chartered to BG, and also through Teekay Petrojarl, which is our FPSO organization, they engaged on an FPSO project with BG, so there are multiple touchpoints, and the same goes with Excelerate.

RA: We saw a recent spike in the tanker market, particularly for Suezmax and VLCCs, what was that from?  Do you have any insight as to what the factors were on that?

GW: It’s all just supply and demand.  In this particular case, I can’t say for sure, but sometimes ships gravitate toward one area and it tips the balance and then you see a spike in some areas.  Typically that’s what happens.

I think there was some particularly active fixing going on with the VLCCs, and sometimes that brings a regional cascade effect with the Suezmax’s.

RA:  I think that’s one of the great things about the shipping industry in they way it’s so influential and the economically dynamic on a global scale.

GW:  Well it’s a pretty cyclical and volatile industry, but that’s part of the fun of it.

RA: You gotta have balls if you’re gonna be a shipowner, that’s for sure.

GW: Exactly, it’s not like you’re going into a car manufacturing plant and knowing that you’re going to manufacture a thousand cars that day.

RA: Graham, what has your focus been here at the Connecticut Maritime Association conference this week?  You gave a speech earlier this week, what did you talk about?

GW:  I had a number of themes.  One was a little bit about legislation.  If you look at the way the industry is legislated, particularly through the IMO,  you realize that the way things are evolving with new rules and regulations, we never take anything away, the bureaocracy keeps piling up.

The way it’s managed through the IMO is via a number of different instruments, whether it be the STCW, SOLAS, MARPOL, etc, so the question I was posing is that IMO really, at some point, should take a step back, and really look at the impact all this legislation is taking, and ask, “is there a better, or more streamlined way, of enacting it so that it’s easier for the seafarers, so that they can concentrate on their real job which is managing risk.”

You now have new regulations on ballast water and emissions control and you need to look at it and ask what is the real impact?  How is the seafarer going to implement this?  It’s the seafarers themselves that concerns me, and the burdens we place on them.

RA:  So essentially it comes down to the training and the knowledge of being able to implement these regulations properly.

GW: You first of all have to understand them, then you have to comply and demonstrate compliance.  Demonstration of compliance is probably the most burdensome.

On the legislation front, we do see increasing trends toward regionalization as opposed to unilateral legislation through the IMO, and I think that’s dangerous.

For example, the EU is looking at the potential for applying a market-based instrument, such as a carbon trading scheme, to ships.  The IMO is doing the same thing.  If you don’t meet in the middle somewhere, you now have two sets of legislation which is more difficult to manage, could create added expense, and potentially could compromise safety.

RA: How active is the IMO in trying to sort these regionalized issues out?

GW: I think the new IMO Secretary General, who I met recently, is very clear sighted with a good understanding of the industry.  He was making a point that the IMO has to take it’s place and be the leader in developing legislation for the industry, and engage with the stakeholders so that they maintain that status.

RA: Piracy is of significant concern within our industry, and I believe you spoke on this topic on Monday.

GW:  I think the point I keep making is that this is not a shipping industry issue, this is a political issue.  What the shipping industry is having to do is to manage the consequences of a failed state.  Shipping is providing a service to the world… that’s what it does.  The politicians need to understand that and governments need to ensure they are providing the right of safe passage.

That’s the biggest point I make on the subject of piracy.

RA: What sort of steps does Teekay take to mitigate the threat of piracy to your fleet?

GW:  We have ships sailing through the Gulf of Aden weekly, and we look at this issue from a risk-based approach.  An LNG ship, which has very high freeboards, may simply transit the area at high speed, whereas the steps we take with slower ships may be quite different.  In some cases, we do deploy armed guards with our ships.

US Secretary of State Hillary Clinton has mentioned the idea of making the payment of ransoms illegal and during a recent piracy conference in London that was one of the outcomes.  The point that the industry made is that there’s one thing to say we’ll stop paying ransoms, but what is the alternative that the governments will offer?

RA:  That’s a good question, because look at the situation now with the Iceberg 1 which was captured two years ago this month.  There doesn’t seem to be much of an alternative to paying ransoms.

GW:  If that becomes the case, what are the implications?  If you were a seafarer, would you transit in these areas?

RA: Certainly not.

GW: So that’s not a practical approach, nor commensurate with the situation.

The other theme I had is the tanker industry, which as you know, isn’t in good shape right now.  The biggest cost we have is fuel, which is running around $700 per ton.  Right now the way the situation works is someone has a cargo and they want to carry it to charter, they use a broker in many instances to negotiate a rate with an owner.  If you look at that, the owner is trying to get the best rate he can, the broker is trying to get the lowest rate he can for the charterer, and the charterer wants to get the ship from A to B safely.

The questions I was raising, and we’ve done some work with INTERTANKO on this, is why do typical charter parties operate on or about 14 knots?

And nobody can tell me where we came up with this number, and shouldn’t there be a more scientific approach to managing the logistics chain?

RA: I think to a certain degree, there is.  When you order a ship, the naval architects design the hull, propeller, and power plant based on a certain hull speed per the shipowner’s specifications.

GW: You’re right about that, but charterers and brokers need to be looking at these ships on a more detailed, voyage-level basis to determine a vessel’s optimum speed based on the cost per barrel landed, the emissions design index, and the TCE.

If you put all these things in a formula, you may be seeing that the ideal speed is 12 knots, not 14 knots, for a given voyage.  And actually, the TCE rate goes up because you’re using less fuel, emissions go down, and cost per barrel landed is cheaper for the charterer as well.

We need to engage the industry in looking at moving toward a formula-based type of negotiation for ship chartering.

RA: Rightship for example, works with shipowners to assist them in making informed decisions when buying used ships.  To put this in the context of buying a used car, they analyze ships from an efficiency standpoint so that shipowners can get an idea of what kind of “mileage” they’ll be getting.  Perhaps this same concept that Rightship is using could be used on a voyage-level basis someday.

GW: And the point you made was right as well.  Once you’ve optimized the logistics chain, what type of ships should we really be building for the future?  As you say, looking at the hull, propellor, and machinery.  So that’s another area I think the industry needs to engage themselves in.

RA:  At the EEDI panel yesterday, one or two of them were pretty adamant about not building anymore ships, taking a step back to look at this issue, and to come up with some new ideas.  Is increasing efficiency by 20 percent with existing technologies feasible, or should we really thinking outside of the box and coming up with some other ideas to meet this goal.

GW:  I really think that 25 percent is easily achievable, but you need to optimize a lot of different things across the spectrum.

RA: I appreciate your time Graham, and the opportunity to talk with you.

The shipping industry is under pressure to comply with ever stricter environmental regulations and, with oil more expensive

Gearbulk is the world’s largest operator of open hatch, gantry craned ships – general cargo ships primarily designed for transporting forestry products. And it has led the way in evolving the designs of its ships. The ships’ large cargo holds allow for an efficient stowage and flexibility of cargo type. Gearbulk seeks to maximise cargo opportunities. It has invested in the capability to support other niche trades such as liquid pitch and orange juice.

The company is always discussing the next generation of Gearbulk ships. “Right now, for example, we are looking at different engine and hull performance monitoring systems on our newer vessels,” says Sjur Gjerde, Managing Director of Gearbulk Norway.

“There are huge savings to be made, better hull forms, better engines – but we need to be able to measure performance – so many claims are being made about performance by suppliers.  We want to tie yards and suppliers to the mast on their claims for efficiency gains. Half of the salesmen walk away when we say this – but we can work with the others.”

But things are moving in the right direction. “Over recent years the industry had to face a ‘take it or leave it’ situation when ordering new vessels in terms of accepting yard standard volume design. Now we are seeing yards trying to grab competitive advantage by offering more fuel-efficient ships – especially in Japan – and we are seeing the potential for soft funding for environmentally efficient ships, those with a low Energy Efficiency Design Index.

Fuel type is another area of attention. With conventional heavy fuel oil so expensive and an increasingly high focus on emissions, alternatives are being sought.

Gjerde thinks that it’s only a matter of time before we see an increasing use of LNG in the deep sea. “It’s obviously attractive in Norway where there is a ready supply. The likely middle ground for some time is dual fuel engines.

“Shipping has been hopelessly conservative. We need fresh views. We probably need to take a fresh approach to recruitment as we need to find the right balance between practical engineering experience and commercial requirements.

“We have to sort out the technical issues – and we always can – but it’s the human issues that are the most challenging. As an industrial player with a long-term approach, intending to operate our specialist ships for 35 years or more, we are very interested in finding the right solutions – it’s a constant process of innovation.”

Nick Brown works at London-based Lloyd’s Register as the Marine Communications Manager, responsible for promoting and protecting the interests of Lloyd’s Register’s Marine business.

Nick has worked in the shipping industry for 20 years: for the Wallem Group (where he was a commercial trainee, Wallem Representative in Bangkok and Saigon and Investment Executive in Hong Kong); for INTERCARGO as Manager in London; and as a Director at the shipping crisis specialists, MTI Network.